S. HRG. 111–1215 

LEGISLATIVE HEARING ON S. 1733, CLEAN 

ENERGY JOBS AND AMERICAN POWER ACT 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

OCTOBER 28, 2009 

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

( 

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LEGISLATIVE HEARING ON S. 1733, 

CLEAN ENERGY JOBS AND AMERICAN POWER ACT 
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S. HRG. 111–1215 

LEGISLATIVE HEARING ON S. 1733, CLEAN 

ENERGY JOBS AND AMERICAN POWER ACT 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

OCTOBER 28, 2009 

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 ELEVENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

ARLEN SPECTER, Pennsylvania 

JAMES M. INHOFE, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

MIKE CRAPO, Idaho 

CHRISTOPHER S. BOND, Missouri 

LAMAR ALEXANDER, Tennessee 

BETTINA POIRIER, Staff Director 

RUTH VAN MARK, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

OCTOBER 28, 2009 

OPENING STATEMENTS 

Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland ................ 1 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 2 

Specter, Hon. Arlen, U.S. Senator from the State of Pennsylvania .................... 3 

Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee ................... 3 

Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota ...................... 4 

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 5 

Bond, Hon. Christopher S., U.S. Senator from the State of Missouri ................. 54 

Barrasso, Hon. John, U.S. Senator from the State of Wyoming .......................... 58 

WITNESSES 

Brehm, Peter, Vice President, Business Development and Government Relations, Infinia Corporation .................................................................................... 59 

Prepared statement .......................................................................................... 62 

Response to an additional question from Senator Klobuchar ....................... 68 

Reicher, Dan W., Director, Climate Change and Energy Initiatives, Google ..... 70 

Prepared statement .......................................................................................... 73 

Responses to additional questions from Senator Klobuchar ......................... 85 

Response to an additional question from: 

Senator Inhofe ........................................................................................... 86 

Senator Alexander ..................................................................................... 87 

Foster, David, Executive Director, BlueGreen Alliance ....................................... 88 

Prepared statement .......................................................................................... 91 

Response to an additional question from: 

Senator Boxer ............................................................................................ 99 

Senator Sanders ........................................................................................ 100 

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

Nutter, Hon. Michael A., Mayor, Philadelphia, Pennsylvania; Trustee, U.S. 

Conference of Mayors ........................................................................................... 103 

Prepared statement .......................................................................................... 106 

Response to an additional question from: 

Senator Sanders ........................................................................................ 118 

Senator Klobuchar ..................................................................................... 119 

Gordon, Kate, Senior Advisor, Apollo Alliance ...................................................... 120 

Prepared statement .......................................................................................... 123 

Response to an additional question from Senator Sanders .......................... 130 

Responses to additional questions from Senator Klobuchar ......................... 131 

Klesse, Bill, Chief Executive Officer, President, and Chairman, Valero Energy 

Corporation ........................................................................................................... 133 

Prepared statement .......................................................................................... 135 

Response to an additional question from Senator Klobuchar ....................... 146 

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 148 

Senator Voinovich ..................................................................................... 152 

Senator Alexander ..................................................................................... 154 

Vassey, Brett A., President and Chief Executive Officer, Virginia Manufacturers Association ...................................................................................................... 156 

Prepared statement .......................................................................................... 158 

Response to an additional question from: 

Senator Klobuchar ..................................................................................... 173 
Page

IV 

Vassey, Brett A., President and Chief Executive Officer, Virginia Manufacturers Association—Continued 

—Continued 

Senator Voinovich ..................................................................................... 175 

Warner, Hon. John, U.S. Senator (retired) ............................................................ 245 

Prepared statement .......................................................................................... 248 

Responses to additional questions from: 

Senator Klobuchar ..................................................................................... 254 

Senator Vitter ............................................................................................ 255 

Hicks, Kathleen, Deputy Under Secretary of Defense for Strategy, Plans, 

and Forces, U.S. Department of Defense ........................................................... 257 

Prepared statement .......................................................................................... 259 

Responses to additional questions from Senator Klobuchar ......................... 265 

McGinn, Dennis, Vice Admiral, U.S. Navy (retired); member, Military Advisory Board, Center for Naval Analysis ............................................................... 268 

Prepared statement .......................................................................................... 270 

Responses to additional questions from: 

Senator Klobuchar ..................................................................................... 278 

Senator Alexander ..................................................................................... 280 

Scales, Robert H., Major General, U.S. Army (retired) ........................................ 282 

Prepared statement .......................................................................................... 284 

Responses to additional questions from: 

Senator Klobuchar ..................................................................................... 287 

Senator Alexander ..................................................................................... 288 

Sloan, Andrew, Captain, U.S. Army (retired); Fellow, Truman National Security Project ............................................................................................................ 289 

Prepared statement .......................................................................................... 291 

Responses to additional questions from Senator Klobuchar ......................... 295 

Carafano, James Jay, Lieutenant Colonel, U.S. Army (retired); Deputy Director, the Kathryn and Shelby Cullom Davis Institute for International Studies; Director, Douglas and Sarah Allison Center for Foreign Policy Studies, 

The Heritage Foundation .................................................................................... 297 

Prepared statement .......................................................................................... 299 

Responses to additional questions from Senator Klobuchar ......................... 310 

Response to an additional question from Senator Alexander ....................... 311 

Crane, David, Chief Executive Officer, NRG Energy, Inc. ................................... 341 

Prepared statement .......................................................................................... 343 

Response to an additional question from Senator Sanders .......................... 349 

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 350 

Senator Alexander ..................................................................................... 352 

Izzo, Ralph, Chairman, President, and Chief Executive Officer, Public Service 

Enterprise Group ................................................................................................. 354 

Prepared statement .......................................................................................... 356 

Response to an additional question from Senator Sanders .......................... 367 

Law, Kevin S., President and Chief Executive Officer, Long Island Power 

Authority ............................................................................................................... 368 

Prepared statement .......................................................................................... 370 

Response to an additional question from Senator Sanders .......................... 377 

Keohane, Nathaniel O., Ph.D., Director, Economic Policy and Analysis, Environmental Defense Fund ..................................................................................... 378 

Prepared statement .......................................................................................... 380 

Response to an additional question from: 

Senator Sanders ........................................................................................ 393 

Senator Inhofe ........................................................................................... 394 

Bluestein, Joel, Senior Vice President, ICF International ................................... 396 

Prepared statement .......................................................................................... 398 

Response to an additional question from: 

Senator Sanders ........................................................................................ 403 

Senator Inhofe ........................................................................................... 404 

Hart, Barry, Chief Executive Officer, Association of Missouri Electric Cooperatives .............................................................................................................. 405 

Prepared statement .......................................................................................... 407 

Johnson, Dustin ‘‘Dusty,’’ Chairman, South Dakota Public Utilities Commission ........................................................................................................................ 424 

Prepared statement .......................................................................................... 426 

Response to an additional question from Senator Sanders .......................... 436 
Page

V 

Johnson, Dustin ‘‘Dusty,’’ Chairman, South Dakota Public Utilities Commission—Continued 

Responses to additional questions from Senator Inhofe ............................... 437 

Wilson, Shari T., Secretary, Maryland Department of the Environment ........... 706 

Prepared statement .......................................................................................... 709 

Response to an additional question from Senator Sanders .......................... 717 

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 718 

Senator Alexander ..................................................................................... 722 

Young, Ronald E., President, California Association of Sanitation Agencies ..... 724 

Prepared statement .......................................................................................... 726 

Responses to additional questions from Senator Inhofe ............................... 735 

Frumhoff, Peter C., Ph.D., Director, Science and Policy, and Chief Scientist, 

Climate Campaign, Union of Concerned Scientists .......................................... 737 

Prepared statement .......................................................................................... 739 

Response to an additional question from Senator Sanders .......................... 789 

Responses to additional questions from Senator Inhofe ............................... 790 

Schweiger, Larry J., President and Chief Executive Officer, National Wildlife 

Federation ............................................................................................................. 792 

Prepared statement .......................................................................................... 794 

Responses to additional questions from Senator Inhofe ............................... 858 

Response to an additional question from Senator Voinovich ........................ 862 

Sharp, Fawn, President, Quinault Indian Nation ................................................ 863 

Prepared statement .......................................................................................... 866 

Response to an additional question from Senator Boxer .............................. 870 

Responses to additional questions from Senator Inhofe ............................... 892 

Sims, James T., President and Chief Executive Officer, Western Business 

Roundtable ............................................................................................................ 895 

Prepared statement .......................................................................................... 898 

Response to an additional question from Senator Sanders .......................... 907 

Responses to additional questions from Senator Inhofe ............................... 908 

Green, Kenneth P., Ph.D., Resident Scholar, American Enterprise Institute, 

prepared statement .............................................................................................. 1021 

ADDITIONAL MATERIAL 

U.S. Environmental Protection Agency, Office of Atmospheric Programs: EPA 

Analysis of the American Clean Energy and Security Act of 2009, H.R. 

2454 in the 111th Congress, June 23, 2009 ....................................................... 1047 

U.S. Department of Energy, Energy Information Administration, Office of 

Integrated Analysis and Forecasting: Energy Market and Economic Impacts 

of H.R. 2454, the American Clean Energy and Security Act of 2009, August 

2009 ....................................................................................................................... 1100 

Environmental Defense Fund: Cutting Global Warming Pollution for a Dime 

a Day ..................................................................................................................... 1182

Statement from the National Association of Home Builders, April 24, 2009 ..... 1185 

Testimony of the Competitive Enterprise Institute, October 28, 2009 ............... 1201 

(1) 

LEGISLATIVE HEARING ON S. 1733, CLEAN 

ENERGY JOBS AND AMERICAN POWER ACT 

WEDNESDAY, OCTOBER 28, 2009 

U.S. SENATE, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, Washington, DC. 

The full committee met, pursuant to notice, at 9:30 a.m. in room 

406, Dirksen Senate Office Building, Hon. Barbara Boxer (chairman of the full committee) presiding. 

Present: Senators Boxer, Inhofe, Baucus, Carper, Lautenberg, 

Cardin, Sanders, Klobuchar, Whitehouse, Udall, Merkley, 

Gillibrand, Specter, Alexander, Voinovich, Bond, Barrasso, and 

Crapo. 

Senator BOXER. The meeting will come to order. We are very 

happy to see the witnesses here. We are going to have 2 minute 

openings today and rounds of 5 minutes each. I am going to pass 

on an opening statement and call on Senator Cardin. 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM THE STATE OF MARYLAND 

Senator CARDIN. Well, Madam Chair, let me just thank all of our 

witnesses that are here, and I am really looking forward to today’s 

hearing. 

We are going to have a chance to talk about jobs and economic 

opportunity, national security, utilities and adaptation. I am particularly pleased that on the fourth panel Secretary Shari Wilson— 

and I will have a little bit to say about her later—the Secretary of 

the Maryland Department of the Environment, because I am proud 

of what Maryland has done in the leadership on global climate 

change establishing its own State program on climate change, and 

I think it is going to be very helpful to the committee. 

Let me just underscore, I guess, two points, Madam Chair, as we 

start the second day of hearings on the legislation that you have 

brought forward. 

First, this is a bill that will create jobs in our community. I mentioned yesterday what is happening in White Marsh with new battery technology for the auto industry. We are very proud of that 

technology. We are very proud of the jobs it is creating in my own 

State of Maryland. We see this as a real opportunity to expand 

technology that was developed in the United States, to keep jobs 

and create jobs in America. 

And second, let me just bring to the committee’s attention an article that appeared in the Washington Post this morning about the 

impact on coastal areas of global climate change with rising sea 
2 

levels. And they talk about the risk to the natural environment in 

the State of Maryland as well as to the residential development 

along our coast. 

This is an urgent issue, Madam Chair, that needs to be dealt 

with now, for the sake of our national security, for the sake of our 

environment, for the sake of the property values of people who live 

in the coastal areas. For all these reasons, it is important that we 

get the job done this year, and I applaud you for your leadership. 

Senator BOXER. Thank you so much. 

Senator Inhofe. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. I would very much like to inquire as to what we 

are doing here. Our side feels very strongly that they would like 

to have 5 minute openings. Since we have four panels, it is an all 

day situation. Would that be acceptable? 

Senator BOXER. Well, Senator, let me explain—— 

Senator INHOFE. I do not plan to take that much—— 

Senator BOXER. Well, yesterday we were here for quite a while. 

We have four panels today. Is that right, four? So, we did get to 

speak a lot. I have waived my opening time. We have 2 minutes. 

If a Senator feels they must go over a minute, I am not going to 

shut them down. So, why do we not just go? I have given up my 

time, but you go right ahead. 

Senator INHOFE. All right. That, well—— 

Senator BOXER. So, if you go over a minute, that is fine. 

Senator INHOFE. Well, anyway, we are going to have a lot of discussion hopefully today about jobs and get out of some of the personal attacks and those things that we had to experience yesterday. 

I do look forward to the number of witnesses that we have. We 

have some from Valero Energy, which I consider to be very well informed on the problems that exist out there and how we are going 

to meet those problems, as well as the Virginia Manufacturers Association, both to talk about how the recession has hurt their operations and their employees. And they will talk about how the Waxman-Markey bill will make things even worse, less refined products 

produced here in America and fewer jobs. 

I think some of these things we do understand. I would only say 

this about yesterday, that I thought it was a little bit overbearing 

to have spent 30 minutes just having Senator Kerry talk about how 

the world is coming to an end, and the only way to save the world 

is to pass the largest tax increase in history. And I do not think 

that is realistic. 

I would say this, though, to my good friend, the Chairman of the 

committee, that if you look at the polling data, the American people 

have caught on. I mentioned yesterday that it was kind of strange 

that after the August recess 60 days ago, everyone was really uptight because they had heard from the American people. But now 

they have forgotten what the American people have said. 

However, the polling data, now I am looking at it right now, I 

have been in kind of shock. The most recent poll just last week 

came out in Politico is 45 percent of the people rate the economy 
3 

as the most important issue, then they go on down to 21 percent 

on spending, 20 percent on health care, 9 percent on the wars, just 

4 percent on climate change. 

So, I think there is an awareness out there that has not been 

there before, Madam Chairman, and I am somewhat rejoicing in 

that. I give back my time. 

Senator BOXER. Thank you very much. 

Senator Specter. 

OPENING STATEMENT OF HON. ARLEN SPECTER, 

U.S. SENATOR FROM THE STATE OF PENNSYLVANIA 

Senator SPECTER. Thank you, Madam Chairwoman. 

My comments will be limited to introducing the distinguished 

Mayor of Philadelphia, who is on the panel. Mayor Nutter is the 

98th Mayor of the city of Philadelphia. It is interesting to visit the 

Mayor’s reception room to see his 97 predecessors on the wall. It 

is a long, distinguished and illustrious group. 

Philadelphia is the sixth largest city in the country. In 1938, 

Philadelphia was the biggest city in the country. With Mayor Nutter’s leadership, we are going to move up to five, four and [unclear] 

surpassing one of the cities, New York, to the World Series where 

the Phillies will be undertaking an important venture on behalf of 

our city a little later today. 

[Laughter.] 

Senator SPECTER. But the Mayor brings a very important perspective to a very critical issue. He has a background from the 

Wharton School of Business, became politically active, worked on 

the City Council, elected in 1991, and now elected to the Mayor’s 

job. 

I have worked with him very closely for many years and look forward to his testimony and his continued outstanding leadership of 

our great city. 

Thank you, Madam Chairwoman. 

Senator BOXER. Thank you so very much. 

And next is Senator Alexander. 

OPENING STATEMENT OF HON. LAMAR ALEXANDER, 

U.S. SENATOR FROM THE STATE OF TENNESSEE 

Senator ALEXANDER. Thanks, Madam Chairman. 

Sometimes a story helps. A couple of weeks ago, I was visited by 

the Chairman of a French company who is the largest maker of 

turbines in the world for nuclear plants. He told me, of course, 

France gets 80 percent of its electricity from nuclear power. We 

hear a lot about Germany and solar. Germany gets 1 percent of its 

electricity from solar. 

France gets 80 percent from nuclear power, and Germany is buying power from France. And jobs from Spain are moving to France 

because France has among the lowest electric rates in Europe. And 

it has among the lowest carbon emissions in Europe. That is 

France. 

This French company is selling, because of all of the technology 

they have developed in France over the last 30 years while we have 

not started one new nuclear plant, France is selling turbines all 

around the world. To Russia, India, the countries that are devel-
4 

oping power, but especially in China. This French president of the 

company told me that China is starting a new nuclear plant every 

3 months. China is building 132 nuclear plants, and we have not 

started one in 30 years. 

My objection to this bill is—I see the problem. I agree with the 

problem. But I see no need for us to send manufacturing jobs overseas by deliberately raising prices of electricity by putting a cap 

and trade on fuel which raises the price of carbon but does not reduce carbon. 

Deliberately raising rates and relying on solar and wind when we 

have had 60 years of experience with nuclear power, invented it, 

and by building 100 new nuclear plants in 20 years and electrifying 

half our cars and trucks in 20 years, and doubling our energy research and development on recapturing, on how to capture carbon 

from coal plants, on how to make solar, which is now four or five 

times the cost of other electricity in our region, cost competitive, on 

making better advanced batteries and on recycling used nuclear 

fuels. 

If we build 100 nuclear plants, the President led us to do that, 

if you led us to electrify half our cars and trucks, if we had miniManhattan Projects on alternative energy, we could reach our carbon goals by 2030 without a national energy tax, without sending 

jobs overseas, and without imposing on Americans higher costs for 

the energy and electricity. 

So, my final question, as my 3 minutes comes to an end, is, if 

the United States were to create a nuclear navy in the 1950s, 

which we did, and it had led the world for 60 years, which it has, 

and if it had done everything we wanted it to do, and if sailors 

have lived safely on top of it for all that time, then if we wanted 

to continue to have a strong military, would we stop building nuclear ships and start subsidizing sailboats? No, we would not. 

So, my question is, I do not have a problem with the problem, 

but why are we developing this solution when we have another one 

staring us right in the face? 

I look forward to hearing from the witnesses on that subject. 

Senator BOXER. Senator Klobuchar. Welcome. 

OPENING STATEMENT OF HON. AMY KLOBUCHAR, 

U.S. SENATOR FROM THE STATE OF MINNESOTA 

Senator KLOBUCHAR. Thank you very much, Madam Chairman. 

I would like to welcome all of our panelists, especially from the 

State of Minnesota, Dave Foster, who has been at this for a long 

time. He heads up the Blue Green Alliance, and he has worked 

representing miners in Minnesota for nearly 7 years. As you know, 

my grandpa was an iron ore miner, worked a thousand feet underground in the mines in Ely, Minnesota, and at the same time always had that respect for the outdoors and loved to hunt and loved 

to fish. 

And so, when Dave had this idea of starting up this BlueGreen 

Alliance, which is a combination of the workers in our State and 

the environmental groups to say we can have a net gain here, we 

can do this together, we can actually do things that are good for 

the environment and bring jobs in at the same time, at the time 
5 

was rather novel. I remember Paul Wellstone leading rallies with 

Dave on this topic. 

And now we have actually seen it in our State, as I was saying 

yesterday in my opening. We have seen a huge increase in our 

green jobs, as compared to a lot of our other jobs in our State. We 

have a 25 percent by 2025 renewable electricity standard that has 

brought all kinds of jobs into our State. And we are seeing iron ore 

mines finally with this economic recession starting to open up 

again, and before that time, were actually doing better than they 

had in decades. We have seen how we can make this work together, and that is what Dave stands for. 

And to have all of these steelworkers standing there saying they 

want to see an energy bill is a great thing in our State. 

So, thank you very much for being here, Dave, and I look forward to hearing from the Mayor and the rest of the panelists as 

well. 

Senator BOXER. Senator, thank you very much. 

Senator Voinovich. 

OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 

U.S. SENATOR FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Madam Chairman. 

The impact of this legislation on jobs, workers and Ohio families 

is at the height of my concerns with this legislation. Again, it 

seems to me we are failing to harmonize our environment, energy, 

economic and national security interests. The bill will cost my 

State of Ohio and the country jobs. This is without dispute, despite 

wild claims of green job creation. There is no credible analysis that 

suggests that this bill will be a net job creator. 

In fact, this legislation includes a form of unemployment insurance for those who will lose their jobs because of its implementation. It is very disturbing that this is included in what proponents 

call a jobs bill. Ohio has already lost enough jobs, and some of it 

is because we have switched from coal to natural gas. 

The job losses also will stem from the bill’s onerous mandates 

and requirements. Further, the Senate Energy Committee passed 

a bill containing a mandatory renewable electricity standard, or 

RES, and the majority leader has indicated that he is going to 

merge that with this bill. This creates a system of overlapping and 

redundant requirements that will inhibit the cost effective admission reductions and will drive energy prices up. 

Indeed, the theory under cap and trade is that we set a cap and 

allow companies to comply with the most efficient means possible. 

No so with this bill. 

The other things that I would like to mention is that there are 

provisions in here for what we call a border tax, or border adjustment. We have researched this thoroughly, and those provisions 

violate the WTO. What we are really going to need, Madam Chairman, is an international agreement that would deal with those 

countries that fail to comply with the new standards that the countries will set, very much like we had with nuclear proliferation 

arms reduction. 

And so much of what we should be doing here is going to be reflected upon what comes out of Copenhagen in December. And that 
6 

1 U.S. Department of Labor. 

is why I think it is really important that we understand for us to 

unilaterally pass this legislation without airing some of the major 

problems that we have, for example, whether we are going to use 

the year 1990 or the year 2005 to determine what are caps are 

going to be, is something that needs to be discussed. 

We also need to deal with allowances and whether they are going 

to be paid for or not paid for. Senator Alexander mentioned France. 

France wants no allowances, no free allowances. They want the allowances to be paid for. Germany, on the other hand, has said we 

have to have allowances so we can predict steel in our manufacturing. 

So, these things are going to have to be worked out on the international level if we expect to make some sense out of our efforts 

to reduce greenhouse gases, not only in this country but in the 

world. 

[The prepared statement of Senator Voinovich follows:] 

STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR FROM THE STATE OF OHIO

The impact this legislation will have on jobs, workers and Ohio families is at the 

heart of my concerns with the Kerry-Boxer proposal. Again it seems we are failing 

to harmonize our environment, energy, economic and national security concerns. 

That this bill will cost my State of Ohio and the country jobs is without dispute. 

Despite wild claims of green job creation, there is no credible analysis that suggests 

that this bill will be a net job creator. In fact, this legislation includes a form of 

unemployment insurance for those who will lose their jobs because of its implementation legislation. It’s very disturbing that this is included in what proponents call 

a ‘‘jobs bill.’’ Ohio has already lost too many jobs, with unemployment now at 11 

percent. 

The job losses will stem from the bill’s onerous mandates and requirements. Further, the Senate Energy Committee passed a bill containing mandatory renewable 

electricity standard, or RES, and the majority leader has indicated his intent to 

merge the cap/trade bill and the energy bill together. 

This creates a system of overlapping and redundant requirements that will inhibit 

cost effective emissions reductions and will drive energy prices up. Indeed, the theory under cap and trade is that we set a cap and allow companies to comply by the 

most efficient means possible. Not so with this bill. Here, we set a cap and then 

mandate how companies comply. 

Residential consumers, small businesses, manufacturers and industrial operations 

all depend on reliable and affordable energy. The consequences of fuel switching 

from coal to natural gas are particularly troubling for our industrial workers and 

for vulnerable consumers like the elderly and those living in poverty. Our environmental policies have already resulted in a sharp increase in the use of natural gas 

for electric power generation—accounting for almost 94 percent of the increase in 

domestic demand for natural gas since 1992. 

As history has proven, the demand for natural gas can send ripple effects 

throughout the economy because of its use as both a fuel and a feedstock for the 

production of everything from fertilizer, to plastics, to the heating of homes. It has 

contributed to a loss of over 3.1 million U.S. manufacturing jobs. 1 In fact, the recession in Ohio began in 2001 when natural gas demand spiked. As an example, the 

chemistry industry has gone from a $19 billion trade surplus in 1997—the most successful export industry in U.S. history—to becoming a net importer of chemicals. 

I find provisions in the bill that actually encourage fuel switching particularly 

short sighted. In fact, a CEO of one of the Nation’s largest utilities told me that 

we would regret the move to natural gas as it will hamper our manufacturers and 

create a ‘‘leap-frog’’ effect over much needed investments in CCS and nuclear technologies. 

Many people down-play the impacts that this policy will have on our economy. 

And although the ‘‘green jobs’’ movement is trying to convince us that rationing energy resources will save the world and our economy, there is little to support these 

claims. 
7 

As I mentioned yesterday, the American Council for Capital Formation (ACCF), 

having performed the only comprehensive analysis of the Waxman bill that I’m 

aware of, concluded that by 2020 the House bill could reduce household income in 

my home State of Ohio by up to $261 per year on average, increase energy costs 

by up to 20 percent, and result in a net loss of more than 100,000 jobs. 

Under this bill, these numbers are sure to go up. This is because the 2020 cap 

is tighter, the pool of distributed allowances is smaller, and there is no Clean Air 

Act or State program preemption. Today, I’d like to ask to have the entire ACCF 

report submitted for the record. 

Recognizing that the bill will put U.S. manufacturers at a disadvantage to overseas competition, proponents seek to offset compliance and fuel and input costs 

through a system of rebates. Yet many manufacturers from my State won’t qualify 

for the rebates, and the bill’s costly requirements will force plant closures and relocation overseas. These include tire, semi-conductor, textile manufacturers and refiners, for example. 

This is bad for the environment and the economy. Some of my colleagues would 

like to insulate our Nation’s manufacturers by including a ‘‘border tariff’’ provision. 

But this is likely inconsistent with WTO requirements. 

My goals throughout this process are to keep Nation’s economy, and that of Ohio, 

on a sure footing while decreasing emissions. This bill just doesn’t get the job done 

and in fact is a threat to the jobs and economy. 

[The referenced analysis follows:] 
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Senator BOXER. Thank you, Senator. 

Senator Whitehouse. 

Senator WHITEHOUSE. Madam Chair, I will waive my opening 

statement. I stand by yesterday’s opening statement. 

Senator BOXER. Which was so good. 

Senator WHITEHOUSE. Thank you. 

[Laughter.] 

Senator BOXER. Thank you very much. 

Senator Bond. 

OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, 

U.S. SENATOR FROM THE STATE OF MISSOURI 

Senator BOND. Thank you very much, Madam Chair. 

People today are talking about a new poll that shows that people 

want Government to take action to cut carbon emissions. Sounds 

like a nice idea. But it is also like asking how many people want 

a free lunch. 

When pollsters ask the American public how much they are willing to pay to fight the emissions they claim for global warming, the 

results are much different. A Rasmussen poll found that 79 percent 

of Americans oppose paying even $100 per year more in higher 

taxes and/or higher utility costs to fight global warming. According 

to the poll, the majority of 56 percent did not want to pay a single 

penny to fight global warming. 

And that is what I am hearing back home. It is not that Missourians do not care about the environment. We do. We have always 

supported measures, responsible measures, to clean up the environment. But what we do not want to do is kill jobs and raise energy 

taxes. What we do not want to do is strangle the economy with a 

deep recession. 

Rural Missourians who depend on electric co-ops for power rose 

up to send this message. And what you see today are over 30,000 

signed cards demanding that we keep power bills affordable. Thirty-thousand Missourians object to unfair proposals that would hurt 

the Midwest and hurt consumers in my State. They want to live 

with reasonable and responsible regulations, not burdensome mandates. 

These are cards that were brought to my office by the Association 

of Missouri Electric Co-ops. The head of the Missouri Co-ops, Barry 

Hart, is here testifying later today. I thank him for his leadership 

and the sacrifices he has made to come up here. He will share with 

the committee how cap and trade legislation, like Waxman-Markey 

or Kerry-Boxer, will raise Missouri electricity rates up to 26 percent starting in 2011, 2012, and rising to 42 percent higher as soon 

as 2020. 

Missourians do not understand why we would slap ourselves 

with energy taxes when it would do nothing, and I will emphasize 

nothing, to change world temperatures. That is what the scientists 

at EPA have told us. If EPA acts alone with a bill like Kerry-Boxer, 

it will have an impact on world temperatures almost too small to 

measure because China and India have already said flatly that 

they will not agree to strangle the growth of their economy to pull 

people out of poverty through mandated carbon reductions, which 

means not enough energy to supply the jobs they need. 
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America can do better. We can cut carbon emissions without raising energy taxes, killing jobs, if we go to zero carbon nuclear 

power, low carbon hybrid and electric transportation, advanced 

fuels, and wind and solar where they make economic sense. That 

is the path that Congress should take. That is the path that Missourians want to see. 

And I thank the Chair. 

Senator BOXER. OK. Thank you very much, Senator. 

I am going to take my 2 minutes to respond to some of what has 

been said, and then we are going to get right to the panelists. 

First of all, this poll is very interesting and so are all the messages you received from your constituents, which are very, very important. 

But I think it is important to look at a poll, a CNN poll, which 

showed in April that only 44 percent of the people supported cap 

and trade system, which we call Pollution Reduction Investment, 

but cap and trade system. And now, after they have learned more 

about it because there have been lots of ad wars back and forth 

and discussions like this one we are having here that get covered, 

60 percent favor it, and it has been described to them not in very 

glamorous terms. 

It says under a proposal called cap and trade, the Federal Government would limit the amount of greenhouse gases companies 

could produce in their factories. If companies exceeded those, they 

would have to either pay a fine or pay money to other companies 

that produce smaller amounts of greenhouse gases. Would you oppose or favor this proposal? Sixty percent favor it. 

And I am going to put in the record, I ask unanimous consent, 

the CNN story that goes with it. It says 60 percent of those questioned say they favor cap and trade, a Democratic sponsored plan 

in which the Federal Government explains it. Thirty-seven percent 

oppose, and it goes on to say that this comes out as the Senate Environment Committee holds a hearing on this legislation, and that 

this legislation includes provisions to hold down costs to consumers 

in certain industries. 

And it says Republicans say the bill would destroy jobs and increase taxes and energy costs. But the bottom line that I found is 

interesting is the youth, the divide on generations, colleagues. And 

I see some young people in the audience. I would say the survey 

indicates a generational divide with 68 percent of Americans under 

age 50 supporting cap and trade. But those 50 and older split on 

the issue. And a Democratic divide there. It says that 3 in 4 Democrats back it, 6 in 10 Independents back it, but only 4 in 10 Republicans. 

So, it is a very interesting situation here. 

Now, I would also say I will put in the record also an analysis 

that shows that under our bill, 161 nuclear power plants would be 

developed as opposed to the Alexander plan, which is 100 plants 

paid for by the rate payers. And the reason is, once there is a price 

put on carbon, it makes nuclear much more affordable. 

In addition, we have a nuclear title in the bill. Some want it 

more robust. Senator Carey is working with Senator Graham on 

just that, Senator Lieberman when it gets to the floor. But right 

now we have an R&D investment in nuclear waste management in 
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our bill. We support safe and clean nuclear energy industry 

through provisions to support worker training, which are funded in 

the bill. 

So, we are moving forward. I see that Senator Barrasso has arrived so—— 

Senator BOND. Madam Chair, may I interrupt to ask unanimous 

consent to have entered in the record the Rasmussen Poll which 

shows that 77 percent would not be willing to spend more than 

$100 for reducing global emissions? 

Senator BOXER. Yes. And happily, our bill does not cost more than $100. 

Senator Barrasso. 

[The referenced CNN poll follows:] 
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OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM THE STATE OF WYOMING 

Senator BARRASSO. Thank you very much, Madam Chairman. I 

know that I have only 2 minutes when I was prepared to talk a 

little longer. But I will tell you that I have concerns about that, 

and I would like to have my entire statement as a part of the 

record. 

Senator BOXER. Yes. And you could go 3 minutes. 

Senator BARRASSO. Thank you very much, Madam Chair. 

Well, the warning signs are all around us that this energy tax 

bill is going to lead to lost jobs, higher energy prices, and I think 

will do very little in terms of an environmental gain. But you do 

not have to take my word for it. Here is an Investors Business 

Daily, Cap and Fade. The sub-headline is the Senate has finally 

rolled out its long awaited cap and trade bill to slash carbon dioxide. Looking at its Draconian restrictions on the U.S. economy, it 

is hard to believe its supporters are serious. 

The editorial goes on to state that the Boxer-Kerry energy tax 

bill will take $9.4 trillion from the gross domestic product, will kill 

2.5 million jobs, gasoline prices will go up, electricity rates will 

nearly double. The editorial concludes the only way to meet BoxerKerry’s goal will be to push the economy into a state of permanent 

recession. A permanent recession. 

Jim Manzi, a Senior Fellow at the Manhattan Institute, wrote in 

the D.C. Examiner that the House passed energy bill would be a 

terrible deal for American taxpayers. If the law works precisely as 

intended, in about 100 years we should expect surface temperatures to be about one-tenth of 1 degree Celsius lower than they 

would otherwise be. The expected costs to the American people are 

at least 10 times that of the expected benefits. So the American 

people are going to bear the brunt of the lost jobs and higher energy costs all for just one-tenth of 1 degree in 100 years. 

The person who actually wrote the most about the cap and trade 

was Thomas Crocker, who is a University of Wyoming professor. 

He has written in the Wall Street Journal as a critic, now, of this, 

saying that cap and trade’s flaws, if applied to climate change, and 

they are extensive. I think Doug Elmendorf stated, as we have 

heard in testimony in the Senate in the last couple of weeks, the 

fact that jobs turn up somewhere else for some people does not 

mean that there are not substantial costs, substantial costs, borne 

by people, communities, firms and affected industries and affected 

areas. We have seen this in manufacturing. We have seen it with 

the Rust Belt. 

The warning signs are all around us. We need to heed them in 

terms of our economy to ensure that Americans who do not get 

green jobs are able to keep the red, white and blue jobs that they 

have and to continue to power the country. 

To me, that is the way to make America’s energy as clean as we 

can, as fast as we can, without raising energy prices on the American families. 

Thank you, Madam Chairman. 

[The prepared statement of Senator Barrasso was not received at 

time of print.] 
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Senator BOXER. Thank you, Senator, you are very eloquent. 

Those exact words almost were used by those who were fighting 

the acid rain cap and trade program. To the words. To the very 

words. And it proved completely incorrect. 

So, we are going to go to the panel. I want to hold up. Since you 

held up a chart, we are going to have our little chart wars today. 

You hold up one, we hold up one. It is kind of equal time. 

Senator BARRASSO. Could I have my editorial on Cap and Fade 

included then in the record as well since—— 

Senator BOXER. Without a doubt about it. Yes. Yes. 

Senator BARRASSO. Thank you, Madam Chairman. 

[The referenced editorial was not received at time of print.] 

Senator VOINOVICH. Madam Chairman, could I have my statement also included—— 

Senator BOXER. Yes. The entire statement will be put in the 

record. 

Senator VOINOVICH. And the information that we have on what 

this would cost—— 

Senator BOXER. Yes, all of your information, Senator Voinovich. 

Senator, anything you want. Anything you want. 

Senator VOINOVICH. Wonderful. Thank you. 

[The referenced information was not received at time of print.] 

Senator BOXER. All right. The U.S. must seize opportunity in 

global clean energy markets. This is a quote from John Doerr, the 

venture capitalist who helped launch Google and Amazon. Now, 

Google is here represented. So this is not from Government people. 

This is from the private sector, the people who know what really 

makes our economy go, more than we do, if I could say. 

As we sit here today, we are in danger of letting the energy technology revolution pass us by. John Doerr, venture capitalist. The 

global clean energy market is estimated to reach $500 billion a 

year by 2020. Despite early U.S. leadership, German, Spanish and 

Chinese firms have gained market share. U.S.-China solar manufacturing market share changed from 2001 to 2008. In 2001, we 

had 28 percent. China had 1 percent. In 2008, the U.S. has 6 percent and China has 29 percent. So, ladies and gentlemen, all of this 

talk about gloom and doom? It is correct. But it applies if we do 

not act. 

We are going to get to our panel, and we are going to start with 

Peter Brehm, Vice President of Business Development and Government Relations, Infinia Corporation. 

Welcome. 

STATEMENT OF PETER BREHM, VICE PRESIDENT, BUSINESS 

DEVELOPMENT AND GOVERNMENT RELATIONS, INFINIA 

CORPORATION 

Mr. BREHM. Thank you very much, Madam Chairman. 

Chairman Boxer, Ranking Republican Inhofe and members of the 

committee, I am Peter Brehm, Vice President of Business Development and Government Relations for Infinia. We are headquartered 

in the State of Washington, and we have operations in California, 

Maryland, Michigan, Massachusetts and New Mexico. I represent 

Infinia on the Board of Directors of the Solar Energy Industries Association, which is also one of the reasons that I am here. 
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It is an honor to appear before you to testify on behalf of Infinia 

and the Solar Energy Industries Association. I would also note that 

we are strong supporters of BlueGreen Alliance and the Apollo Alliance, and I work quite extensively and have in the past with Mr. 

Reicher as well. 

In the 5 minutes I will be speaking to you today, enough sunlight 

will shine upon the United States to satisfy America’s energy needs 

for an entire month. 

Let me first tell you a bit about my firm. Infinia has developed 

and manufactures the Infinia Solar System, a unique, high performance solar power system that uses a Stirling engine and a 

parabolic mirror to convert sunlight, which is free, into electricity, 

which is valuable. Our system is not a PV or solar panel-based system, but instead a unique U.S.-developed and manufactured concentrating solar power system. 

Each of our Infinia Solar Systems produces 3 kilowatts of gridquality electricity. Our systems do not consume water, which is in 

short supply in the West, nor do we need flat or graded ground to 

operate. 

Notably, we manufacture here in the United States, and at a 

time when the auto industry is facing historic difficulties, our technology is perfectly suited to be manufactured on automobile factory 

lines. 

I will diverge from my testimony a bit just to respond to Senator 

Voinovich’s comments earlier. I would like to note that two of our 

most significant vendors, which we are very proud of, are based in 

Ohio, MSG Molded Fiberglass Companies, they make the fiberglass 

backing for our solar panels—— 

Senator VOINOVICH. I know them very well. 

Mr. BREHM. You know them very well. They are an excellent 

company and they have done great work with us. Another one is 

Zigent Automotion Systems in Ohio, and they actually are a robotics firm, and they place our mirrors on those same panels. 

And I also note that our initial Stirling engine technology was 

developed in cooperation and with the great assistance of the folks 

at NASA Glenn. 

Our technology is only one of many that are being developed and 

in commercial use. The greatest challenge the U.S. solar industry 

faces is scaling up production and distribution of solar technology 

in order to continue to drive down prices and be on par with or 

below the price of traditional fossil fuels. 

The outlook for solar is bright, pardon the pun, particularly if 

Congress levels the field by enacting strong climate change legislation. Recently, the U.S. solar industry has demonstrated remarkable growth with the annual rate of solar distributed generation installations increasing by more than 80 percent in 2008. Last year, 

solar produced over 8 times as much energy as in 1985, and already this year 40 percent more than last year. 

This is great, but not nearly enough. More can be done, and more 

should be done, if the United States is going to put a serious dent 

in emissions of greenhouse gases. 

There is a very significant potential for growth of solar energy 

in the United States with the price signals and incentives that 

could be provided this legislation. 
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Infinia is a growing company that currently employs over 140 

people, and if a robust climate change bill is enacted, our growth 

rate will double. Good, high paying clean energy jobs will be created here in the United States. 

We believe this climate change policy is a key step in a comprehensive national energy policy. The proposed legislation will 

spur tremendous demand for all renewable energy technologies. We 

encourage the committee to strengthen the proposed legislation to 

ensure that more of the demand for renewable energy technology 

and products will be supplied by U.S. manufacturers. 

Solar energy will create thousands of jobs, install half a gigawatt 

of solar capacity and avoid more than 1 million tons of carbon 

emissions in 2009. These numbers will more than double in 2010. 

With the right incentives, a fair regulatory environment and the 

right economic environment, there will be no limit to how much 

solar energy can contribute to the solution. For the solar industry, 

a robust climate change bill will send a clear price signal on the 

cost of emitting carbon, which currently has no market price other 

than the cost to our global environment that will be paid by our 

children and grandchildren. This price signal will affect long-term 

generational planning and project financing and may mark a paradigm shift in the Nation’s energy future. 

In the more immediate term, solar and other renewable energies 

need to receive allowances in the early years of the program in 

order to scale up the industry and bring down the costs so we can 

more effectively satisfy the [unclear] of a carbon-free clean energy. 

Those allowances can come from Federal deployment programs for 

distributed generation and utility-scale renewables and from allowances going to the States and localities for renewables. 

For Infinia, it is particularly important that some of those State 

allowances go toward the manufacturing development of incentives 

for solar and other domestic renewals energy technologies. It would 

be a huge missed opportunity if we replaced oil imported from the 

Mideast with renewable energy technology from overseas. 

In addition, we encourage the committee to consider the inclusion of Senator Sherrod Brown’s IMPACT, Investments for Manufacturing Progress and Clean Technology, bill or similar proposals 

into this climate change legislation to spur the development and 

manufacture of renewable energy technologies in the U.S. 

We believe this comprehensive legislation should include the following features. A robust cap and trade—— 

Senator BOXER. Mr. Brehm. Are you almost done? 

Mr. BREHM. I am almost done. A Federal renewable energy 

standard, transmission policy, national retail net metering, and 

reasonable access to Federal lands. 

Thank you very much. 

[The prepared statement of Mr. Brehm follows:] 
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Senator BOXER. Very good. Thank you very much. 

Dan Reicher, Director, Climate Change and Energy Initiatives at 

Google. 

Welcome. 

STATEMENT OF DAN W. REICHER, DIRECTOR, CLIMATE 

CHANGE AND ENERGY INITIATIVES, GOOGLE 

Mr. REICHER. Chairman Boxer and members of the committee, 

my key message today is that the critical need to address the climate crisis provides us with an unprecedented opportunity to rebuild our energy system with vast economic security and environmental benefits. 

By putting significant limits on carbon emissions and adopting 

strong, complementary energy policies, we can create millions of 

new jobs, reduce our dangerous dependence on foreign energy, and 

protect ourselves from a global climate crisis. 

Google published a scenario last year called Clean Energy 2030, 

which outlines one potential path to a clean energy future. In sum, 

the Clean Energy 2030 proposal reduces U.S. CO2 emissions about 

50 percent below the baseline projection while creating 9 million 

new jobs and net savings of $800 billion. 

At the global level, the International Energy Agency estimates 

that between 2007 and 2030, the world will need to invest $26.3 

trillion in energy infrastructure to meet currently projected energy 

demand. As venture capitalist John Doerr has also said, this massive global energy spending could make clean energy technology 

the biggest economic opportunity of the 21st century. 

The ability of the U.S. to seize this historic economic opportunity 

will be influenced to a large extent by actions taken by Government to put a significant price on carbon emissions. But a significant price on carbon, while absolutely necessary, is not sufficient 

to address the climate problem, and importantly, will not put the 

U.S. in position to seize the extraordinary opportunities that will 

come with rebuilding the global energy economy. 

My primary focus today is on four complementary energy policy 

mechanisms that will be essential to taking advantage of these opportunities. 

First, we must significantly increase public funding of research 

and development of advanced energy technologies. In 1980, 10 percent of the total government R&D investment was in energy. 

Today, it is only 2 percent. The Federal stimulus package has certainly provided a shot in the arm for clean energy projects, but 

there is a serious risk of falling off a funding cliff when these investments run out. 

We were encouraged when President Obama called for investing 

$15 billion per year over the next decade in clean energy technologies and took note when Secretary Chu said that energy R&D 

spending must move closer to the level in the high tech industry, 

which are generally around 10 percent of sales. 

A failure to invest, Madam Chairman, becomes glaringly apparent when we realize that barely a fifth of the top 30 manufacturers 

of wind turbines, solar panels and advanced batteries are American. In contrast, all 5 of the world’s leading Internet technology 
71 

companies are from the U.S. And the Internet itself was the product of federally funded R&D work by DARPA in the 1970s. 

Second, we must increase the capital available to deploy these 

advanced technologies at commercial scale. Moving from a Nation 

that derives 70 percent of its power from fossil technologies to one 

based largely on clean energy will require literally trillions of dollars of investment. 

The challenge is that raising this kind of a capital, especially for 

innovative technologies, is not easy. The problematic step of moving a technology from a small pilot project often funded by venture 

capital to full commercial-scale projects financed largely by the 

banks is frequently the point at which many promising energy 

technologies die. Indeed, we call it the Valley of Death. 

At Google, we are major supporters of pending bipartisan Senate 

legislation that would create a Federal Clean Energy Deployment 

Administration to provide various types of credit support to drive 

private investment in Valley of Death projects. CEDA would be an 

independent administration within DOE with a Senate-confirmed 

administrator and board of directors. 

Third, we must build a bigger and smarter electric grid to harness energy efficiency and renewable energy. A smarter grid will 

let us see our energy use, measure it, price it, and manage it to 

get the most out of every watt. And a bigger grid will allow us to 

tap our Nation’s vast clean energy resources and deliver them 

where we need them. 

At Google, we are working to advance the smart grid on several 

fronts. Among these, our engineers have developed a simple secure 

and free software tool called Google Power Meter that gives consumers an easy means to see their home electricity on their computer or smart phone. 

Fourth and finally, we must set national standard to accelerate 

the uptake of clean air and more efficient technologies. Google supports the adoption of both a strong national energy renewable 

standard and a strong national energy efficiency resource standard. 

State renewable energy and energy efficiency standards have 

sparked new industries and created thousands of jobs. 

Before I wrap up, let me mention two examples of where a price 

on carbon and complementary energy policies can be catalytic. One 

is solar thermal power, where early on DOE-funded demonstration 

projects proved the technology and where today State renewable 

standards are driving demand and Government-backed finance is 

helping plants get built. 

Looking ahead, an advanced geothermal energy technology called 

EGS presents another opportunity where a strong energy policy 

and a price on carbon could drive a new industry that could 

produce cheap, renewable power 24 hours a day year round and nationwide. 

In conclusion, let me stress that we need both a significant price 

on carbon and complementary energy policies. A significant price 

will definitely send a signal about the need to reduce carbon emissions, but it will not by itself ensure that the technologies that can 

address the problem are invented and deployed here in the U.S. 

with massive resulting economic and security benefits. 
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And while smart energy policies can strongly advance solutions 

to the climate crisis, they will not ensure that these solutions can 

compete straight up with fossil fuels without a significant carbon 

price. 

Thank you. 

[The prepared statement of Mr. Reicher follows:] 
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Senator BOXER. Thank you very much. 

Mr. Foster. 

STATEMENT OF DAVID FOSTER, EXECUTIVE DIRECTOR, 

BLUEGREEN ALLIANCE 

Mr. FOSTER. Good morning, Madam Chair, members of the committee, and thank you, Senator Klobuchar, for that kind introduction. 

My name is David Foster. I serve as the Executive Director of 

the BlueGreen Alliance, a national partnership of six major labor 

unions and two national environmental organizations. We bring together 8 million members from the steelworkers, the largest manufacturing union in North America, communication workers, laborers, service employees, utility workers and teachers with the Sierra 

Club and Natural Resources Defense Council. We touch virtually 

every corner of the country in our pursuit of good jobs, a clean environment and a green economy. 

I am especially pleased to be given the opportunity to testify before the Environment and Public Works Committee on this critical 

issue, and we look forward to working with you throughout the 

process to pass clean, comprehensive climate change legislation 

that creates and retains millions of family sustaining green jobs 

and finances the transition to a clean energy economy. 

To maximize its economic success, this package must be comprehensive. It must deal with every piece of the puzzle, capping 

carbon emissions, providing incentives for job creation, investing in 

clean energy, preventing carbon leakage, and setting mandates for 

energy efficiency and renewable energy production. 

Some say that it would be easier to pass one piece of the puzzle 

and then try to move on to the next. But doing so underestimates 

the complexity of the problem, sends contradictory messages to our 

energy markets, and most importantly, fails to solve the underlying 

climate crisis. 

Capping carbon emissions will create the necessary incentives for 

America to develop its clean energy economy. Without the certainty 

of true emissions reduction, we can achieve neither our environmental goals nor our job creation goals. 

We also need to include a strong national renewable electricity 

standard and energy efficiency resource standard such as those introduced by the Senators Udall of Colorado and New Mexico. 

The transition to a clean energy economy is the most important 

opportunity for strengthening and expanding American manufacturing in my lifetime. As evidenced by Gamesa in Pennsylvania, 

the ClipperWind facility in Cedar Rapids, Iowa, ATI Casting in 

LaPorte, Indiana, the Pauwels Transformers facility in Washington, Missouri, and many, many more, our workers can produce 

the steel, glass, precision parts and cement needed by our clean energy industries, but only if we provide them with the proper investment and protections. 

We can do this by including a robust manufacturing title in the 

bill which would ensure that strengthening and revitalizing America’s manufacturing base is a priority. There is no reason why 

America and its workers should not lead the world in green manufacturing. 
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A critical component is providing adequate allocations to energy 

intensive and trade exposed industries. While the Kerry-Boxer bill 

addresses this issue, it does not provide sufficient allowances to ensure that energy intensive industries are not put at a competitive 

disadvantage. This is a vital provision for preventing the leakage 

of jobs and carbon pollution, and I appreciate that the Chair and 

committee have agreed to work with us to ensure that these industries are kept whole. 

In addition, the legislation should include a longer-term border 

adjustment provision to limit carbon leakage, ensure the fair treatment of American workers, and provide an incentive to other countries to negotiate industry sectoral agreements as those allocations 

phaseout. We were supportive of the House ACES bill and hope 

that this model can be included in Senate legislation. 

I cannot emphasize enough to the committee how critical both 

the rebates and border measure are to the success of the climate 

bill. As part of the manufacturing title, climate and energy legislation should also provide incentives to help our manufacturing base 

convert to the clean energy economy. We appreciate the inclusion 

in funding of clean vehicle manufacturing provisions and hope that 

Senator Brown’s IMPACT Act will also be included and funded. 

Programs like the Retrofit for Energy and Environmental Performance and investments in improved building codes will finally 

put forth a dedicated effort to make buildings and homes more energy efficient. We also believe that national minimum standards 

are an essential part of any program receiving support from the 

Federal Government to spur residential energy efficiency. The 

State and Local Investment in Energy Efficiency and Renewable 

Energy, included in the bill, will provide the dedicated investment 

to support deployment of critical technologies and practices. 

Our work force must have all the necessary tools and knowledge 

to successfully work in green jobs. We can do this by offering training for all who want the opportunity. We believe that the Green 

Jobs Act of 2007 gives us the best framework, and we thank you 

for providing allowances to fund this provision. 

Along with training, we must open doors to certain communities 

that are too often left out. The Green Construction Careers Demonstration Project provides an outlet that will promote quality employment practices that are accessible to low income communities 

and workers. 

I want to close by telling the story of the R.E. Burger power 

plant in Shadyside, Ohio. A coal-fired power plant originally built 

in the 1940s, Burger needed to be fitted with new pollution control 

equipment. That equipment proved to be too costly, and the owners 

were preparing to close the plant and lay off hundreds of workers 

in an already economically depressed area. 

Thankfully, with the help of Utility Workers Local 350, 

FirstEnergy decided to retrofit the plant and convert to biomass. 

This proved to be more cost effective and saved the jobs of over 100 

employees and the creation of another 200 jobs. The Burger plant 

today is poised to become one of the largest biomass-fueled plants 

in the country. 

After comprehensive climate legislation is enacted, we will see 

more and more plants like Burger. Many will be retrofitted with 
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carbon capture technology and some switched to natural gas or biomass. We will see concentrated solar power plants built where 

there has never been a power plant before. We will see wind farms 

going up alongside oil derricks. We will see buildings erected that 

emit zero carbon pollution and produce zero waste. 

We look forward to working with you to pass what could and 

should be the greatest job creating bill ever passed by the U.S. 

Congress. 

Thank you. 

[The prepared statement of Mr. Foster follows:] 
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Senator BOXER. Thank you very much, Mr. Foster. 

It is our pleasure to welcome Mayor Michael Nutter, the Mayor 

of Philadelphia, Pennsylvania. 

STATEMENT OF HON. MICHAEL A. NUTTER, MAYOR OF PHILADELPHIA, PENNSYLVANIA; TRUSTEE, U.S. CONFERENCE OF 

MAYORS 

Mr. NUTTER. Madam Chairman Boxer, Ranking Member Inhofe 

and members of this committee, I want to thank you for the opportunity to testify on the Clean Energy Jobs and American Power 

Act. 

I also want to thank my Senator, Senator Arlen Specter, for the 

wonderful introduction, very complimentary, and I appreciate that. 

The Senator and I have a long-standing working relationship on 

behalf of Philadelphia and some Pennsylvanians for a long period 

of time. 

My name is Michael A. Nutter, Mayor of the city of Philadelphia 

and a Trustee of the United States Conference of Mayors. I am 

pleased to be here today on behalf of the Conference in full support 

of this legislation, and I would ask, Madam Chairwoman, that my 

full testimony be submitted for the record. 

Senator BOXER. Without objection. 

Mr. NUTTER. Thank you. 

The United States Conference of Mayors has been urging Congress to pass a comprehensive climate protection plan that reduces 

our Nation’s greenhouse gas emissions, encourages renewable energy, increases energy efficiency and enhances our economic security. The bill before us today will achieve these outcomes. 

As all of you know well, our Nation finds itself at a difficult time. 

Faltering city, State, Federal and global economies, rising national 

security challenges further complicated by rising environmental 

threats, now define the first decade of this new century. We must 

confront these challenges with courage, vision and action. 

And that is exactly what this committee is doing today in moving 

forward with this important legislation. If we do this right, we will 

chart a new direction that will increase our energy independence, 

reinvigorate our economy and create new jobs in the process. 

I would like to discuss how this legislation will not only protect 

our environment, but will also support economic recovery and 

longer-term economic growth. 

On behalf of the Nation’s mayors, I want to thank you, Chairwoman Boxer, Ranking Member Inhofe and the members of this 

committee for recognizing the important role that city and local 

governments must play in a comprehensive climate protection plan 

by including commitments to the Energy Efficiency and Conservation Block Grants Program, also known as EECBG. 

Cities in our metro areas are not only the economic engines of 

the United States economy, but they also represent some of the biggest users of total energy consumed. Local governments are responsible for transportation networks, water and wastewater systems, 

building code enforcement, fleets of vehicles, solid waste disposal 

and recycling collection. These activities are a source of many of 

our emissions. But cities are also a source of innovative solutions 
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that will have a significant impact on reducing greenhouse gas 

emissions and energy consumption while also creating new jobs. 

Under ARA, the city of Philadelphia will receive $14.1 million in 

EECBG funding. We have developed a plan that makes immediate 

investments in energy efficiency and conservation while leveraging 

and extending these investments into the future, generating jobs 

and economic benefits that will be realized over the coming months 

and years ahead. 

In 1997, our Streets Department replaced all of our red light 

traffic signals with LEDs, saving $8.4 million and over 40 million 

tons of greenhouse gas emissions over 10 years. Using EECBG 

money and other leveraged funds, we will convert an additional 

58,000 yellow and green traffic signals and replace 27,000 red LED 

lights. The project will save our city $1 million in electric costs 

every year. 

There are enormous potential returns to energy saving investments in building retrofits. The debt incurred to fund the improvements will quickly be offset by reduced energy operating costs. 

With EECBG and other leveraged funds, again we will be offering 

low interest loans to commercial, industrial and institutional property owners that wish to undertake building energy efficiency retrofit projects. In addition, $500,000 in matching grants for building 

energy efficiency improvements will be made available to small 

businesses. 

Besides the EECBG, there are numerous other programs contained in this legislation that are good for both the economic and 

job creation fronts. I wanted to highlight a few that are going on 

in Philadelphia and what this legislation can do for us in the future. 

In 2008, we installed a new solar hot water system on a riverside 

correctional facility, the first in the Nation. The additional cost of 

a solar heating system is expected to pay for itself through lower 

energy costs in less than 9 years. Over its useful life, estimated at 

25 years, the solar system will save over $1 million and reduce 

emissions by over 1 million pounds of CO2. 

There is potential to develop and deploy solar at scale. We have 

acres and acres of public rooftops, also knowing as housing in 

Philadelphia, row homes in our city that could support similar installations. The city of Philadelphia currently spends $19 million 

annually on housing preservation and weatherization, supporting 

about 3,600 projects a year. An expanding building and retrofit program contained in this bill could become part of a pipeline to retool 

Philadelphia’s work force to meet a growing demand in the private 

market for building retrofit. 

A new job training program developed by our Energy Coordinating Agency will certify new weatherization specialists. Some of 

this training can be completed in as little as 2 weeks, allowing unemployed and underemployed Philadelphians to transition rapidly 

into a sector with tremendous opportunity. The total number of 

trainees is expected to be over 800 in the first 2 years of operation. 

Our Nation cannot remain economically competitive if we continue down a path where petroleum is our primary source of power 

for the transportation sector. This means that all federally assisted 
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transportation investments must—and this legislation does—emphasize sustainable transportation. 

Philadelphia has already decreased its transportation greenhouse 

emissions by nearly 10 percent from its 1990 levels. But we have 

established a further goal of reducing emissions by 10 percent by 

2015. My experience in Philadelphia is characteristic of so many 

cities that are moving forward with these kinds of investments. 

Let me conclude by saying that I have provided a few examples 

of the energy and climate work underway in our city, and I am just 

one example of what many mayors across America are doing in our 

Nation. These innovative practices and programs stimulate the 

economy, create jobs and protect our environment. At the same 

time, we know that the potential to do more exists, including creating millions of new jobs in advanced and growing opportunity 

through this work and we have only scratched the surface. 

I congratulate you, Chairman Boxer, Senator Kerry and members of the committee for your hard work on this critically important legislation. The Nation’s mayors support your efforts, and we 

encourage the Senate to move quickly to enact comprehensive energy and climate legislation during this Congress. 

Thank you, Madam Chairwoman. 

[The prepared statement of Mr. Nutter follows:] 
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Senator BOXER. Thank you so much, Mr. Mayor. 

Our next speaker is Kate Gordon, Senior Policy Advisor to the 

Apollo Alliance. 

Welcome. 

STATEMENT OF KATE GORDON, SENIOR ADVISOR, 

APOLLO ALLIANCE 

Ms. GORDON. Thank you, Chairman Boxer and members of the 

committee. Thanks so much for inviting me here today to talk 

about how a strong comprehensive energy and jobs bill can bolster 

the American economy, usher in a new era of sustainable growth 

and create millions of high quality jobs. 

After September 11th, this country faced a recession that we 

combated through unsustainable investments in financial paper 

and real estate. The next recession, the one we are in now, is much 

deeper and is hitting Americans much harder. Since December 

2007, the ranks of the unemployed have increased by over 7 million 

people and the unemployment rate now stands at close to 10 percent. 

While the investments made through the Recovery Act successfully staved off deep economic crisis, the American economy is still 

in search of its next economic generator. The need for an economic 

strategy that keeps our workers in their jobs while creating a 

whole host of new, good jobs has never been so urgent. 

Clean energy investments are the key to America’s new sustainable growth strategy. Despite inconsistent support from the Federal Government, these industries have already proven themselves 

to be growth areas for the future. Investments in wind, solar photovoltaic and biofuels grew by 50 percent between 2007 and 2008 and 

are expected to exceed $325 billion within a decade. 

Jobs in wind energy generation grew by 23 percent, solar generation by 19 percent between 1998 and 2007, outpacing the 3.7 percent job growth in the rest of the U.S. economy experienced over 

the same period. But until the Federal Government truly commits 

to a low carbon future, investment and employment in these industries will just never grow to the scale needed to truly drive an economy-wide resurgence. 

While many of the pioneering renewable energy technologies 

were invented here, today American companies control only 6 of 

the world’s top 30 companies in solar, wind and advanced batteries. 

Our European and Asian competitors have moved aggressively to 

support renewable energy and in the process have developed greater renewable capacity as well as stronger industrial growth. In fact, 

China’s leaders are investing $12.6 million an hour to green their 

economies. As David Sandalow, Assistant Secretary for Policy and 

International Affairs at the Energy Department recently put it, if 

they invest in 21st century technologies and we invest in 20th century technologies, they will win. 

Our clean tech industry is impressive, but by global standards 

we are playing in a garage band. And we must—and should—become Bruce Springsteen. 

By taking decisive action to limit and reduce climate pollution, 

the Clean Energy Jobs and American Power Act will send a clarion 

call through the world that America is ready to step up and take 
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action to curb climate change. It will also send the signal many of 

companies have been waiting for, that this country is serious about 

opening up vast new markets for clean energy investment. Where 

there is clean energy investment, clean energy jobs will follow. 

The Apollo Alliance has long made the case that investment in 

clean energy is not just good environmental policy, it is good economic development policy. Recent studies support these claims. 

Jobs in the clean energy economy have grown nearly 2 and half 

times faster than overall jobs in the economy. An analysis by the 

Center for American Progress and the Political Economy Research 

Institute found that an investment package combining the Recovery Act and House bill on climate would create a net 1.7 million 

new jobs in the economy. 

These employment opportunities, it is important to note, will be 

across all sectors of the economy and will provide a unique opportunity to rebuild our middle class through job creation in sectors 

particularly hard hit by recent recessions. 

Fully 55 percent of all new jobs in these emerging industries are 

projected to be in the manufacturing and construction industries. 

These are industries that provide a living wage and high-quality 

jobs for the 68 percent of working Americans who do not have a 

4-year college degree. Jobs in manufacturing and construction are 

also more likely to serve middle-skill workers and are more likely 

to be unionized, providing higher wages, better benefits and greater 

access to job training. 

In addition to providing market certainty for clean energy investments through predictably decreasing limit on carbon emissions, 

this bill makes important investments in expanding renewable 

power and energy efficiency projects, domestic manufacturing of efficient vehicles, and green collar jobs programs. 

And my fellow panelists have said some important things about 

these provisions, and I would highlight some of the provisions that 

they talked about, particularly those that funnel money through 

State and local governments. We know that this is one of the best 

ways to stimulate the American economy. The bill contains the 

SEED accounts, the Energy Efficiency Conservation Block Grant 

Program, and the money for clean vehicles, which will provide 

needed incentives to scale up our industries to meet growing demand. 

We look forward to the coming weeks when there will be opportunities to make this bill more comprehensive and to strengthen 

several of its critical provisions. I would particularly point to a couple of areas. 

One, while the act includes important cost protections for energy 

intensive industries, it should also invest directly in thousands of 

other domestic manufacturing firms ideally placed to meet new 

clean energy technology demands. And Apollo has worked very 

hard on this issue, talked to hundreds of small manufacturing 

firms across the country who tell us they need investments to retool and become part of these industries. We encourage you to include IMPACT and Senator Bingaman’s Restoring American Manufacturing Leadership in this bill. 

We also applaud the Climate Change Worker Assistance Program—— 
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Senator BOXER. Could I ask you to—— 

Ms. GORDON. Yes, I am almost done. 

And we would encourage you to also include community economic 

development provisions in that bill. 

As the committee considers this bill, please, we encourage you to 

put the American economy on the road to a stronger economy 

through investments in these clean energy and good jobs in American workers. The path we are on now, it is important to note, is 

not working. It is leading to unemployment, environmental degradation and dependence on other countries. 

With your leadership, we know we are up to the challenge—— 

Senator BOXER. I am sorry. All right. Thank you. 

Ms. GORDON. Thank you so much. 

[The prepared statement of Ms. Gordon follows:] 
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Senator BOXER. Thank you. 

And now, that completes the Democratic witnesses. And now we 

have the Republican witnesses. 

The first one is Bill, I want to make sure I pronounce it right, 

Mr. Klesse. 

Mr. KLESSE. Klesse. 

Senator BOXER. Klesse. Bill Klesse, Chairman and CEO of Valero 

Energy Corporation. 

Welcome, sir. 

STATEMENT OF BILL KLESSE, CHIEF EXECUTIVE OFFICER, 

PRESIDENT, AND CHAIRMAN, VALERO ENERGY CORPORATION 

Mr. KLESSE. Thank you, Madam Chairman, Senator Inhofe and 

other committee members. I am honored to be here today—— 

Senator BOXER. Is your microphone on, sir? 

Mr. KLESSE. Yes. Representing an independent refiner, Valero 

Energy Corporation. And also, I come before you as the Chairman 

of the National Petrochemical & Refiners Association, which represents over 450 businesses that make reliable and diverse products for all Americans. 

The implications of this legislation are devastating for the American people and for the American refining and petrochemical industries. One of our chief concerns is that this legislation provides foreign refiners and petrochemical operations a competitive advantage 

to American businesses. 

You must remember that we are a global business. India, China, 

Europe and other countries provide intense competition to American refiners. With the recession, increasing regulation and now the 

potential costs associated with this legislation, results are devastating, not only to our businesses, but to the millions of Americans who work in or around this industry. 

Today, refiners and petrochemical plants are idling units, closing 

facilities, hundreds of jobs are being lost. This legislation will force 

U.S. refiners to further reduce or close even more operations. It is 

entirely counterproductive to lifting our economy out of this recession, and it will drive refining production to other countries. 

In addition to exporting one of the last great American manufacturing sectors that is globally competitive, you will simply be transferring the carbon dioxide emissions overseas, making the overall 

impact on the environment negligible or even worse. 

Are we a country willing to ruin the American industry that literally fuels our economy? The legislation has nothing to do with 

national energy security. In fact, given the negative effect this legislation would have on our industry, we are actually talking about 

a threat. America’s safety is threatened by increased imports of refined products and the Pentagon’s ultimate reliance on military 

fuels produced in unstable regions of the world. 

As to the consumer, this legislation will impose huge new costs. 

Close to 3 million tons of CO2 are emitted each year transporting 

people and goods across our great Nation. Even at a low carbon 

price of $20 per ton, the refining sector will have to purchase $63 

billion in carbon credits every year. In addition to placing an unmanageable financial strain for cash on refiners, consumers will 

feel much of this burden in the form of higher fuel costs. 
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We all desire a broad menu of safe, reliable, low cost fuels. Today’s vehicles operate primarily on traditional gasoline and diesel 

fuel. Emerging technologies will be part of the fuel mix, but are 

still years away from commercial viability and affordability. 

This legislation attempts to raise all product prices so that other 

less economic products look better to the consumer. Is this really 

fair to the American consumer or to our industry? As diesel fuel 

prices increase, what happens to the jobs in railroads and trucking? 

The NPRA is not opposed to energy policies that promote alternative fuels. We support a balanced and realistic energy policy 

rooted in true fuel diversity. We must invest in future technologies, 

but not at the expense of the economic fuels that we have today. 

My company has a 50-megawatt wind farm in the Texas Panhandle next to our refinery. We are also very active in the ethanol 

business. We support programs that include meaningful global participation and ensure that the U.S. can continue to compete in the 

global markets. We support a national program with realistic carbon emissions. However, policies should not pick winners and losers. 

We support the actions of this committee. The adverse impacts 

of the proposed legislation to our workers are staggering. Valero refinery employees live in your State, Chairman Boxer, Senator 

Inhofe, and other members of this committee, Delaware, New Jersey, Tennessee and Louisiana. These are real people. Many did not 

graduate from college, instead learned a critical skill. They work 

hard. These are people with families. They educate their kids, they 

pay taxes, they have good health benefits and solid retirement. 

They are the heart of the country. They are the middle class. We 

are in favor of green jobs, but not at the expense of the heartland 

red, white and blue jobs. 

Valero and the NPRA and its members are ready to work with 

you and to create a policy that will protect the interests of the 

American consumer, preserve good paying jobs, enhance U.S. competitiveness in the world and achieve a desired environmental objective. 

Thank you. 

[The prepared statement of Mr. Klesse follows:] 
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Senator BOXER. Thank you very much, sir. 

Mr. Vassey. And let me say, Brett A. Vassey, President and 

CEO, Virginia Manufacturers Association. 

Welcome. 

STATEMENT OF BRETT A. VASSEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, VIRGINIA MANUFACTURERS ASSOCIATION 

Mr. VASSEY. Thank you, Chairman Boxer, Senator Inhofe and 

members of the committee for the opportunity to testify before you 

today on this bill. 

I am the President and CEO of the VMA from Richmond, Virginia. We are the trade association for manufacturers and industrial suppliers to manufacturers for 87 years. Our members employ 

over 120,000 Virginians. We produce over 400 megawatts of renewable energy from our facilities, and finally, we make everything 

from ships to chips. That is our logo. 

We are also very proud we are from the Commonwealth, the 

fourth year running the No. 1 State for business as ranked by 

Forbes Magazine. 

So, there is additional information in the testimony I submitted 

on the economic impact, and I will, in the interest of time, just get 

to the points. 

My testimony today is going to be specifically addressing the cap 

and trade provisions of this bill. Due to the time constraints, I am 

only going to address three of the four issues. In my written testimony, those issues are going to be specific to the credit allocation, 

to the issue we are bringing forward of capacity confiscation, and 

to, finally, leakage, which is addressed only in part in this bill. 

On the credit allocation, this system allows political leaders to 

choose winners and losers in the economy. The important thing 

about this is the system risks global manufacturing because they 

make decisions on future capital investments today. Congress and 

the EPA allocating credits is a critical decision before you because 

States like Virginia and other States will lose opportunities to compete and create jobs in the future as long as this is a threat hanging over the heads of those looking 3 to 5 years where they are 

going to invest. I will explain in just a moment why that is linked 

to leakage. 

But the second issue is productive capacity confiscation, and this 

is important for us. To avoid paying for emissions credits, only 

point sources such as manufacturers that comprise only 3 percent 

of all businesses in the Commonwealth, mind you, will be forced to 

involuntarily accept limits on their emissions. This limitation ignores the fact that Virginia’s industrial sector emits less CO2 today 

that it did in 1990. 

Additionally, in accepting lower allowable emission rates, the 

companies involved will be restricting each of their regulated facilities to a correspondingly lower allowable production rate. Energy 

equals production. This is productive capacity confiscation, and 

there is no provision in this bill to compensate Virginia’s, or any 

State’s, affected businesses for the productive capacity that the 

Federal Government will be confiscating from us. 
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Now, on to leakage. The truth is cap and trade, from our perspective, is simply a tax on energy, and it is regressive on manufacturing because of its intense nature. There is nothing in this bill 

that stops leakage to more favorable nations, and there will be 

more favorable nations. 

Virginia, for instance, if we eliminated all CO2 emissions from all 

sources, China’s growth alone would replace it in 77 days. On this 

note, it is my opinion, which I would like to share with the committee, that there is a gentleman named Mr. Tom Mullikin, he is 

environmental attorney with Moore & Van Allen out of Charlotte, 

North Carolina, who has produced a very substantial body of work 

on this issue and has changed the thinking of many global leaders 

on the impact of leakage. And I suggest that he could be somebody 

very helpful to you. 

Mullikin’s findings, basically, his finding is basically that due to 

productivity of American manufacturers and their workers and the 

efficiency of our facilities, our Nation’s carbon emissions from industry are only 11.5 percent of the country’s overall carbon emissions whereas the EU’s is 16.2, Japan’s is 21.5 and China’s is 28. 

In other words, the U.S. is the largest manufacturing economy 

in the world, and if it were to grow the industrial base rather than 

limit it, we may grow GHG emissions slightly in this country, but 

we would lower the overall global emissions to the world. 

And to give you evidence of that, since 1997, Virginia manufacturers have increased its gross State product—excuse me, since 

1997, the Virginia industrial sector has increased its gross State 

product per kilowatt hour of electrical input from $2 to $3.14. What 

that means is we are 64 percent more efficient in production that 

we were just in 1997. And I would dare say if you challenge your 

State, you will find the same data. 

Industrial businesses understand the importance of environmental stewardship, voluntarily spending millions. In Virginia, we 

spend nearly $1.72 billion just in compliance costs on environmental regulations. We commend the efforts of this body to legitimately address this complex scientific issue while affording equal 

protections to the economy. These are not mutually exclusive principles. 

You already know the studies published by NAM, the Heritage 

Foundation and others which I will not recite. But in your materials you do have a letter dated June 6, 2008, from 10 Senators of 

this body signed also by our Senator, Jim Webb, stating that there 

must be protections for manufacturing jobs in the then LiebermanWarner bill. But the most important statement they made is this 

bill must include enhanced safeguards to ensure a truly equitable 

and effective global effort that minimizes harm to the U.S. economy 

and protects American jobs. We agree. 

In closing, the VMA wants Congress to develop responsible policies that protect domestic jobs and the environment. We are concerned that these bills will cap industrial competitiveness and 

trade domestic manufacturing jobs abroad for entirely undefined 

environmental benefit. We can do better, and we must do better. 

Thank you for the opportunity. 

[The prepared statement of Mr. Vassey follows:] 
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Senator BOXER. Thank you so much. 

So, we are now going to be, each of us, having 5 minutes each 

to question. And we will go with the early bird rule. 

I would like to start off, Mr. Klesse, with you, because you said 

something very strongly, and I know you feel it, and that is American security is threatened by this legislation, by the Kerry-Boxer 

legislation. Those are your words. 

I would just like to say the opposite is true. And I am going to 

put into the record, to go along with your statement, the Center for 

Naval Analysis. They did a paper called National Security and the 

Threat of Climate Change. And some of the people on there are 

General Gordon Sullivan, Admiral Frank Bauman, Lieutenant 

General Lawrence Farrell, and they are from every area of our 

military, Anthony Zinni. So, I am just going to say I am putting 

three pages into the record. 

One statement here is projected climate change poses a serious 

threat to America’s national security. The other is climate change 

acts as a threat multiplier for instability in some of the most volatile regions of the world. And another is the U.S. should commit 

to a stronger national and international role to help stabilize climate change at levels that will avoid significant disruption to global security and stability. 

So, I just wanted to put this into the record because one of the 

reasons that we have so much strong support from these groups of 

military people, and also we have seen reports from the CIA, and 

I am going back to Republican Administrations, is because of the 

threat if we do nothing. 

And another point I want to counter, because you are very clear 

on what you are saying, is that you worry about the jobs in California, and of course, Senator Feinstein and I we are very worried. 

As we look at the studies of job creation, I think that Ms. Gordon 

spoke to this, Mr. Foster and Mr. Brehm, the one area of growth 

that we have seen, even with this horrible recession which, as you 

know, has put out of work so many people basically starting with 

the housing sector and the lack of construction, has been clean energy jobs. 

And we have seen, you know, 400 new solar businesses spring 

up. We have seen 125,000 new jobs. We have seen this, the percentages are there already, even without this legislation. 

So, I have not yet seen a study that shows that we are not going 

to be dependent on domestic oil. Our goal is to stop sending $1 billion out of the country for foreign oil, which we get from countries 

who do not like us, and keep the $1 billion here. 

[The referenced paper follows:] 
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Senator BOXER. So, Mr. Klesse, I just would like to ask you, do 

you see any truth in what I have just stated, or are we so many 

miles apart here? 

Mr. KLESSE. Thank you, Chairman. Chairwoman. No. First off, 

we are not against working on the climate change issue. 

Senator BOXER. Good. 

Mr. KLESSE. I stated that. The military is talking about the climate change. I was speaking about fuels and the sourcing of fuels. 

We do import crude oil today, and we also import some products. 

The domestic refining industry, though, the jobs are here in the 

United States. The fuels are generated here in the United States 

from crude oil that comes from all over the world. 

Senator BOXER. Right. 

Mr. KLESSE. If we want more crude oil, which is a whole different subject, and we are not in that business, so it is very easy 

for me to speak about it, we should let the industry drill, and we 

should figure out how to hold them accountable. And as I said, we 

are not in that business. 

Senator BOXER. I understand. 

Mr. KLESSE. But I was talking about fuels. And if you—the actions that are being taken will adversely affect the domestic refining industry. It will cause jobs to leave. Those fuels will have to 

be sourced elsewhere. 

Senator BOXER. Thank you. 

Mr. KLESSE. No, green jobs, just, if I can, we are supportive of 

green jobs. We are not against green jobs. 

Senator BOXER. Good. 

Mr. KLESSE. I told you we have a wind farm. So, we are not 

again those. 

Senator BOXER. Good. Well, I am glad we have some areas where 

we can—— 

Mr. KLESSE. We have a lot of areas of agreement. 

Senator BOXER. Good. I am very glad. I want you to know, just 

in the bill, because it may, and I want to share this with you afterwards because my time is expiring here, I want you to see what 

we have tried to do to lessen the blow on the refineries, because 

we do have a lot of allowances going in that direction. But I will 

show you after this is over, if you—— 

Senator KLESSE. If I could just comment on—— 

Senator BOXER. I must—— 

Mr. KLESSE. In your State of California, at 2 percent allocation, 

Valero will have to buy, just for California, $850 billion of carbon 

credits in one form of another, and that is adjusted for the 2 percent. 

Senator BOXER. Well, let me again reiterate. What we are doing 

in our bill is we are trying to ease the burden on the smaller refiners, and we have a study here we will put in the record at the way 

we are easing the burden on oil. So, we will talk to you about it. 

We will take a look at it. 

And because of the extended answer, I must ask one other question to Mr. Brehm. In your testimony, you discussed the potential 

for growth of the U.S. solar industry. Can you describe the types 

of jobs that the cap on carbon in this bill and the additional investment in renewable energy will create? The types of jobs. 
214 

Mr. BREHM. As you know from my testimony, we are particularly 

supportive, and for our company in particular, of U.S. manufacturing jobs. We think those are actually the highest valued, most 

important jobs because that is where the U.S. has fallen behind in 

recent years. So, primarily manufacturing. But also, obviously, installer jobs, development jobs, project jobs, the operating jobs of 

solar facilities so really quite a plethora of across the spectrum jobs 

and real job generators. 

Senator BOXER. Thank you. 

Senator Inhofe. 

Senator INHOFE. Thank you, Madam Chairman. 

Mr. Klesse, you just stated, the very last thing you stated, in the 

State of California you would be forced, under these provisions, to 

buy $850 billion what of allowances? 

Mr. KLESSE. Assuming that carbon sells for $20 a ton—— 

Senator INHOFE. OK. 

Mr. KLESSE. We would be obligated to buy $850 billion a 

year—— 

Senator INHOFE. Just in California? 

Mr. KLESSE. Just in California. 

Senator INHOFE. Who is going to ultimately pay that? 

Mr. KLESSE. Obviously, the refining business is a very low margin business. I know many people do not believe that. But it is. 

Valero, for instance, in 2006 made as much money as it had made 

in 25 years before that in the golden age of refining. So we will 

pass that cost through. 

Senator INHOFE. Exactly. So the people of California are going to be paying the $850 billion that you have to pay. 

Mr. KLESSE. And they will see the price of fuels go up dramatically. 

Senator INHOFE. Yes. OK. 

Mr. Klesse, you did not, you alluded to, but did not have time 

in your opening statement, to talk about all of these organizations 

in terms of jobs. This is a job panel. We are going to have the National Security Panel in a few minutes. But this is—the CVO has 

testified to Congress that this, cap and trade, this type of arrangement, would cost a lot of jobs. EPA, CBO, EIA, CRA, the Heritage 

Foundation, all concluded that the bill would cause job loss. 

For example, EIA predicts cap and trade would cost some 2.3 

million jobs or 800,000 manufacturing jobs by 2030. Do you agree 

with that figure? 

Mr. KLESSE. I agree that there will be a significant loss of jobs. 

Senator INHOFE. Mr. Vassey. 

Mr. KLESSE. And I would also add that our people in Paulsboro, 

New Jersey, where we have a refinery, the building trade union 

came out yesterday and said very clearly they have no expectation 

of making solar panels in New Jersey. 

Senator INHOFE. OK. Mr. Vassey, you commented on the United 

States relative to Japan and Western Europe. I did not quite get 

that in terms of emissions. 

Mr. VASSEY. What our basic suggestion is is that you may be 

looking at the metrics a little wrong from the point of view of how 

industry is measured in this. If you look at overall carbon emissions of the industrial sector as a percentage of each country’s over-
215 

all emissions, the United States has the lowest at 11.5. Our major 

trading partners, which just also happen to be those countries trying to push us in this direction, are substantially higher—— 

Senator INHOFE. Where is China on that? 

Mr. VASSEY. China is at 28 percent to our 11.5 percent. 

Senator INHOFE. All right. Now, if we all agree, and I think everyone does, in terms of the 2.3 million jobs, then if some of those 

jobs are going over, obviously if we cannot produce the energy here, 

those jobs are going to have to find some place where there is energy. Logically, it could be China. It is my understanding that 

China is cranking out currently some two coal-fired generating 

plants a week. 

Now, if that is the case, would it not be reasonable to assume 

that if those jobs go from here, where it is 11.5, to China’s where 

it is 28, we could end up with a net increase in emissions by having 

cap and trade only applying to the country of the United States? 

Mr. VASSEY. That is the principle of leakage, which we are trying 

to point out is that it is pretty obvious that the energy intensive 

industries that are global will have options to produce in countries 

where they are wanted. 

Senator INHOFE. All right. And Mr. Klesse, you talked about the 

petrochemical jobs. Do you have any—you may want to do this for 

the record—any specific details in terms of the jobs that we have 

already lost? We have information from the NAM and others, but 

do you have any concerning your specific situation? 

Mr. KLESSE. Well, I can comment on Valero. We have reduced 

personnel in Delaware City. This reflects not only the current economics in the economy, but clearly with this legislation, we will 

have to reduce and shut down other units. We also have an effort 

to reduce our costs in Paulsboro, New Jersey, and across our system. 

We have shut down units in Aruba, which is outside of the 

United States but does supply the United States with feed stocks. 

We have idled that refinery. And one of our competitors has idled 

a refinery in New Jersey. 

Senator INHOFE. All right. Well, let us get for the record specific 

numbers of people in jobs so we can plug that into the information, 

the testimony that we have from all of these groups that are already mentioned. 

Let me make just one—my time has expired—just make one 

comment about what I think is going to happen. 

When we had the bill, the Markey bill, the Markey-Waxman bill, 

it passed the House by 219, a bare majority. Some of us are old 

enough to remember, back in 1993 and 1994 the BTU tax, which 

was a similar thing in terms of energy costs that we passed on to 

the American people as we have been talking about. That also 

passed the House by 219 votes, a bare majority, the same majority. 

And of course, it did not get anywhere in the Senate. 

So I certainly hope that you folks can get into as much detail as 

you can in terms of the numbers of jobs, manufacturing jobs, 

Valero jobs, where you think they would go, how that would affect 

our economy, and do that for the record. 

Thank you very much. 

Senator BOXER. Thank you, Senator Inhofe. 
216 

Mr. KLESSE. Madam Chair, I need to correct. My people tell me I said billions, and it is $850 million a year. 

Senator BOXER. That is a big difference. 

Mr. KLESSE. It is only a few zeros. 

[Laughter.] 

Senator BOXER. Well, the reason that is important—— 

Mr. KLESSE. It is $850 million a year—— 

Senator BOXER. Yes. And we think you are going to be able to 

cover that. And we are going to put in the record the Stanford 

study that shows that the profits will be preserved for these companies. But we will, this is a Stanford research study because of the 

allowance we are giving out, it is entered. 

But I am so happy you corrected the record because my heart 

stopped myself when you said billions because we have, we believe, 

covered the problem. 

Senator Cardin. 

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Senator CARDIN. Thank you, Madam Chair. And let me thank all 

of the witnesses for their testimony. 

Let me just urge people to take a look at this entire bill. There 

are significant amounts of allocations that go to help the consumers 

and to help industries in transition, which is not reflected in the 

numbers that we are given. So, I think you need to take a look at 

what this bill does in its entirety. 

And let me talk for a moment about leakage. I heard Senator 

Voinovich, in his opening statement, talk about the concern about 

the provision in the House bill which, by the way, is not in the jurisdiction of this committee, so it will be taken up, Senator Carper, 

in the Finance Committee. 

We are concerned about leakage. I think that is an issue we need 

to work together on. I have urged our negotiators in Copenhagen 

to deal with enforcement. And I would hope that we would get the 

support of industry here working with our colleagues around the 

world to say look, we do need an enforcement provision in the Copenhagen agreements. 

We need to set reasonable targets in Copenhagen, we need to 

have a mechanism to achieve those targets, we need to deal with 

the financing issues of third world nations, and we need to deal 

with enforcement. 

And we would be far better off if Copenhagen deals with enforcement so that there is an international regime that says that if a 

country does not do its obligations internationally, such as China 

or India or any other country, when their products enter the international marketplace that there will be an assessment on that—— 

[Audio gap.] 

We just work together and get that into the Copenhagen agreement. I have not heard very much from industry helping us in putting the focus where it should be in the negotiations that are taking place internationally. And I agree with Senator Voinovich that 

it would be far better than to try to do deal with this through the 

WTO and individual countries acting. 

So, there are answers to these questions. So, let us work in a 

constructive way. 

Mayor Nutter, I agree completely with your point that where we 

are looking at the source, where most of the new jobs are going to 

come in America, are going to come from the new technologies, the 

technologies that were developed here. This is going to create jobs 

in our communities. 

I have already given examples in my own State of Maryland with 

the new technologies for automobiles and trucks in White Marsh. 

I could have used the algae ethanol technology that is being advanced by a relatively small company in downtown Baltimore that 

is developing this technology that we hope will be able to give us 

alternative fuels that will not have a disruption on our food chain, 

which is important, I think, for our economy. 

And Mr. Brehm, on solar technology, Maryland is a leader on 

solar technology. The number you gave, I think you said a 40 percent increase in the first 6 months from last year. That is an incredible growth rate, and I know it is still a relatively small part 

of the overall mix. But if we can duplicate that type of growth in 
227 

solar production, that could have a dramatic impact on meeting our 

needs and creating jobs here locally. 

What do we need to do in order to duplicate that and make sure 

that continues? 

Mr. BREHM. Well, clearly the policies advocated by, that would 

be put in place by this bill, would set the base for the entire renewable energy industry. Because once you get certainty on price on 

carbon, then people start to make the long-term commitments, the 

long-term planning. 

And then, as some of my colleagues have also commented, incentives it would put in play, that can be put in play to encourage U.S. 

manufacturing of these technologies, would be hugely beneficial. 

And I happen to be familiar with, of course, Senator Brown’s impact data. But I believe there are some other opportunities out 

there as well. 

The combination basically, this bill here creates a demand. Some 

other acts that Congress could take on would then create the supply. 

Senator CARDIN. Let me, I think that is a critical point. Predictability is so important for investment. Industry knows how to adjust if they know what to expect, and investors will deal with that. 

I agree with Senator Alexander on the point of nuclear investors. 

One of the reasons we have been unable to get investors in nuclear 

energy is because of the uncertainty. We have got to change that. 

This bill, I think, in a way does change it. Not in a way. It does 

change it, because it gives a predictable return for energy sources 

that have a friendlier carbon footprint. That is going to be good for 

investors in nuclear energy as it will be in solar energy. 

That is what, I think, is the most exciting thing about this bill, 

Madam Chair, is that we unleash the American economy with predictability so investors can invest and the creative ingenuity can 

solve this problem and create jobs and keep jobs here in America. 

Thank you. 

Senator BOXER. Thank you very much. 

Senator Alexander. 

Senator ALEXANDER. Thank you, Madam Chairman. 

I want to go back to Mr. Klesse for just a minute. You mentioned 

a figure which I think is accurate that refiners in America would 

have to buy about $63 billion of allowances a year. Am I accurate 

about that? 

Mr. KLESSE. That is assuming $20—— 

Senator ALEXANDER. The $20. But it could be more than that 

over time? 

Mr. KLESSE. It could be. 

Senator ALEXANDER. But let us say, conservatively, that it is $20. 

Basically, what you are in the business of is taking oil that comes 

from all around the world, but mostly in the United States, is that 

right, and turning it in, and refining it in a way that we can drive 

it in our cars and trucks? 

Mr. KLESSE. We take oil from all over the world and refine it. 

But more oil is imported today than is produced domestically. 

Senator ALEXANDER. So, in the scheme of things, the way this 

bill works, you are responsible for the oil, the fuel that all of us 

use. If I drive to work in a car, I do not pay anything under this 
228 

cap and trade bill. You pay it for me, in effect, with the allowances 

that you would buy every year. Is that right? 

Mr. KLESSE. I would pay for the allowances. We would get the 

allowance, but everything above that we have to assume the cost. 

Senator ALEXANDER. Yes, but what you were saying in answer to one of the questions was that $63 billion a year basically would be 

passed on to the gasoline taxes and fuel taxes we pay. Correct? 

Mr. KLESSE. It has to be. This business is very efficient. Our 

total—— 

Senator ALEXANDER. Well, let me just ask, have you computed 

how much of an increase in gas, in fuel prices, that would be? 

Mr. KLESSE. There are numerous studies out. We have used in 

the middle, the 77 cents which in 2019 is the half way. It assumes 

no international offsets. If you take that number, and today we 

have $2.50 gasoline, so it would be a third. It is a 30 percent increase. 

Senator ALEXANDER. A 30 percent increase. So that is—— 

Mr. KLESSE. That is from this regulation—— 

Senator ALEXANDER. From $2.50 to $3.30 or $3.40? 

Mr. KLESSE. That would be correct in 2019. 

Senator ALEXANDER. Now, we have had testimony from, among 

others, Dr. David Greene of Oakridge Laboratory, which basically 

says that an economy-wide cap and trade is a poor way to reduce 

carbon because it has the effect of raising the price, as you just 

said, 80 cents, but it is constructive but insufficient impact on vehicle travel and fuel consumption. In other words, that while we bear 

a lot of pain from the effect of an economy-wide cap and trade on 

our fuel prices, we might not change our behavior. Do you know 

anything about, is that true? 

Mr. KLESSE. Yes. I understand the questions would be clearly 

does the higher price, in that range, actually change consumer habits. 

Senator ALEXANDER. And your experience is? 

Mr. KLESSE. Our experience would be in Europe and in Canada 

that it may not. 

Senator ALEXANDER. That it may not. So, we might have the situation where fuel, being 30 percent of all of the carbon we produce 

in the United States, we raise the price but do not reduce the carbon. So basically, all we have done with this bill is raise the price 

of gasoline and fuel. 

Mr. KLESSE. That is correct. It is a tax, but it also places this 

industry at a competitive disadvantage internationally. This is a 

very global business. 

Senator ALEXANDER. Let me ask Ms. Gordon, and to other witnesses, many of you have mentioned clean energy or green energy. 

Do you mean by that any form of energy that is carbon-free? Do 

you have a definition for it? 

Ms. GORDON. I think that low carbon technologies is usually 

what we say. 

Senator ALEXANDER. Low carbon or no carbon? 

Ms. GORDON. Yes. 

Senator ALEXANDER. So, would you agree that if we have subsidies and incentives or focus that we ought to look at the whole 

wide range of low carbon or no carbon—— 
229 

Ms. GORDON. Sure. I think we should look at a range. We should 

look at a range that includes cost competitive technologies and 

measure those the way we measure technology in general. 

Senator ALEXANDER. Does anyone on the panel disagree with 

that? As we generally speak of clean or green technologies, would 

you agree that we ought to be equally interested in all forms of say, 

electricity production that would produce no carbon or low carbon 

electricity. Anyone want to comment on that? 

Mr. BREHM. I am speaking for myself and my company. I actually do not know the Solar Energy Industries Association position 

on nuclear, but we are located actually in eastern Washington, 

where Hanford is, Hanford Nuclear Site is, Pacific Northwest National Lab, and we are actually very pro-nuclear. We believe that 

nuclear and solar, in particular, are very complementary. 

Senator ALEXANDER. That winds up, my time is about up, but I 

would like to mention is, according to the Department of Energy, 

the direct jobs produced by 100 new nuclear reactors would be 

250,000. That would be three times as much as building 180,000 

wind turbines. Seventy percent of our carbon-free electricity is nuclear, and as I listened to the whole range of panelists, no one mentioned nuclear power, which we invented, which produces 70 percent of our carbon-free electricity, which the rest of the world is 

using, and we have not started a new nuclear plant in 30 years. 

So my plea is, and Senator Cardin mentioned that, he has been 

a consistent supporter of nuclear power, so if have got a form of 

energy that will solve our problem, and I will conclude, Madam 

Chairman, with this comment. My view is that if we built 100 nuclear plants, if we electrify half the cars and trucks, and if we had 

mini-Manhattan Projects in energy R&D, we could reach the Kyoto 

goals in 2030. 

We have got 40 Republican Senators who support what I just 

said and many Democrats. I do not know why we do not do it. 

Mr. BREHM. May I respond? As far as I am concerned you may. 

Is this appropriate, Madam Chair? 

Senator BOXER. Well, just if you could make it brief because we 

are over the time. Go ahead. 

Mr. BREHM. Again, as I pointed out, we are certainly very pronuclear. But to answer your point earlier, where you talked about 

France, France also views nuclear and solar as being very complementary. In spite of the fact that France gets 70 percent of their 

power from nuclear energy, they just implemented one of the 

strongest pro-solar feed in tariffs in the world. So, they are very 

complementary technologies. 

Senator ALEXANDER. I agree. 

Senator BOXER. OK. 

Senator Specter. 

Senator SPECTER. Thank you, Madam Chairwoman. 

Mayor Nutter, it is quite a compliment to the city of Philadelphia 

that you have been selected to present the testimony for the United 

States Conference of Mayors. The testimony that you have given is 

a win-win situation here on green jobs and energy saving. 

Mr. NUTTER. Yes. 

Senator SPECTER. I note that you have allocated more than $33 

million to retrofitting and job training for young people, $14.1 from 
230 

the formula allocation from the stimulus package and $19 million, 

$11 million from the Community Development Block Grants. But 

the city of Philadelphia has put up $8 million on its own, and it 

provides some 800 trainees with as little as 2 weeks’ training on 

weatherizing and retrofitting. 

What kind of an impact do you think that will make on other 

considerations like crime control in the city of Philadelphia? So 

that, by putting these people to work, it obviously is a real problem, so you attack the issue in a number of directions, jobs, energy 

efficiency and crime control. 

Mr. NUTTER. Senator Specter, it goes without saying that for the 

city of Philadelphia specifically, which presently, unfortunately, 

has an unemployment rate of 10.7 percent, and many economists, 

local economists, anticipate that will grow, putting people to work 

has to be our No. 1 priority. 

And I would only suggest here that the best anti-crime program 

is a job, that when people are working, they are much less likely 

to be involved in negative or illegal activities. That is why we have 

focused so much of our dollars in the green economy area. 

Just this past Monday, I was at a press conference with Maxwell Education Group. They received a $150,000 grant from Workforce 

Investment, economic recovery dollars. Twenty-four men graduated 

from their training program. That particular program is 8 weeks. 

Monday was their last day of training. Every one of them will walk 

into a job this week. Five of those 24 individuals are ex-offenders, 

six of them are military veterans most having just recently served 

in our international war efforts. 

These programs work, and they put people to work. All 24 of 

those men who graduated on Monday are dislocated workers. None 

of them were currently employed. All of them will be employed by 

the end of this week. 

Senator SPECTER. The important factor, Mayor Nutter, is that 

the jobs you are giving them will have application in the private 

sector as well. 

Mr. NUTTER. Well, Senator, all 24 of them will be working in private sector jobs. None of them will be working for me or for the 

city of Philadelphia. The industry is demanding so many workers 

that there is capacity out there for these individuals. They will all 

be working in the private sector. 

These are not make work jobs. These are not what anyone might 

think of public service jobs. These are private sector jobs paying a 

good wage. These individuals will be able to sustain themselves. 

And the opportunity for entrepreneurship in this particular industry, I believe, is limitless. People will go from training to entry 

level jobs and eventually many of those individuals will start companies of their own. And for us, of course, everyone working, paying taxes is what will help turn America’s cities around. 

Senator SPECTER. I turn now to Mr. David Foster, another Pennsylvanian, a representative of the BlueGreen Alliance launched by 

the United Steelworkers and also by the Sierra Club in 2006. 

I note at the outset that the United Steelworkers, which is very 

much concerned about jobs and very much concerned about foreign 

imports and what China and India are doing, has endorsed the 

House bill. 
231 

I was particularly interested in the part of your testimony where 

you specified that the studies which you have conducted on renewable electricity standards show that there is the potential for creating some 850,000 manufacturing jobs, and you specified quite a 

number of States. And when it turns to Pennsylvania, 42,000 new 

jobs will be created. 

There have been a lot of comments on the committee about job 

loss and about impact on the traditional American industries. And 

there is no industry more zealous of its standing than the Steelworkers. Leo Girard, the president, scoffs at the idea of protectionism and says I want to talk about law enforcement. The Chinese are violating our trade laws under WTO. 

My question to you is, explain the confidence level of the United 

Steelworkers in supporting this kind of legislation when we have 

heard so many objections raised by some members of this committee on the jobs issue. 

Mr. FOSTER. Thank you very much, Madam Chairman. 

Senator Specter, I think you have pointed at a very critical issue, 

and it underscores the fact that, while there is a problem with carbon leakage, as we think about climate change solutions, there is 

a simple and elegant solution. And we achieved that in the work 

we did with the House committee in a three-pronged approach that 

said energy intensive industries need assistance through allowance 

allocations during the early years of the regime. 

Then we need to have a push to have international sectoral 

agreements, and we need to frame that up and urge our negotiators and the world’s negotiators to take part in trying to solve 

these industry by industry in the energy intensive trade exposed 

industries. And if that does not work, then we need to have a date 

certain at which border adjustments would back stop that effort. 

And if we do that, we are creating a system that allows us to go 

forward with great confidence that American industrial workers 

who are among the cleanest of producers of products in the global 

economy, that has been stated and I wholeheartedly agree with 

that, that those workers can participate in the global economy, 

produce the products that we need to build a clean energy infrastructure in this country, and do so with the assurance that their 

jobs are going to continue on into the future. 

Senator SPECTER. Thank you very much. 

Thank you, Madam Chairwoman. 

Senator BOXER. Thank you, Senator Specter. 

Senator Barrasso. 

Senator BARRASSO. Thank you very much, Madam Chairman. 

I would like to continue a little bit talking about some of the impacts on the economy, and Mr. Klesse, if I could, you know, I appreciate your testimony today. It is good to hear from folks really 

on the ground who will feel the impact of this cap-and-tax scheme 

first hand. 

Green jobs are being touted as our economic salvation, but I believe we need all the jobs, green jobs as well as the red, white and 

blue jobs that power our country. I do not think we ought to be 

here in this room picking winners and losers when it comes to 

American jobs. 
232 

I have concerns about the impact that this will have, the bill will 

have, on electricity consumers in the Rocky Mountain West. And 

in Wyoming, coal provides roughly 95 percent of our electricity. 

I know Senator Inhofe already asked about mandates in this bill 

and what they were going to do to your power production costs. I 

believe you said they were going to be increased. Then he asked 

what was going to happen as a result of that in terms of, you know, 

the costs, would they be passed on directly to consumers, your customers, and you said yes, they would. 

So, what do you see happening specifically in the Rocky Mountain West, places that are more reliant on coal? Are they going to 

be disadvantaged by this bill? 

Mr. KLESSE. Well, I am in the oil business, the refining business. 

So coal is much harder for me to speak about. However, we agree 

on energy generation, power, that it should come from nuclear, 

coal, natural gas, geothermal where it can, solar if it is appropriate. But we should not be penalizing these core businesses. 

When I speak, we have four USW unions, different locals, at our 

plant. When I speak to the rank and file people, they understand 

this issue very quickly. And even though the general, Leo Girard, 

has his coalition, very clearly the rank and file people are very concerned. 

The refining industry is under stress. We have CAFE standards 

coming in, which is lowering the carbon footprint. We also have the 

RFS and those are, in fact, reducing carbon emissions. But they 

also then are affecting the domestic refining business and this type 

of legislation just compounds it. 

But on coal, it is very difficult for me to give—— 

Senator BARRASSO. And then, the cost to the consumer as the result of all of this? 

Mr. KLESSE. It has to go up. It is a tax, the tax will be passed 

through. I was going to say earlier, our total cash operating costs 

in refining, cash operating, are 10 cents a gallon. That does not include profit or depreciation. So this is a very low cost, very pennies 

business. 

Senator BARRASSO. And Mr. Vassey, if I could, someone said that 

the new regulations and Federal spending to mitigate these greenhouse gas emissions are going to create new job opportunities for 

some sectors of the economy. But those jobs, I believe, are going to 

come at the expense of activity elsewhere in the economy. 

So, in terms of your State of Virginia, what do you see happening, kind of 10 years from now, in terms of manufacturing and 

the expenses of that and the costs if this bill becomes law? 

Mr. VASSEY. What we see, as we testified earlier, the companies 

that are in the global commodities business, those that are in 

paper, that is about 15,000 employees, Senator Inhofe, those that 

are in chemical and plastics, that is another 40,000. Those are the 

companies that are going to be in jeopardy because they will have 

options elsewhere. 

But also, they have very limited margins, just like refining, that 

they have to work with, and any fluctuation in their supply chain 

or in their regulatory burden they cannot pass through. Customers 

will not pay it. 
233 

The other things that I will share with you, we see decline in 

that, which is not good. We do not see immediate replacement with 

this provision. There needs to be some address to that. The other 

thing in my testimony, I said that just the threat of this coming 

will have immediate consequences. 

And to your question about coal, we had a meeting this week 

with some of the coal producers, and we have now learned, which 

I would encourage the committee to review, many of the independent coal producers in Appalachia are being brought out by 

Eastern European companies for the express purpose that they are 

looking down the line and trying to preserve their family, their particular investment. 

But the Eastern Europeans, as we understand it, see this as an 

opportunity that the United States is going to cap and trade their 

economy, but they will have access to raw materials so they can be 

the steel producer of the world in Eastern Europe. I think that is 

something worth knowing, that acquisition of American companies. 

Senator BARRASSO. When you used the phrase opportunities elsewhere, you were not talking about cross-State border, you were 

talking about jobs moving, leaving the country and going overseas. 

Is that a correct assessment of your evaluation? 

Mr. VASSEY. We do not see these companies as non-competitive. 

That is not the issue. The issue is that their margins and their 

pricing for consumer products they simply cannot pass along. So, 

they will find a place. They will find a way, they always have, to 

produce and sell in this economy. 

Senator BARRASSO. Thank you. 

Thank you, Madam Chairman. 

Senator BOXER. Senator Whitehouse. 

Senator WHITEHOUSE. Thank you, Madam Chair. 

Mr. Vassey, I was delighted by the focus of your testimony on the 

problem of leakage and the promise that I hope that brings of the 

industry representatives paying more attention to the problem of 

enforcement. 

I have detected a decidedly mixed message from industry on the 

question of trade enforcement because it has been so advantageous 

for CEOs and management to offshore jobs, find lower wage rates 

overseas, and it has not been in their best interests to push very 

hard at the fact that those overseas jobs often violate environmental laws and treaty requirements, labor laws and treaty requirements, workplace safety laws and treaty requirements. 

So, I see that David Foster is here. I know that the cost of the 

offshoring hits the labor community particularly hard as jobs gets 

picked out of America and moved by management to foreign countries to seek that labor advantage and the parallel advantages of 

that environmental law, bad labor law, bad workplace safety conditions. 

And so, I am hoping that what we see here is the beginning of 

an industry-labor coalition that will take what had been our policy 

of conspicuous non-enforcement and change that and also work 

very hard to assure, as both of you wish to, to assure that this bill, 

when it goes forth, particularly including the package that comes 

out of the Finance Committee that relates to the border adjustments, is really tough. 
234 

And if we have to tangle with the WTO a little bit on this subject, I am perfectly happy to do that. But this is, I just wanted to 

make that point. Both of you are here. It is not often that industry 

and labor are in such apparent agreement, and I wanted to take 

a moment to highlight that, and I will give you a chance to make 

a brief comment on that if there is time. 

But I wanted to ask Dan Reicher something, which is that we 

have talked a lot about the smart grid, and smart grid has become 

jargon to a lot of us who are very familiar with these issues. 

Google is a very forward looking company. You have a very forward looking position in that company. I would like to ask you to 

take a few minutes to try to make real for people who may be 

watching some of the kinds of changes that might happen in the 

middle class American home, that people might see as the consequences of smart grid and how that will work itself out in the 

lives of consumers. 

And the core area of that question is what kind of products 

might we be building here in America to make those new services, 

technologies, appliances possible? 

Mr. REICHER. Thank you, Senator Whitehouse. First of all, the 

smart grid seems to mean a million different things to a million 

different people. But I think, when all is said and done, what it 

does is it gives people a lot better information about their own energy use, whether it is in their home, in their factory, in their business. 

And I think where energy technology and information technology, 

ET meets IT as we put it, where that intersection is, we can do so 

much, I think, to deal with some of the problems we are talking 

about today, to lower the costs of energy use, to green up energy 

supply. There is so much we can do. 

And at Google we are very, very excited about it. We have 

launched a product, we call it Google Power Meter, we give it away 

for free. It is a piece of software, and it lets people know in near 

real time how much electricity they are using in their home. You 

can go on your smart phone, you can go on your laptop. I have provided some handouts today that will show you what you get. But 

when you go on your laptop, you go to the home page where you 

might show your stocks and your weather and the sports scores, 

and you will also see how much electricity you are using in real 

time. 

And it is quite extraordinary what people discover. One of my 

colleagues found out that he was paying for the washers and dryers 

in his apartment building. Another discovered what that second refrigerator in the garage with the one six-pack of beer in it was really costing him. Another woman discovered that the pump in her 

pool had been operating non-stop for years. 

The electric motor in my furnace, I did not realize that it was 

40 years old, and every time it popped on I was hitting 1,000 watts. 

The furnace person said do not bother replacing your furnace, it is 

not worth it. Replace that little electric motor and you are going 

to dramatically cut your electricity use. 

So it is quite extraordinary. And when we get to the biggest appliance in the house, which is the plug-in vehicle which is on its 
235 

way, what we are going to be able to do with the integration of that 

into the grid is quite extraordinary. 

What we do not want to do is be plugging in millions of these 

cars of a hot day in the summertime at the same moment and taking the grid down. What a smart grid will allow us to do is figure 

out when those cars should best charge up over the evening into 

the next morning. They will allow us to store that intermittent 

electricity that comes from solar and wind that is problematic for 

various reasons. 

So, Senator, I think this whole area of the smart grid is so exciting. And that is why it is companies like Google and Microsoft and 

on and on who are really seeing the opportunity here. So, have at 

it. I think the President yesterday announcing $5 billion in spending on advanced meters is really going to lay a good foundation, 

and I think this bill could do an awful lot more. 

Senator WHITEHOUSE. Thank you, Chairman. 

Senator BOXER. Thank you, Senator. 

Let us see. We are going to Senator Udall, and next Senator Carper and then Senator Merkley, unless our other colleagues come 

back. Go ahead. 

Senator UDALL. Thank you, Madam Chair. 

Mr. Reicher, a little over 10 years ago, Google, as a company, 

was based out of a garage with only a handful of employees. Last 

year it had annual revenue of over $21 billion, triple the amount 

in just 3 years. 

Why would a company like Google, which has a successful business in advertising, in search engines and information technology, 

be looking at clean technology and energy efficiency as a new business opportunity? And what kinds of energy projects has Google already done in this area, and what kind of results does Google hope 

to achieve as a company and as a part of society? 

Mr. REICHER. Thank you, Senator Udall. 

First of all, you know, Google, those instantaneous searches that 

everyone has come to rely on in their lives, they do take some electricity. So, we recognize that. We have done a lot to green up and 

reduce the energy use in our data centers all over the country. So 

that was Google’s entry point into this. 

But I have to say, more importantly, this intersection I said between energy technology and information technology, we are quite 

convinced is really, really promising to help us deal with the big 

challenge we have as a country, and frankly, as a way to make 

some money for companies of all sorts. 

So, as I said, we have launched this product called Google Power 

Meter. We have also built a fleet of plug-in vehicles, and we have 

been testing them for the last few years. And you know what? They 

actually work. They plug into a system at Google that, on a sunny 

day, is powered by the sun. Our employees use them in their dayto-day business, driving around Northern California. And they really have shown us that you can do so much with these plug-in electric vehicles. 

So, we are convinced that this whole area of the grid and the net 

coming together holds such great promise for our country and for 

the world, and frankly, I think this bill provides some allowances 

for the smart grid, and we are very appreciative of that. 
236 

We think the R&D need is great, and we have to continue to invest in these kinds of technologies to move them forward. But all 

in all, it is a great package, and I think it is the good news in this 

whole story. Thanks. 

Senator UDALL. To follow up a little on that, you have spent time 

in the energy sector and in the Department of Energy, and now you 

are really in this entrepreneurship venue. And so I wanted to ask 

you, with that background, when we hear Senators say, and the 

naysayers many of them, that we cannot achieve these goals, and 

we cannot get the reduction in terms of 20 percent by 2020, do you 

believe that American creativity and ingenuity and innovation are 

going to, when we put the signal in the market, the price signal 

out there, are we going to able to achieve many of these things earlier than we think? 

Mr. REICHER. Absolutely. And it is curious, Senator, that this 

whole conversation this morning has really avoided what is really, 

I think, the low hanging fruit, which is energy efficiency. The low 

hanging fruit. And you know what? This is low hanging fruit that 

grows back. That old incandescent light bulb you replaced with the 

compact fluorescent you are going to replace again with an LED 

bulb. 

So, there is great ability, here and now, to get the kind of savings 

that we need to deal with our climate emissions problem. So, I 

think we overstate the costs of meeting this important challenge, 

and I think we understate the opportunity that could come in growing some major businesses in this country. 

So, energy efficiency is the place to start. But going beyond that, 

as you say, what is the innovation pipeline producing? It is producing extraordinary opportunities. We saw the kind of companies 

that just a couple of days ago the Energy Department announced 

it was investing in all over the country with a whole range of technologies that promise vast savings in terms of carbon emissions 

and energy savings. 

I will highlight, and I think it is something that is very important to your State, is the whole opportunity with advanced geothermal. Not too many feet below the surface of the earth is just 

a vast, vast energy and increasingly we know how to drill down 

there at low cost, we know how to extract it. 

It is a great complement for the oil and gas industry because 

they know how to get to those depths. So, let us put these industries together. Let us put geothermal and oil and gas together and 

really take advantage of what is a highly attractive energy source 

and one, frankly, that is base load. It is 24 hours a day, 365 days 

a year, and increasingly it is on a very impressive price trajectory. 

Senator UDALL. Thank you. Thank you to all of our panelists. 

And thank you, Madam Chairman. 

Senator BOXER. Thank you. 

Senator Voinovich. 

Senator VOINOVICH. Thank you, Madam Chairman. 

I have heard a lot of—I am sorry I did not hear you, Mr. Vassey. 

But Mr. Vassey, have you ever talked to Mr. Foster? 

Mr. VASSEY. No, sir. 

Senator VOINOVICH. Mr. Foster, some of the things that you 

talked about in your testimony, your concern about manufacturing 
237 

and the allowances and how it works, and you have got some recommendations on how we can improve this piece of legislation. I 

would assume your concern that the allowances in the bill are not 

enough to take care of manufacturing, that the cost of energy will 

be passed on to your members, and therefore, it is going to cost 

them more to do business. 

What I am concerned about here, the big picture, is this. The allegation is that we need cap and trade and set limits on emission 

so that we have the incentive to get people to do things that they 

ordinarily might not want to do. 

From what I have heard here, Mr. Brehm, you have gone forward and done some very unique things working with a couple of 

businesses in Ohio. The question I have is, did you take advantage 

of any of the programs that are available in the Department of Energy for you do to this, or did you do this on your own? 

Mr. BREHM. Senator, a combination. We are a recipient of a number of grants from the DOE, from the department that Dan used 

to run, Energy Efficiency and Renewable Energy. In fact, we are 

working on some of those R&D projects with companies in Ohio, 

and we are working on some of the production and the manufacturing with companies in Ohio which were more done with private 

funds. But a combination. 

Senator VOINOVICH. The concept of the bill is that we charge for 

allowances, that raises money, and there is more money for incentives. The question I have got is that if we concentrated on the incentive part of this, would we not be far better off than to create 

a gigantic new process where we give out allowances, or we pay for 

allowances and so forth, and really got at the real issue here, and 

the issue is technology. 

And everybody analogizes, I do not know if you are familiar with 

this, with the Clean Air Act which had the acid rain provisions, 

and I was familiar with that as Governor at Ohio. At the time we 

put that into effect, there were 15 years of work to deal with NOx- Ox, mercury, we were not talking about greenhouse gases. And we 

were able to move forward with it. 

The problem, as I see it big picture-wise, is we do not have the 

technology in many of these areas. Mr. Klesse, for example, you get 

2 percent of the allowances, you have got 44 percent of the problem. How do you reconcile some of these things? If he gets 2 percent of the allowances, they raise the cost of gasoline, that is 

passed on to the people in Ohio, and they provide the allowances, 

so they provide the money for the incentives for you to do what you 

want to do. And it just seems like we are just kind of going around 

in a circle. 

Mr. Klesse, I will just ask you this. What is your solution to this? 

I understand that refineries, you guys are going to stop refining oil 

here, you are going to get it refined overseas because of the cost. 

Even if you do that, you are still going to pass a big cost on to your 

customers. What is the solution to this? How do you deal with this? 

Mr. KLESSE. Well, we see this program as very unfair to this industry. We already have CAFE standards coming in, the RFS, renewable fuel standards, in, so we see these things happening. We 

also are supportive. I agree with the comments on efficiency. There 

is tremendous opportunity in efficiency. When I started working as 
238 

an engineer, we had an investment tax credit. We could have a lot 

of positive initiatives here to encourage industries, smart grids, all 

of those, to make investments to improve efficiencies. 

But this bill is inherently unfair, penalizes the refining and oil 

business directly, and is legislatively picking winners and losers. 

Senator VOINOVICH. I would just like to comment, too, that I introduced a bill with Senator Dorgan called the National Energy Security Act. And one of the biggest things we talked about was the 

grid. And Mr. Reicher, you talked about the grid. Now, we are putting $3.5 billion into the grid. Most people say if we really want 

to do the grid, we are probably going to have to spend $60 billion 

to do it the right way. 

I guess that, from my perspective, maybe our priorities are not 

in line. And Mr. Foster, I want to call you afterwards and talk to 

you about what your group is concerned about. Because I think 

there are some things here that could be reconciled, where we 

could come up with something that would move us forward but not 

get us engaged in a large system where we are collecting allowances, paying for allowances, giving allowances away and end up 

with a set up that raises, increases everyone’s costs, and does very 

little to really reduce the emissions. 

Mr. REICHER. Senator, if I could very quickly. You said—— 

Senator BOXER. Make sure to answer quickly because we are 

running out of time. 

Mr. REICHER. You said technology is the issue. Technology is 

part of the issue. But until we put a significant price on carbon 

emissions that really reflects the true impacts they are having on 

the global climate, we are not going to drive the kind of change 

that we need. 

It needs to be a combination of technology and policy if we are 

going to see the sort of changes we need that are going to be both 

good for the economy and good for the environment. And that is 

what is behind this bill. And either EPA is going to do it, or the 

Congress is going to do it, one way or the other. 

Senator BOXER. Thank you very much, Mr. Reicher. And thank 

you, Senator. 

Senator Udall. I mean, Senator Carper. I almost gave you a second round. 

Senator Carper. 

Senator CARPER. One of the Toms. One of the Toms gets to go 

next. 

Let me say, Madam Chair, it is a good panel. And some of these 

folks I have the privilege of knowing. It is great to see the Mayor 

of Philadelphia, our neighbor to the north. I understand there is a 

baseball team in Philadelphia. You are playing ball there very 

soon, we hope. Good luck. A lot of Phillies fans down in Delaware, 

as you know. 

Mr. Klesse, has anyone ever mispronounced your name? 

Mr. KLESSE. Yes. 

Senator CARPER. Today? In the last hour, probably. Thanks for 

bearing with us. It is so nice to have you here. Valero is one of any 

number of companies that are going to refinery operations in Delaware City. 
239 

I came out of the Navy in 1973. I had been a naval flight officer. 

And I moved from California to Delaware and got a Masters in 

Business Administration. I took a course in my first semester, and 

I had to do a research project on a company that had problems, 

really, with the law. And Getty, at the time, owned the refinery in 

Delaware City and they had long standing problems with Clean Air 

Act compliance. 

And I ended up, literally, in my first semester at Delaware, in 

my first months at the University of Delaware, doing a fair amount 

of research on the refinery there. There have been a lot of owners 

since that time. We think Valero actually is one of the better operators and the more responsible operators with more of an environmental conscience than some of the others. So, we appreciate that. 

And I appreciate what you said earlier about—you have, I think 

you said, a 50-megawatt windmill operation at your headquarters, 

and I think you said you are also into ethanol, and we would welcome that kind of diversification. I hope your shareholders do as 

well. 

I almost fell out of my seat, though, and I think my colleagues 

did as well when, I think you said to Senator Boxer, that it looked 

like you would be spending for your operations, your refinery operations in California, $850 billion in a year. 

Corrected, you said $850 million in California in a year. And I 

have looked at your testimony, and I am up to page 3, and my staff 

here behind us has been trying to help me figure new on some 

numbers, and I just want make sure we got this correct. 

I will just quote your testimony. It says industry-wide, we estimate the compliance costs for process emissions with carbon at $20 

a ton to be $4.1 billion a year. And that is, I think, nationwide, I 

believe in a year, for all refineries. And your portion of that would 

be, I suppose, less than maybe one-quarter. But in any event, I presume that is what we are talking about industry-wide, $4.1 billion 

a year. You estimate the costs of consumer emissions to be about 

$63 billion a year, for a total cost to domestic refiners, and potentially to consumers, of more than $67 billion a year. 

That is a lot of money. I think we all agree with that. And I ask 

myself, well, figure out for us, if you can, how much gasoline and 

how much diesel fuel do we use when we drive our cars and trucks 

and they came back and said about, today, about 450 billion gallons of gas and diesel refined and consumed annually. 

If I do my math right, and I divide 450 billion gallons into $67 

billion, it works out to, I am told, somewhere between 13 and 15 

cents per gallon. I think that is a correct number. And I am told 

this is by 2020. 

When I heard this $850 billion number, I was real price sticker 

shocked. When I think of 13 to 15 cents per gallon by 2020, I just 

want to say we can remember back only a year or so ago when we 

saw such price volatility that the price of gasoline in my State, and 

I think all of the States, probably went up by 13 cents per gallon 

in a month, maybe in some places in a week. And we are talking 

about an increase of 13 to 15 cents over the next decade, by 2020. 

Are my assumptions reasonably correct? Is 13 to 15 cents per 

gallon pretty much on target? 
240 

Mr. KLESSE. If you use $20 per ton, and nothing else changes, 

then I would say your numbers are exact. But that is not what we 

expect to happen at all. Nor do any of these reports that are published, including the DLE. We have a wide range of numbers that 

go all the way up to $1.50 by 2019 or 2020. It depends on what 

you assume for the cost of carbon. In my number, it is $87 a ton. 

Senator CARPER. Let me just ask the Chair a question, if I could. 

Senator BOXER. Yes. 

Senator CARPER. I have been told by others that the costs of car- bon per ton will probably, initially, be less than $20 and eventually 

it is going to rise. Do we have a cap? 

Senator BOXER. We do. We have a soft collar, as you probably 

know. 

Senator CARPER. What is that? What does that mean, Madam 

Chair? 

Senator BOXER. Well, it means that the bottom is $11 and the 

top is $28, and if it gets to $28, we have an allowance reserve fund 

where those allowances are sent out so we that we will not see 

prices over $28 because absolutely, and this is something we did, 

Senator Carper, if I can just say, this is something we did because 

industry was concerned about carbon going up too high, and also 

others were concerned about market manipulation. 

By the way, I am going to add time on to you. 

We also have the ability to go for offsets as well. So, I think, 

given all of that, I feel very good with that 13 cents that you 

quoted. 

Could you just put Senator Carper back to a minute please? 

Mr. KLESSE. Can I—— 

Senator CARPER. Let me just finish one more point because my 

time is limited. And I would welcome the opportunity to continue 

the conversation beyond this hearing. 

But just doing the math, back of the envelope math, if we say 15 cents per gallon with carbon at $20 a ton, if we go up to $28 

a ton, that would raise the price to roughly 20 cents per gallon. 

Does that sound like even wildly in the range of—— 

Mr. KLESSE. That does and those are correct numbers. However, 

this cap increases every single year. It has the ability to increase. 

We also do not think the allowances will be adequate. 

A cap and trade program means anybody can trade. You and I 

can trade in this business. People will hoard them. We have seen 

this with the RFS and the renewable fuel standard where we have 

to buy RINs. RINs have gotten very high. It was never the EPA’s 

expectation that RINs would get up to 18 or 19 cents a gallon. 

So, these businesses, there are a lot of players and people act in 

their self-interest. 

Senator CARPER. All right. 

Mr. KLESSE. And the cap goes up every year. 

Senator CARPER. Fair enough. Thank you for engaging this dialogue with us today, and I just look forward to continuing it. And 

again, to all of our witnesses, a lot of encouraging stories, including 

the launching yesterday of Fisker Automotive in—— 

Senator BOXER. I would like to—— 

Senator CARPER [continuing]. GM plant comes alive again, and 

we are going to be starting to build in a couple of years vehicles 
241 

that will get 100 miles or so per gallon, and the plant hybrids, and 

we are going to be deploying the first windmill farm off the coast 

of Delaware, probably in about 3 years. And the idea here is to 

eventually have windmill farms up and down the East Coast to 

provide a powerful vehicle like the vehicle we are building here. 

I still think there will probably be plenty of opportunity for our 

refineries to make a buck as well. 

Thank you very much. 

Senator BOXER. Senator, thank you very much. 

So, here is what we are going to do. Our last questioner, we are 

going to shut it down after Senator Merkley and go to our next 

panel because we are running late. 

Senator Merkley, please proceed. 

Senator MERKLEY. Thank you very much, Madam Chair. 

Mr. Reicher, you mentioned that Google is providing free software. I am assuming that I have to get a digital replacement for 

my mechanical electric meter to interface with that in some way? 

Mr. REICHER. Senator, you have two options. You either get a replacement for your current meter, and there are many of those on 

the way or already arrived, and in fact, the money yesterday from 

the President is going to speed that up. Or even simpler, you can 

clip a little tiny device on your fuse box, and those are readily 

available as well. They are inexpensive. You do not even need the 

smart meter. 

Senator MERKLEY. Is Google giving those away with the software? 

Mr. REICHER. Not at this point. 

[Laughter.] 

Senator MERKLEY. You would have about a million calls after 

this hearing because—— 

Mr. REICHER. I will not announce that here. 

Senator MERKLEY. I am sure a lot of Americans will find this a 

very interesting idea. I just wanted to publicize that a little bit. 

Thank you. What does one of those little clip on devices cost to put 

on your fuse box? 

Mr. REICHER. The devices are, today, around $150. And we are 

expecting they are going to come down very significantly in price 

when they go to mass market. 

Senator MERKLEY. Well, I am going to be calling my utility company and find out when I can get a meter or whether they are 

going to subsidize that cost. That is very helpful. When people start 

monitoring how they are using energy, they change practices. So, 

thank you for mentioning that. 

I wanted to shift to the personal vehicle plan that is part of the 

overall Google energy plan. And I believe that personal vehicles 

now produce about 20 percent of the carbon dioxide in the U.S. 

economy. Is that a roughly accurate estimate? 

Mr. REICHER. I do not know. It is in that range, but I do not 

know. 

Senator MERKLEY. I believe transportation is about 60 percent of 

the carbon dioxide, and personal vehicles are about a third of that, 

I believe. So, I was going to pin you down a little bit on how much 

that particular piece of the plan would reduce the carbon dioxide 
242 

produced in the personal vehicle sector. And you may not have a 

reading on that—— 

Mr. REICHER. Well, I will say, and Senator Alexander talked 

about replacing half the fleet with plug-in vehicles, if we move to 

do two things, increase our use of plug-in vehicles and green up the 

electric grid by whatever means from solar to wind to geothermal 

to nuclear and beyond, we will have very significant impacts in the 

personal transportation sector on greenhouse gas emissions. 

Senator MERKLEY. At one point, I heard it described this way. 

And I think this is a little out of sync with the numbers in your 

studies, but I will mention it and have you give your version. It 

was that if we enable every vehicle, every vehicle, so at a 100 percent transition, if you will, to go at least 30 miles on electricity, 

that we would reduce 70 to 80 percent of the carbon dioxide produced by personal vehicles. 

Does that fit, or do you have a different version of that statistic? 

I realize, in your plan, by 2030 we do not get to 100 percent doing 

the first 30 miles on electricity, but—— 

Mr. REICHER. It is in that range. And the difficulty in making the 

estimate is that you really have to know the state of the electric 

grid, how green is the grid at that point in time. But the faster we 

green up the grid, by whatever means, the more that the emissions 

from the personal automobile sector are going to go down. 

But what is exciting about it is that it is a very efficient way to 

run a vehicle, and I think these hybrid gas-electrics will give people 

both the ability to lower their fuel bills but at the same time have 

some confidence that, you know, when that 30 miles on electricity 

is up, there is another several gallons in the tank that they can 

continue with. 

Senator MERKLEY. Well, I want to really emphasize how much 

potential carbon dioxide savings are here. Because if we can reduce 

70 percent of 20 percent, that is a substantial, substantial amount, 

about 14 percent of the carbon dioxide produced in our economy. 

And if we look at it this way, this plan we are putting out right 

now aims to reduce 20 percent below the 2005 levels, but we are 

zeroing in on 9 percent already. So that means we really only have 

to reduce 1 percent per year over the next 11 years to meet our 

2020 target. And here we are talking about just personal vehicles 

with the potential to reduce up to 14 percent. 

So, you lay out three strategies. One is new sales, more and more 

new sales being plug-ins and full electric cars. A second is having 

the remaining conventional vehicle sales significantly increase 

their mileage from 22 to 45, which I think you note is the European standard for 2012. And the third is to accelerate turnover of 

the older cars. 

In your vision, taking those theoretical goals, how do we convert, 

if we were to actually say let us set mileposts, and let us make 

those happen, what type of legislative strategy would be most effective? 

Mr. REICHER. Well, I think, first and foremost, what this committee is focused on, which is put a significant price on carbon 

emissions, and do it by an efficient mechanism from a business perspective. I think that will dramatically drive change. 
243 

Second, the direction we are headed in terms of increasing the 

fuel efficiency standards for regular vehicles. I mean, I think third, 

if we are going to really accelerate the introduction of plug-in vehicles of all sorts, I think incentives can help. I think investment in 

battery technology which is the real rub here can help a great deal. 

And then I think making sure that we have got a grid that is able 

to charge up large numbers of these vehicles and getting that 

ready, I think, is the third. 

Senator MERKLEY. Thank you very much. Our time is expired. 

Thank you, Madam Chair. 

Senator BOXER. So, Senator Sanders, you came in the nick of 

time. 

Senator SANDERS. I was cheating. I was watching TV. 

Senator BOXER. OK. Unless there is a Republican who comes in, 

if they do, I will give them time, we are going to move to the national security panel after Senator Sanders. 

Senator SANDERS. Mr. Reicher, the State of Vermont, although 

Senator Boxer may argue with me, I think the State of Vermont 

is leading the country in terms of energy efficiency, and in fact, we 

are consuming less electricity now than we did a couple of years 

ago. 

If the country was aggressive in terms of energy efficiency, how 

many jobs do you guess that we can create over a period of years? 

Mr. REICHER. Well, Senator, first, Vermont has an exemplary 

record when it comes to energy efficiency improvements. It is a 

good race that Vermont has with California, frankly, so I applaud 

all that you are doing there and know some about what is going 

on. 

In terms of job creation, another point that was not made today 

is that among the highest producing areas of energy in terms of job 

creation is, in fact, energy efficiency. You know, going in and retrofitting a home is real, real jobs, doing all the sorts of things to improve energy use in a commercial building or in a factory. Those 

are real labor intensive jobs. They are good jobs. They are jobs that 

the unions like. They are jobs that electricians and plumbers and 

builders really love. 

So, the job creation potential in energy efficiency is extraordinary. We are talking hundreds of thousands. We are talking potentially millions of jobs. Just look at the low income weatherization program. The billions we are now going to be spending there 

over the next couple of years. Major, major job creation in areas of 

the country that desperately need it. 

Senator SANDERS. Let me ask you this. Do you believe that this 

committee should require that allocations for electric utilities go at 

least, in part, to energy efficiency, just like allocations for natural 

gas? 

Mr. REICHER. I do think that would be a wise improvement to 

the pending bill. 

Senator SANDERS. OK. Let me ask Kate Gordon a question. And 

Mr. Mayor, you can jump in on this as well. 

We spend, depending on the year, hundreds of billions of dollars 

a year importing oil from Saudi Arabia and other foreign countries. 

If, over a period of time, we invested those hundreds of billions of 

dollars in energy efficiency and sustainable energy in this country, 
244 

wind, solar, geothermal, biomass and other technologies, in energy 

efficiency in mass transportation, do you have a guess as to how 

many kinds of jobs we could create? 

Ms. GORDON. It is a tough question. We do know that jobs in 

transit, our transit investments create about nine times the number of jobs as similar investments, in new highways, for instance. 

And I think it is a critical point that we cannot just talk about the 

current amount that we spend on existing technologies. We have 

to talk about reducing how much we use technologies and moving 

to new technologies. 

Massive investments in energy efficiency create jobs and bring 

bills down. Major investments in transit systems and in clean vehicle manufacturing, as are in this bill, bring driving times down, 

bring vehicle miles traveled down, make those miles more efficient, 

that has an impact on consumer costs just as great, if not more, 

than the amount that we spend on the technology. 

Senator SANDERS. Mr. Mayor, let me ask you this. I mean, I 

think in Vermont, and I am sure in Philadelphia, most people do 

not think it makes a lot of sense every year to be spending hundreds of billions of dollars making the sheiks in Saudi Arabia a little bit richer. What do you think about that? 

[Laughter.] 

Senator SANDERS. I know that is a tough question. But you can 

go on the record here. 

Senator BOXER. I hope that your team gets as many soft balls tonight. 

[Laughter.] 

Mr. NUTTER. All right, Senator. Thank you. We are looking forward to it. 

Senator Sanders, first let me say thank you very much for the 

question and also your leadership with regard to the EECBG, and 

of course your previous service as a Mayor in Burlington. 

The fact of the matter is, as a Mayor, I try to do my best to stay 

pretty focused on the narrow area of domestic policy. I do not get 

engaged in many conversations about what might be going on in 

Saudi Arabia. 

But what I can tell you is that the city of Philadelphia owns 450 

buildings and facilities. We want to retrofit every one of them. That 

is a job that cannot be outsourced somewhere else. You have to do 

that work right in our city. We are seeking to reduce our energy 

costs just for the city of Philadelphia by 30 percent through our 

Green Works Philadelphia Plan by 2015. That is real money. 

Senator SANDERS. A 30 percent reduction? 

Mr. NUTTER. A 30 percent reduction in our own city energy costs 

by retrofitting our buildings, making them smarter, more energy 

efficient and taking other steps. All of that work would have to be 

done in Philadelphia. Those are jobs right here in our city. 

So, there will be thousands of jobs created through the green 

economy, whether it is by the work that we do. Earlier, in my testimony, I do not remember if you were sitting there or not, Philadelphia is a city of mostly row homes. We have 400,00 houses that 

pretty much have flat roofs or can certainly take solar panels, 

green roofs, white roofs, the Dow Chemical Company, which just 
245 

took over Roman Haus, has materials that can be used for that application, those are all jobs in the city. 

Senator SANDERS. Great. Thank you very much, Mr. Mayor. 

Senator BOXER. I just want to say to the panel, to all of the panelists, from the majority witnesses to the minority witnesses, we 

greatly appreciate your time. You have been terrific, every single 

one of you and really helping us as we move this bill forward. 

Thank you very, very much. 

So, we are going to go right to the next panel. I promised Senator 

Klobuchar. I just want to make sure everybody knows, if you get 

any questions from the committee, we need them at the end of 

close of business today, the answers. I do not expect you will. I 

have not heard of any. Do you have any? OK, there will be some 

questions. They have to be in tonight. 

I am going to ask folks if they could depart because we have an 

extremely distinguished panel waiting to come in, Hon. John Warner, Kathleen Hicks, Vice Admiral Dennis McGinn, Major General 

Robert Scales, Drew Sloan, Lieutenant Colonel James Carafano. 

Ladies and gentlemen of our next panel, we thank you so very 

much for your patience. I do have some good news for you. There 

will be no opening statements by Senators on this panel, so we are 

going to get right to the testimony. We are greatly honored by your 

service to country, by your presence here today, and for your willingness to help us tackle this very important issue. 

Just for the rules, we are going to start with our esteemed Senator John Warner. And we are going to go straight down the panel. 

If you can keep your remarks to about 5 minutes, we would appreciate it. I am not going to cut you off if you go 30 seconds over, 

but then I will start tapping this little gavel only because we have 

two more panels today to hear from, and we want to get all of you 

in. 

So, we will begin with someone who needs no introduction. I was 

mentioning, Senator, that I personally really missed you from this 

committed, and everyone has kind of agreed. But I was out there 

wishing you were sitting here once again. 

Senator INHOFE. Let me echo her remarks, Senator Warner. We 

do miss you. And of course, he and I were on two committees together so we spent a lot of time together. 

Senator BOXER. I know. Well, Senator Inhofe and I are in agreement on this, at least. 

[Laughter.] 

Senator BOXER. So, Senator Warner, please proceed. 

STATEMENT OF HON. JOHN WARNER, 

U.S. SENATOR (RETIRED) 

Senator WARNER. Well, thank you very much, Madam Chairman, 

and my long-time friend, Jim Inhofe. I can remember campaigning 

for you when you first ran for the Senate in your wonderful State. 

And other friends around this table. 

I will tell you, when I look back, I spent half of my adult professional life in this U.S. Senate. And I hope that, when your time 

comes, that you feel as I do. It was worth every day of it. I miss 

it daily, but life, as Thomas Jefferson said, you have got to step off 
246 

the path of public life and let those following behind take over. And 

that I do. 

But I commend you on the hearing today. Seriously, I have been 

involved in this for some time. This was a good hearing. I mean 

good, constructive exchange of viewpoints and tough questions. And 

that is what is most severely needed. 

So, unless you wish to give me the oath of office—— 

Senator BOXER. No, just please proceed. 

Senator WARNER. But under the Ethics Law, I am permitted to 

accept your invitation which I do, most respectfully, to join you 

today. I shall be very brief. Hit that gavel at 5 and I will stop instantly. 

I thought long and hard about what I might add today other 

than contribute my written statement. So, I just thought I would 

say what I have done since I last appeared before you. 

First, I want to say how privileged I am to be with this distinguished panel. I cannot see all the way to the end. 

[Laughter.] 

Senator WARNER. I have appeared with many of them before on 

other panels and particularly my friend Vice Admiral McGinn here. 

Senator Inhofe, here is a top gun, and let me tell you, he has an 

extraordinary career in aviation like yours. And we fly by the seat 

of our pants. We have been to what, eight or nine States together, 

basically to carry forward, and listen to the people out there. It has 

been fascinating. 

I would say that the American public has a high level of interest 

in this subject. And they are anxious to learn. And that puts upon 

those of us in our respective positions the obligation to help them 

learn so that they can formulate their own opinions and be a constructive part of the dialogue on this issue which is, in every respect, as complicated and as tough and as challenging as the 

health care issues before this august Congress today. 

So, I have had that privilege to travel to the States. My basic 

message is the linkage between our climate global considerations, 

the desire for our country, and many, to try and seek higher efficiency use of their energy, new renewable sources, and the whole 

galaxy of issues that are coupled with energy. And last, how all 

that is tied in to our national security. 

And members of our panel today, I am going to yield the floor 

to them because I have covered the subject with the committee, 

and I have some of it in my statement. But I think this is a chance 

for them to give a new perspective on it, and I am anxious to hear 

their testimony. 

Very quickly, the Pew Foundation, which I basically work for, 

and the Center for Naval Analysis, which Admiral McGinn and I 

work on, had the concept that there is an awful lot of discussion 

going on in Washington, but we need to go out and listen a little 

bit and perhaps share with those in the States what we know 

about it back here and learn from them what they think they know 

about it and what they want to know in greater detail. And that 

we have done. 

Then I want to commend the departments and agencies of the 

Federal Government under the leadership of the President and others. Madam Chairman and members of the committee, they are 
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moving out. And you will hear a most impressive story about the 

Department of Defense. As you may recall, when our mutual 

friend, now Secretary of State Clinton, was on this committee, the 

two of us teamed up and on the Armed Services Committee put in 

the legislation requiring the Department of Defense to begin to 

work in their out year quadrennial 4-year projections of what the 

roles and missions might be of the men and women of the Armed 

Forces. 

The bottom line is, that when we talk about national security, 

our thoughts are with them because when the President, as Commander in Chief, issues the order to go, be it a humanitarian situation like the tsunami or the fragile collapse of Somalia years ago, 

they are the ones that have to drive the airplanes, fly them to 

ships, bringing forth the platforms that lift capability to try and 

bring a measure of relief in the humanitarian situations and a 

measure of stability in those where sovereign nations are collapsing. 

The intelligence community is doing a great deal of study on this. 

Admiral Blair, the Director of National Intelligence, recently said 

the intelligence community judges, and I repeat judges, it made a 

judgment, that global climate change will have an important implication on our U.S. security for the next 20 years. That is our top 

person in intelligence. 

The CIA has originated its own program. And I must say, I went 

out and visited—I have worked with the CIA for all of the many, 

many, many years I have been here and when I was in the Department of Defense. It is not a spy mission. It is simply utilizing their 

vast array of collection devices to gather information, synthesize it, 

and let it be made known for the general public use as well as the 

policymakers and the Government. And I commend them, particularly Director Panetta, who has put this into going. 

So, there is growing progress in our Government. Then there is 

growing progress in other nations of the world. I listened to the 

leakage issue, and that is a vital one. But at the same time we are 

confronting the leakage issue, we have got to be aware that nations 

are moving out and taking the positions which this country dominated for a number of years. For example, Japan is leading in batteries, Germany in photovoltaic cells, Korea in the components for 

nuclear power plants, Denmark the wind energy, and in China and 

India, pretty well across the board in all those things. 

Now, they are investing in trying to get the solutions that the 

United States and other nations will need when they finally confront the issue of climate change and decide what they are going 

to do. I just generically say they are the black boxes, they are the 

silver bullets to help decide how we do sequestration, how we do 

the plug-in systems, all of those things. 

They are out there putting that technology and putting the stock 

on their shelves. So, when the United States, and we will, as sure 

as I am sitting here, someday this country is going to move forward 

unifiedly, executive branch and legislative branch, and begin to 

temp our role in dealing with this. Those black boxes we will have 

to buy from the shelves in these nations. 

So, I will yield the floor. 

[The prepared statement of Senator Warner follows:] 
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Senator BOXER. Thank you, Senator, very much. 

Our next speaker is Kathleen Hicks, Deputy Under Secretary of 

Defense for Strategy, Plans, and Forces, United States Department 

of Defense. Thank you very much. 

STATEMENT OF KATHLEEN HICKS, DEPUTY UNDER SECRETARY OF DEFENSE FOR STRATEGY, PLANS, AND FORCES, 

U.S. DEPARTMENT OF DEFENSE 

Ms. HICKS. Thank you, Senator Boxer, members of the committee, ladies and gentlemen. It is an honor to appear before you 

today to testify on DOD’s views on how climate change relates to 

U.S. national security. 

As the Deputy Under Secretary of Defense for Strategy, Plans, 

and Forces, I am responsible for advising the Under Secretary of 

Defense for Policy and the Secretary of Defense on all matters pertaining to the development of U.S. national security and defense 

strategy, including the ongoing Quadrennial Defense Review to 

which Senator Warner referred. 

Let me begin by stating that DOD takes climate change seriously 

because of its significant implications for national security. Our 

strategic planning efforts look 20, 30, even 50 years into the future. 

We attempt to account for all factors that may affect how our military may be used and what capabilities we may need. 

Climate change is a stress that has the potential to cause a rise 

in global temperatures, a rise in sea levels, an increasing frequency 

in severity of weather events, among other manifestations. These 

stresses carry with them clear geopolitical implications. Displaced 

populations, contributing to border tension and increased conflict, 

damage to agriculture posing risk to food supplies, and an increased global demand for humanitarian and disaster relief operations place a potentially serious burden on the U.S. military and 

international forces. 

The effects of climate change are characterized by a degree of 

variability and uncertainty for a range of forecasting and modeling 

scenarios. Although specific climate change effects and outcomes 

cannot be predicted with accuracy or certainty, there are general 

trends in climate change that are reasonably expected to occur and 

that, out of prudence, we must account for in planning and conducting DOD activities. 

Even under the most modest predictions, climate change will aggravate existing trends of population growth, dense coastal settlement, resource scarcity, poor governance and environmental degradation. Absent significant forestalling of climate effects, DOD’s 

requirement to support civil authorities and contingency responses, 

both domestically and abroad, is likely to grow. 

DOD also recognizes the strong linkage between global energy 

consumption and climate change. We cannot address one without 

impacting the other, and both have operational and economic consequences. Our dependence on traditional nonrenewable fuel 

sources constitutes a liability for our forces worldwide. This necessitates that a sizable portion of our force structure is dedicated to 

just keeping gas tanks topped off, and that instead of spending 

money on our people and on developing new capabilities, we are 

buying and burning fuel to haul fuel. 
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In the more distant future, as hydrocarbons grow more scarce 

and world demand continues to grow, the competition for upstream 

sources also increases, carrying with it the potential for conflict. 

U.S. Joint Forces Command General James Mattis has spoken 

from his field command experience in Iraq of the need to unleash 

us from the tether of fuel. 

In mountainous underdeveloped terrain such as U.S. and allied 

forces face in Afghanistan, the need for fuel for everything from 

diesel generators to keep our modern war fighting systems up and 

running to the energy needed to power armored MRAF vehicles is 

a daunting logistical challenge and puts our soldiers, sailors, airmen and marines at greater risk as enemies target our logistics 

tail. 

If we could free ourselves from the tether of nonrenewable fuel 

sources, we could greatly improve our war fighting agility. Alternative sources of energy have significant add-on implications for 

stabilization and reconstruction activities as well where providing 

energy to the local populace has been a continued challenge. Failure to provide for basic population needs can undermine the legitimacy of U.S. assistance efforts and host nation governments. 

DOD is the single largest energy consumer in America. It accounts for nearly 1 percent of the Nation’s energy use and nearly 

80 percent of the Federal Government’s consumption. DOD’s energy use is roughly on par with Nigeria and Bangladesh, which 

have populations of 140 million and 150 million respectively. 

With military installations across America, operating bases 

throughout the world, and the significant requirement of combat 

forces, powering the military is both an immense task and an immediate problem that has a direct impact on our ability to fight 

wars today. 

As the largest consumer, we have a responsibility to be the 

smartest. DOD has long been a source of innovation for the United 

States. 

In conclusion, as climate sciences advance and new observations 

give us fresh insights, we will regularly reevaluate climate change 

risks and opportunities in order to develop policies and plans to 

manage its effect on DOD’s operating environment, missions and 

facilities. 

Managing the national security effects of climate change necessitates that we work collaboratively through a whole of government 

approach with both traditional allies and new partners. 

Thank you. 

[The prepared statement of Ms. Hicks follows:] 
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Senator BOXER. Thank you very much. 

Next, another majority witness, Vice Admiral Dennis McGinn, 

U.S. Navy retired and a member of the Center for Naval Analysis 

Advisory Board. 

Welcome. 

STATEMENT OF VICE ADMIRAL DENNIS MCGINN, U.S. NAVY 

(RETIRED); MEMBER, MILITARY ADVISORY BOARD, CENTER 

FOR NAVAL ANALYSIS 

Mr. MCGINN. Madam Chairman, Senator Inhofe and members of 

the committee, it is an honor for me to appear before you to talk 

about these critical national security subjects. I am here representing the CNA Military Advisory Board consisting of a dozen 

former Generals and Admirals representing all four services. 

Let me start by summarizing some of our key findings from the 

two reports which you mentioned earlier, Madam Chairman. 

First, our economic, energy, climate change and national security 

challenges are all inextricably linked. As Senator Warner said, you 

just cannot address one without taking into consideration the effects on the other. 

Our past pattern of energy use is responsible, in a very significant way, for our economic situation today, not just nationally but 

globally. We therefore must make a long range comprehensive view 

to develop effective national policies and make real and positive 

changes in the ways in which we power America. A business as 

usual approach, continued over-reliance on fossil fuels, or small incremental steps simply will not create the kind of future security 

and prosperity that the American people and our great Nation deserve. 

The time to act is now. And the time to act boldly is now. Without U.S. leadership and decisive action by our Nation, fierce global 

competition, instability and conflict over dwindling supplies of fossil fuels and increasing global warming will be a major part of the 

future strategic landscape. 

Moving expeditiously toward clean and sustainable energy 

choices to power America can lessen that danger, improve global, 

national and sub-national economic security, and help us to confront the serious challenge of global climate change and energy insecurity. 

If we do not address these challenges in a bold way and in a 

timely way fragile governments have great potential to become 

failed states and desperation and hopelessness will drive whole 

populations at a scale never seen before to be displaced. And this 

turmoil and power vacuum will create a fertile breeding ground 

around the world for extremism and the terrorism that surely follows. 

The United States military will be called to respond to these new 

threats from humanitarian assistance and disaster relief up to the 

higher potential for regional war. As Secretary Hicks has pointed 

out, the Pentagon has already started to prepare contingency for 

such scenarios and will focus on the issue in its 2010 Quadrennial 

Defense Review, as will the State Department in its Quadrennial 

Diplomacy and Development Review. 
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At the same time, increasing demand for, and dwindling supplies 

of, fossil fuels will add greatly to instability created by climate 

change in many of the very same places that are worst hit by climate change. America’s current energy posture constitutes a serious and urgent threat to our national security, militarily, diplomatically and economically. 

We need to carefully avoid the temptation to ignore these connections and take only small steps to address narrow issues. Large, 

interconnected security challenges require bold comprehensive solutions. We must recognize that we, as a Nation, are at a pivotal moment in history. Those who say that now is not the time to act fail 

to recognize the gravity and the urgency of our energy and climate 

change challenges. 

But they also, as was pointed out by the previous panel, fail to 

recognize the tremendous opportunity. There is a new multi-billion 

dollar revolution in clean technology around the world, and there 

is compelling evidence that clean energy policies are powerful economic drivers and energy efficiency, being the cleanest fuel that 

never need be mined, drilled or burned, and it represents a barely 

tapped resource that holds enormous power for all economies 

around the world. 

The same is true for a whole host of clean and sustainable energy choices. There is a general agreement that there may not be 

a silver bullet to meet our growing energy needs, but surely there 

is a lot of silver buckshot that can be used to constitute a viable 

portfolio of energy sources that are not reliant on greenhouse gas 

producing feed stocks or processes. 

Most importantly, America’s leadership and key partnerships 

around the world in addressing these truly global challenges will 

act as a powerful catalyst for international collaboration to better 

address a whole host of pressing issues. The United States has an 

opportunity and an obligation to lead. 

We can, as America has in the past, address the most pressing 

issues of our time. Through thoughtful dialogue, effective leadership and united action we can transform daunting challenge into 

sustained security and prosperity across the Nation and across the 

world. 

Thank you, Madam Chairman, and I look forward to your questions. 

[The prepared statement of Mr. McGinn follows:] 
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Senator BOXER. Thank you very much. 

And now we turn to a minority witness who is here, and we welcome you, Major General Robert H. Scales, retired. 

STATEMENT OF MAJOR GENERAL ROBERT H. SCALES, 

U.S. ARMY (RETIRED) 

Mr. SCALES. Thank you very much, Madam Chairperson. It is indeed an honor to address this hearing on the national security implications of the Clean Energy Jobs and American Power Act. 

Our intellectual and popular culture thrives on speculating about 

the horrific effects of mega-disasters. But the historical record 

strongly suggests that such devastating disasters rarely if ever result in large scale wars. In fact, more often than not, sadly, wars 

cause pandemics, starvation and societal dislocation rather than result from them. 

If the more popular climate change models are right, perhaps 

some time in the very distant future glacial fed rivers might dry 

up, sea levels might rise and areas of the planet might become 

more waterless. Some environmental scientists conclude that such 

a climatic crisis would precipitate human friction in the form of 

mass migration away from ocean fronts, river valleys and regions 

of the world that suffer from drought. 

The problem is that even if such disasters occur, they will not 

likely be a cause for serious wars, particularly a war between a 

major competitor and the United States. In fact, a brief turn 

through the historical record suggests that periods of great societal 

stress causing enormous suffering and dislocation reduce the likelihood of state versus state conflict. 

Mass misery caused by climatic and environmental disasters occurs so slowly that populations adjust through migration and societal atrophy. Such phenomena create social miasma that inhibits 

rather than fuels aggression. In a word, states about to collapse 

from the consequences of natural disasters are more concerned 

with survival than picking a fight with a global competitor. 

Wars that affect major nation-states will be precipitated in the 

future by the same factors that have ignited conflict for millennia. 

A far greater strategic threat, at least in the shorter term defined 

by the next 20 years, will come from a dramatically reduced access 

to raw and refined fossil fuels that likely be an unintended consequence of this bill. 

This argument rests on two premises. First, that fossil fuels will 

continue to power our war making capability for generations. And 

second, that this bill may reduce our ability to surge fossil fuel production should we face the threat of a large scale major war in the 

future. 

There is no scientific evidence that suggests that wars will be 

propelled and sustained by any power source other than fossil fuels 

in the future. Dominance in machine warfare on the land, sea and 

in the air requires fuels that generate the greatest combustion and 

heat from the smallest volume. Only fuels derived from petroleum 

will be capable of propelling aircraft, most ships and ground vehicles on and over battlefields where performance is measured by 

how efficiently fuels can be transferred into energy. 
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Industrial age machines must still be produced in large numbers 

to win against a large scale competitor. Ships, vehicles, guns and 

aircraft will continue to be made predominantly from steel, aluminum, rubber and titanium. And all of these machines and the 

material to support them must be transported to the theater of war 

and across and over the battlefield with fossil fueled engines. 

This bill might well over the decades slowly diminish the ability 

to produce fossil fuels in the strategic confines of American territory. According to one study, refining capacity could plummet because the cost of doing business would soar. Production at U.S. refineries would drop while production in countries that do not limit 

greenhouse emissions would rise. 

We have no assurance that off shore refining would take place 

in regions secure from foreign power influence. According to several 

studies, the United States would have to increase its petroleum imports by one-fifth by 2030 as our domestic production would plummet by as much as 25 percent. Should we suffer such consequences, 

the ability of the United States to surge its wartime energy production might well be held hostage to foreign influence. 

This bill would reduce American industrial capacity as the very 

industries essential for the production of war fighting material 

would move overseas. Recent studies suggest that this bill would 

result in a loss of industrial production of over 6 percent by 2030 

and a consequent loss of over half a million manufacturing jobs, 

many of those in the defense industry. 

Nothing in this bill will reduce the likelihood of American involvement in future wars, nor will it improve America’s war making capabilities. Indeed, over the decades, the consequences of this 

bill might well reduce American influence and retard our ability to 

deter and fight wars in the future. 

Thank you. 

[The prepared statement of Mr. Scales follows:] 
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Senator BOXER. Thank you very much. 

And now we go to a majority witness, and I am just going to take 

a minute to let everybody know who Drew Sloan is. 

Drew Sloan is pursuing a joint MBA and MPA from Harvard 

Business School and Harvard Kennedy School. He spent 5 years in 

the U.S. Army where he served in Afghanistan and Iraq. He was 

awarded two Bronze Stars and a Purple Heart. He graduated from 

the United States Military Academy at West Point in 2002. And we 

are just so honored to welcome you here today. Thank you. 

STATEMENT OF ANDREW SLOAN, CAPTAIN, U.S. ARMY 

(RETIRED); FELLOW, TRUMAN NATIONAL SECURITY PROJECT 

Mr. SLOAN. Thank you. 

Madam Chairwoman, Ranking Member Inhofe, members of the 

committee, ladies and gentlemen, it is my honor to be here with 

you today to discuss this very important issue of climate change 

and national security. 

I give the following testimony under the assumption that the 

world’s climate is changing, and the burning of fossil fuels and increased deforestation are the main drivers of that change. Furthermore, in the coming years, this change will lead to more severe and 

frequent precipitation events and prolonged periods of drought for 

many areas. These are environmental changes, but they will have 

human impacts, both here and abroad. 

The effects of climate change are the ambushers on the horizon. 

Our great military cannot take a hill that will stop temperatures 

from rising, or wage a counterinsurgency against a storm surge. An 

exquisitely coordinated bombing campaign cannot stop glaciers 

from melting nor can all the ships in our Navy prevent sea levels 

from rising. However, while the military cannot stop climate 

change, it will be the institution that will be forced to deal with it. 

As a former infantry officer with combat experience, I believe I 

have an appreciation for what I think our forces will face if we do 

not act decisively against climate change. Please allow me to 

present a potential climate change induced security threat. 

In Bangladesh, 10 percent of the country’s 155 million citizens 

live just 2 to 3 feet above sea level. Storm surges, magnified by rising sea levels, could very conceivably create a quasi-permanent 

state of flooding. This flooding of sea water would damage water 

sources and ruin crops. Water and food become increasingly scarce, 

and sanitation levels begin to plummet, opening the door for diseases such as malaria and cholera. 

People, potentially millions of people, will be forced to relocate 

but have no good options as to where to go. India, by this time, will 

have completed the wall that they are already building to keep the 

Bangladeshis out, so they will not be able to go there. The central 

government in Dhaka will potentially be overwhelmed by these 

events. 

With nowhere for people to go, refugee camps will be created, 

and a case for a humanitarian mission will be made. As if often the 

case, anger, bitterness and hopelessness will spread throughout 

these camps, and like the mosquitoes born in the stagnant water 

left after the floods, extremism will be born and spread as well. 
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In a relatively short span, climate change has turned the already 

poor nation of Bangladesh into a failed state, potentially destabilized an entire region, sparked a humanitarian crisis, and created 

a breeding ground for extremists. All of these conditions will necessitate a response from our national security apparatus. 

This conceivable situation is what I think of when I picture what 

General Anthony Zinni, former CENTCOM Commander, was referring to when he acknowledged that failing to reach our greenhouse 

gas emissions will force us to pay a price in military terms that 

will involve human lives and exact a human toll. This is the 

human face of climate change, and this is the national security 

threat. 

While the situation I described above is hypothetical, the threat 

and demands it would place on our military are not that abstract. 

In fact, in 2004, when a tsunami devastated large portions of Indonesia, it was the American military that responded. In 1992, America sent its military into Somalia to feed those forced into starvation by prolonged periods of drought. A military response is required largely because the military was, and remains, the only institution capable of such a response. 

While these actions of benevolence and generosity arguably depicted America at its best, they were not without cost. Operations 

in Indonesia cost an average of $5 million a day. When relief 

turned into peacekeeping in Somalia, 16 Army Rangers lost their 

lives. 

As a changing climate increases the severity of droughts in Africa and the intensity of storms in Asia, the demand for an American 

response will increase as well. Not only will this be costly in dollar 

and human terms, but it will also likely impede the military’s ability to adequately address the more conventional threats that are 

sure to arise. As climate change wreaks havoc across the world, so, 

too, will it wreak havoc on the military’s ability to properly handle 

the Nation’s national security interests. 

I stand here before you today as a former infantryman, as a 

graduate of West Point, as an educated citizen to unequivocally 

urge this body to chart a new path away from the climate change 

ambush, to pass legislation that meets the threat of climate change 

head on by stimulating our economy and our people through the 

creation of a clean, new energy system for America. 

America can and must do better. The security of our Nation depends upon it. 

Thank you, and I have also submitted a written statement. 

[The prepared statement of Mr. Sloan follows:] 
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Senator BOXER. Thank you so much, Mr. Sloan. 

Lieutenant Colonel James Jay Carafano. Is that correct? 

Carafano? 

Mr. CARAFANO. Yes, Madam. 

Senator BOXER. And you are a minority witness, and please proceed. 

STATEMENT OF LIEUTENANT COLONEL JAMES JAY 

CARAFANO, U.S. ARMY (RETIRED); DEPUTY DIRECTOR, THE 

KATHRYN AND SHELBY CULLOM DAVIS INSTITUTE FOR 

INTERNATIONAL STUDIES; AND DIRECTOR, DOUGLAS AND 

SARAH ALLISON CENTER FOR FOREIGN POLICY STUDIES, 

THE HERITAGE FOUNDATION 

Mr. CARAFANO. Thank you. I have just five points to make. 

First, you know, I would like to say how constructive and productive I think this hearing is and how excited I am to look forward 

to it. What I have heard here today really makes me optimistic because I really believe that both sides share common goals. And I 

think that is the most important thing, that both sides, everyone 

interested in this debate, is interested in keeping this country safe, 

free and prosperous. 

I also think that everyone shares a common goal that the United 

States would be a good steward of our global environment. So, I 

find that encouraging and productive and a good basis for moving 

forward. 

The second reason why I think this hearing is amazingly important is because it does state in the Preamble of the Constitution 

that providing for the common defense is the fundamental obligation of Government, and I think it would be irresponsible to consider any major piece of legislation that is going to impact on such 

a vast swath of our economy and really drive our future and not 

think about and ponder the national security implications of what 

is being done. 

That leads me to my third point, which is my perspective for answering your questions in the way I have. And it really combines 

some three things. The first is my 25 years of military service, a 

lot of which was spent dealing with strategy and policy issues. But 

I had a concomitant career that went along with that, much like 

General Scales, which is as a historian, and much of my historical 

work has been not just on military history but really looking at 

where the lines of military history and science and culture and 

public policy, economic and business, intersect, which I think is relevant particularly to this issue. 

And the third is, as a professor who researches a lot of what is 

euphemistically called now wicked problems, which is complex public policy problems and deciding how do you find the right way to 

look at the right problem to get to the right answer. 

And this leads me to my fourth point, and here is my concern. 

My concern is that making the case for any major piece of legislation based on a conclusion of its long-term impact on either the environment or energy production is incredibly problematic. I make 

that statement because in order to draw those kinds of conclusions 

you have to construct a complex system, and a system which in the 

end is so complex that I think it is incredibly unrealistic to think 
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that you can actually draw anything other than merely subjective 

conclusions about how the future is going to unfold. 

I just might illustrate that with an example. Many of you have 

probably heard of or read Jared Diamond’s absolutely terrific book 

called Collapse, in which he does a terrific job talking about historically why societies, some societies, fade from the scene. Well, Diamond lists 12 variables alone that impact on how human environment interactions work out. 

And he reaches those conclusions and analysis based on really 

drawing over a century of history and archeology. And he is looking 

backward with hindsight. He is not looking forward to where, and 

you see as the case studies unfold, human decisions and environmental change constantly change the nature of the problem every 

day. 

So, what my argument is is arguing from a complex systems approach that we can predict how the environment, human decisions 

and conflict and violence and humanitarian needs will work out 

over the long term is simply incredibly unrealistic, and using that 

as an argument either for or against this bill I just think is incredibly inappropriate. 

This leads to my fifth and last point, which is what my recommendation would be. My recommendation would be to focus on 

the traditional short-term methods of cost-benefit analysis to determine the impact of this legislation and it would have on national 

security. 

So, I think there are realistic issues to address as if our economy 

does decline, that will impact on our ability to fund defense and defend ourselves. And if our economy does decline and that impacts 

on the global economy in general, well that is much more likely to 

create situations of humanitarian concern and spiraling violence. 

And so I think that has to be weighed against what benefits in the 

short term you would actually gain from this legislation. 

So I would urge you to make that the focus on your deliberations. 

What are the costs and benefits in the short terms of this legislation rather than ruminating on what are the long-term implications 30, 40, 50 years down the road to either our ability to ensure 

our national security or to ensure the readiness and the cleanness 

of energy and be a good steward of our planet. 

Thank you. 

[The prepared statement of Mr. Carafano follows:] 
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Senator BOXER. Thank you. 

I think I will pick up on that point. The message is you cannot 

predict the future so do not pass complex legislation. I mean, that 

is kind of what you are saying. And I just want to say, if we had 

that attitude, we would not have passed the Clean Air Act, the 

Safe Drinking Water Act, the Endangered Species Act. We would 

not have passed a lot of things, even the National Highway System. I mean, that was shocking when Ike proposed it. 

So, I just do not think that is quite the way I would approach 

legislation. I think the important point you are making is, of 

course, we cannot predict exactly what will happen. But we should 

be conservative here. We should look at what the experts are telling us, which is going to mean I am going to turn to Vice Admiral 

McGinn. 

The Major General and Vice Admiral were just completely on opposite sides, and both of you are very, very clear. So I want to say, 

from my point of view, obviously, I think I know Vice Admiral 

McGinn’s work on this. The point that Major General was making 

is that, and I wrote down the notes here, is that there is literally 

little chance that any of the impacts of climate change would involve a big war between the great powers. I mean, that is what he 

said. He is shaking his head, so I did get that right. 

But is it not true, Vice Admiral, that right now what we seem 

to be facing more than that fear is instability, terrorism, the kinds 

of things that Mr. Sloan talked about? The dangers that we are facing right now in two wars where our young people like Mr. Sloan, 

you know, are giving so much and gave so much, did not have to 

do with two great powers, they had to do with terrorism and instability. 

And is it not true that that threat is exactly what we are worried 

about here, not the clash between two nations who need oil? You 

know, I just hope you would expand on that. 

Mr. MCGINN. When I was in the Pentagon 50 yards from the 

American Airlines flight that hit on September 11th, I was not concerned about it being a great power war. There was no mistake in 

my mind we were at war. We had come to that conclusion, and I 

had convened my inner circle as the Deputy Chief of Naval Operations for Warfare requirements after the first airplane on a clear 

September day hit the first tower in New York. 

It is about instability. It is about threats to America’s well-being, 

not just measured by the things that happen inside our borders, 

but how the things that happen inside our border can be influenced 

by places far away that have an increased level of instability. 

I would also point out that while I think the adage is those who 

ignore the lessons of history are doomed to repeat them, that is an 

argument that can cut both ways in this debate. And if General 

Scales and I were sitting here 100 years ago as uniformed members 

of our respective services, he would be arguing against this damned 

infernal combustion engine taking out the cavalry and the horses 

have been really agile and they are good. I would be arguing 

against putting those damn boilers on perfectly good sailing ships. 

So this idea of change and predictability goes back in our history. 

The thing that is different today is that we have never before on 

this planet had close to 7 billion people, which we will have in 
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2011. We have never had the unprecedented level of per capita use 

multiplied by that 7 billion people. We have never had information 

technology that gives us an ability to understand what is going on 

to a much greater level, not with certainty, but to a much greater 

level that we ever have in the past. 

And we have a whole host of indicators, warnings and trends 

that tell us climate change is bad for national security. 

Senator BOXER. I want to ask Kathleen Hicks this question. 

Again, when Major General Scales was talking about the fear that 

he had that we would not have enough oil and all the rest, is it 

not true that our greatest vulnerability in the energy sphere, and 

I would again quote Vice Admiral McGinn, and I wrote it down, he 

said our current energy posture is a national security threat if all 

those, our current energy posture is a national security threat. 

Are we not stronger when, for example, America steps out and 

takes the lead in making jet fuel out of algae, and we do not have 

to go the sheiks and we do not have to spend $1 billion a day? I 

mean, is that not what you are looking at, the ability to not be dependent on folks who do not like us? 

Ms. HICKS. Senator, I think that really is the crux of the debate 

here. I think, as Jim Carafano pointed out, everyone is beginning 

from the same premise of wanting to secure the Nation. What I 

hear as the fundamental divide is whether or not to embrace 

change, whether or not lead and adapt, or have that fear of not 

being able to succeed in doing so. 

So, what we are not talking about, really, is the opportunity cost 

of doing nothing and that opportunity cost is, as you suggest, Senator, that we are tied down by fuel, that fuel is a real day-to-day 

today, not a future concern only, a today concern for our forces in 

the field who are tethered to that fossil fuel tail. 

Can we change that overnight? No. But if we do not stop working 

on solutions, we will never get to a different future. We will never 

shape that future for ourselves. 

Senator BOXER. Thank you very much. 

Senator Inhofe. 

Senator INHOFE. Well, Ms. Hicks, I just really appreciate that 

last statement that you made, that this is something that is not 

here now, it is not available at this time, and can we look into the 

future and say yes, this would be nice when we get to the point 

that we have all of these things. 

To me, I agree with the Chairman, that is the crux of the problem, when we have just this week, well, first of all, let me just stipulate to what the EPA Director said when I asked the question, in 

the event we pass legislation like this for the United States, is this 

going to have a reduction in overall emissions? And the answer is 

no. I think logically we all know that so let us keep that in mind. 

But when we have a report that just came out by CRS that says 

America’s combined recoverable natural gas, oil and coal reserves 

is the largest on earth, but the problem is that 83 percent of it we 

cannot get to. So let me just ask you a question, Admiral McGinn. 

Would you not agree that, do not look way down in the future, let 

us look at tomorrow, let us look at today, we need to have the 

availability of fossil fuels. Now, is that not true, do you not agree 

to stipulate to that? 
314 

Mr. MCGINN. Senator, I agree, and I would say that the age of 

fossil fuel has been very, very good to the United States of America 

starting back with Colonel Drake in 1854 in Pennsylvania discovering this oil. It has been very good. And we are not going to transition off it overnight. 

Senator INHOFE. OK, then—— 

Mr. MCGINN. But it is just that we need to start, and we need 

to start in significant ways, not small incremental steps. 

Senator INHOFE. Well, let me ask you real quick. These have to 

be short answers because I am operating under this short timeframe. When the statement that you made, General Scales, that 

there is no scientific evidence to suggest that wars would be propelled and sustained by any power other than fossil fuels, I know 

you are talking about now and in the near future. Colonel 

Carafano, do you agree with that statement? 

Mr. CARAFANO. You know, I went to Bob, because he is a historian. But my point would be that, in the short term, is that you 

have to look at what is the competitiveness structure of the United 

States. And so, my concern is that when you start take away jobs 

and economic growth, this is the single most important fuel to the 

defense industrial base. 

And that limits your ability, more than anything else, to respond, 

and that stair steps down. As the United States is a lesser and less 

capable power, that increases instability. So, it is overall the climate and the economy in the short term which I think creates the 

kind of world that we are trying to avoid here. 

Senator INHOFE. Yes, I understand that. You wanted to say 

something, General Scales? 

Mr. SCALES. Yes, sir. Two quick points. If Dennis and I were to 

have a conversation 100 years ago over cavalry versus coal powered 

ships, we would at least have been able to discuss the looming 

probability that oil-fired burners were just around the corner, that 

by 1918 or 1919, the great navies of the world had already started 

to convert from coal. 

Senator INHOFE. OK—— 

Mr. SCALES. My point is this, Senator. I do not see any evidence 

right now, within the next 20 of 30 years, that some other form of 

fuel will propel our war making machinery. And my concern is that 

if we reduce our availability of refined petroleum products over the 

next 20 or 30 years, that might reduce our ability to go to war. It 

is just that simple. 

Senator INHOFE. Yes, and I agree with that. And I will not ask 

for a response, Admiral McGinn, because my time is expiring pretty fast here. 

The only thing I want to get to here, and I think it is very important for every member of the panel to recognize, at least publicly 

recognize the fact that we have to have fossil fuels today to fight 

wars. This is a national security issue. And when we have, we have 

the largest reserves in the world. And yet, politically, we cannot develop 83 percent of it. 

Would you not agree that we need to, if you really feel sincere 

about not depending upon foreign countries, our enemies, perhaps 

depending on them for our ability to fight a war, should we not develop our own resources? What do you think, Colonel? 
315 

Mr. CARAFANO. Yes, sir. 

Senator INHOFE. Is there anyone who would disagree that we 

need to develop our own resources? 

Mr. MCGINN. We do need to develop our own resources. But we 

need to recognize that there is an opportunity cost. If we place too 

much of our time and effort and resources into the continuation of 

our track record of fossil fuel, there is a tremendous opportunity 

cost for not doing other things that are going to have much, much 

better returns in jobs in the near term and in national security and 

prosperity in the long term. 

Senator INHOFE. We are talking about fighting a war today, General Scales. You have got to have fossil fuels to do it. Right now, 

we have fossil fuels, but we are importing fossil fuels from countries that could cut us off. There is a risk there. And when are 

looking at our opportunity to develop fossil fuels without, not at the 

expense of anything else, wind or anything else, but to develop 

them because we have these reserves, can you think of any reason 

not to do it? 

Mr. SCALES. I cannot, Senator. But I would also agree with Dennis, that we need to push the limits of science, we need to find different fuels, we need to find alternative sources, we need to conserve. All of that is absolutely essential for national security. I am 

worried about the next 20 years when, whether we are fighting a 

war against a major power or a failed state is attempting to attack 

us, at the end of the day, we still have to fuel the machines and 

right now, the only alternative is fossil fuels. 

Senator INHOFE. And Senator Warner, do you not think we 

should develop our own resources? 

Senator WARNER. Absolutely. And if I might interject, there has 

been a lot of discussion here this morning about nuclear power. I 

was privileged to be a party of a navy where we had over 100 platforms operating safely as they have been throughout almost the entire history of the Naval Reactor Program. We ought to draw on 

that technology, as the Senator from Tennessee said and put together a strong package as a part of any legislation to help the nuclear industry come back again to the strength it once was in this 

country. 

And it seems to me you have to package that, also, with greater 

access to this 80 percent. And when you get down to legislating, 

colleagues, you know it is those types of packages that will balance 

off the cap and trade which is so intensely felt on part of this hearing room as well as the energy sources of nuclear and drilling on 

the other side. And it is that type of package you have got to put 

together, Madam Chairman, to get this bill through. 

You are at a fork in the road right now as to whether or not Congress is going to lay down the road map for this country, or we are 

going to just rely on the executive branch and the inherent power 

of the agencies and the departments. 

Senator BOXER. Exactly. I am going to put into the record, without objection, the study that was just done by U.C. Berkeley, University of Illinois and Yale University about job growth, because 

the Lieutenant Colonel talks about the instability of losing, but 

there is job growth associated with this. Some studies say 2 million 

jobs, some say more, some say 1 million jobs. I think it is very key. 
316 

And I just have to again say our reliance on foreign oil is what 

Vice Admiral McGinn, Senator John Warner and others are concerned about. The current energy posture of America is a national 

security threat now. Not even 20 years later. Now. And I think we 

have a young man who had his boots on the ground, and I think 

he has very strong views about that. 

Senator Cardin. 

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Senator CARDIN. Thank you, Madam Chair. And let me really 

thank this entire panel not only for your testimony today but for 

your service to our country. We very much appreciate everything 

that you have done. I think this panel has been extremely helpful 

to us in dealing with this subject. 

And it is always an honor to have Senator Warner with us. 

There was no greater champion of national security here in the 

U.S. Senate, and I consider myself fortunate to have served with 

Senator Warner in the U.S. Senate. So, it is a pleasure to have you 

back before our committee. 

I think the point that Senator Warner raised, the point that our 

Chairperson raised, about national security on our energy sources 

here, we can do everything that we can to deal with oil, we just 

do not have enough of it. I have joined with Senator Alexander in 

saying that we have to do a better job with nuclear. We need the 

whole package for the sake of our national security, including the 

much stronger emphasis on alternative and renewable energy 

sources and better conservation. 

So, Senator Warner has brought to our attention many times the 

direct threat that our energy policies pose to our national security, 

including climate change and sea level increases and the effect that 

it will have on our military facilities. 

One thing to me is somewhat shocking is the significant increase 

in expenditures by our military on energy. It has gone up 500 percent over the last 9 years. And that is just funding countries that 

are our most challenging are far as our military is concerned. So, 

it is counterproductive to our own national security, and we have 

to do a much better job with the energy policy. 

I want to take advantage of this panel, if I might, on an area 

that has not gotten as much attention, and that deals with the fact 

that we do allocate in this bill for preventing international deforestation and allowances for international adaptation, which some 

say, well, gee, is that not just humanitarian aid by America? I see 

that as part of our energy strategies and our international strategies, and it very much has a national security focus. 

I want give it first to Admiral McGinn, if you would. How important is it for the United States to speak about the financing of global climate change issues and adaptation and deforestation funds as 

we go toward an international agreement, we hope, in Copenhagen, 

but as we work with other countries? How important is it for the 

United States to show leadership on the financing of these issues? 

Mr. MCGINN. I think it is very important, Senator. I mean, there 

are some that over 50 years ago would have said that the Marshall 

Plan was primarily a humanitarian relief program. But in fact, it 

was at the core of creating a new world order and creating a much 

more secure place for the United States and for Europe. 

In terms of this new challenge, there are so many good things 

that come from investment of time and effort by the military, by 

the whole intergovernmental process, in resources, in technical assistance, that can create relationships with nations and with the 

militaries that can really help to make a difference to mitigate and 

to adapt to the potential effects of climate change. So, I think it is 

a very, very important part of our strategy going forward for our 

defense and national security strategy. 
329 

Senator CARDIN. Thank you. Senator Warner, you have negotiated with a lot of our friends around the world, and you know 

how much they look to the United States as far as leadership on 

issues. As far as helping to finance the consequences of global climate change internationally, how do you see the United States as 

far as leadership is concerned? 

Senator WARNER. Well, I think the United States should be a 

leader. But we have got to be mindful that we are in very competitive world, and so many of our principal competitors, as was clearly 

brought out in this excellent dialogue today, do not follow the 

framework of laws and human consideration in this country. 

So, we have got to strike a balance. We would not want to put 

forward legislation that is going to put us at a disadvantage in this 

competitive world. So, you were right when you raised the point 

Copenhagen is the forum. Maybe not this sessions coming up in 

December, but there will be a subsequent, and a subsequent, and 

that issue has got to be agreed upon by all nations for a fair playing field. 

Senator CARDIN. You know, that is an extremely important point. 

Even if we have the most successful outcome from Copenhagen 

that many of us hope for, that we establish targets and a mechanism to achieve those targets, and we have the financing and enforcement, it is the beginning. It is not the end of this process. 

There is a lot more work that is going to have to be done in all 

of our countries, including, after we pass this bill, we still have a 

lot more work to be done. 

Thank you, Mr. Chairman. 

Senator LAUTENBERG [presiding]. As acting chairman, I know 

that Senator Alexander is next. 

Senator ALEXANDER. Thanks. Thanks, Senator Lautenberg, 

thanks very much. 

I want to thank the witnesses for being here, and I want to take 

particular advantage of Senator Warner being here and try to rely 

on his experience, both as a legislator and his military experience. 

And Admiral, you may have something to add here, too. 

I would like to look at the next 20 years. As I think Senator Warner knows, I agree with him that climate change is real, that humans are causing it. My problem is with the solution. I think the 

economy-wide cap and trade has some real disadvantages. 

One, it does not work with fuel. It raises the price of fuel, but 

it does not reduce much carbon. We have had plenty of testimony 

on that, and that is 30 percent of carbon. Something else has to 

deal with fuel. 

Second, it is a problem with manufacturing, which is under 

stress anyway, because it is going to raise the costs in manufacturing, and manufacturing may, probably will, go overseas looking 

for cheap energy. And that is a problem for us. 

And three, it deliberately raises the price of energy when our 

goal for ourselves and for the world, in my view, ought to be cheap 

energy so we can have a prosperous economy and so we can relieve 

hardship for poor people. 

So, I have suggested a different way for the next 20 years, which 

I believe is simpler and will work, which does not include a na-
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tional energy tax, and I believe there is broad bipartisan agreement 

for it. 

No. 1, build 100 nuclear plants in 20 years. No. 2, electrify half 

the cars and trucks in 20 years. And No. 3, four mini-Manhattan 

Projects of the kind the six would talk about to make solar costs 

competitive, to find ways to recapture for coal plants, to make electric batteries that will take our cars 400 miles instead of 100 miles, 

and to find ways to recycle used nuclear waste in a way that does 

not isolate plutonium. 

By my computations, if we did that, at the end of 20 years we 

would be producing about 40 percent of our electricity from carbonfree nuclear, we would be producing maybe 5 or 10 percent from 

solar and wind and other forms like that, about 10 percent from 

hydroelectric, about 25 percent from natural gas, and we would actually reach the Kyoto goals for 2030 without a national energy 

tax. 

But my problem is, and this is my question for you, every time 

we have a panel here, we talk about wind, which is 1 and 1.5 percent of our electricity, we talk about solar, which is promising but 

negligible. Even in Germany, where they are head over heels for 

solar, it is 1 percent of their electricity. We talk about biomass, 

which scientists are reminding us, if you haul hundreds of trucks, 

I mean, just to create the equal of one nuclear plant in electricity, 

you would have to continuously forest an area 1.5 times the size 

of the Great Smoky Mountain National Park with hundreds of 

trucks today. So, all of those things are a long way away. 

Yet we have China with 132 nuclear reactors. We have Japan, 

two a year, Russia, two a year, other countries moving ahead of us. 

And we have not built one in 30 years. 

So, if you were again the Secretary of the Navy, and we were 

going to war, and we had created a nuclear navy 60 years ago, and 

it was doing exactly what we wanted, and we had had thousands 

of sailors living on top of reactors safely for 60 years, would we 

stop building nuclear ships and start subsidizing sailboats? 

I mean, why is that panel after panel never mentions nuclear 

power except reluctantly when we invented it, it is available, and 

we know we can build 100 plants in 20 years with Presidential 

leadership? 

Senator WARNER. Well, Senator, you have no stronger proponent 

of urging the Congress and the country to accept the reality that 

we have to move to a vastly expanded base of our energy from nuclear power. It is the zero emitter of greenhouse gases, as you well 

know. 

But let us come back to it. I think we agree on that. But you 

raise a larger question. How much can we do in terms of legislation 

now, and how much must we do in subsequent years? 

I think this very complicated subject is not unlike building a 

great cathedral. You are going to lay a foundation, hopefully in this 

session of Congress, and in the next maybe begin to build on it 

slowly. Because it is an enormous educational process that has to 

be undertaken with the Nation’s public, which inherently believe 

they want cleaner air and cleaner fuel and this and this and this, 

all of which is part of this evolution of energy and climate change. 
331 

But let us look at the means by which we can find, in this session of Congress, a package of steps, good, forward looking steps, 

one being nuclear on which we can agree, and put them together, 

and then recognize what we have to do in the ensuing years. 

It is going to be like building that cathedral, and frankly, I will 

not be around when the final capstone is put on that cathedral. But 

that is the way great edifices and great things are achieved. I know 

the Chairman feels very strongly about trying to put forward some 

legislation. I just hope that you can package together that which 

you can agree on. 

But let me make one thing clear. It has to be bipartisan. It really 

does. It has to be a concurrence of all of us reflecting the views of 

our diverse citizenships, the needs, and in this complex world of 

competition, we have got to remain strong. 

It is easy for me to sit here and not having to vote as do you, 

but I am most respectful for what you are trying to do in this committee and in other committees, and I think you can achieve some 

milestone in this Congress. I hope you succeed. 

Senator BOXER [presiding]. Well, the plan is that we get our bill 

out, and it gets married up with other bills. And Senator Kerry is 

working with Senator Lindsey Graham now, which is really very 

encouraging, to try and get to that sweet spot that you described. 

That is what we are trying to do. 

Now, next on my list, I will go through, Specter is not here, 

Klobuchar, so it would go to Senator Whitehouse next. 

Senator WHITEHOUSE. Thank you, Chairman. 

First, let me extend a particular welcome to Senator Warner. I 

could not be happier that he is back. It was a pleasure working 

with him during the time that we overlapped, and he represents, 

represented, both represents and represented, I think, our institution at its very, very best. So it gives us honor that you are back 

here, and it gives me great personal pleasure that you are here. 

Thank you for the many kindnesses that you showed me as a new 

Senator finding my way around this place. You reached across the 

aisle and were extraordinarily generous and I appreciate that. 

Senator WARNER. Well, I thank you Senator. And do not forget 

what I told you one day in private. Look at your future. 

Senator WHITEHOUSE. Why do we not leave it private? That 

would be embarrassing. 

[Laughter.] 

Senator WHITEHOUSE. Admiral McGinn, I want to clarify a point 

because some of the comments, I think, might leave the suggestion 

that it is our intention that we turn our naval forces, for instance, 

to sail power or to turn away from fueling battleships with whatever the best fuel is for their tactical purposes. 

As I understand it, this bill does nothing to interfere with the 

military’s selection of the appropriate—the most appropriate fuel, 

to carry out its mission. The focus of this particular panel, as I understand it, is that the missions that our military will have to address will be more dangerous, more frequent, more widespread, if 

we cannot control our climate and if we cannot control our role in 

intoxicating our atmosphere with carbon pollution. 

And the means that we go about doing that, as I understand it, 

is to put a price on the pollution that, and it is just major polluters, 
332 

that the major polluters have been getting away with for free for 

years. And by putting a price on it, you allow the market to adapt 

to the real cost of their product, as opposed to that implicit subsidy 

that they have been enjoying. 

But nothing about this says that an aircraft carrier has to put 

up sails and can only go in the wind. If it is running on a nuclear 

plant, if it is running on bunker fuel, whatever it is running on, 

as I understand it, is not affected by this legislation. Is that correct? 

Mr. MCGINN. As I understand it, it is not. You are right, Senator. 

I would commend to the committee’s study a speech that was given 

on the 14th of October this year by the present Secretary of the 

Navy, Secretary Mabus, in which he outlined some very bold and 

far reaching measures that the Department of the Navy, both the 

Navy and the Marine Corps, were undertaking to lower the carbon 

boot print, if you will, to increase the portfolio of energy choices 

and the energy efficiency with which we use those choices in a 

very, very great way. It is a terrific speech, very specific on the 

goals, and I did not see a sail on an aircraft carrier once in that 

speech. 

I will say that on the 13th of October, the Naval Air Test Center, 

Patuxent River, fired up an F–404 engine, the engine that powers 

the F–18 Super Hornet, powered by bio-based fuel. And they intend 

to fly a Super Hornet that has become affectionately known as the 

Green Hornet in April of this year, entirely fueled by bio-based 

fuel. 

Are we going to suddenly convert all of our military applications 

from petroleum to bio-based? No. But we are starting to take some 

measures. And every percent, every gallon, that we can get to 

break our—the stranglehold of petroleum on our Nation, is that 

much further down the road we are toward better security. 

Senator WHITEHOUSE. And on that subject, could you just touch 

briefly on the national security consequences of our national dependence on a foreign oil supply? The military could move off it 

and decide that it is only going, you know, in a time of real emergency, that it would only use domestic fuel services. But the cost 

to the general economy, if we were interrupted in our foreign 

sources of fuel, I think would be fairly considerable. Would you, 

how do you evaluate that? 

Mr. MCGINN. I do not think it would be, in the overall sense of 

national security, it would be a terrible situation to find ourselves 

in where we had to allocate increasing amounts of existing available domestic fuel oil to military purposes, and as you say, it would 

devastate our economy and thereby have a terribly bad effect on 

the overall national security. 

Senator WHITEHOUSE. So, our present reliance on foreign oil is 

a national security risk? 

Mr. MCGINN. It is. 

Senator WHITEHOUSE. Thank you. 

Senator BOXER. Thank you, Senator, very much. 

So, in the absence of a Republican, we will go to Senator Udall. 

Senator UDALL. Thank you, Madam Chair. 

Senator Warner, it is great to have you back here with us again. 

A number of Republican Governors from California to Connecticut 
333 

are reducing greenhouse gas emissions in their States as part of 

binding programs. Other Republican Governors in States like Utah 

and Florida have also embraced action on climate change. As you 

well know, John McCain is one of the original fathers of climate 

change legislation in the Senate. And you played a key role when 

you were in the Senate and on this committee, and also what you 

are doing today. 

Do you believe there is bipartisan support? You mentioned the 

word bipartisan, and you really emphasize that. Do you believe 

there is bipartisan support in the country for legislation to set 

binding national targets to reduce greenhouse gas pollution and to 

move to a more secure energy future? 

Senator WARNER. Senator, I very definitely believe that. As a 

consequence of having the privilege of conducting many, many 

town meetings, I suppose that is participating in many, many town 

meetings and talking to a number of universities, I visited Colorado 

recently and the Air Force Academy and the University of Colorado, politics really does not feed into these discussions. It is a 

thirst and a desire for a better understanding of what this all 

about. They feel the need. They want to participate. They just need 

an avenue and some leadership. 

And currently, the Governors of the several States are providing 

strong leadership, together with the legislatures. And particularly 

the university and college structure, the educational institutions. 

That is why I think it is so important for the Congress to join in 

providing some uniformity. 

Because you take the average power supplying mechanisms in 

our country, they do not serve just one State, they serve six or 

seven or eight States in a region. And the complexity of the environmental initiatives in the various States drive them to the, you 

know, common denominator somehow that they can figure it out. 

So, the need for this road map which is really the province and 

the province alone of the U.S. Congress is really needed as early 

as possible. And I agree with you 100 percent. I commend the Governors for their leadership, and there is a strong feeling of bipartisanship as we traverse the land and listen to the people. 

And thank you for your courtesies. Under the Ethics Laws, I cannot communicate with any of you when I am in your States. But 

I try to get in and out without causing you any problems. 

[Laughter.] 

Senator UDALL. I bet you are glad you are not doing town hall 

meetings in this climate we have right now. 

Senator WARNER. Well, I am. But I must tell you, in sharp contrast, they are very constructive. 

Senator UDALL. Yes. Yes. Let me ask you about the situation, 

and I think you mentioned this in your testimony, that we are facing right now. The Administration sees that climate change is a 

major issue, and we have heard from the Under Deputy Secretary 

here, and we have heard that in many ways from this panel. 

So, they are moving forward with an aggressive effort at the 

EPA, which is very limited under the Clean Air Act as to what they 

can do. But they can do a lot, and they are going to try to regulate 

7,500 of these business entities that eject more than 25,000 tons of 

carbon dioxide. 
334 

The other side of it, and that is what I would like you to talk 

to, is, you know, if we do nothing, then the Administration proceeds down that path. If we move forward, there is so much we can 

do in the Congress to help the various sectors, to help people that 

are at the lower end of the scale, all of those kinds of things. 

Do you think the more prudent path is really the path of Congress acting rather than this more blunt approach that the Administration is taking? 

Senator WARNER. Very definitely. As I said, we are at a fork in 

the road, and right now we just cannot leave it to the executive 

branch. It seems to me that Congress has got to lay down a map. 

But it would seem to me, and I may be little presumptuous, the 

President has been a strong advocate of this whole concept. But at 

some juncture, and it is up to the leadership of the Congress, of 

course, but it would seem to me the President ought to join in as 

these several committees are beginning to try to strike a consensus 

among the bills, and say, look, I have left to you the initiative, but 

this is a framework of the essential points I deem necessary in 

such package of legislation as the Congress may tackle in this last 

remaining months of this session of Congress. 

I would hope that he would look upon that. I realize that the 

health bill is all consuming at the moment. But this is equally important. You have Copenhagen when the eyes of the world are 

going to be examining on where is the United States at this session. 

Senator UDALL. Thank you, that is very constructive. And thank 

you to all of the panel for your service. Thanks, Madam Chair. 

Senator BOXER. Yes. And Senator Warner, I think there will be 

some good news out of this committee next week. So, stay tuned. 

Senator WARNER. I will be staying tuned. 

Senator BOXER. In terms of moving forward with this work that 

we have to do because the window of opportunity is closing. It really is. And we have wasted some time. 

So, here is the situation. If nobody else shows up, the order is 

Merkley and Lautenberg. OK? 

Senator Merkley. 

Senator MERKLEY. Thank you very much, Madam Chair, and 

thank you to members of the panel. 

I would like if you all could comment on a different aspect of the 

national security energy puzzle, and that is the funds that flow 

overseas when we purchase energy, and those funds that go to 

Venezuela, that go to Saudi Arabia, and according to some reports, 

end up in the hands of folks who do not have particular sync, they 

are not in sync with the United States, with all of our values and 

objectives. 

So, maybe we could explore a little bit your thoughts on the na- tional security issues that are raised by the $1 billion we spend 

overseas on oil. 

Ms. HICKS. Senator, let me take the first stab at that. I think you 

have really hit the nail on the head with your question. When we 

cede control of our energy strategy to foreign actors, and in many 

cases it is quite small subset of foreign actors, we really put our 

own national security at great risk given our incredible reliance on 

it. So, again, I think you have got the problem quite right. It is not 
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just the states, it is what happens to the funds at the sub-state 

level. 

We have, or course, in the internal environment, Al Qaeda and 

other transnational terrorist movements that prey upon various 

sources of funding, and the more that we can do to control that aspect of the problem, the better off we are in terms of our security. 

So, a comprehensive energy strategy by the United States is incredibly important to solving that problem. 

Mr. CARAFANO. Senator, I think the question you have to ask 

yourself is if the price of taking money out of the hands of bad actors crippling your economy in the short term. And if the answer 

is yes, then you have to ask yourself is the cure worse than the disease? And then you also have to ask yourself, what other alternative mechanisms can we use to keep money from going into the 

hands of bad actors? And that has to be, I think, part of the discussion. 

Senator MERKLEY. Yes, Vice Admiral. 

Mr. MCGINN. 2008, Senator, was, or should have been, a wakeup call for America and our dependence on foreign oil. We shipped 

$386 billion outside of our economy to pay for our oil bill, to pay 

for our, as President Bush said it in his State of the Union several 

years ago, to pay for our addiction to oil. 

And as you rightly point out, this goes to, in many cases, statefunded oil companies. That money finds itself to the Hugo Chavez 

Fund and other actors in the Middle East that are counter to our 

interests and to our beliefs, in many cases. 

So, what should we have learned? Oil was $140 a barrel. It is 

about half that, or maybe a little bit more, right now. It will go up. 

There is no doubt about it. No matter how much drilling we do in 

this country, no matter how much domestic we try to squeeze out, 

the price of oil will go up. And every $10 increase in a barrel of 

oil costs the Department of Defense nearly $2 billion that is taken 

out of our ability to pay for other things, war fighting capability. 

That should be the wake-up call. We cannot let it happen again. 

We have got to start moving in a different direction. 

Senator MERKLEY. One of the questions that I think it is worth 

wrestling with is whether we should have a coherent national 

strategy to reduce our importation of oil. We affect it indirectly 

through this bill in all kinds of ways, but not in terms of targeted 

milestones. 

But we had testimony earlier today that changing just our passenger transportation strategy could reduce the amount of oil we 

import by 44 percent. And I think about what we could do in air 

transportation, where biofuels can substitute, freight transportation where there is a non-profit working in Oregon that reshapes 

all the air foils in trucks and puts automatic air pressure in the 

tires, which boosts mileage, home heating oil which can be converted to natural gas. 

So, I just want to pose the question, should we have a coherent 

national plan, if not to reduce our oil imports to net zero, maybe 

to reduce them by 80 percent to a level where no particular supplier could exert either a huge oil shock to our economy or a huge 

national security risk by constraining our access? 
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Mr. SLOAN. Senator, I think the more important question is not 

reducing imports, per se, but is lessening our use of fossil fuels by 

making ourselves more efficient and kind of embracing clean energy technologies that invigorate the economy as a whole. Restricting fuel market access is not where we should be headed, I do not 

believe. I think really the focus is on kind of innovating within, 

using our resources more efficiently and progressing from there. 

Senator MERKLEY. Any other thoughts? 

Senator. 

Senator WARNER. Well, let me give you an example. When I visited the Air Force Academy, they put this booklet together for my 

visit and actually for other reasons, but it really sets forth how the 

Air Force Academy as an island, right there in Colorado, is going 

to making and conserving its own energy. It is going to run itself, 

totally free of the domestic availability of energy around it. 

I find that all forms of initiatives are out there within the private 

sector and in the public sector, working. What they need is a 

framework plan. And you have got to devise a stream of funding. 

How many times in these town meetings have people said to me, 

if we could only get a small grant, we have got an idea which we 

can develop and contribute. Of course, the cap and trade system is 

to be that funding stream. 

But if you can just begin to at least find a funding stream to 

help, whether it is nuclear energy or others, get started and get off 

the ground now. 

Senator MERKLEY. Thank you so much. My time is up. I will just 

close by noting that I appreciate your comment, your testimony, 

Senator, that the young leaders at the Air Force Academy really 

get this issue. And that certainly corresponds with what I have 

seen on university campuses in the State of Oregon. 

Thank you. 

Senator BOXER. Thank you so much. 

Senator Lautenberg. 

Senator LAUTENBERG. Thanks, Madam Chairman. 

I do want to say publicly about how inspired we are by the leadership of Senator Boxer. She has decided that this cause of ours deserves as much attention as it can get and persisted, and here we 

are, and thus a lot of time invested, but that is what we have to 

do. 

And I thank all of the witnesses for being here. I disagree with 

one or two, which we will try to get to. 

Senator, I was in the Army. So, we can smile at one another. 

John Warner and I shared something. Senator Whitehouse said 

you gave him information as a young man. You gave me information, leadership, as a mature man, a little more than a young man. 

We both wore the uniform of our country in World War II. I think 

you also spent some time in Korea or with the Korean War. So, our 

experiences may or may not be relevant. 

But when I see what is happening, and General Scales, I thank 

you for your service to country as well as Admiral McGinn and the 

other little, see what happens when you are so young? We do not 

get to quite acknowledge your service. But each of you is owed a 

debt of gratitude by our country. 
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General Scales, in your remarks, you talked about a climatic crisis precipitating human friction, mass migration, you outlined 

things that might happen. But you say the problem is that even 

if such disasters occur, they will not be a serious cause for war, 

particularly a war between a major competitor and the United 

States. 

And I look at what is happening now, as we all see, about what 

is happening in Afghanistan, and how madmen can bring us in 

time to our knees, even though we have the weapons, we have the 

troops, we have bravery, we have systems. But here they are. And 

there are more of them than there are of us in the final analysis. 

They are not afraid of our guns. They are not afraid of our might. 

And they do not give a damn about their lives. 

So, what kind of a war can be precipitated? I see a disaster. And 

Admiral McGinn, we have had a chance to meet and talk in the 

past. Is there going to be a restructuring of the Navy that is going 

to cost lots of money? Is it worth it if we have to do it? 

Senator Warner, do you see a major restructuring of equipment? 

Senator WARNER. My good friend, I thank you for your comments 

on how both of us were privileged to wear the uniform in years 

past, and I certainly enjoyed the work that we did together. 

I would defer to this wonderful witnesses right here. I have appeared with her a number of times, and she works under the tutelage of a wonderful professional, Secretary Flournoy, who I met recently, and they are looking forward 4 years into how are United 

States military and Quadrennial Defense Review are to be restructured, the policies revised to confront the very thing that you mentioned. 

Just a little historical footnote. In World War II, we did not experience that type of suicidal attacks in any way near the percentage 

we see now, except for the last battle in Okinawa and subsequent 

conflicts. But this is something we have go to confront, this suicidal 

tendency—— 

Senator LAUTENBERG. Confront or even acknowledge. Because 

the price that these people are willing to pay is so enormous, as 

we see now in Afghanistan and have seen in Iraq. And when people 

are trying to say they do not care so much about their lives, but 

they all care about their families’ lives, and they will do anything 

to reach our shores if their countries are underwater. And I think 

that is what is going to precipitate—— 

Senator WARNER. Ask Secretary Hicks. She is working on that 4- 

year progression, together with others in your department, on how 

we are going to change strategies to confront the very thing that 

the Senator raises. 

Ms. HICKS. Senator, we are about three-quarters of the way 

through our Quadrennial Defense Review which, as you know, is 

the congressionally mandated review we undertake at the beginning of every Administration. 

We look out actually about 20 years and we look, in particular, 

at sort of 5-year time lines, 5 years out, 5 years beyond that, et 

cetera. And the world you are depicting, we do see in the future. 

I do not want to say that to undermine the very important point 

Major General Scales made, which is that we do think state-onstate warfare is something to worry about in the future. We in no 
338 

way dismiss or diminish the importance of preparing the United 

States, and through the capabilities of the United States military, 

for handling that kind of challenge. 

But the fact of the matter is the world is simply more complex. 

And as the Secretary likes to say, our Secretary likes to say, this 

is not about fighting the wars we wish we were fighting. This is 

about fighting the wars we are in and the wars we will have to 

fight in the future. 

That will require quite a bit of rebalancing of our forces. That 

does not necessarily mean substantial shifts in funds, because some 

things cost more than other things. But it does require substantial 

shift in mind set and how we think about the types of challenges 

in the future. 

The fact of the matter is that there are lots of different trends 

out there that are worrisome. Climate change is really an 

accelerant to a lot of trends we already see that could—it threatens 

the most those states that are least able to cope with those sorts 

of challenges to population, to water resources, to migration, to disaster. And as such, it can create, as we have already seen in some 

states where there is a lack of governance, it creates these 

ungoverned spaces, these opportunities for actors that counter U.S. 

interests to really come in and start to take over a population. 

Senator LAUTENBERG. Thank you. Madam Chairman, General 

Scales wants to—— 

Senator BOXER. Yes. Yes. 

Mr. SCALES. Could I just? A couple of quick points. 

Senator LAUTENBERG. Yes, please. 

Mr. SCALES. First of all, I do not see the future as being a cataclysmic state-on-state type of war either. What my point earlier 

was is that what motivates the Taliban is not being denied oil or 

the rising tide of rivers in Afghanistan. It is an ideological religious 

motivation, not the fact that they are economically deprived. 

And the other point, if I may, just add the point about fuel consumption. Yes, state-on-state warfare does demand large amounts 

of fuel. But I have been to Afghanistan. I was there last year. And 

if you look at the amount of fuel that is needed to fight a non-state 

enemy or an enemy like the Taliban, it is enormous. 

That tether that fuels helicopters, and MRAPs and M1 Abrams 

and all the rest of that is an enormous fuel drain. And it would 

be unfortunate that if we had our ability to produce, refine and 

transport that fuel to a theater of war. 

Senator BOXER. We are going to bring this to a close. I so appreciate, Senator Lautenberg, your questioning, because you have just 

made the case for our bill. We need homegrown fuels because it 

will always be important. And that is why in my State, where they 

are turning, you know, we are seeing jet fuel being produced from 

algae and I think, Vice Admiral, you discussed a bio-mass fuel that 

is being used. 

When it is homegrown, we do not have to worry about getting 

it from parts of the world that our friend Mr. Sloan had to go to, 

you know, and risk his life on a daily basis and win all those incredible commendations. 
339 

I just want to say what an incredible panel this has been and 

how energized I am. Even those of you who did not agree with our 

approach. 

Lieutenant Colonel, I just have to say, I know that your testimony was written on Heritage Foundation stationery, and you said 

you were speaking for yourself. But I have to say you did them 

proud today with your, you know, the way you presented it. 

But there is a flaw in what you said. And I do this as a friend 

so that we can continue this conversation. To put out a scare testimony that there is going to be scarcity and shortages and lack of 

jobs, that is totally untrue. The opposite is true. 

We are going to have a different mix of energy. That is true. And 

we are going to see jobs moving into other sectors across the line. 

But there are going to be more jobs here, more businesses here, 

better jobs that you cannot export. 

And yes, it has a cost. There is no doubt. Thirty cents a day for 

the average family. And you know, that cost does not take into account what we save when we avoid the ravages of global warming, 

one of which is what you are talking about, all of you today, most 

of you today, not all of you, which is the real possibility that we 

are going to have to go to war and send young people to war because of the instability caused by the climate and the refugees and 

the water problems and all the famine and all the things, the 

droughts that go with it. 

So, yes, the studies show that there will be more jobs, that we 

will not have shortages, we will free ourselves from imported oil 

slowly over the time. But all of you have been so great. 

And I want to thank my staff. I was so taken with Vice Admiral 

McGinn’s comment that they already turned it into a chart. 

[Laughter.] 

Senator BOXER. They are remarkable using solar energy. No, I 

am only kidding. 

America’s current energy posture constitutes a serious and urgent threat to national security, militarily, diplomatically and economically. This is a quotable phrase. And it is what I believe, it 

is what a lot of members of the committee believe, it is certainly 

what Senator Kerry believes. It is why we place such stock in your 

testimony. And part of our wonderful coalition in support of our 

work is a huge number of young people and people all the way up 

the age stream who believe that we are doing the right thing for 

our national security. 

So, again, my deepest, deepest thanks. And I am also going to 

place in the record a press release and statement from the CIA 

that they are opening up a Center on Climate Change and National 

Security. They view this as a serious threat now, and they want 

to get ready for it as the years go on. 

So thank you very much. We stand adjourned. We are going to 

come back at 2:15 p.m. for our next panel. 

[Recess.] 

[The referenced press release and statement follows:] 
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Senator BOXER. I want to welcome all of you. You are panel three 

in our hearing marathon today. I am so very pleased. This record 

that you are going to make today is so very important. And today 

we are going to hear from utilities how you feel about what we are 

contemplating doing here in the Kerry-Boxer bill. 

So, we are going to go from this way to this way, and we will 

start with David Crane, President and Chief Executive Officer, 

NRG Energy. 

Welcome. 

STATEMENT OF DAVID CRANE, CHIEF EXECUTIVE OFFICER, 

NRG ENERGY, INC. 

Mr. CRANE. Thank you, Madam Chairman, and thanks for this 

opportunity to discuss legislation on climate change which is an 

issue which we consider to be the transcendent challenge to our 

generation of American leadership. 

And I want to salute you and the member of your committee, 

Senator Kerry and your staffs for starting this important work in 

the Senate. 

As a major fossil fuel user, we have long recognized the challenge 

of climate change to our company. But rather than oppose it, years 

ago we chose to transform that challenge into an opportunity, and 

we are 3 years into our $15 billion RepoweringNRG Program, 

which involves advanced nuclear, wind, solar, biomass and postcombustion carbon capture projects in active development across 

the country, 

To date, we have spent hundreds of millions of dollars on this effort. As a merchant power company, we have no rate paying public 

to pass that cost onto. Indeed, we can only recover that money if 

we control costs and risks and make these low carbon projects work 

in the marketplace. 

But today’s market does not put a price on carbon emissions. 

Right now, the easiest and cheapest thing for us to do to is to emit 

all the carbon produced as a byproduct to our generation process 

into the atmosphere, and we are allowed to do that for free. 

So, for our investments in these new low and no carbon technologies to work, the Senate needs to act now to make carbon emissions part of the economic equation for NRG as well as for the rest 

of the economy. 

Your draft legislation, I believe, tacitly recognizes that effective 

Federal climate change legislation will, in fact, be our national energy policy for the next two generations. In that regard, I want to 

compliment you and this Administration for your focus on encouraging renewable generation, and I would note that NRG has a 

multi-billion dollar investment plan for renewables already well 

underway. 

But I would also caution, with respect to renewables, that there 

are inherent issues of intermittency, limited-scale expense and geographic constraints. There are serious limitations. We need to build 

a zero carbon base load foundation under our wind farms and solar 

fields, and that foundation is new advanced nuclear power. 

And it is zero carbon nuclear that will provide the juice for our 

personal transportation system based on a nationwide fleet of elec-
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tric cars, dramatically reducing both tailpipe emissions and the 

transfer of American wealth to the oil exporting nations. Right now, NRG’s $10 billion 2,700-megawatt South Texas 

Project is on the short list to receive DOE loan guarantees. We are 

confident that it will succeed, be built on budget and be on line in 

the later part of the next decade, along with at least two of the 

other projects presently under consideration by the DOE. 

But three new nuclear plants by 2020 does not a nuclear renaissance make. We need 75 new nuclear units by 2050 simply to 

maintain nuclear power’s current share of electricity production. 

And to double it, we need to build at least 150 new units. 

The nuclear title in your bill is a good start. But in addition to 

support for worker training and R&D, it needs more support for domestic manufacturing capability, siting on suitable Federal land, 

additional but shorter lived loan guarantees, and efficient approval 

processes to safely handle a much larger volume of projects. 

The de-carbonization of the electricity sector is the single biggest 

step we can take to reduce greenhouse gas emissions. But simple 

math tells me that if the goal is 83 percent carbon reduction by 

2050, we need also to de-carbonize the private transportation sector 

as well. 

Your bill, again to its credit, recognizes the importance of the 

electrification of the transportation sector but is, I believe, too modest in its goals. We need legislation that will incent a commercial 

foothold strategy that will quickly capture a significant market 

share for electric vehicles among actual American consumers in key 

American cities that themselves have taken meaningful steps to deploy an electric car ecosystem right now. 

In addition to the huge benefits in tailpipe emission reductions, 

the electrification of our transportation sector will provide the cure 

to our national addiction to foreign oil and will substantially reduce 

the $400 billion of annual wealth transfer that currently takes 

place from the U.S. to the oil producing nations. Keeping that $400 

billion at home is important to me, not just as the CEO of NRG, 

but as an American. 

As to the general market-based format of your bill, we support 

all of its key structural elements. But we would respectfully suggest four areas for your potential consideration. 

First, avoid under allocating transitional allowances in the power 

sector in order to assure the ability of the power sector to deploy 

game changing clean technologies. Second, act affirmatively to limit 

the EPA’s ability to use existing Clean Air Act provisions to regulate greenhouse gas. Third, increase the supply of offsets and act 

now to establish EPA criteria to ensure a supply of early offsets 

that will be valid for compliance. And fourth and finally, ensure the 

market stability reserve program is large enough to provide a suitably firm cap on allowance prices. 

Thank you. 

[The prepared statement of Mr. Crane follows:] 
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Senator BOXER. Mr. Crane, thank you for those very important 

words and also your very specific recommendations. We really appreciate it. 

Our second majority witnesses is Ralph—how do I say it? 

Mr. IZZO. Izzo. 

Senator BOXER. Izzo. And Ralph Izzo is the Chairman and Chief 

Executive Officer and President of Public Service Enterprise Group 

Incorporated. 

STATEMENT OF RALPH IZZO, CHAIRMAN, PRESIDENT, AND 

CHIEF EXECUTIVE OFFICER, PUBLIC SERVICE ENTERPRISE 

GROUP 

Mr. IZZO. Madam Chairman, PSEG owns and operates a large 

fleet of power plants. Roughly half of our power comes from nuclear 

generation, while the remainder is fueled equally by coal and natural gas. We are investing over $1 billion in energy efficiency, solar generation and offshore wind. And we serve more than 2 million electric and gas customers, many of whom struggle to pay their bills. 

So PSEG cannot be defined strictly as a nuclear company, strictly as a coal company, a renewable company or a regulated utility. 

We have all of these interests under one corporate umbrella. 

As such, we have had to think hard about the challenges and 

tradeoffs associated with climate change. We conclude that our 

company, our customers and our Nation urgently need this Congress to establish a national cap and trade system. I applaud you 

and Senator Kerry for your bill engaging in this critical dialogue. 

There are many provisions in the bill that my company supports, 

but some that we do not. But we choose not to let perfection be the 

enemy of the good. We must continue the drive to final congressional action. 

First, without action, our industry is paralyzed. Those in our industry who are already subject to carbon regulation, including 

PSEG, are responding by making low carbon investment choices. 

But uncertainty about a national program slows or transition to a 

green economy. Those in our industry not subject to carbon regulation recognize that they soon will be. 

If Congress does not act, the EPA will. The EPA has already announced its intention to regulate greenhouse gases under the Clean 

Air Act by March of next year. 

We all know how markets respond to uncertainty. Investment is 

cautious, innovation is stifled, job creation is tepid. The uncertainty 

about carbon regulation hangs over decisions about retrofitting coal 

plants to reduce their emissions, pursuing new nuclear, or investing in offshore wind. It is bad for investors, it is bad for customers, 

and it is bad for employees. 

Only Congress can give us the certainty of a sustainable national 

cap and trade program. This program should supersede existing regional programs to create an even and predictable playing field for 

investment as the bill before this committee does. 

However, to ensure sustainability, we cannot overburden customers with cost increases. That is why a price collar that minimizes price volatility and limits the price of carbon while maintaining the integrity of the cap is a critical provision. 
355 

It is also vital to distribute an adequate number of carbon allowances to customers through their regulated electric utilities. Providing allowances to utilities and mandating that the savings be 

passed to customers is the most direct way to minimize cost increases. This was part of the allowance compromise agreed to by 

members of the Edison Electric Institute. This agreement recognized the need to balance protections for customers in coal heavy 

regions with protections for customers who are already paying 

higher prices for cleaner generation. I commend this committee for 

preserving this framework. 

The second reason for moving ahead promptly on climate change 

is that America is losing ground to other countries. Germany and 

England have robust offshore wind industries. Israel and Denmark 

are deploying electric vehicle infrastructure. China is becoming the 

world’s primary source for solar panels. 

Putting a price on carbon is the single most important step toward making America a leader in this new energy economy. It will 

encourage investments in energy efficiency, in renewable energy, in 

energy storage, nuclear power, electric vehicles and other low carbon solutions. In short, it will create jobs. Fueled by strong State 

level policies, a local New Jersey company is hiring 100 workers to 

make inverters for solar panels for PSEG to mount on our utility 

poles. We need to drive this kind of job creation nationally. 

The third, final and most important reason we cannot delay action on climate change is that scientists say we are quickly running 

out of time. The latest data sends an unmistakable message that 

climate change is already occurring and faster than predicted. 

This issue will always be difficult. There will always be regional 

disputes and concerns about impacts on customers. But we must 

overcome these challenges sometime if we are going to confront climate change, create jobs and make America a leader in the low 

carbon economy. 

Thank you for listening. 

[The prepared statement of Mr. Izzo follows:] 
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Senator BOXER. Thank you, Mr. Izzo. I found your remarks to be 

very important. 

I am going to ask Senator Gillibrand to introduce our next witness because she actually arranged that this very important witness be heard. 

Senator. 

Senator GILLIBRAND. Thank you, Madam Chairwoman. I appreciate you allowing me to introduce a fellow New Yorker. 

Mr. Kevin Law is not just a fellow New Yorker, but also the 

President and Chief Executive Officer of the Long Island Power 

Authority, also known as LIPA. LIPA is the second largest public 

utility in the United States, serving more than 1.1 million customers from Montauk to Far Rockaway. 

Mr. Law also serves on a number of important organizations 

such as the Advanced Energy Research and Technology Center located at SUNY Stony Brook, as well as the New York State Smart 

Grid Consortium. 

Madam Chairman, I am so happy that he could be here with us 

today to discuss this very important legislation and his efforts to 

advance energy efficiency and consumer protection programs all 

across Long Island. 

Senator BOXER. Well, thank you so much, Senator, for all your 

hard work. And I just want to say that, for those who are here 

from New York and outside of New York, the role that the Senator 

from New York has played in this, putting together this bill and 

focusing on many of the aspects, including the way cap and trade 

would work and also making sure we take a look at ways to incentive clean cars, especially in her home State. 

So, I am just so glad you are here today. I know how hectic you 

are. 

Mr. Law, you got a very good introduction; please proceed. 

STATEMENT OF KEVIN S. LAW, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, LONG ISLAND POWER AUTHORITY 

Mr. LAW. Well, I appreciate that. Thank you very much, Senator 

Boxer and my home State Senator, Senator Gillibrand. Thank you 

very much for those kind words. 

I will be brief. I have submitted written testimony, and I ask 

that be entered into the record. 

Senator BOXER. Without objection. 

Mr. LAW. Again, I want to thank you for the opportunity to brief 

you on things that are going on in New York and on Long Island. 

I want to thank Governor David Paterson, who has challenged 

LIPA and is leading the way in New York in terms of energy efficiency and renewable energy, and challenging the utilities to help 

address the goals of New York State. 

I support your efforts for this bill. The old ways of doing things 

in terms of generating electricity and distributing electricity are no 

longer working. And they are not going to allow us to address our 

energy challenges and economic challenges for the future. We have 

a 21st century high tech world with a 20th century low tech grid. 

And we need to be doing things differently. 

We also need partnerships. No one entity can do it alone. We 

need the Federal Government to play its role, we need the State 
369 

government and the local governments and the utilities, because no 

utility can do it alone either. And so we appreciate your efforts 

here with this legislation. 

New York, Senator, is already operating under a cap and trade 

system. We are part of the Regional Greenhouse Gas Initiative, 

which is part of 10 Northeastern and Mid-Atlantic States throughout the country that are participating under RGGI. And guess 

what? The sky did not fall. 

[Laughter.] 

Mr. LAW. The program has been operating well, and all of the 

utilities have been cooperating. So I share that news with you. 

As for LIPA, we are doing some very exciting things that I think 

the rest of the country can follow. We have a Solar Pioneers Program, and we have placed over 2,000 customers with solar panels 

to date. We are also doing the largest solar energy project in New 

York State’s history, a 50-megawatt project. 

But here is the key, and from the testimony this morning with 

your colleagues. Before LIPA started that solar program, there 

were only two companies on Long Island who were involved with 

the installation and maintenance of solar panels. Today, several 

years later, we have over 30 companies on Long Island involved 

with the installation and maintenance of solar panels. It is all 

about jobs. And we have demonstrated that we can create jobs. 

We are also exploring the country’s largest offshore wind project 

in the country. I am doing that with Consolidated Edison, an investor-owned utility. Remember, LIPA is a public utility, we do not 

have shareholders, we only have rate payers. We are working on 

that with ConEdison and other State entities and agencies, and we 

know that is also something that can also create jobs. So, we are 

in the process of exploring that. 

But one of the best programs that we have going is Efficiency 

Long Island. It is the largest energy efficiency program for any 

public utility in the country. It is a $924 million program over the 

next 10 years, and the goal of that program is reduce our peak demand. The goal is help our customers lower their bills and to allow 

LIPA to avoid having to build the next power plant. 

This program is the power plant we do not have to build. That 

is why efficiency, we believe, is the next best resource and the 

cheapest resource for both our rate payers and our environment. 

So, I believe this legislation can work. I have submitted testimony with parts that we like and some parts where we suggest a 

couple of minor tweaks. But if we are going to enter into and prepare for a clean energy economy, we need to start investing in our 

energy future today. 

We are doing that on Long Island, we are doing that in New 

York State with the help of Senator Gillibrand and Senator Schumer and Governor Paterson, and we know the rest of the country 

could do it. 

We look forward to working with you and other utilities across 

the country to show that this can work. 

Thank you, Senator. 

[The prepared statement of Mr. Law follows:] 
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Senator BOXER. Well thank you so much, Mr. Law. There is a 

very can-do New York spirit there. 

Now, I want to make sure that I pronounce your name right. So 

is it Nathaniel Keohane? 

Mr. KEOHANE. Keohane. 

Senator BOXER. Oh, Keohane. See, I made you Hawaiian. 

Mr. KEOHANE. Exactly. I wish I were Hawaiian sometimes. 

[Laughter.] 

Senator BOXER. Keohane. K E O H A N E. That is a challenge. 

Mr. Keohane is the Director of Economic Policy and Analysis at 

the Environmental Defense Fund. I want to welcome you and point 

out that EDF has been such an important, pragmatic partner to all 

of us as we sat down with business, with labor, with environmentalists, with all of the stakeholders. You have been really a 

stand out, and I want to thank you. 

And Mr. Keohane is another majority witness. 

STATEMENT OF NATHANIEL O. KEOHANE, PH.D., DIRECTOR, 

ECONOMIC POLICY AND ANALYSIS, ENVIRONMENTAL DEFENSE FUND 

Mr. KEOHANE. Thank you, Madam Chair, and thank you for your 

leadership on this critical issue. I am honored to be here today. 

Congress has an unprecedented opportunity right now to put the 

American economy on a strong footing for the 21st century. A cap 

on global warming pollution will ensure that we lead the world in 

the next generation of clean energy technologies. 

And the innovation and investment unleashed by a carbon cap 

will help jump start our economy today while paying rich dividends 

later in the form of cleaner air, enhanced energy security, and most 

of all a livable planet to pass on to our children and grandchildren. 

Now, in the process, a carbon cap will transform the public commons into a valuable asset. That asset is a public trust, and allocating its value wisely and equitably is a crucial test of any climate 

bill. This is the issue I would like to focus on today. 

My message is simple. Consumer protection is the bedrock principle of allowance allocation. By directing a substantial portion of 

allowance value to households through multiple channels, as I will 

explain, Congress can ensure that the program is easily affordable 

for American families. 

As part of that package, local utilities have an important role to 

play in helping to protect consumers. Congress should design the 

legislation to guarantee that households receive the full allowance 

value intended for them while preserving incentives for common 

sense investments in energy efficiency. 

So, as I said just now, the allowances created by a carbon cap 

represent a valuable public asset. A wise allocation of that asset 

should be guided by three core principles. First, invest in the transition to a growing clean energy economy. Second, preserve and 

strengthen American manufacturing by preventing carbon leakage. 

And third, protect consumers. This is the bedrock principle. 

In allocating allowances, we should focus first and foremost on 

keeping the program affordable for American families. There is no 

single best way to do this, no one size fits all approach. Instead, 

we should use a variety of channels. Because low income house-
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holds are vulnerable even to small changes in energy costs, those 

households should be fully protected. Because we all have a stake 

in solving climate change, a generous broad-based dividend to 

every American family must be part of the package. 

And because how electricity is generated varies widely in different areas of the country, local utilities can provide a useful 

channel for directing allowance value to households in a way that 

accounts for regional variation. 

Let me spend a minute on the local utilities. The Kerry-Boxer 

bill, like legislation passed by the House, gives a large share of allowances to local distribution companies, or LDCs, for the benefit 

of their rate payers, including residential rate payers or households. I will show why this approach makes sense. 

But first I want to underscore that in giving allowances to LDCs, 

the legislation should be absolutely clear that the value must flow 

to consumers. Safeguards to ensure this can include clear language 

specifying that consumers must receive the full value of allowances, 

requirements that LDCs publish detailed plans before receiving 

any allowance value, mandatory audits to ensure that those commitments are being met, and strong enforcement provisions. All of 

those provisions are included in the Kerry-Boxer legislation. 

At the same time, I would also say that care should be taken to 

ensure that the method of allocating allowance value does not 

dampen incentives to take advantage of cost effective, common 

sense ways to reduce energy use. This could be done with something as simple as a monthly check made out to each household 

where the size of the check was the same regardless of the amount 

of energy consumed. 

Now, back to the rationale for having the LDC approach in the 

first place. Even as we look ahead to the new clean energy economy, it is only fair to take into account our starting point, that is 

the current patterns of electricity generation that have arisen for 

geographical and historical reasons. In fact, as I show in my written testimony, electricity consumption is far and away the most 

significant source of regional variation in household level emissions. On the other hand, once you account for differences due to 

electricity, there is little regional variation from other sources. 

Those facts tell me three things. First, allocating allowances to 

LDCs makes sense as a way of smoothing out regional differences. 

Second, as we build a new low carbon energy infrastructure, these 

regional disparities will disappear, and the LDC allocation can be 

phased out accordingly. And third, we will need other mechanisms 

in addition to the LDC allocation, including dedicated auction revenue for low income households as well as a broad-based consumer 

dividend to every American family. 

Allowance allocation is sometimes caricatured as complex. But 

the bottom line is easy to grasp. By investing in the transition to 

a clean energy economy, preserving jobs, and above all, protecting 

American families, we can tackle climate change, achieve real energy security and strengthen our economy. 

The House legislation provided an excellent start. Now it is time 

for the Senate to finish the job. 

Thanks for much. I look forward to your questions. 

[The prepared statement of Mr. Keohane follows:] 
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Senator BOXER. Thank you very much. 

OK, our next majority witness, and our last majority witness on 

this panel, Joel Bluestein, President, Energy and Environmental 

Analysis Incorporated, ICF International. 

Welcome, sir. 

STATEMENT OF JOEL BLUESTEIN, SENIOR VICE PRESIDENT, 

ICF INTERNATIONAL 

Mr. BLUESTEIN. Thank you very much. 

Good afternoon. My name is Joel Bluestein. I am a Senior Vice 

President at ICF International. 

We became part of ICF International almost 3 years ago. ICF is 

a consulting firm headquartered in Fairfax, Virginia, that provides 

objective technical analysis to public and private sector clients including U.S. Government agencies, but does not take advocacy positions on these topics. 

I am happy to be here today to discuss the potential role of natural gas in addressing greenhouse gas emissions. 

Many people expect that natural gas will play an important role 

in achieving greenhouse gas reduction. This is not surprising since 

natural gas has the lowest carbon content of all fossil fuels. It can 

be used in very efficient technologies, and it can be used effectively 

in power generation, transportation and direct in-use applications. 

At the same time, there is concern for some that gas could play 

too large a role, that a massive dash to gas will occur in the electric 

power sector and that North American gas supply is too limited to 

support this increased gas consumption. 

My two messages are, one, the recoverable U.S. natural gas resource is understood today to be much larger than ever before, and 

two, a variety of projections show that natural gas can play a significant role as part of a greenhouse gas mitigation strategy without causing economic upheaval and hardship. 

As a point of reference for the estimates of the natural gas resource, U.S. consumption of natural gas has been in the range of 

22 trillion to 23 trillion cubic feet per year for the last 12 to 15 

years. The most recent estimate of the U.S. natural gas resource 

is this year’s report of the Potential Gas Committee, a nonprofit 

independently governed entity associated with the Colorado School 

of Mines. 

The PGC’s most recent report, the 2008 assessment released in 

June 2009, estimates that the total U.S. natural gas resource base, 

at the end of 2008, was 2,074 trillion cubic feet, more than 36 percent higher than the 2006 estimate. This total reflects the highest 

level in the committee’s 44-year history and represents about 90 

years of supply at current consumption levels. 

The big change in this new assessment is a greatly increased 

evaluation of the shale gas resource largely due to the development 

and application of new drilling and production techniques. These 

advances have allowed shale gas to evolve from a small component 

of the gas resource to the major gas component. The Barnett shale 

formation near, and actually underneath, Fort Worth, Texas, by 

itself currently accounts for approximately 10 percent of U.S. natural gas production. 
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The increased supply from these resources has fundamentally 

changed the supply demand balance for natural gas in North 

America. 

Turning to the role of natural gas in greenhouse gas reduction, 

interestingly the base case modeling performed by the U.S. EPA 

and EIA, of the Waxman-Markey bill, and by extension, of the 

Kerry-Boxer bill, does not show a dash to gas. These projections 

show gas use flat or slightly declining even in the power sector. 

The key drivers of these results are very low energy demand 

growth, very high reliance on offsets, and higher reliance on new 

low emitting technologies such as renewables, nuclear, and coal 

with carbon capture and storage. 

Under these conditions, there will be limited demand for gas. 

However, most analysts expect that the supply of offsets will be 

significantly less than the maximum allowed under the bills and 

that some of the technologies may be slow to reach wide application. 

The EIA has run a scenario with no international offsets and no 

new nuclear or CCS technology which results in a 15 percent increase in gas consumption in 2020 and a 25 percent increase in 

2030. Even with this significant increase in natural gas consumption, the well head price of gas increases by $1 per million BTU 

in 2020, and actually does not increase from the base case in 2030. 

So, even a significant increase in gas consumption does not result 

in a major increase in the long-term price of gas. Moreover, these 

cases do not include the most recent data on expanded natural gas 

supply, which could reduce the price impacts. 

Finally, I want to note that one of the important changes in the 

Senate bill relative to the House bill is the delay in direct regulation of fugitive methane emissions. This allows the generation of 

offsets from methane sources through 2020, which would otherwise 

be precluded. 

Since the use of offsets is one of the most important cost control 

measures in the bill, the ability to increase the supply of offsets 

could be important to ameliorate allowance prices. 

Overall, we expect that compliance with greenhouse gas legislation will require the use of a diverse mix of clean technologies including gas, coal with CCS, renewables, nuclear and energy efficiency. We do not expect any one technology to dominate. 

That said, we expect that several of these options are unlikely to 

be widely available until at least 2020. Thus, we do see an increased role for natural gas at least through that time, especially 

if the availability of offsets is limited and the economy is revitalized. 

Fortunately, the new drilling and production techniques have expanded our natural gas supply options and should allow us the 

flexibility to use gas cost effectively as one of the options for greenhouse gas reduction. 

Thank you for the opportunity to testify, and I look forward to 

your questions. 

[The prepared statement of Mr. Bluestein follows:] 
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Senator BOXER. Thank you. And I wanted to point out that we 

have worked very closely with ANGA, the American Natural Gas 

Association, and they have been very, very helpful. And there has 

been so much news about natural gas finds. It is very good news, 

I think, for the environment. 

And now we turn our two witnesses that were cordially invited 

by the minority. We welcome you here. The first one is Barry Hart, 

Chief Executive Officer, Association of Missouri Electric Cooperatives. 

Thank you for being here. 

STATEMENT OF BARRY HART, CHIEF EXECUTIVE OFFICER, 

ASSOCIATION OF MISSOURI ELECTRIC COOPERATIVES 

Mr. HART. Thank you, Senator Boxer. I thank the committee for 

inviting me to participate today. 

I am proud to represent all of the great folks back in Missouri, 

the Show Me State, that own their own electric co-ops. I do appreciate this opportunity, and I want to thank Senator Bond for calling me. But I also want to thank our junior Senator, Senator 

McCaskill, for what she is doing for our State. And I would be remiss if I did not tell the Governor of our State, Jay Nixon, hi from 

the Nation’s capital. He is a good friend of mine. 

Let me give you an idea of our customer mix in Missouri, who 

we represent and their situation. That might give you a snapshot 

of what is going on out there. Presently, electric cooperatives in 

Missouri represent 2 million people that are getting electricity from 

40 not-for-profit consumer-owned electric cooperatives. 

These consumer-owned electric cooperatives operate in the best 

interests of the consumer who owns them. And because we have 

done a good job of that over the years, we have 91 percent customer satisfaction ratings in our State. We are very proud of that. 

Let me give you a snapshot of some of our members in these 

small rural communities in Missouri. One-third of our members are 

65 years of age or older, 83 percent of that group are retired and 

are living on a fixed income. Half of our households in our State 

earn less than $40,000 a year. 

It is tough times for these folks. They work in the ag, timber and 

tourism industries. And they cannot, a lot of times, pass these additional costs along. So that makes them sensitive to price increases. 

We have a long history in our State of working for our members, 

bringing electricity to the communities and economic development 

for our rural communities. We like to lead the way in rural Missouri. 

We would like to continue that commitment today in working on 

the energy issues of our country and our State. We are very proud 

of the fact that as co-ops in Missouri we were the first in our State 

to develop large scale wind projects. Presently in Northwest Missouri we have 300 megawatts of wind under contract. And our communities are supporting those projects. 

We are also investing in efficiency for our members. We have 

dedicated $31 million of co-op member money toward Energy Star 

appliances, energy audits, ground source heat pumps, and CFLs. 
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We are very proud of the fact that in the last year we have installed 2 million CFLs in our members’ homes. 

We are also one of the first utilities in the Midwest to join the 

Chicago Climate Exchange, and we are trying to do something 

about our carbon footprint in Missouri. 

Our consumers started looking at this issue right after the House 

passed the legislation. They started hearing about all of these different studies that were done, and the studies had conflicting costs 

associated with them. So, they asked us to do our own study. And 

because our consumers asked us, we felt we had better get on it. 

So, we asked all of the investor-owned utilities, the municipal 

utilities and co-ops in our State, the people that are generating 

electricity every day, to come together and look at the WaxmanMarkey bill and tell us how much it is going to cost our consumers. 

The results are staggering, and it got our members’ attention. 

They are looking at 12 to 26 percent rate increases in 2012, which 

could go up to 50 percent under different cost scenarios. The impacts to our State are a lot larger than what a lot of people 

thought. We also are looking at 20 to 42 percent rate increases in 

2020, and those could reach as high as 77 percent under the worst 

case scenario. 

As we review the Senate bill, and we know you have put a lot 

of hard work into this bill, and as some of the other testifiers have 

said, you have tried to work on consumer protections. But this bill 

is not good for Missouri. I have to be honest with you. We only get 

out of this bill 60 percent of the carbon credit allocations that we 

need, and we have to pass those costs on to our consumers. 

And I agree with some of the earlier testifiers that the carbon 

credit allocations need to benefit consumers because they are the 

ones that we are asking to pay the bill. 

We want to work with the Senate, any Senate committee, any of 

the Senators, to get a bill that protects consumers and meets the 

goals of the United States of America. And we will stand ready to 

work with anybody, anywhere, anytime to meet that test. 

Presently, we do not think the committee’s bill meets that test. 

I am going to take it back to our consumers in Missouri. I am going 

to present it to them. And I will get back with both of our Senators 

and let them know what the consumers are telling me back home. 

Thank you for the opportunity. But I do have to caution you, I 

am just afraid that if I take that 60 percent allocation back to our 

members, our consumers in our State, they are going to tell me to 

ask both of my Senators to vote no on this bill. 

Thank you for the opportunity. 

[The prepared statement of Mr. Hart follows:] 
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Senator BOXER. And our next minority witness is Brett Hart, no, 

it is Dustin Johnson. I have got to get this right. I have got my 

wrong panel here. Dustin Johnson, Commissioner, South Dakota 

Public Utilities Commission, and Mr. Johnson is serving as the 

Commission’s Chairman. Congratulations, Mr. Chairman. And we 

are honored to have you with us. 

STATEMENT OF DUSTIN ‘‘DUSTY’’ JOHNSON, CHAIRMAN, 

SOUTH DAKOTA PUBLIC UTILITIES COMMISSION 

Mr. JOHNSON. Thank you very much. 

Good afternoon Madam Chairman, Ranking Member Inhofe, 

members of the committee. 

I am Dusty Johnson. I am Chairman of the South Dakota Public 

Utilities Commission, and since I was elected 5 years ago statewide, it has been my great pleasure to fight for consumers. And I 

love doing it, and I know you all do as well. These folks have 

earned their money, and they should not have to spend any more 

than they have to on their natural gas and electric bills. 

And that is really what brings me here today. I understand the 

desire to reduce our carbon footprint. And I think we should. But 

I am concerned that this bill is not fair, and I am concerned that 

it hurts consumers, especially Midwestern consumers, far more 

than it has to. 

What do I mean? Well, this bill, I think, first hurts Midwestern 

consumers by significantly increasing their utility bills. Our analysis indicates that bills in South Dakota are going to go up 25 percent between now and 2012. And that is just to pay for allowances. 

That is not to clean up anything, or to build anything new. That 

is just to pay for the allowances. And that is about a quarter of a 

billion dollars a year hit for South Dakota. And I just do not know 

how you can take a quarter of a billion dollars out of South Dakota 

every year and not hurt families and businesses. 

Of course, those price spikes are going to come at a time when 

we are already seeing electricity prices increase pretty significantly, and we are seeing that in South Dakota. Black Hills Power 

has already asked us for a 27 percent rate increase, Xcel Energy 

has asked us for an 11 percent rate increase, and most of those 

costs are related to Xcel trying to get cleaner. 

Let us be honest. Building new wind power, building new transmission lines, converting coal power plants to natural gas power 

plants, as they are doing, that stuff does not come cheap. And we 

are getting greener in South Dakota. We are very proud of that. 

But that does cost serious money. 

So I think that is my big concern. You get that double-barreled 

shot of folks having to pay for allowances while at the same time 

having to pay to green up their energy sources. That is going to 

have an impact on consumers, and I do not think anybody can deny 

that. You all have heard CBO Director Elmendorf has testified that 

the House bill would cut the Nation’s GDP by 3.5 percent over the 

lifetime of the bill, and that impact is going to be disproportionately felt in States like mine. 

Why? Because this bill, in a lot of ways, picks regional winners 

and losers. You look at California. Under this bill, California would 

receive 12 million more carbon allowances than it needs. And little 
425 

South Dakota would be left about 3 million allowances short. Other 

Midwestern States are left in similar situations. And that is going 

to mean a very real transfer of jobs and billions of dollars from our 

Nation’s Heartland to the coasts. 

That is, I think, one clear example of how this bill, at least in 

its current form, is bad for the Midwest. And I think, is an example 

of a provision that is more about politics than about the environment. 

Now listen. I am a politician. And I understand that politics is 

about the art of compromise. But I think this bill that tries to give 

a little bit of something to everybody in some ways has obscured 

the central role of carbon regulation. What do I mean? Well, I 

think in some ways this bill gives our country a fish when we need 

a fishing pole. 

People have talked about softening the impact to consumers by 

giving some of them rebates. But I do not want Americans to be 

more dependent on a check from the Federal Government to pay 

their utility bills. If we want to reduce our carbon footprint, and 

again I think we should, if we should do it, then let us go do it. 

Let us invest that money in nuclear and in energy efficiency and 

in research and development. Let us solve the problem rather than 

making us more reliant on the Federal Government to pay those 

bills. 

I should mention that I am not alone here. The National Association of Regulatory Utility Commissioners, and these are the folks 

who are fighting for consumers every day, they do not oppose this 

bill. But they do agree with me on a whole lot of this. They agree 

allowances should be given based primarily on emissions, that compliance revenues should be invested in technology and efficiency, 

that the utility sector should receive a full portion of allowances, 

and that State commissions need more flexibility. 

I am no Neanderthal and neither are my regulatory colleagues. 

I believe the globe is warming, and I think we should reduce our 

carbon footprint. One hundred percent of the generation that has 

come on line in South Dakota in my 5 years as an energy regulator 

has been renewable or low carbon. We have invested $1 billion in 

wind, we have new transmission lines, we have a thousand green 

jobs, and the ACEEE recently, just last week, named South Dakota 

one of the most improved States in the entire country in the last 

year because of our energy efficiency efforts. 

I believe in a low carbon future. We are making strides in South 

Dakota, and I am hopeful that we can improve this bill so that it 

moves us farther down the field in the right way. 

Madam Chairman, thank you very much for the time. 

[The prepared statement of Mr. Johnson follows:] 
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Senator BOXER. Thank you very much, Mr. Johnson. 

I am going to start with you because you said a few things that 

I want to correct in the record. You talked about being a champion 

of consumers. I am so proud of you for that, because I am considered a champion of consumers. I got the award from the Consumer 

Federation of America a while back, and I am very proud of that. 

So, let us talk about that because I would not support a bill that 

was not fair to consumers. Do you know what percentage of the allowances go to protecting consumers in the Kerry-Boxer bill? 

Mr. JOHNSON. Well, I have seen different numbers. But I think 

your central point, Madam Chairman, is absolutely right. A lot of 

the allocation revenue does go—— 

Senator BOXER. Do you know the percent I am talking about? 

Mr. JOHNSON. I do not, Madam. 

Senator BOXER. OK. It is 70 percent. OK. So, first thing is that 

we are in agreement. Now, it may be at the end of the day it needs 

to be higher to meet your needs. But I do want to make that point 

that, and Senator Klobuchar has been very, she is not here now 

but I want to give her a shout out because she really worked hard 

on that piece, and that is why at the end of the day the costs for 

an average American family is 30 cents a day. 

Now, you also talked about, and I could not agree with your 

more, you do not want people to be dependent on the Federal Government. Do you want people to be dependent on foreign oil? I 

doubt it. That is a patriotic issue, too. 

So, I think the issue is, how do we do this in the right way where 

we become energy independent, create jobs for our people, and keep 

consumers whole? I think we share those goals. 

Now, I want to work with you and your Senators to make sure 

that this bill meets those standards for your State. But I have to 

say, you know, some of the things you said about a hit on the economy of 3 percent is not correct. We even do better than the House 

bill. The House bill, the analysis is one-quarter of a percent in 

2020. And at the end of the day, there will be 250 percent larger 

economy when we get to 2050 instead of a 251 percent. And that 

does not include any of the unforeseen costs that could come. For 

example, if we just had one Katrina a year, that is $100 billion. 

So I think what we need to do, all of us, is to step back from this 

and say, what is best for our country? You and I agree on so many 

principles. We have got to take care of consumers, we have to make 

sure they are treated fairly, we want to create jobs and we want 

to make sure that people can get what they need. 

And that is the whole purpose of our bill. I guess what I want 

to ask the rest of the panel is, the minority witnesses are, you 

know, very concerned about the impact of this on consumers and 

on the economy. I wonder if any of you can sort of repackage your 

enthusiastic statements, because I think it is sort of a gloom and 

doom, frightened of the future type of picture that I get over there, 

so different than the picture that I got from Mr. Izzo, Mr. Law and 

Mr. Crane. So, whoever would like to take the time. 

Mr. CRANE. Thank you, Madam Chairman. What I would just 

add on—— 

Senator BOXER. Where are you headquartered? I did not ask. 

Mr. CRANE. Princeton, New Jersey. 
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Senator BOXER. OK. 

Mr. CRANE. I would just add two points. First of all, since we 

started studying the impact of various sort of cap and trade regimes on the economy, I have seen so many different studies, you 

know, linear model progressions and the like, and they all come out 

with extremely different answers. We see them from the Government, we see them within U.S. cap, we have done studies of our 

own. And I would just add two points to the comments you made. 

First, the one thing that has been common to all studies is what 

you assume about how many nuclear power plants and how much 

success we have in deploying clean coal has a huge impact on the 

outcome, particularly in the 2020 to 2040 factor. So that, to me, is 

a really important part of the overall package. 

The second point I would make, Madam Chairman, while I have 

seen a lot of studies about cap and trade under the House bill, and 

I am starting to see it on your Senate bill, what we have not seen 

is what the impact on our economy is going to be if we allow the 

EPA to act to regulate carbon. And from my perspective, while we 

are unable to quantify that right now, the consequences of that are 

very worrisome to our company. 

Senator BOXER. Please, Mr. Izzo. 

Mr. IZZO. We, too, are worried about customer impacts. We have 

modeled that, and it looks like our customers under the EPA numbers could see anywhere from a 5 to 6 percent rate increase by 

2015. And those are customers who are already probably paying a 

lot more than other parts of the country which will see a greater 

percentage increase, but at the end of the day will still be paying 

a lot less for their electricity. 

We never dispute that this legislation will cause an increase in 

electric rates. By increasing the allocations to consumers, you mitigate against that. We will be cleaning the air, we will be making 

the world a better place, and we will be investing, and I know of 

no investment that comes freely, we will be investing in job creation. We say that from experience. We have created those jobs already under the RGGI regime in the—— 

Senator BOXER. So, in other words, the person, I see South Dakota here under the House bill, the average consumer would pay 

$5 a month more. That is the average. We think we have made 

that slightly better. Maybe it is at $4 or $4.50 for your people. 

But if that same person gets a job, we anticipate the creation of 

2 million jobs, I think that is a very good solution if we go into this 

clean energy future. 

Mr. Law and Mr. Keohane, if you want to add. And then we will 

go to Senator Inhofe, and I will give him an extra minute for his 

questions. 

Mr. LAW. Yes, Senator, I think that something that people need 

to distinguish is the difference between rates and bills. There are 

a lot of things that go into the rates that the utilities have and the 

goal of the programs, and the legislation, to become smarter with 

the energy that we use, and more efficient, is to help our customers 

lower their bills. 

So there is not a lot we can do about rates in terms of a lot of 

our costs are fixed. But we can try to help our customers lower 

their bills by—— 
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Senator BOXER. By being energy efficient. That is your point. 

Mr. LAW. Exactly. Exactly. 

Senator BOXER. That is a really important point. 

Mr. KEOHANE. I want to build on that point and make a couple 

of very quick other ones. First, the EPA in its analysis of the House 

legislation actually estimated savings of household utility bills. 

Now that reflects, like any modeling result, that reflects the assumption that went into the analysis. But I think the point that 

makes is that, when you look at the best analysis that is out there, 

the most careful analysis that is out there, you get a very different 

picture than what we heard before. 

I also want to just repeat, every credible economic analysis, because I have looked at them all, says and shows that we can grow 

our economy very robustly with a cap on carbon. As you said, 

Madam Chair, the economy will be much larger in 2020 and 2030 

and 2050 than it is today, regardless of what we do. What this is 

about is protecting our future and making an investment in the future, but it is something that we can absolutely afford. 

I wanted to say one more thing in response to what Chairman 

Johnson said. This cap is exactly what we need to drive the innovation and the development of the investment that he mentioned. We 

do not need the Government figuring out which projects to devote 

the money to. We need this system, this market-based system, to 

figure out how to unleash that innovation. 

Senator BOXER. OK, I am going to give Senator Inhofe the extra 

time I used because I feel it is only fair. 

I do want to put in the record for Mr. Johnson and Mr. Hart, 

here is something about the Great Plains, regional climate impacts 

on the Great Plains. Think about this in your mind. Projected 

changes in long-term climate and more frequent extreme events 

such as heat waves, droughts, heavy rainfall will affect many aspects of life in the Great Plains. These include the region’s already 

threatened water resources, essential agricultural and ranching activities, unique natural and protected areas and the health and 

prosperity of its inhabitants. 

So, here is the point. You take the $5 a month that is the average that people would pay. You put that into that equation. If we 

can avoid these other disasters from happening, how much better 

their lives will be. Putting a price on carbon creates the incentives 

for all these new technologies that you will be carrying. 

And you are a young man, you will be carrying these out, the energy efficiency, as Mr. Law pointed out, that you would get. And 

I think, at the end of the day, it is an exciting story of America 

stepping out and leading the world, not this frightening let us pull 

the cover over our heads because we fear the future. 

And the more I hear from all of the panelists, they are all excellent, whatever side they are on, whether they are on Senator 

Inhofe’s side or my side, I am coming down to a sense that this is 

about the future versus the past. I love to take the best parts of 

the past. I am getting older. I love the past. I loved the 1950s, the 

1960s, the 1970s. But at the end of the day, it is my grandkids and 

your kids, it is their world. I think if we are not fearful, we can 

do this the right way. But I so appreciate this panel. 

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Senator BOXER. And Senator Inhofe, you get some extra time. 

Senator INHOFE. All right. Well, I could have used that yesterday. 

Senator BOXER. I am sorry, we cannot go back to the future. If 

I could, I would. 

Senator INHOFE. All right. Well, first of all, I would think that 

this bill would do nothing to address your concerns since it will result in no temperature changes because China and other developing nations refuse to accept binding emission targets to keep carbon below any amount. 

But let us go ahead, since I am also in the Heartland and the 

Midwest, I would like to have both of you respond to this. Because 

I have seen the same charts. I have seen how we are going to be 

treated. Oklahoma is right between you guys. So, would you like 

to, can you help me understand why we still believe that our costs 

would be greater? 

Well, first of all, let me say to you, Commissioner, I just left your 

Senator Thune, he said to say hello. And it is good to see you, Mr. 

Hart, over in Arkansas. 

Mr. JOHNSON. Well, thank you very much, Senator. 

I do want to make clear that regional disparities are some of the 

things that bother us the most. No one on this panel has argued 

for inaction. No one on this panel has said that carbon should not 

come with some price. The concerns that have been raised have 

been primarily around regional disparities. And I do think that is 

a big problem. 

We start talking about a postage stamp a day, or we talk about $100 a year, those are national numbers. And I think they gloss 

over the very real, and the very problematic, regional disparities. 

You know, $5 for South Dakotans, I do not believe it. Most of that 

analysis has been done on flawed presumptions that the energy 

that is created in South Dakota is used in South Dakota. The Federal Government has not allowed us to do that. We have a lot of 

hydroelectric facilities in South Dakota and 80 percent of that 

power leaves the State. 

And so, all of the numbers I have seen about South Dakota are 

based on some very, very flawed assumptions. 

Senator INHOFE. Any comment, Mr. Hart? 

Mr. HART. Senator, in Missouri, I mean that is why, because 

there are all these different studies, the people that live in Missouri wanted to know from the people generating kilowatt hours, 

whether it is wind farms, nuclear, natural gas, hydro, they want 

their professionals, the men and women generating kilowatt hours, 

to tell them, this is what it is going to cost us. 

Now, the numbers I see under the different scenarios, one was 

$25 a ton for carbon, another one was $50 a ton for carbon. Various 

assumptions they made under different cases, but the rate increases, you are talking about 42 to 77 percent. 

Senator INHOFE. The example you used this morning—— 

Mr. HART. Those are people that are generating kilowatt hours 

every day. And I guess the regional disparity is what the people 

that live in Missouri are keying in on, too. They are telling all of 

us that they do not understand why utilities in California get 100 

percent allocation of emissions and Missouri gets 68. 
638 

Senator INHOFE. Yes. Let us keep in mind, too, that the costs 

that are going to be, now, if we are using the State of Missouri, 

we have heard your Senator, Kit Bond talk about how much it is 

going to cost the farmers. But there are other costs other than 

what we are talking about today. We are talking about the cost of 

fertilizer, the cost of all of things that affect, of course, we will have 

that panel tomorrow. 

Let me ask you, Commissioner Johnson, you said in your statement, I am going to quote it here, the Chairman’s mark includes 

a reserve fund with soft collar that this mechanism will not do 

enough to protect consumers. Could you explain that to me? 

Mr. JOHNSON. I think the real concern you see in all of this modeling is when you get an allowance price that climbs up higher 

than what a lot of us plug in to our studies, $15 or $20. That is 

where I think the real fear comes in, Madam Chairman. 

And I understand that. I think some people are looking for some 

level of confidence, that even if things get bad, consumers are not 

going to take the brunt of it, particularly Midwestern consumers. 

And I understand what the reserve, the strategic reserve, is supposed to do. I read a number of economic analyses on it that indicate, perhaps, that it will not be as successful as we all hope that 

it will be. It seems to me that some sort of a hard collar would give 

us more confidence that, at the end of the day, the burden is not 

falling too squarely on the backs of Midwestern consumers. 

Senator INHOFE. All right. Well, Commissioner, also, I do not recall just in what context you used that term a quarter of a billion 

dollars. Now what was that? Would you repeat that sentence for 

me? 

Mr. JOHNSON. Almost every single load serving entity in South 

Dakota that has performed an analysis indicates that in the short 

term, utility prices would rise 25 percent in South Dakota. We spend $1 billion a year on natural gas and electricity in South Dakota. I am not a mathematician, but I take $1 billion 

times 25 percent and I get $250 million a year. 

I think that shows why talking about a postage stamp a day or 

$100 a year may make sense for our country. Maybe for the country the costs are reasonable. But there are regional disparities that 

essentially punish some parts of this country far more than they 

can afford to be punished. 

Senator INHOFE. When you said that, I did not do the math because I figured you already had it. But you only have what, 

800,000 people? 

Mr. JOHNSON. We have only 800,000 people, just over 300,000 

households and it ends up being a big ticket item. 

Senator INHOFE. OK. So, you have done your math on the households, 300,000. 

Mr. JOHNSON. It is $850 a year. 

Senator INHOFE. Well see, this is the problem that we have, because we have seen these analyses way back to and including the 

treaty that this all started with 10 years ago, the Kyoto Treaty. 

And all the way through that, and through the 2003 bill, the 

McCain-Lieberman bill, the 2005 bill, the Warner-Lieberman bill in 

2008, all of these analyses done by MIT, by all of these other 

groups, they come in the same consistent pattern. It does hit the 
639 

Heartland more, that the costs we are talking about is somewhere 

between $300 billion and $400 billion a year. And that is huge. And 

it affects different parts of the country in a different way. 

Mr. Hart, you said in your opening statement, I wrote this down, 

you said that you have a 91 percent customer satisfaction rate. Are 

you proud of that? 

Mr. HART. We are pretty proud of that. 

Senator INHOFE. You should be. 

Mr. HART. We do what our consumers tell us to do. They are supporting our wind development in the State. They like that we are 

going there. 

Senator INHOFE. What do you think would happen to that 91 percent if you have this increase that we are talking about? 

Mr. HART. I am not sure. I think it is going to go downward. 

Senator INHOFE. Yes. I would think so. 

Mr. HART. I think whatever policy is developed has got to have 

the support of the consumers. Whether you live in Missouri or Iowa 

or Arkansas or California or New York, we have got to get the people of this country, who love their country, to support the policy. 

Here is another problem. This is tough pill for Missourians to 

swallow. The last power plant, base load power plant we built in 

Missouri came on line in 1983. I have done a lot of research on 

this. What was going in 1983? It was after the Arab oil embargo, 

our country was wanting us to get away from dependence on other 

countries. We could not generate electricity with gas because there 

was a Federal law that was passed that said you could not generate electricity with oil or gas. 

We were going to build, our primary project that we wanted to 

build, was a nuclear project in the region. We had all the financing 

put together, we invested $80 million in site development, we submitted to the NRC, our members did. A week after we submitted 

the license, the moratorium was put on nuclear licensing. So now 

nuclear is not an option to our members. 

This is 26 years ago. Our only option in Missouri was coal. And 

the Federal policy at that point in time, in the history of this country, was encouraging consumers to go with coal. And so now, 26 

years later, for our consumers to feel like, because they live in Missouri they are going to be penalized, it is a tough pill to swallow. 

Senator INHOFE. The problem is not are there other resources out 

there because, I have said in the last two panels, recently it has 

been documented that we are No. 1 in terms of our resources, our 

reserves in coal, gas and oil. It is a matter that 83 percent of that 

is off limits. As you point out, the moratoria are killing us. If we 

really want to wean ourselves off of foreign oil, let us go ahead and 

develop our resources that we have here. 

Madam Chairman, my time has expired, but I have two letters 

for the record to submit. First is from the American Public Power 

Association, the association is represented here although not necessarily the whole association. The second is a statement from the 

Public Service Commission of North Dakota, outlining their concerns. 

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Senator BOXER. Thank you very much. 

I would like to put into the record two documents, too, at this 

point. One is the map that shows the modest impact on electricity 

rates, including in your parts of the country, and then also page 

1 of the EPA analysis that says the cap and trade policies outlined 

in these bills would transform the way the U.S. produces energy. 

The average loss in consumption per household will be relatively 

low, and this is the key thing, the impacts of climate policy are 

likely to vary comparatively across geographic regions. 

You keep saying California. I also would put a third document 

into the record that says green States to get few rewards in U.S. 

climate bill. And we are a green State with extensive energy efficiency. 

[The referenced EPA document follows:] 
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Senator BOXER. But I thank you all, and we will go now to Senator Gillibrand. 

Senator GILLIBRAND. Thank you, Madam Chairwoman, and 

thank you witnesses for being here. Your testimony is very important to this national debate, and I am very grateful for your leadership and opinions and sharing your expertise with all of us. 

I would like to direct my conversation, initially, to Mr. Law. I 

would like it if you could please describe for me, for the panel, and 

for our attendees the kind of work that you are doing for your customers as part of the Efficiency Long Island Program and how energy efficient investments are saving your customers money by reducing energy consumption. 

Mr. LAW. Thank you very much, Senator Gillibrand. Our Efficiency Long Island Program, as I said, is about a $1 billion program over the next 10 years. 

We have had a new base load power plant on Long Island that 

just came on line this year. It cost $1 billion. And now it will have 

to be fed fossil fuels for the next 30 years to operate. I would rather 

invest the next $1 billion, and give it back to our customers, in the 

form of helping them become smarter with the energy that they 

use. 

We do that in the form of rebates to help them buy Energy Star 

appliances, lighting appliances, pool motors, furnace motors, air 

conditioning units, dehumidifiers, things like that. The goal there 

is to help them lower their consumption and lower their bills. 

When they lower their consumption, that allows us to reduce our 

peak demand. And the goal of the program, for LIPA, is to avoid 

having to build that next power plant. 

So, it helps LIPA, it helps the customer in terms of lower bills. 

And again, we find that it is not only the right thing to do, but trying to site a power plant, nobody wants one in their backyard, and 

then trying to finance it, and then having to deal with the emissions, and then having to feed it fossil fuels, are all challenges. 

We find it is better to help our customers become smarter with 

the energy they use, and that is the goal and the purpose of Efficiency Long Island. 

Senator GILLIBRAND. Thank you. Mr. Keohane, can you discuss 

how prioritizing efficiency in the utility sector would benefit customers nationwide, and do you believe that a minimum requirement for efficiency would enhance the consumer protection from 

this legislation? 

Mr. KEOHANE. Thank you, Senator. I think, first of all, it has 

been shown time and again through, I think, a variety of very successful programs across the country that wise, smart investments 

in cost effective energy efficiency can be very effective ways of reducing consumers’ bills. I think there are also ways that consumers 

can take advantage of those common sense approaches. 

I think in terms of the—in the context of allowance allocation, I 

think the most important principle is that the value go to those 

consumers for their benefit, and if it can be shown that the best 

way to do that is cost effective energy efficiency investments, as we 

have seen in some areas in the past, I think that is terrific. 
693 

But I would say the bedrock principle there is just make sure 

that allowance value does protect the consumers and that it goes 

to their benefit. 

Senator GILLIBRAND. Thank you. Now, for Mr. Crane, and this is 

for the whole panel, can you discuss the development of utility 

scale renewable projects and your thoughts on the potential growth 

of large scale projects in the next decade? 

Mr. CRANE. Well, I think right now, as much as this Administration has tried to stimulate renewable projects, the absence of a tax 

appetite, the dropping of fossil fuel prices, and the absence of financing from Wall Street, which has not really recovered as you all 

know from your State, makes large scale renewable projects very, 

very difficult, and quite frankly, the Department of Energy Loan 

Guaranty Program right now is critical. 

Our company is hoping to build what would be the largest solar 

thermal project in Senator Udall’s State, but without the—because 

the technology is emerging and all those other problems, without 

the loan guaranty from the DOE, it is just not going to happen. 

So, it is a challenging environment. But our company, Mr. Izzo’s 

company, many companies are pursuing these projects in the hope 

that we can overcome all of these. So, we are all hard at work at 

this. 

Mr. IZZO. Senator, the primary obstacle to growing renewables is 

the fact that the current technology just is not competitive with the 

current market price for electricity. By having a cap and trade system, you will more accurately reflect long-term costs. That gap will 

narrow. 

Having said that, that will then lend itself to large scale renewable development in certain parts of the country. Absent a national 

renewable portfolio standard, you will not see growth in renewables. Therefore, it is no surprise that over 70 percent of the renewables that have been installed in the last 2 years in this country have been in those States with renewable portfolio standards. 

Senator GILLIBRAND. Anyone else before my time—— 

Mr. HART. I might say the electric cooperatives nationwide have 

set up what they call a National Renewable Energy Cooperative, 

and the idea there is to pool resources to see if we can tap into 

some of the expertise in Missouri on wind, and New Mexico, co-ops 

down there doing the solar, if we can pull all those folks together 

and come up with a national initiative. 

But the investment tax credits are a huge catalyst to getting financing for renewable energy, and I have heard a lot of the wind 

developers tell me that if we could just get those investment tax 

credits extended for a longer period of time, it is going to make it 

easier for them to finance them. So, that is something you might 

want to consider. 

Senator GILLIBRAND. Thank you. 

Senator BOXER. Thank you. 

Senator Bond. 

Senator BOND. Thank you, Madam Chair, and my good friend 

Barry. I apologize. I have a couple of other committees that I have 

to work on. 

I want to straighten out a few things, Madam Chair. I made a mistake yesterday when I said your bill would provide $16 billion 
694 

less than Waxman-Markey. When we now have had an opportunity 

to review the targets, and how it operates, we now see that it does 

not provide 35 percent of the program allowances. This is what 

Waxman-Markey provides. 

But when you take a number of slices out of the pie, it is a smaller pie. And so we have $1.46 billion fewer allowances, and that 

means that there will be a shortfall of about $4.4 billion allowances. Multiplying that by the estimated price per allowance reveals a $133 billion shortfall. If it is complicated, it is taking us 

some time to analyze—— 

Senator BOXER. I will give you some more time. I will give you 

another minute. If I am going to give you a minute, I just want you 

to understand that that went in to the Deficit Reduction Trust 

Fund. So, that was the reason we did the haircut. 

But the pie, in terms of the percentages, remained the same. But 

we did have to take across-the-board cuts for deficit reduction, and 

they only went out 10 years. We went out to 2050 and we wanted 

to have a deficit neutral bill. 

But you are absolutely right on the point. You are absolutely correct. There is less in there because of Deficit Reduction Trust 

Fund. But go ahead. We will add a minute to you. 

Senator BOND. OK. I wanted to add another point that we talked 

about cap and trade. You said that it worked for acid rain. I happened to be the lead Republican sponsor on the Byrd-Bond amendment, some people back home call it the Bond-Byrd amendment. 

That worked because we had a ready solution to acid rain production. 

There is no affordable technology ready to remove carbon from 

coal and sequester it. 2020 is what Secretary Chu said. With no 

low carbon type of coal, the main strategy Missouri utilities would 

have to use to meet the mandates here would be to move more production to nuclear power. And Barry, if Missouri power generators 

are forced to switch from coal to natural gas, what would that do 

to power rates in Missouri? 

Mr. HART. Under that study that I talked about earlier, it is the 

worst case scenario. If we switch to natural gas, you are looking 

at by 2012, 46 percent and by 2020, 77 percent. So that is the 

worst case scenario for our State. 

Senator BOND. How would your co-op members react if Congress 

passes this legislation that really burdens coal dependent regions 

like the Midwest? 

Mr. HART. They may not be very happy, and I might not be back 

here next year. I am not sure. 

Senator BOND. What I really worry about is how do you think 

employers in Missouri would react to the higher power bills? Would 

you see some of the smaller businesses that are energy intensive 

moving out of the region? 

Mr. HART. That is a hard one to factor in. But I know businesses 

that—we are in a recession right now, so it is tough for small business. One thing we know, too, in Missouri is a lot of our small businesses are the entities that create the jobs. 

Senator BOND. Well, I think everybody knows that small business is the job producing core, and we seem to be steamrolling 
695 

small businesses in a lot of things that we are doing up here. That 

is why it worries me. 

We previously submitted a study from the Food and Agricultural 

Policy Research Institute and the University of Missouri working 

with Iowa State and others. It said that a farmer, a row crop farmer of corn and soy beans, 1,900 acres, would see $11,000 cost initially going to $32,000. I imagine a significant number of your customers are row crop farmers. What would that do if you put that 

extra burden on their operations? Would they stay in business, or 

would they be hard pressed to make ends meet? 

Mr. HART. I think they are going to be hard pressed. But I know 

the one segment that I have heard from a lot is the dairy industry. 

Their difficulty is that they are very energy intensive—— 

Senator BOND. Right. I think ATTRA is doing a study on dairy 

and livestock, and this would be, I assume, equally devastating to 

them. We have a lot of sources we can use. The point I have been 

making is we can reduce emissions, but we cannot do so if people 

are losing their jobs and cannot afford to buy power. 

We have a lot of biomass in Missouri. Some six-sevenths of our 

14 million of timber is scrub timber. You can burn that with coal. 

But to do that, you have to stay in business. And obviously we need 

more nuclear in Missouri. I assume when working with the other 

utilities you are looking for these cleaner energy solutions, and for 

Missouri it seems to me that the wind does not blow very frequently except in Jefferson City when the General Assembly is in 

session. I would think that biomass would a better—pardon, nuclear would be a better source for you. What is your view on it? 

Mr. HART. Well, first of all I want to make sure everyone knows 

that I did not say that about Jefferson City. 

[Laughter.] 

Senator BOND. I did. 

Mr. HART. Yes. You can get away with it. But I just think that 

if Senators can work to minimize this impact on consumers, whether they are residential, the elderly on fixed incomes, I was telling 

them, Senator, that one-third of our membership is Missouri is 

over 65—— 

Senator BOND. A lot of us are. 

Mr. HART. And 80 percent of those are on fixed income. If we can 

work all of these different segments, people that are using electricity in this country, we might be able to come up with policy that 

is going to be successful. 

Senator BOND. Thank you. 

Mr. HART. But the consumers have to support it. 

Senator BOND. Thank you, Madam Chair. 

Senator BOXER. Yes. And speaking of senior citizens, AARP sent 

us a letter. I am going to put it in the record. They are excited 

about the possibilities here. 

[The referenced letter was not received at time of print.] 

Senator BOXER. Senator Lautenberg. 

Senator LAUTENBERG. Thanks, Madam Chairman. When you 

mentioned senior citizens, I was ready to take the microphone. 

[Laughter.] 

Senator BOXER. Well, I am one as well. 
696 

Senator LAUTENBERG. I am sorry that I was late in arriving. We 

have a couple of other committees that are meeting at the same 

time. 

But I did want to welcome Ralph Izzo here. He is the Chief Executive of Public Service Electric and Gas and has been a real leader 

in terms of understanding the needs of the community, but understanding also that you have to communicate with the customers 

and let them know what we are about. 

And it has resulted in a really nice relationship even though people understand that there is going to have to be some extra money 

spent. And we hate to see it. Recession is really still very heavily 

among working people, and job loss is not something that we face 

lightly. But the fact of the matter is that we are where we are. 

Mr. Izzo, what has been the response from your customers to the 

aggressive actions that PSEG has done, whether it has been distributing light bulbs, whether it is pleading for a more careful use, 

et cetera? 

Mr. IZZO. We survey our customers once a quarter on how we are 

doing, how quickly we are answering the phone, how do you like 

what we are doing in terms of community outreach, and we get 

consistently high marks from customers for our aggressive actions 

in promoting renewable energy sources and energy efficiency. 

In addition to that, the extra benefit that I, quite candidly, did 

not anticipate is the enormous pride our employees feel at being active in the community and now being viewed not as the electric 

company and the monopoly, but someone who is trying to preserve 

the planet for their children and their grandchildren. 

Senator LAUTENBERG. You know, we have the good fortune in 

New Jersey to be on the coast. It is a wonderful coast. But the fact 

is that we are to the east of States that have a lot of material being 

sent up into the air from coal burning plants, et cetera. So, there 

is some imbalance. 

Mr. Johnson, I kind of look to you when I say that. And no one 

needs lecture the other party. But I will tell you this. When South 

Dakota had floods and terrible things happening, we were there to 

help them through a natural disaster. And so it is at this time. And 

while it does, when you say it, it sounds terrible, we should not 

have to penalize one State to get to another. 

But in the distribution of expected increases in costs, New Jersey 

looks like it might be $3, South Dakota $5 a month. It is not pleasant to contemplate. People with modest incomes feel those kinds of 

things very seriously. 

So, I would urge you to look at this and see what kind of—to use 

the cliche ́ around here that says, what goes around comes around. 

There are very few States that have not, at some time or other, 

been there with their hand out, with a plea for the Federal Government, please, come help us, move our citizens away from flooded 

areas, et cetera, et cetera. So we are all in this together. 

And we also know one other thing. I will reduce my philosophizing in a minute when the clock hits over here. But the fact of 

the matter is we have a sick patient. This patient is not strong. 

This patient is weak. The patient needs medicine. The medicine 

tastes terrible. But that is the condition that the country is in. We 
697 

are still in recession, we are overrun by inadequate infrastructure 

development, et cetera. 

But if we are called upon, we all spring together to put on a uniform as I did a long time ago, and you do what you have to. I am 

not telling you what kind of message to give to the South Dakotans, but the fact of the matter is there may be a little imbalance 

here, but we are all looking for the same outcome, and that is a 

safer place for our children to grow, for our plants, for our wildlife, 

so that we can breathe the air and enjoy life. 

Thanks, Madam Chairman. 

Senator BOXER. Thank you. 

Senator Udall. 

Senator UDALL. Thank you, Madam Chair. Mr. Bluestein, your 

testimony notes that the major recent supply increases of natural 

gas provide us with a powerful option to reduce greenhouse gas 

emissions with a widely available fuel using existing infrastructure. 

In the climate debate, there has been concern that fuel switching 

would cause natural gas prices to increase for manufacturers and 

fertilizer to increase for farmers. Are these fears based on an outdated understanding of the natural gas supplies that are now 

available in the U.S.? 

Mr. BLUESTEIN. Yes, I think they are. As I said earlier, these 

new shale gas resources are really changing our fundamental understanding of North American gas supply. And they are really just 

starting to take off. As that resource was starting to take off, we 

had the economic downturn, and the demand for gas came down, 

and some of the drilling actually reduced because there was less 

demand. 

So, I do not think we have really even yet seen the reality of how 

large this resource could be, and I think that will be good news for 

industrial gas users and feedstock industries like ammonia that 

rely on natural gas. 

Senator UDALL. And could you give us an idea of the magnitude 

just in the last couple of years? 

Mr. BLUESTEIN. In terms of the resource, you know, the National 

Petroleum Council in its study in 2003 estimated—let me just 

check my numbers—the shale resource at, I think, less than 100 

TCF. We did a study, it was done really about 18 months ago, we 

estimated it at 385 TCF. The Potential Gas Committee, in its study 

that came out in June, estimated it at 616 TCF. So it is really 

growing by leaps and bounds. And as I said, I do not know if we 

have fully evaluated it yet. 

Senator UDALL. Now, I understand that you have studied the impact of a proposal made by the American Natural Gas Association 

to enact a so-called Bridge Fuel Credit, a new emissions credit 

based upon additional use of natural gas to reduce greenhouse gas 

emissions. Could you explain how such a credit would work and 

what its impacts would be? 

Mr. BLUESTEIN. Well, the idea of this proposal is to provide a 

credit for any entity that uses natural gas to reduce greenhouse 

gas emissions by increasing the use of natural gas relative to a 

higher emitting fuel. We did an analysis of that proposal for the 

American Natural Gas Alliance. 
698 

There were several steps. The first was to develop a baseline that 

is comparable to the EPA and EIA modeling as a reference case. 

We then added in an estimate of the increased gas supply that is 

available now. So, not surprisingly when you account for that additional supply, you find that gas consumption goes up, and gas 

prices go down, relative to the baseline. 

We then added the incentives for increased gas use, and we 

found, again, moderate increase in gas consumption and a decrease 

in allowance prices relative to the baseline and a slight increase in 

gas consumption, about 6 percent, with the increased use of gas. 

So, back to your first question. Using gas to reduce emissions in 

the near term, not a huge increase in gas prices and actually a decrease in the CO2 allowance price as a result of the program. 

Senator UDALL. And do you have any recommendations on where 

you think the best use of natural gas is? Is it in the transportation 

sector? Is it in the electric power sector? 

Mr. BLUESTEIN. Yes, I think that, you know, one of the strengths 

of natural gas is that is has very wide applicability. It is a very 

clean fuel, and as I said in the beginning of my testimony, I think 

it can be used effectively throughout the economy, power generation, transportation, there is a great opportunity, direct use by consumers, and of course, it is an important feed stock. 

So, I think in the past there has been a feeling that we have to 

decide, is it better to use it here or there. I think that the hope is, 

with the greater resource, we do not have to worry about that. 

Senator UDALL. Thank you. And I thank the whole panel. 

Mr. Crane, you mentioned that NRG was putting a plant in Dona 

Ana in Dona Ana County in New Mexico. And I just want to thank 

you for moving into the solar energy business and bringing it into 

southern New Mexico, and it is great to have you here today. 

Thanks to the whole panel. 

Thank you, Madam Chair. 

Senator BOXER. Thank you. Unless a Republican shows up, we 

have Whitehouse, Carper and Cardin. 

Senator Whitehouse. 

Senator WHITEHOUSE. Thank you, Madam Chair. 

Commissioner Johnson, you, in your testimony, let me read this, 

say that these bills all envision softening the impact to consumers 

by providing some of them to low and middle income rebates to pay 

their utility bills. But I do not want more Americans more dependent on the Federal Government to pay their utility bills. If we need 

to reduce carbon, then let us do it. Let us put that money toward 

energy efficiency and toward research and development. 

I think you are onto a very, very good point. But I want to let 

you know about a particular glitch that you might not be aware of, 

which is that when the allowance revenues are returned to the 

local electric utility or utility distributing companies, if we in Congress take a further step of saying that this is where they should 

be spent, the wizards at the Congressional Budget Office have determined that that is an expenditure of money by the Federal Government that needs to be offset with new revenues to meet our pay 

goal requirements. 

So, we are a little bit handcuffed here in Congress by CBO’s scoring methodology so that when we take, let us say the round num-
699 

ber is $1 billion. You put $1 billion back into the local distributing 

companies, no cost. You say, and you should spend half of it on efficiency, now we have to offset $500 million with revenues. 

So, we are in a bit of a pickle. And I could not agree with you 

more about the direction you seek. I think the place to go is not 

back into the bill, because we will tell you that. The place to go is 

to your friends at NARUC and to your fellow utility commissioners. 

Because you can say, in your ratemaking process, OK, fellows, 

you are getting all of this money coming in from the Federal Government for these purposes. We want you to come in and show us 

how it is going to work, and you can put them under pressure to 

make sure that efficiency and R&D is where it goes in a way that 

we really are inhibited from doing by these peculiar CBO constraints. 

Mr. JOHNSON. Well, Senator, thank you very much for that clarification. I would agree that the State level is a fantastic place, really the best place to do energy efficiency. I do wonder if research 

and development are not better done at an national level. And I 

also wonder about nuclear. 

Senator WHITEHOUSE. It could well be. I was really focusing on 

the efficiency part, and I feel that is very important. 

Mr. JOHNSON. Well, I agree with you 100 percent. I do also really 

believe in nuclear; it is tough to overstate how important it is going 

to be if we are going to get to 83 percent carbon reduction by 2050. 

Senator WHITEHOUSE. We have good—I think you will be happy 

with the way this comes out on nuclear. There is a new nuclear era 

coming, and we just need to make sure we do it right and that we 

work as hard as we can to have the nuclear byproducts be manageable and there is technology that allows them, in fact, ultimately 

to be used as fuel. And we need to make sure that we develop that 

because that is the hazard. 

Mr. JOHNSON. Well, Senator, thank you very much. You do give 

me reason for optimism that it is going to get better because I 

think actually, right now, the nuclear title is rather weak. But I 

will take your word for it, and we will wait for better wording. 

Senator WHITEHOUSE. The other question that I have is for Mr. 

Izzo and Mr. Law. You both run major utility operations. I cut my 

teeth as a new lawyer doing the public utility regulatory work for 

the Attorney General’s Office in Rhode Island. And way back in the 

1980s, we did the first conservation-based rates with what was 

then called Narragansett Electric and New England Electric System. Now it is all National Grid. 

So I have been familiar for some time with the predicament that 

electric utilities are in when they make money by selling kilowatt 

hours, but we need to reduce those kilowatt hours and improve the 

fuel mix in ways that may be less immediately cost effective for the 

utilities. 

There has been some disaggregation of the electric utility industry and to GenCos and DisCos and TransCos, and I am wondering 

what your advice is to us on the best way to structure the electric 

utility operating environment so that the conservation efforts can 

become a profit center. I think you have a vital role in conservation. I hope even the lead role. Does a ConsCo that goes along with 
700 

the TransCos and DisCos and GenCos make sense, or can you just 

do it with the rate adjustments and rate neutrality? 

Mr. IZZO. We are not huge fans of the rate neutrality approach. 

We think it makes sense, but we do not worry about that a lot. 

What we are trying right now in New Jersey that is working very 

well is that we have a $250 million program whereby a light bulb 

looks the same way on my P&L statement as a circuit breaker. So, 

we have redefined the assets that we can put into what is called 

our rate base and earn a profit on. And that is a home run for the 

customer and for our shareholders. 

Senator WHITEHOUSE. Mr. Law. 

Mr. LAW. Thank you, Senator. As the head of a public utility 

without shareholders and only rate payers, I almost think we have 

a little bit of a higher standard to strive for because we are not trying to show a profit. We are not-for-profit. So, not every decision 

we can make a cost-benefit case on. Sometimes we need to look at 

things as investments. And I think we need to be investing in diversifying the portfolio of fuels used in our system now and by encouraging our customers to become more efficient. 

So, one of the ways we are doing that in the entire State of New 

York, for both the regulated utilities and the public utilities, is, you 

know, the concept of decoupling revenue recoupment because, at 

least for the investor-owned utilities, at the end of the day they 

need to cover their costs and show a profit. And if you are going 

to encourage all of your customers to use less energy while your 

costs are still fixed, you are going to lose money. 

So, part of the incentives to get the utilities to be more aggressive in promoting renewables and efficiency is to allow them to recoup or decouple some of the moneys that they will likely lose. 

Senator WHITEHOUSE. Thank you. I appreciate it, Madam Chairman. I look forward to working with you all. 

Senator BOXER. Thank you. 

Senator Carper. 

Senator CARPER. John, thanks so much for being with us and not 

just today, because I know you have been with us before, and we 

appreciate your advice and counsel and your willingness to come 

back again today and subject yourself to this. Hopefully, it is not 

too bad. 

Let me just start off by asking a question maybe of Mr. Izzo and 

Mr. Crane and Mr. Keohane. You pronounce your name Keohane, 

do you not? 

Mr. KEOHANE. Keohane. 

Senator CARPER. I asked five different people up here, and I got 

five different answers. But Nathaniel’s right, is it not? 

[Laughter.] 

Senator CARPER. Just a question for each of you. I think, in the 

past, each of your organizations, I believe have supported the notion of multi-pollutant legislation. And I, as you may recall, have 

long supported a 4–P approach, I believe it just makes sense from 

a business perspective and a public health perspective as well. 

We have had a fair amount of discussion about the wisdom, or 

lack thereof, of adding 3–Ps to the climate bill, sulfur dioxide, nitrogen oxide and mercury. And I would ask, if adding 3–P legislation in the form of an amendment to the climate bill does not slow 
701 

momentum to passage, would you be supportive of a multi-pollutant approach? 

Mr. CRANE. On behalf of NRG, we would support that. But we 

do not, I mean, you had a key condition there. I mean we think 

the urgency of climate change legislation, if it did slow it down, 

that would give us pause. But we support your 3–P legislation and 

leave it up to you as to how you actually get it through. 

Senator CARPER. Fine. Thank you. 

Mr. IZZO. Senator Carper, we have been, and remain, supporters 

of your 3–P legislation. It is an essential part of regulatory clarity 

for us going forward in our industry. I try to convince myself that 

I am a moderately OK CEO, but I will never try to convince myself 

that I am intelligent legislative strategist. So, I leave that decision 

to this committee. We would love to see it if it could, indeed, go 

right through with that. 

Senator CARPER. OK. Thanks so much. 

Mr. Keohane. 

Mr. KEOHANE. Well, Senator, I know you have been a leader on 

this, and we would certainly, absolutely support a comprehensive 

approach, and I think we have long been behind a comprehensive 

approach to air pollution regulation. I think the priority for us is, 

right now, making sure we get a climate bill. And if we can also 

get the strong 3–P bill along with that or as part of that, and still 

move that climate bill and get that protection, I think that would 

be terrific. 

Senator CARPER. All right. Thanks. Thanks very much. 

I will go back to you, if I could, Mr. Izzo. I think you mentioned 

in your testimony that you support a 50-50 allocation distribution 

of local electric-local distribution company allowances. I am not 

sure what all is involved in striking that compromise within EI, 

but I just want to thank you. I know how hard we have struggled 

with it here. And for those of you who actually worked to deliver 

that baby, thank you very much. 

But that is, I think, 50 percent distributed on historical emissions and 50 percent distributed on generation. That is correct, is 

it not? 

Mr. IZZO. That is correct. 

Senator CARPER. The 50 percent distributed based on generation, 

which we also know affectionately as output, would greatly help 

nuclear energy. Is that correct? 

Mr. IZZO. That is correct to the extent that you are selling into 

a competitive market. 

Senator CARPER. Would you elaborate on that, please? 

Mr. IZZO. Well, if you are in a competitive market, the least efficient unit is what sets the price. Typically, the least efficient unit 

is the one with the highest cost fuel, which would be a natural gas 

unit. And a natural gas unit, because it emits carbon, will see a 

higher price. The nuclear power plant will not see a higher price 

because its fuel does not entail any carbons. So, your costs as a nuclear plant operator, of which we are one, does not go up but the 

price you receive does go up. 

Senator CARPER. All right. I want to ask you and Mr. Crane, I 

will start with Mr. Crane. In terms of the potential for offshore 

wind for generating electricity on the East Coast and maybe the 
702 

Mid-Atlantic, what kind of future do you see for that for our region 

of the country? 

Mr. CRANE. Well, I think offshore wind has a very important future, because I think one of the things that we have had regional 

difference here is that basically offshore wind in the—I think it is 

called the Mid-Atlantic Bite, is basically the only large scale renewable resource that the Northeastern States have. And it is close to 

the load centers. 

But right now the obstacles to getting offshore wind in the 

United States are pretty substantial. I mean, we do not have the 

infrastructure they have in Europe with, you know, purpose-build 

ships needs to be developed and other—you know, you need to have 

someone who takes the responsibility to build it. And you know, 

the building season is not that long in the Northeast United States. 

So, I think there are obstacles, but I think there are several companies that are pursuing it, and I think it is an ideal area for a 

public-private partnership, and you know, Delaware, New York and 

New Jersey, I think, are all leaders in this area. 

Mr. LAW. Senator, can I chime in on that one? 

Senator CARPER. Please do, Mr. Law. 

Mr. LAW. You might have missed my comments in the beginning—— 

Senator CARPER. I did. 

Mr. LAW. LIPA and ConEdison, an investor-owned utility in New 

York City, and some other State entities are exploring what could 

be the country’s largest offshore wind farm. It is about 13 miles off 

of the coast of the Rockaways, near Coney Island, to educate you 

geographically, Senator. And here is why we are looking at that. 

One, we are looking at a private-public partnership to share the 

costs and share the power and share the risks. But unfortunately, 

all of the users were called load. And the load, in the New York 

City metropolitan area, is in New York City and on Long Island. 

We have got about 8 million people. All of our wind and hydropower is Upstate New York. 

What we need to do, and what we will be doing, is comparing the 

cost of trying to import hydro and wind from Upstate New York, 

where it is plentiful, on congested transmission lines down to the 

load. Or might it actually be easier, more cost effective, to build it 

13 miles off the coast, so you eliminate the aesthetic impact issues, 

and only have to do it 13 miles underneath the seabed to the substations on the Island. 

So that is what we are looking at right now. Because at the end 

of the day, we think it is actually going to be cheaper to build a 

large scale offshore wind farm in the ocean than try to bring it 

down through the Adirondacks and the Catskills into where the 

population centers are. 

Senator CARPER. OK. Good. Thanks very much. 

Senator BOXER. Thank you so much, Senator. 

Senator Cardin. 

Senator CARDIN. Thank you, Madam Chair. And let me thank all 

of our witnesses on this panel. 

Mr. Crane, I just want to underscore the point that you made 

and then refer to one of your facilities in Maryland, that climate 

change framework that will unleash the power of American cap-
703 

italism and the innovative genius of American entrepreneurs. You 

promised that, given that framework, you can produce low carbon 

energy technologies. 

Let me just point out one of your facilities that we are particularly proud of as far as the plans, and that is the facility located 

in the Vienna Steam Station, which is a 170-megawatt oil-fired 

generating station located along the Nanticoke River in Vienna, 

Maryland. 

We understand that you are in the process of developing a new 

biomass and solar facility in Dorchester County, which will not 

only be good for the environment, will not only be good for what 

we are trying to accomplish on an energy policy in this country. 

Dorchester, Maryland, has one of the highest unemployment 

rates in Maryland. And this, we look at it as creating jobs for the 

people on the Eastern Shore of Maryland. And I just really want 

to underscore—I think this project puts it all together for us, and 

I just really wanted you to know that we are watching what you 

are doing, and we are very proud of the plans that you have in regard to the Eastern Shore of Maryland. 

Mr. CRANE. Well, Senator Cardin, I appreciate that. But I wish 

you had not said it in front of Mr. Izzo because he is sort of our 

competitor in the area. But you have told him all our secret plans. 

[Laughter.] 

Senator CARDIN. Mr. Izzo, I have a deal for you that you will not 

be able to refuse. 

[Laughter.] 

Mr. CRANE. But I think that, you know, our Vienna Plant is a 

1970 zero oil-fired plant which rarely ever runs. But the great 

things about these old plants is they are perfect sites for redevelopment with renewables, and it really does not need to be either/or 

because they have the transmission system built around it. And the 

fact that we are looking at biomass and photovoltaic solar there, 

it is the type of thing that can be done in large parts of the country. It just takes a little bit of creativity. 

Senator CARDIN. And we look forward to more creativity from the 

members of the panel. 

Madam Chair, if I could, I want to reserve my last 2 and a half 

minutes to introduce the first witness of the next panel. 

Senator BOXER. Well, Senator Merkley, you are it. And unless a 

Senator from the other side comes, we are going to move to the 

next panel. 

Senator MERKLEY. Thank you, Madam Chair. I appreciate all of 

your testimony and particularly getting to the nitty gritty of the allocations which is something that we all immersed in as we try to 

figure out how to make this really work where the rubber hits the 

road. 

Mr. Law, I appreciated your public power perspective, and the increase in the allocation for renewable energy and energy efficiency 

is something that we have worked hard on on this committee. And 

I appreciate your support to keep raising it. 

Based on your comments on allowance allocations and increased 

investment in energy efficiency, I wonder if you could comment on 

the concept that we have considered at various moments, which is 
704 

to require that utilities use a portion of their allowance specifically 

for energy efficiency. 

Mr. LAW. I support that. And we support that. And again, it is 

way to, I guess, incentivize and encourage the utilities to help their 

customers to become more aggressive in the area of energy efficiency. So, we like that. I think, as I also pointed out, I am a public 

utility. LIPA is a public utility and is part of the APPA and the 

LPPC. I do not speak on behalf of all public utilities. But I am 

speaking on behalf of LIPA and the State of New York and what 

we support in New York. 

Senator MERKLEY. Do you have any sense of how to strike the 

balance between addressing the additional costs to consumers 

versus investment in energy efficiency? 

Mr. LAW. It is a challenge, especially when you come from a utility like mine where we have the second highest rates in the Nation 

already, not something that we are proud of, but something that 

is historical. Things that happened before I got there. But it is the 

challenge. 

I think most customers, again regardless of their party affiliation 

or their political affiliation, I think they support efforts for renewable energy, energy efficiency. But when you ask them are you willing to pay more, you know, for that, that is when the tough part 

comes because people are hurting today because of the economic 

conditions. 

And so it something that we need to be stronger in encouraging 

our investments in that because, as I think Senator Lautenberg 

said before, our system is working, it is reliable, it is working OK. 

But it could be a whole lot better. And we need to make some 

tough decisions to invest in our energy future if we are ever going 

to get to a clean energy economy. 

Senator MERKLEY. Thank you. Mr. Johnson, I think you were 

making the case also to allow investment in renewable or clean energy investments. So, there are three possibilities of helping to address costs, investing in energy efficiency, which then reduce costs 

over the long term, and clean energy. 

Would you expand a little bit on your advocacy on the clean energy side of the equation? 

Mr. JOHNSON. Thanks very much, Senator. I think, in the perfect 

world, each State would be given broad flexibility to determine how 

they would distribute in rebates to ease consumer impact, in energy efficiency research and development, and in investments in 

other things. To me, some States are so far along the energy efficiency path that the low hanging fruit is gone, and they may want 

to target those dollars into a different arena. 

In South Dakota, I would tell you, we would place a great value 

on energy efficiency. I mean to me, that is the first power source. 

And if you are not doing almost everything you can cost effectively 

for energy efficiency, then I think it is tough to talk about doing 

anything else. 

But listen, some States are not set up to do that. And I would 

really ask that the U.S. Senate try to maintain maximum flexibility for States to design a system that will work best for their 

consumers. 
705 

Senator MERKLEY. I am going to give back the rest of my time 

because I know we are anxious to get on the next panel. I thank 

you all very much for you insights. 

Senator BOXER. And Senator Merkley, I think one our problems 

that we have had with CBO is that, if we try to do what you want, 

which a lot of us do, and the utilities are split on it, it is terrible 

for our deficit problem. We have to take a haircut, put more money 

into deficit reduction. It makes no sense. 

Senator MERKLEY. I am well aware. You might recall that I sat 

down with CBO on this very problem. 

Senator BOXER. You called them. I know, it has been very difficult. 

Senator WHITEHOUSE. Did you make any progress? 

Senator MERKLEY. I can explain it to you in profound detail, 

but—— 

Senator WHITEHOUSE. It made no sense. 

[Laughter.] 

Senator BOXER. I do not know of anybody that has made any 

progress with it. They just do not seem to use any logic. Oh, do not 

tell them that I said, that, OK? 

[Laughter.] 

Senator BOXER. All right. Thinking out loud. Not good. 

First of all, I know, Mr. Izzo, you never heard a word that Senator Cardin said about the plans for Maryland, right? Because I noticed that you were not really listening. 

[Laughter.] 

Senator BOXER. Let me just thank this panel. You have been terrific, every single one of you. And I just would leave us with an 

analogy that, as I look at the chart, and yes, it is going to cost consumers $5 a month, but by the way there are some even offsets to 

that for our lower income consumers. That is why AARP and Public Citizen and Consumer Union are very happy with the way we 

are moving on the bill. And we want to work with you. We want 

to keep working to make this a better product. 

But you know, some of us are moms and dads, some of us are 

grandmas and grandpas as well, and some of us are uncles and 

aunts, and I think if we knew that our kids were in trouble and 

we had to get a better lock for the house, and it cost money, $50, 

plus you had to hire someone to put that lock in, maybe it was 

$100, it would be worth it. They would be safe. 

And I think sometimes we get so involved in something that is 

not as large as what we are dealing with here. And we are seriously dealing with an issue that requires us all to pull together. We 

have got to come together. 

And Mr. Hart is right. If the American people do not support us, 

it is not going to work. Just as in your situation, if your consumers 

do not understand it. And I have to tell you in our State, which 

is not perfect but it is close—— 

[Laughter.] 

Senator BOXER. Our consumers are so driven with the notion 

that they can be part of the solution. And when Mr. Law explained, 

it is a lot about the rate, yes, but it is also about what you pay 

in the end. And in our State, we have realized this. So, our energy 

efficiency, and if Bernie Sanders I would explain, we are still Num-
706 

ber One in that score. Because we get it. Our rates may be high, 

Mr. Johnson, but because we employ so much energy efficiency, the 

low hanging fruit that everyone can do, at the end of the day, they 

are doing OK. 

Now, they can always do better. I wish they did not have to pay 

anything at all. But the bottom line here is, let us continue to talk, 

because I sense from everybody’s comments that we all want the 

same thing. 

So thank you very much and we will move on to the next panel. 

Thank you very much. 

So, our next panel, Senator Cardin is going to introduce our first 

witness, so I will not. She is Shari Wilson, then we have Ronald 

Young, Peter Frumhoff, Larry Schweiger, Fawn Sharp, Jim Sims 

and our last witness was ill and could not be here, Dr. Green, and 

we wish him well. 

Ladies and gentlemen, thank you very much for being here. We 

are going to start with our witness from Maryland. So, Senator 

Cardin, why do you not introduce her, and we thank that last 

panel. They were quite terrific. This has been quite a day for us 

all. 

Senator CARDIN. Chairman Boxer, I know I speak for the Members of the Committee, thank you for the very informative hearing 

that has been put together today. 

I am very proud to introduce Shari Wilson. Shari Wilson not only 

serves as Maryland’s Secretary of the Environment, she is also 

Chair of the Maryland Commission on Climate Change. Governor 

O’Malley has made this a top priority of his administration. In that 

role, Secretary Wilson has been integral in creating and implementing our State Climate Action Plan, which outlines Maryland’s 

adaptation efforts and goals. 

Maryland has been one of the Nation’s leaders in addressing climate change. Maryland is a member of the Regional Greenhouse 

Gas Initiative, the multi-State effort that is already benefiting from 

a cap and trade program. Maryland was one of those States that 

pressed for the so-called California Waiver in order to control 

greenhouse gas pollutions from the mobile sector. 

And Maryland is one of the few States in America to actually 

produce a statewide plan to address climate change in a proactive 

way. And one of the main reasons that Maryland is in the forefront 

of these efforts is Shari Wilson. 

We are fortunate to have her in Maryland, and we are very fortunate, I think, to have her help on this panel. I am pleased to welcome Shari Wilson to our committee. 

Senator BOXER. Ms. Wilson, go right ahead. 

STATEMENT OF SHARI T. WILSON, SECRETARY, MARYLAND 

DEPARTMENT OF THE ENVIRONMENT 

Ms. WILSON. Thank you very much. Good afternoon, Chairman 

Boxer and members of the committee. It is a privilege to be here. 

The past several weeks have been filled with optimism for public 

health and the environment in Maryland, with landmark legislation being introduced to restore the Chesapeake Bay and now hearings on the Clean Energy Jobs and American Power Act. 
707 

Senator Cardin, we appreciate your leadership in all of these efforts, and we are right there with you, of course. 

Adaptation. This is word that is the shorthand for the changes 

we, as a society, need to make to be better prepared for the 

changes that we are and will continue to experience as a result of 

climate change. Whether it is making sure that our critical infrastructure—and expensive, I might add, infrastructure—for water, 

sewer and transportation is protected, or whether it is making sure 

new investments, a private home or a public road use design standards that will withstand the increased frequency of storms or floods 

or surges, we need to start making different decisions now to make 

sure we are targeting our investments smartly. 

To date, efforts to adapt a climate change across our country lack 

cohesion. There are no clear roles, no clear responsibilities at the 

Federal, State or local level. We lack the necessary data and resources to comprehensively and efficiently prioritize our actions to 

adapt. We do, though, have the knowledge and tools and tremendous public health, economic and environmental motivations to better prepare. 

The Clean Energy Jobs and American Power Act provides that 

needed structure, clarifying responsibilities, the framework for the 

data and assessments that need to be completed, and funding to 

get this work underway. 

As is the case with greenhouse gas reductions, States have not 

waited for Federal action. To reduce greenhouse gas emissions, as 

Senator Cardin just mentioned, 10 States in the Regional Greenhouse Gas Initiative developed and are now successfully implementing a market-based regional cap and trade program to reduce 

emissions from the electricity generating sector. Likewise, to adapt 

to climate change, 30 States have adopted climate action plans. 

Four of those include adaptation strategies. 

In 2007, Governor O’Malley ordered that we in Maryland prepare 

a climate action plan. Over 100 Marylanders, representing the private, the academic and the public sectors, came together to do so. 

And a key part of that plan is our adaptation strategy. 

Adaptation plans are absolutely necessary for public health, economic and environmental reasons. Using Maryland as an example, 

we have over 3,000 miles of coastline, and over the past century 

we have experienced a foot of sea level rise, and projections show 

that we could experience another 2 to 3.4 feet of rise. We lose 580 

acres a year to shoreline erosion; projections include projected 

losses of up to 161,000 acres lost of marshland. 

These risks includes increased erosion along our streams, rivers 

and coastal shorelines, sediment being one of our major pollutants 

that we are dealing with the in the Chesapeake Bay, increased 

droughts and effects on water supply, groundwater tables, the likelihood of salt water entering our fresh water supplies and impacts 

on agricultural production, numerous economic consequences related to coastal property protection and the livelihoods that rely on 

clean water. And it includes threats to our historic resources, and 

once those are lost, we of course know they are lost forever. 

The Clean Energy Jobs and American Power Act requires a national adaptation strategy. It requires Federal planning, and it requires State plans. It requires research to better develop our un-
708 

derstanding of impacts to our water supply, our drinking and 

wastewater infrastructure, and it provides for mechanisms to mitigate impact on forestry and agriculture. It provides assessments 

funding, data collection and mapping funding to integrate the adaptation strategies nationally, at the State level, and at the local 

level. 

All of these adaptation policies necessitate addressing a range of 

policies to make sure they protect vulnerable areas. It ranges from 

insurance to flood protection to health assessments and agricultural preservation. These raise local, State and Federal policy 

issues and a national framework to comprehensively shift our country to an effective adaptation strategy. 

This bill that you are hearing today provides that clear national 

strategy. It involves coordinates plans, it is the only way to ensure 

effective prioritization of our expenditures to make sure we have 

regional coordination and to set data and assessment priorities for 

the country. 

It also provides much needed dedicated funding to get this work 

underway as soon as possible. In particular—— 

Senator BOXER. I am going to ask you to sum up. OK? 

Ms. WILSON. Yes, thank you. The coastal and Great Lakes adaptation program acknowledges and prioritizes the unique challenges 

that are faced by coastal States. This is a critical part of the adaptation strategy and we applaud the inclusion of the provisions in 

this bill. 

Thank you for your consideration of Maryland’s viewpoints today, 

and we look forward to working with you on any questions you may 

have. 

Thank you. 

[The prepared statement of Ms. Wilson follows:] 
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Senator BOXER. Thank you so much. 

Our next panelist is Ronald E. Young, President of the California 

Association of Sanitation Agencies. And we are very happy to have 

you here, sir. 

STATEMENT OF RONALD E. YOUNG, PRESIDENT, CALIFORNIA 

ASSOCIATION OF SANITATION AGENCIES 

Mr. YOUNG. Thank you, Madam Chair. 

Today, I represent my local agency, which is a water and wastewater agency that recycles water for about 100,000 people. I represent the California Association of Sanitation Agencies, which includes 124 publicly owned treatment works that treat wastewater 

for over 25 million people in California. 

And I also have the honor of representing the National Association of Clean Water Agencies, NACWA. They represent over 300 

POTWs nationwide which serve over 80 percent of the sewered 

communities in this Nation. 

I am grateful to appear, and I am pleased that this bill, S. 1733, 

represents a solid step toward finding solutions for water sector climate change impacts. And we support this endeavor. 

The POTW owners and operators believe we can play an important role in participating in climate change solutions. We generate 

sources of renewable energy, such as digester gas, biosolids, and 

biodiesel. If harnessed, these resources can reduce greenhouse 

emissions. And we also produce recycled water, and this is a climate resilient water supply. 

Water supply and water quality services are like the canary in 

the coal mine. POTWs will be among the first and hardest hit by 

climate change. This is because most communities use gravity as 

their source of energy to convey wastewater to the treatment 

plants. These treatment plants are located at the lowest end in the 

watershed. In coastal areas, the plants are often located along the 

coast or in tidal estuaries. 

Even in the case of inland locations, these outfalls and plants are 

located in river valleys and flood plains. Therefore, our agencies 

acutely experience the effects of either sea level rise or storm surge 

events attributable to climate change. 

In the West, and particularly in California, my State, we are also 

experiencing a severe drought, and it has wreaked economic havoc 

on the entire State. The impact of unpredictable precipitation and 

decreased water content in the snow pack has resulted in a statewide effort to reduce water consumption. This reduction is being 

done through conservation. It is also forcing consideration of construction of alternative water supply production such as recycling 

and desalination plants. 

Climate analyses indicate that modified weather patterns, depending on the region, will produce too much or too little water. 

For example, severe storms that can lead to surges of wastewater 

flows that can overwhelm collection systems and treatment plants. 

Alternatively, drought conditions lead to reduced flows and increased concentration of pollutants that compromise wastewater 

flows. 

Other impacts that we believe our agencies expect to encounter 

include rising sea levels that inundate infrastructure and cause 
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health risks, warmer ambient surface water temperatures that will 

likely lead to new regulatory requirements and associated treatment needs, and decreased potable water supplies requiring greater reuse and recycling of wastewater effluent. 

Today, I am proud to present this report that NACWA and the 

Association of Metropolitan Agencies are releasing. It is a study on 

the impacts and challenges the wastewater community expects to 

encounter. It is entitled Confronting Climate Change: An Early 

Analysis of Water and Wastewater Adaptation Costs. 

I provide a copy of the study and request that it be included into 

the record as part of the formal committee record. 

Senator BOXER. That will be done. 

Mr. YOUNG. Thank you. 

The most important finding in this report is that climate change impacts on agencies will impose costs as high as $900 billion by the 

year 2050, depending on how quickly we reduce emissions in the 

meantime. This is in addition to the existing half a trillion dollar 

funding gap for water infrastructure. That is a total of almost $1.5 

trillion. 

The report found agencies would need to address the issues of 

bigger rainstorms, higher treatment requirements, more energy demands, more shutdowns of service because of these calamities, 

more emergency situations, and less safe and reliable water supplies. 

There are opportunities, though, and these come with the energy 

that can be produced from our wastewater solids. We believe that 

up to 10 times as much energy can be produced from the solids out 

of wastewater as is required to treat our wastewater. 

So, one of the things that is very important for this legislation 

is, and we request, that the committee explicitly identify biogas 

and biosolids as renewable energy sources for purposes of meeting 

the goals and objectives of this bill. 

In conclusion, CASA and NACWA support the comprehensive climate change legislation, and we believe the bill will put us on the 

path toward reversing and avoiding catastrophic impacts of climate 

change. 

I look forward to answering your questions. 

[The referenced report was not received at time of print.] 

[The prepared statement of Mr. Young follows:] 
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Senator BOXER. I am very proud to have that support, and I will 

let Senator Kerry know about your comments. 

Our next witness is Dr. Peter Frumhoff, Chief Scientist, Climate 

Campaign, Union of Concerned Scientists. 

Welcome. 

STATEMENT OF PETER C. FRUMHOFF, PH.D., DIRECTOR, 

SCIENCE AND POLICY, AND CHIEF SCIENTIST, CLIMATE 

CAMPAIGN, UNION OF CONCERNED SCIENTISTS 

Mr. FRUMHOFF. Thank you. Madam Chair and distinguished 

members of the committee, thank you for the opportunity to speak 

with you today. 

I am Dr. Peter Frumhoff, Director of Science and Policy at the 

Union of Concerned Scientist and Chief Scientist of our Climate 

Campaign. I have been privileged to serve as a lead author on multiple reports of the Intergovernmental Panel on Climate Change 

and guide several assessments on climate change impacts on the 

United States. 

The Union of Concerned Scientists strongly supports the inclusion of sound domestic and international climate adaptation investments as an essential complement to emissions reductions within 

the Clean Energy Jobs and American Power Act of 2009. 

As you know, the U.S. National Academy of Sciences and virtually every major U.S. and international scientific body with relevant expertise have affirmed that global warming is underway 

now and primarily human caused. 

The climate related impacts are expected to increase in severity 

and extent, and meeting the climate challenge requires two approaches, both swift and deep reductions in our emissions of heat 

trapping gases and investments in adaptation to help us cope with 

those impacts that are now unavoidable. 

Now, the reason why adaptation is so essential is that substantial further warming is locked in due to the heat trapping gases 

that we have already emitted. Much of that heat has been absorbed 

by the earth’s oceans. As the oceans release that heat, the atmosphere will continue to warm for the next several decades. 

Further, the carbon dioxide that we have already released 

through our burning of fossil fuels and clearing of forests lingers 

in the atmosphere for several decades, continuing to warm the climate. 

Smart investments to prepare for now unavoidable impacts are 

essential, for example, to ensure that our Nation’s low lying coastal 

infrastructure from New Orleans to Boston are resilient to rising 

sea levels, that our public health systems can cope with more frequent extreme heat and changing disease vectors, and that our cities and industries and ecosystems can address and cope with the 

additional stress that climate change will increasingly place on our 

Nation’s fresh water resources through declining snow packs and 

more frequent and more severe floods and droughts. 

It is also directly in our national interest to help the most vulnerable developing nations cope with now unavoidable climate 

change. I am pleased that the proposed legislation includes provisions that support international adaptation and would respectfully 

submit that those investments could well be increased. 
738 

But adaptation alone is not sufficient. Beyond the next few decades, the cost, and indeed, the feasibility of adaptation, depends on 

how swiftly we reduce our emissions. In June of this year, a team 

of more than 30 of our Nation’s top scientists released a major assessment of global climate change impacts on the United States. 

This peer-reviewed Federal report, initiated and largely carried out 

under the Bush administration, documents extensive impacts 

across our Nation if we do not swiftly reduce our heat-trapping 

emissions. 

By the end of this century, for example, if we do not swiftly reduce emissions, extreme heat waves as severe as Chicago experienced in 1995, killing more than 700 people, are conservatively projected to occur every year in Indianapolis, Minneapolis and other 

Midwestern cities. 

If we do not swiftly reduce emissions, an average summer in Missouri is projected to have more than 2 months of days over 100 degrees Fahrenheit. An average summer day in Pennsylvania is predicted to feel like a summer day does today in Georgia or Alabama. 

If we do not swiftly reduce emissions, in Minnesota, Michigan 

and Wisconsin, heavy down pours, twice as frequent now as they 

were a century ago, are projected to increase further and cause 

widespread flooding, damage to infrastructure and delay planting 

of crops. 

If we do not swiftly reduce emissions, in New York, New Hampshire, Vermont and Maine, the winter snow season is conservatively projected to be cut in half and reduced to just a week or 

two in Pennsylvania. The ski industry across the Northeast, for example, stands to lose up to $800 million in annual revenue. 

U.S. leadership is reducing heat trapping emissions by levels and 

great and perhaps ultimately greater than those proposed within 

the Clean Energy Jobs and American Power Act, is essential to 

keep these and other impacts from becoming legacies of climate 

disruption that we leave for our children and grandchildren. 

The opportunity in front of us is to reap the multiple benefits of 

U.S. leadership to a vibrant clean energy economy. I and my colleagues at the Union of Concerned Scientists are pleased to support 

this legislation and to work with this committee to ensure that the 

Act maintains and strengthens provisions to reduce emissions and 

adapt to those changes we can no longer avoid. 

We strongly encourage that this historic legislation be reported 

out of this committee and passed by the full Senate as fully as 

swiftly as possible. 

Further information on climate science, impacts and solutions is 

included in my written submission. 

Thank you. 

[The prepared statement of Mr. Frumhoff follows:] 
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Senator BOXER. Thank you. 

Next we hear from Larry Schweiger, President and Chief Executive Officer of National Wildlife Federation. 

Welcome. 

STATEMENT OF LARRY J. SCHWEIGER, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL WILDLIFE FEDERATION 

Mr. SCHWEIGER. Thank you, Senator. 

Good afternoon, Madam Chairman and members of the committee. I want to thank you and the other members who have sponsored this important bill and for the work that you are doing to advance this bill of this day. 

Thanks also for the opportunity to testify on behalf of the National Wildlife Federation and our over 4 million members and supporters across America. 

This bill before us addresses the most compelling challenge of 

our time. It means more jobs, less pollution, and greater security 

for every American. It includes sensible provisions to minimize the 

costs for families in all parts of the country, provides fair distribution of resources to solve our energy needs, and helps vulnerable 

people in developing countries cope with climate change while protecting nature. 

Congress must enact a two-part agenda. It must cap and reduce 

pollution to levels dictated by science to avoid the most dangerous 

consequences. And it must provide dedicated funding to address 

the inevitable impacts of global warming on nature. 

The Federation supports the strongest CO2 targets possible. The 

20 percent near-term reduction is a modest, easily achievable target and is the minimum starting point for moving forward on this 

problem. 

The fourth report of the Intergovernmental Panel on Climate 

Change warns that in the lifetime of a child born today, some 20 

to 30 percent of the world’s plants and animals will be on the brink 

of extinction if we do not take bold action now. A million species 

could be denied to our children and our grandchildren if we allow 

current carbon emissions to continue, if we fail to safeguard nature 

from the worst impacts of climate change. 

Because of this, we are pleased that the Chairman’s mark provides long-term dedicated funding for natural resources. I would 

like to highlight the work of Senator Baucus and Senator 

Whitehouse on these provisions particularly. The investments provide essential public and private sector jobs, especially in rural 

areas where local economies are dependent on natural resource activities. 

Our country is blessed with an abundance of natural wealth. It 

provides food, shelter and economic and spirituality vitality. 

Unique landscapes define us as Americans. I think Ken Burns in 

his film recently spelled that out clearly to all of us. 

Born and raised as a hunter and angler, I can say that my wildlife heritage has helped me forge family values, and I hope to pass 

this on to my children. I think that is true of many other American 

families from generation to generation. 

These hearings are about whether Congress and all of America 

will step up to its moral duty. If we do, one day we will be able 
793 

to look our children and grandchildren in the eye and be proud of 

our conservation heritage. If we fail to act now, the alternative is 

almost unimaginable. It is not an exaggeration to call what we are 

facing a climate crisis. This will be the defining challenge of the 

21st century. 

For years, commentators have framed climate change such as 

melting of Arctic sea ice and rising of seas as mere possible outcomes in the distant future. In fact, these and other profound ecosystem changes and climate feedbacks are well underway and are 

occurring far more rapidly that scientists recently projected. 

I just wrote a book called Last Chance: Preserving Life on Earth 

which I will provide to the committee and ask that it be included 

in the record. I believe we are facing our last chance to protect life 

on earth as we have known it. If we fail to cap pollution, nothing 

we can do on the adaptation front will save endangered wildlife or 

conserve ecosystems, including parks, marine sanctuaries, refuges 

and forests that support the economy and protect our quality of 

life. 

If we cap pollution but fail to make investments in protecting 

and restoring our natural resources, we will have accomplished 

only half of the job. Any solution must do both. It must cap pollution and use some of the resources generated to repair the current 

and future damages caused by global warming. 

I must ask. Are we ready to talk about a world without polar 

bears, without vast sage brush depth and free roaming antelopes? 

Are we willing to talk about a world without ice fishing or deep 

snows in the winter, a world with insufficient river flow in the 

summertime to support salmon and trout, a world where coastal 

wetlands teeming with wildlife is just a memory? 

The choice is ours. The time is now. 

The National Wildlife Foundation and our partners are committed to doing all that we can to safeguard nature from a warming world. We are working with scientists, resource managers and 

a coalition of over 700 hunting and fishing and conservation organizations from every State in the Union. Just the other night, we had 

over 13,000 sportsmen on the phone with Senator Warner talking 

about this very issue. 

This bill offers America a better way to power our future and to 

protect our planet. America has always worked best when we work 

together. Let us work together not to meet our moral obligations 

to future generations. 

Thank you. 

[The referenced book was not received at time of print.] 

[The prepared statement of Mr. Schweiger follows:] 
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Senator BOXER. Thank you. Thirteen thousand people on one 

phone call with Senator Warner. 

Mr. SCHWEIGER. We had 11,000 on another with Ted Roosevelt. 

Senator BOXER. It is extremely impressive. 

I want to make sure I pronounce our next witness’s tribe in the 

right way here. Fawn Sharp is easy to say. But is it Quinault? 

Ms. SHARP. Yes, it is Quinault. It is also pronounced in French 

as Quinault. There is a Quinault wine. But we pronounce it 

Quinault. 

Senator BOXER. Quinault Indian Nation. 

Ms. SHARP. Yes. 

Senator BOXER. From Washington State, is that correct? 

Ms. SHARP. That is correct. 

Senator BOXER. Welcome. 

STATEMENT OF FAWN SHARP, PRESIDENT, QUINAULT INDIAN 

NATION 

Ms. SHARP. Thank you. I thought you were going to ask about 

my name pronunciation. I do want to comment, with regard to Senator Whitehouse, I was introduced by a Narragansett official last 

week and he pronounced my name Fawn Shop. 

[Laughter.] 

Senator WHITEHOUSE. You know, that is not bad for Rhode Island. 

[Laughter.] 

Ms. SHARP. Thank you. Senator Boxer, Senator Inhofe and members of the committee, I am truly honored, indeed, to present testimony on behalf of the Quinault Indian Nation. The Quinault Indian Nation truly appreciates the committee’s efforts and dedication. My testimony was prepared in consultation with several of the 

tribal organizations and tribes throughout the United States, including the National Congress of American Indians. 

We applaud the committee for expanding this bill to include important tribal provisions that were not in the House bill, H.R. 2454, 

namely, inclusion of the BIA funding as an eligible purpose of Department of the Interior natural resources adaptation funding, an 

extra alternative funding possibility for natural resources adaptation on tribal lands, as well as inclusion of tribal land as an eligible 

recipient of funds under the Supplemental Agricultural Reductions 

Program which significantly increase and extend it from 0.25 percent for 2 years to 1 percent throughout the life of the bill, and finally, the required consultation with the Secretary of the Interior 

when EPA determines the tribal set-asides. 

I have also reviewed the adaptation provisions of the recently released Chairman’s proposed amendment to the bill and express 

overwhelming appreciation and support for these additional provisions that were not included in the original version. I have identified them in more detail in the expanded version of my testimony 

that has been submitted for the record. 

Senator BOXER. We will put that in. 

Ms. SHARP. Today, we urge congressional leadership to move forward with legislation to help the United States prepare and adapt 

for the challenges of climate change and to attain the goals of energy independence and security. We look forward to working with 
864 

Congress and the Administration in the development of climate 

change legislation to ensure that tribal needs and concerns are adequately addressed. 

I begin my remarks by stating a very important fact. Indigenous 

peoples, including American Indians, Alaskan Natives and Hawaiian Natives are among the most vulnerable to the impacts of climate change in the world. This fact is recognized by the Intergovernmental Panel on Climate Change. 

In the United States, according to the GAO office, 86 percent of 

Alaskan Native Villages are threatened by flooding and erosion because of warming temperatures. Thirty-one villages are imminently 

threatened, and 12 villages have opted to relocate permanently. 

Since 1928, my neighbor to the North, the Hoh Tribe, has been 

plagued with flooding every 10 years. The result is severe soil erosion that has reduced the reservation from 443 acres to 400 acres. 

For more than a decade, the Hoh Tribe has been aggressive in its 

efforts to get the reservation relocated before extreme river flows 

and increases in sea level completely wash the land, the people and 

the future of the Hoh Tribe into the ocean. 

At home, the Quinault Indian Nation is proactively addressing 

the uncertainties and impacts of climate change by developing risk 

assessment, adaptation, and mitigation plans by July 2010. 

During my first year as tribal President, I was confronted faceto-face with impacts of climate change. I received an urgent call 

from our scientists who had discovered massive dead fish washed 

ashore our pristine coastline. This was known as the Dead Zone. 

It affected the entire West Coast of Washington and the shores of 

Oregon. The shore was riddled with dead fish from every spectrum 

of the food chain. It was not a singular fish. 

In the last year, actually, earlier this month, I took a helicopter 

flight over the Anderson Glacier. This glacier, which feeds the 

Quinault River, is one of four. We have been monitoring this glacier quite closely over the last 20 years. The University of Washington has photos and has been monitoring it since the turn of the 

century. 

In the last 20 years, we noticed that it receded 1,700 feet. When 

I took the flight earlier this month, the entire glacier is gone. It 

disappeared. 

We are heartened that the Senate and House committees have 

recognized the nation-to-nation relationship between the Federal 

Government and tribes by including us in many critical provisions 

like renewable energy, domestic adaptation and natural resources 

adaptation. 

We seek to be sovereign partners in the climate change programs. We seek equitable shares of the allocations provided to 

States and tribes. 

Finally, I have two other recommendations that I would like to 

note in my remarks. We ask that the committee direct the GAO to 

prepare a report on climate change and tribal nations in the Lower 

48. There have been two GAO reports on the impacts of climate 

change to Alaska native villages, once in 2003 and once in 2009. 

A report on climate change and tribal nations in the Lower 48 

would document for Congress and the Administration the wide-
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spread cloud of destruction that awaits our reservations, our people 

and our livelihood. 

Last, section 372, the Additional Provisions Regarding Indian 

Tribes, we ask that contain a disclaimer to protect treaty and other 

federally reserved tribal rights. 

Thank you. 

[The prepared statement of Ms. Sharp follows:] 
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Senator BOXER. Thank you very much. 

I just want to make sure that you are aware that Senator Udall 

of New Mexico has really been our point person. So, the thank yous 

that you gave in my direction I am going to say, without Senator 

Udall, I do not think we would have done as good a job as we did. 

So, I just wanted to make that public because he worked so hard, 

he and his staff. 

And now last, but not least, our minority witness. I want to just 

say that poor Senator Inhofe came in, and he said what happened 

to my other witness, because he had two. Well, his other witness 

got H1N1 and there was not enough time. 

But here is the really interesting thing. Tomorrow, his—another 

witness got H1N1. But there was time to replace that witness with 

another witness. But we wish both of those witnesses well. 

Now, Mr. Sims, I am going to welcome you back to the Senate 

where, as I understand it, you worked for 12 years including as 

Chief of Staff to former Senator Robert Kasten, Jr., and then you 

worked in the White House as President George W. Bush Director 

of Communications for the Energy Group, which was led by Vice 

President Cheney, and now you serve as Chief Executive Officer of 

the Western Business Roundtable. 

So, we are very pleased to welcome you back to your old homestead. 

Mr. SIMS. Thank you. 

Senator INHOFE. I might also add that since we only have one 

minority witnesses, you can have 10 minutes instead of 5 minutes. 

Senator BOXER. Well—— 

[Laughter.] 

Mr. SIMS. I am not sure I would ask for that. 

Senator BOXER. Well, with unanimous consent, we will give you 

7. How is that? 

STATEMENT OF JAMES T. SIMS, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, WESTERN BUSINESS ROUNDTABLE 

Mr. SIMS. I will be efficient regardless since we are a pro-efficiency group. 

Madam Chair, thank you very much. Mr. Ranking Member and 

members of the committee, it is good to be back here. I feel like 

the Senate is really my home in a lot of ways. 

The members of the Western Business Roundtable, Senator 

Boxer, we are a very wide ranging, broad based group of members, 

and I think it is fair to say that of our 50 or so members, we probably have 50 different views on what to do about climate change. 

We do have a number of things that we do agree upon, though, 

and I have entered those into my statement as long as that can be 

placed in the record. I would appreciate that. 

Senator BOXER. Absolutely. 

Mr. SIMS. I would also mention that I am the co-founder and the 

former head of what is not known as the Geothermal Energy Association. I am a very strong proponent of renewable energy and have 

a lot of experience in that area. My job these days running a large, 

broad based organization is to promote more of everything. 

Regrettably, our organization is not able to lend our support to 

your bill as it currently stands today. What I wanted to do, and I 
896 

hope I present this in the right way, is to put forth some additional 

ideas and suggestions, constructive things that can be done in addition to a bill like this or in lieu of a bill like this, whatever the Congress is trying to do. 

Our members, and I am very proud of this, our members are 

companies that are out there right now trying to develop the exact 

technologies, greenhouse gas mitigation, CCS technologies that will 

get us to the point where we will be able to grow our economy and 

mitigate greenhouse gas emissions. 

So, we would like to make a couple of concrete suggestions for 

the Congress and the committee, of course, to consider. 

We suggest the launching of four major initiatives, public-private 

partnerships, along the lines and with the same intensity as this 

country entered into when we put a man on the Moon in less than 

a decade. A number of members have talked about some of these 

very initiatives. For example, we would like to see a public-private 

partnership put together that would specifically build and deploy 

at least six 500-megawatt pilot projects near zero emission coalfired power plans that can demonstrate a wide variety of CCS technologies. 

Now, a lot of people are talking about these technologies. Frankly, a lot of them are on the drawing board. We believe we need to 

get out there in the field, and this is going to require some assistance from the Government, to start building these kinds of technologies. 

We would also like to see a major initiative to build out our infrastructure to support compressed natural gas and electric vehicle 

fleets. That is something that I think a lot of support exists on both 

sides of the aisle. We would also like to kick start the construction 

of at least three coal-to-clean liquids and/or coal-to-gas facilities to 

help us convert the energy locked up in coal in cleaner and cleaner 

ways. 

Finally, we would like to see a dramatic acceleration, I think all 

would agree with this, a dramatic acceleration of our build-out of 

the high voltage electric transmission system. I would add that we 

feel very strongly, however, that as that process goes forward, we 

need to make sure that we do not restrict access to the grid. We 

should build lots of wind, solar, geothermal, clean coal, nuclear, et 

cetera, and all should have access to that grid. 

We also would recommend, and I think, Madam Chair, there is 

no disagreement on this, a much more aggressive push on energy 

efficiency. And I would also add process efficiency. Energy efficiency looking at building envelopes and standards, those are obviously going to get stronger, and they should. But also there are tremendous efficiencies that can be reaped through industrial processes, whether it is power generation, manufacturing, et cetera. 

Obviously, the more efficient we are in those processes, the more 

production we can have with a comparable decrease in emissions. 

We also believe, and I think there are a number of members that 

also agree with this, that we need to find a way, if we are going 

to make CO2 sequestration really work, we have got to find a way 

to deal with the legal liability issue. We have Price-Anderson for 

the nuclear industry. I think we are going to have to look at some 

kind of a structure so that, whether it is a Governor or a county 
897 

or the U.S. Government, when we start seriously sequestering CO2

underground, we have to understand and know that we are not 

going to have, quite frankly, a flurry of lawsuits, because that is 

going to prevent those projects from going forward. 

We also believe that we need a massive build-out. The massive 

build-out of clean energy technologies that we are all seeking, renewables in particular, are also going to require a major increase 

in this country’s ability to do mining and mineral development. 

Now, most folks do not put these 2 and 2 together, but if you 

think about it, a 3-megawatt wind turbine, those are the big ones 

that you see now going all over the country, one of those wind turbines requires 335 tons of steel, that is one turbine, 4.7 tons of copper, 1,200 tons of concrete, aggregate and cement, 3 tons of aluminum, and 1 ton of something we call rare earth elements. 

And I think many of you are starting to hear more and more 

about the fact that rare earth elements, which are used in wind 

turbines as part of the permanent magnets, they help us create the 

electricity. Right now, our country, like it or not, is dependent on 

one nation for 99 percent of all the rare earth elements that we import. The nation is China. And the reason that is important is that 

the Chinese, as they are building out their wind power manufacturing and deployment capabilities, they are talking now about restricting their exports of those rare earth elements. 

The point being that if want to build a lot more renewables, we 

are also going to need to have to do a lot more environmentally 

sound and sensitive mining and minerals development. 

Madam Chair, I want to make one note on climate adaptation. 

There are a lot of things going on in climate adaptation. I think 

they are all good. Frankly, I am one who believes, and I do not 

think anyone would dispute this, the climate is always changing. 

Humans are having a role in that. 

But the fact is we need to be careful about adapting to whatever 

climate we have in our future. I would note, this is a little controversial, I think there is a truth in this issue that frankly is best 

summed up by Patrick Moore, who is one of the founders of 

Greenpeace, who makes the point that ice and frost are the enemies of life. 

Now, that is not to say that we should not be concerned about 

global warming. It is to say that as the globe warms, which everyone says it is going to, that some of the catastrophic predictions of 

species extinctions probably, I believe, are not true. That is not to 

say that we should not be working to try to prepare for ourselves 

for any climate adaptation that comes down our path. 

Madam Chairman, thank you very much. 

[The prepared statement of Mr. Sims follows:] 
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Senator BOXER. Thank you very much. 

I am going to think about that, when ice and frost our enemies 

of life since Greenpeace thinks our bill is too weak, I think you took 

that point a little out of context. 

[Laughter.] 

Senator BOXER. But I guess if you are a polar bear, ice is good. 

If you are an ice skater—but no, we will get there later. But thank 

you. 

I felt that your points were very well done. Hey, you have to 

start the clock. Have you put a cost to your plan? It is a publicprivate partnership and it is pretty big, visionary. 

Mr. SIMS. It is, Madam. 

Senator BOXER. So what do you put as a cost to taxpayers of 

this? 

Mr. SIMS. We have not, but we will do that. We have a number 

of people on it right now. I will get that back to the committee. 

Senator BOXER. Please. Because I am looking at this, and I am 

thinking, you know, one of the interesting things about the approach we are taking is that the 7,500 largest polluters, as you 

know, will have to buy the allowances. It is a polluter pay type of 

a program. Now, my colleague calls it a tax. It is not a tax because 

if you clean up your act, and you figure out how to get the carbon 

out of the air, you do not have to do anything. So, it is not a tax. 

It is polluter pay. 

So, the point is, that is different than taxpayer pay. And that is 

why I ask you for the price that you would put on these things. It 

may be that they are very worthwhile, some of these ideas. So I 

am very interested in hearing from you. 

Mr. SIMS. Can I make a quick suggestion in that regard? 

Senator BOXER. Please do. 

Mr. SIMS. Speculating, as well do, on the outcome of this debate 

and this legislative process, if it is the case, Madam Chair, that the 

bill passes, a bill like this passes, I think, being practical, as my 

member companies tend to be, I think a lot of folks we can reasonably project that the regulations that would be written to implement such a bill will be, like it or not, in the courts for a number 

of years. I think all sides will probably be suing, quite frankly, to 

change those regulations. 

And part of the reason that we are putting forward things that 

we think can be done in the near term is that these are things that 

can be done in the near term, possibly while the outcome of this 

debate continues to go forward. 

So, our member companies are out there on the ground now, actually trying to make these things work, and we are looking for 

whatever assistance we can to push that ball forward. 

Senator BOXER. I hear your point. I think it is an interesting 

point. I would, however, say do not underestimate that there would 

be lawsuits over some of the things that you put on the list. It is 

just the way it is. And the question is, how swiftly it moves. It took 

time, but we finally got the ruling from the Supreme Court that 

carbon is covered by the Clean Air Act. 

So, we need to move forward. And I would suggest to you that 

the one way we know we have lawsuits is if we do not move forward on that because the Supreme Court has ruled. So, whether 
911 

EPA does it or we figure out a more flexible way to do it, it shall 

be done. 

I guess I want to ask our representative of the Native American 

tribes here, since she is representing one tribe but she did talk 

about the Alaska Tribes, this idea that ice is the enemy, and frost. 

When I visited Alaska, well, I actually visited Greenland and Alaska—when I visited Greenland and we met with the tribes there, 

they are just devastated with the melt. Devastated. I mean, everything that they have done for generations is changing. 

So, I wonder if you could comment on that. I mean, I just do not 

agree with that comment. 

Ms. SHARP. Sure. Absolutely. A lot of thoughts went through my 

mind as I heard the testimony. You know, when you think of Chief 

Seattle’s quote, I do not know how many of you have ever read 

Chief Seattle’s quote, he talks about what we do to the earth we 

do to ourselves, all things are connected. And it seems that there 

is a collective value. 

And we, as native people, have a deep reverence for the natural 

world, the natural environment, because we receive air, we can 

breathe, we receive water, we receive food that nourishes and feeds 

our bodies. And so, we see an intimate relationship with all aspects 

of the physical environment, and the degradation of any one physical aspect on the earth has a domino effect. 

The glaciers that I mentioned in the Upper Quinault that feed 

the Anderson Glacier, that is now gone. That water provides essential water flows for salmon, and the salmon are essential to our 

culture and our value system, and that maintains our continuity as 

a people. 

Senator BOXER. Thank you. I think that is beautifully stated. 

Mr. Young, my fellow Californian, could you describe why wastewater facilities are vulnerable to the expected impacts of global 

warming and how those impacts are addressed in the adaptation 

provisions of out bill? 

Mr. YOUNG. That impacts I think that we are talking about are 

because of location. Because of the immediate impact of flooding, 

of rising sea water inundating already perhaps challenged facilities. This causes the opportunity for sanitary sewer overflows, for 

impacts on public health, for contamination in our streams and rivers, and all of these impacts that are there. 

How the adaptation section of this bill can help is with the challenge grants that are offered so that the most serious problems can 

rise to the top of the list, and the most serious partnerships can 

be made between the local agencies and the Federal Government 

to go out and solve those issues in a partnering way, to be able to 

come up with solutions that can be applied throughout the country. 

Senator BOXER. Thank you. 

Senator Inhofe. 

Senator INHOFE. Thank you, Madam Chairman. Well, first of all, 

on the consumer polluter pays, let me quote the Director of CBO, 

Director Elmendorf, he said at any point in which we are putting 

a price on carbon emissions that would be passed through to the 

cost to consumers, is it possible to design a system using the revenue it generates to ensure no net increase in the overall burden 

to consumers. His answer is no. 
912 

Mr. Sims, you raise some questions that I think are significant 

in terms of preemption that we would want to make sure that, the 

argument has been made that you have to pass legislation to preempt the Clean Air Act. Does this, in any way, preempt that? 

Mr. SIMS. I think that, and I will admit, Senator Inhofe and Senator Boxer, that I am still reading the bill. I would have liked to 

have built it in 25 pages. I am sure we all would have liked to. It 

is just not possible to do that. So, we are still examining it. 

But I know that there is no provision, as far as I know, that 

would specifically preempt additional action by EPA. Now, obviously EPA is going to have to write the regulations to implement 

much of this bill. So that is going to happen regardless. 

I think our concern was that if the Congress does not act in some 

fashion, does not provide some legislative and regulatory certainty, 

we are going to continue to have problems. Our members agree 

with that. By the same token, we are concerned if Congress does 

not act, and the EPA goes forward. The EPA does not have the 

tools under the Clean Air Act to adequately regulate greenhouse 

gases. Clearly. I do not think their recent change is going to regulate farms and cows with—farms that have 25 cows on it. 

Senator INHOFE. And I would also say what provisions of the bill 

would help us get more natural gas out of the ground? 

Mr. SIMS. I think there is an irony, Senator. You make a great 

point. I am afraid that a good piece of this bill and other bills that 

we are seeing come out of the Congress are aimed, ostensibly, at 

increasing America’s energy independence while at the same time 

they have elements that are decreasing our ability to move toward 

that goal with regard to natural gas and oil development. 

We have enough natural gas, we have enough oil, domestically, 

specifically off our coast, and with oil shale, to move completely to 

energy independence. But I am afraid we are not going in that direction. 

Senator INHOFE. Yes, well, the last thing that I asked you was 

if it is in the bill or if you have seen it because some of these answers, as you mentioned the carbon capture sequestration, is there 

anything in the bill that would remove the barriers to that? 

Mr. SIMS. There are. And I think a lot of the details will still be 

worked out. As I said, a lot of the devil that will be in the details 

from this bill, I think, will come in the writing of the regulations. 

So, frankly, from our perspective there is a lot of stuff that needs 

to be filled out, and no one really knows what some of these details 

are going to be until those regs get written and the inevitable court 

challenges get adjudicated. 

Senator INHOFE. Well, I think you bring out a good point when 

you talk about getting some of these resources, like natural gas, in 

previous—and I want to get this into the record, in each one of our 

hearings the new report that came out just last week from CRS 

designated or revealed that American’s combined recoverable natural gas, oil and coal reserves as the largest on earth. We are No. 

1. 

Now, the problem is that we are precluded from developing 83 

percent of that by regulatory obstacles that are out there. Do you 

see anything in this bill that would relieve any of those obstacles 

that are there? 
913 

Mr. SIMS. I am afraid to say no, Senator. 

Senator INHOFE. One of the concerns I have is, if you get beyond 

this bill, some of the same people who are promoting this bill are 

also for some of the other provisions, for example, doing away with 

hydrologic fracturing. You mentioned getting more of the oil and 

gas. Obviously, if you remove hydrologic fracturing, you would have 

a real serious problem doing that. I think you would agree with 

that. 

Mr. SIMS. Senator, I would say there is a tremendous irony in 

that threat as well. One industry that would probably be hurt the 

worst by shutting off or slowing down our natural gas production 

is wind. Wind energy, as most of us I think now understand, is an 

intermittent resource, and it desperately needs natural gas to help 

balance out the load. The two work well together, hand in hand. 

Senator INHOFE. Yes, well, I think what I am saying is that the 

one thing that bothers me more about the debate than anything 

else in when people say, oh, we are concerned about the dependency on foreigners for our oil, gas, our energy, when in fact the reason we are is our regulations over here. And if we wanted to be 

energy independent, all we need to do is get rid of these barriers 

that are there. And these are legislated. I am talking about moratoria for offshore drilling and you mentioned the immense oil shale 

and methane hydrate deposits. Those are huge, and they are not 

even considered in this conclusion that we are No. 1 in terms of 

reserves. 

Mr. SIMS. Right. 

Senator INHOFE. We have far more than China, far more than 

Saudi Arabia. It is mind boggling to me that, in this debate, we 

never talk about doing something to reduce those barriers. 

I see a lot of shifting around over here. Do you disagree? Do any 

of you guys really want to keep the barriers there so that we cannot produce our own, develop our own resources? 

Dr. Frumhoff. 

Mr. FRUMHOFF. I would be happy to respond. Thank you, Senator. 

I think the challenge is to make sure we have a level playing 

field that takes into account the true price and cost of energy use, 

which this bill would establish through putting a price on carbon. 

Once you have a price on carbon, along with other corollary policies, then the appropriate mix of energy resources can be better—— 

Senator INHOFE. Yes, but that was not my question. My question 

was, should we not develop our own resources? 

Mr. FRUMHOFF. I think we have to look at the cost of extraction. 

Obviously, in the case of offshore drilling the cost of extraction, the 

environmental and societal costs of extraction are very high. If we 

have lower cost ways of essentially achieving the same energy benefits through the low hanging fruit of energy efficiency—— 

Senator INHOFE. Well, how do we find out if we are not able to 

go after 83 percent of those resources reserves that are out there? 

How can you determine what the costs are? 

Mr. FRUMHOFF. Well, most environmental assessment with 

which I am familiar suggest that the environmental costs of that 

extraction would be very high. And that is why I think it has been 
914 

wise to look for other approaches to achieve our energy independence and to reduce carbon at the same time. 

Senator BOXER. Thank you, Senator. 

I am just going to put into the record, Mr. Sims, I know you have 

not read the whole bill, but if you look at section 191, subtitle H, 

what you will find is a whole natural gas section. And the natural 

gas industry is working with us, the American Natural Gas Association, because different from the House bill, and different from 

Lieberman-Warner, we have a natural gas title here, subtitle, and 

what we allow for is, if you are plugging up a leak from a natural 

gas pipeline, that is an allowable offset. 

That is No. 1, and it huge for them. It is very good for them. And 

second, there is an authorization to help them build cleaner plants. 

So, please know that we agree with you that natural gas is very 

important, it is very abundant apparently, and we are working 

with them to do even more. But we have come a long way. 

And at this point, is it Senator Whitehouse? Or is Senator Udall 

first? 

Senator Udall followed by Senator Whitehouse. OK. 

Senator UDALL. Thank you, Madam Chair. 

Senator BOXER. Oh, I am so sorry. In between the two of you is 

Senator Alexander. Forgive me. 

Senator UDALL. He has been waiting there, patiently. 

Madam Chair, thank you for your very kind comments about my 

advocacy for tribes. I think you also have been very attentive to 

tribal needs, and in particular, worked hard, I think, to protect 

California tribes, and you are a real champion of tribal sovereignty. 

With that, let me ask President Sharp. It is my understanding 

that the Quinault Indian Nation, and other Indian tribes, have 

been engaged extensively over the past several years to establish 

intergovernmental cooperation at State and Federal levels. We 

have had some success in improving the coordination and cooperation with Indian tribes in this legislation so far. 

But what would you suggest we do to strengthen provisions to 

support tribal participation in such forums in this legislation? 

Ms. SHARP. I think, probably, the main thing that we would seek 

is that tribes have a direct and specific policy, what I call policy 

and regulatory deference. Tribes are in the best position to know 

and understand the problems that we confront and face at home. 

We have extensive oral history throughout many generations. 

And we would like to be able to blend western science with traditional knowledge. And to be able to do that effectively, tribes 

should be given regulatory and policy deference as we develop our 

own standards, our regulatory structures, as well as how that impacts our economy within reservation lands. 

Senator UDALL. Now, this legislation that we expect to pass here 

through the committee in the next couple of weeks is expected to 

be combined with the Senate Energy Committee, and we also hope 

to include legislation on tribal energy being developed by the Senate Indian Affairs Committee. 

Should this legislation be improved to encourage and facilitate 

tribal development of clean, renewable energy? 

Ms. SHARP. Absolutely. 

Senator UDALL. What would you suggest there? 
915 

Ms. SHARP. I would suggest that, if Congress and Members of 

Congress in leadership could take a step back to really understand 

that tribes, in this particular issue, need to be direct participants. 

We have advanced these issues locally, regionally, nationally and 

internationally operating under this assumption. We are facing a 

global crisis that is of apocalyptic concern. 

In those circumstances, it is not right for us, for me as a policymaker of one jurisdiction, to operate in a vacuum. Not only a 

human vacuum, a mankind vacuum, but to look at the interests 

that transcend borders. And leadership in this era, in this time, demands and requires that all public policymakers draw on all information, economic information, cultural, historic information, scientific information. 

And so, I would strongly encourage that this Congress realize the 

value that Indian country brings when tribes do collaborate with 

the Federal Government on restoration efforts that blend traditional knowledge. The benefits are multiplied. And we are at an 

era where it is such a crisis, we need all information to make calculated decisions moving into the future. 

Senator UDALL. Thank you. That is very well put. 

Mr. Schweiger, in New Mexico, we are already seeing the early 

impacts of climate. The Jemez Mountains west of Santa Fe saw the 

biggest average increase in temperature and decrease in moisture 

of anywhere else in the State in 2008. Those change likely contributed to a massive Pinion Pine forest die off in the mountains that 

we have not seen in a long, long time. 

Now, natural resource adaptation is an unfamiliar phrase to 

many folks, even those who may be familiar with traditional conservation efforts. Could you describe a few examples of the types 

of projects that would be pursued under this legislation, including 

the investments made in communities and the jobs that would be 

created and preserved? 

Mr. SCHWEIGER. Thanks, Senator. I think the great challenge we 

have today is that the ecosystems that we have tried to protect in 

previous actions may, in fact, be disconnected from the resources 

themselves. And there are some places where we need to create 

corridors where wildlife—and we also need to take steps to protect 

stream sides from over warming through planting of buffer strips 

and reducing the temperatures of stream side corridors. 

We also, I believe, have opportunities to take steps to deal with 

coastal sea level rise and invest in protecting habitats that will 

someday be submerged while than allow those habitats to be built 

upon today. 

So, there are a number of things that we can do. I also think 

that, you know, we need to remember that in order to stay even 

with climate change today, the animals, birds and plants need to 

be moving at about 30 to 43 feet per day according to the best calculations that we have seen. So, it means that we need to help 

them move either up slope or move further north to make those adjustments. 

It is going to redefine conservation. And frankly, I think there 

are a lot of really good minds working on what that looks like because it is not going to be the same thing as we had 40 or 50 years 

ago. We need to rethink how we manage natural resources to pro-
916 

tect the living resources and plants to help them adjust to the climate consequences that we are causing. 

Senator UDALL. Thank you, and thank you to the entire panel. 

Thank you, Madam Chair. 

Senator BOXER. Thank you, Mr. Schweiger. That was really fascinating to listen to you. 

Senator Alexander. 

Senator ALEXANDER. Thanks, Madam Chairman. And thanks to 

the witnesses for being here. 

A couple of things for the record. First, the Chairman and I have 

gone back and forth a little bit about the costs of wind power 

versus nuclear plants. I accept the National Academy’s conclusions 

that climate change is real and that humans have probably caused 

most of it recently. And I hope the Chairman will accept the report 

of the National Academy of Sciences of July that says the cost of 

making 20 percent of our electricity from wind power is about the 

same as making 20 percent of our electricity from nuclear power. 

Senator BOXER. Senator, honestly, I do not remember discussing 

the cost. I was talking about the rate payers’ costs. 

Senator ALEXANDER. Well, that is who pays for each one. 

Senator BOXER. OK. 

Senator ALEXANDER. The cost to the rate payer for nuclear, according to the National Academy, is 6 cents to 13 cents over the 

lifetime per kilowatt hour and 4 cents to 10 cents for wind over its 

lifetime. And the wind does not include the transmission power or 

the back-up power. You have to build, you know, natural gas or 

coal or nuclear plants to back them up because the wind does not 

blow but a third of the time. And it does not include the taxpayers’ 

subsidy, which over 10 years—— 

Senator BOXER. I am going to add back a minute to your time 

because I want to—— 

Senator ALEXANDER. I just wanted to—— 

Senator BOXER. No, no. I think this is important. 

Senator ALEXANDER. But the rate payers would pay the same. 

Senator BOXER. OK. I think it is important to note that taxpayers picked up the bill for the Price-Anderson Act. And that is 

always forgotten. 

Senator ALEXANDER. No, Madam. 

Senator BOXER. It is in there. 

Senator ALEXANDER. May I correct that? Because—— 

Senator BOXER. Well, after the certain amount of billions, then 

the taxpayer is for catastrophic. We know that. 

Senator ALEXANDER. Well, each, let me see if I remember right, 

you have got 104 nuclear reactors, they each are responsible up to 

the first $10 billion? 

Senator BOXER. Ten billion dollars. 

Senator ALEXANDER. So, anything above 104 times $10 billion 

the taxpayer would be responsible for, but the taxpayer takes care 

of disasters every time we have one of that magnitude. 

Senator BOXER. Well, if I could say, it is quite a different situation. But I mean, if you know what happened in Chernobyl, I do 

not see that happening with wind power. 

Senator ALEXANDER. That was in Russia, Madam. 

Senator BOXER. Yes, and Three Mile Island—— 
917 

Senator ALEXANDER. The taxpayer has never paid a penny of—— 

Senator BOXER. But that is not the issue. The issue is, if we do 

not have to, why do we not repeal? I will join you in repealing it, 

because I think that would make it much more attractive to the 

American people if they did not have to worry about the possibility 

of a catastrophic—— 

Senator ALEXANDER. I would do that if you would join me in repealing in the $170 billion subsidy for wind power that we will be 

paying over 10 years to make 20 percent of our energy. 

Senator BOXER. Well, let us talk. I doubt that we will reach a 

meeting of the minds for a lot of reasons—— 

Senator ALEXANDER. Probably not. 

Senator BOXER. But I have to say, I have to say, really, I think 

nuclear is going to be part of the mix. And this is the last point. 

I think what we have argued about more than the cost is that at 

the end of the day there will be more nuclear plants built under 

the Kerry-Boxer bill than under your plan to build 100 plants. That 

is what the studies show. 

And for some reason, you continue to make the point that nuclear is the answer when, in fact, in our bill there will be more nuclear plants built under out bill than under your build 100 plants 

now scenario. 

Senator ALEXANDER. Well, my problem with that, Madam Chairman, and I would like to discuss this with you, is that the bill that 

we are writing here will be combined with the renewable energy 

bill, which favors wind and excludes nuclear. So, we have a national windmill policy that encourages and subsidizes building 

windmills, and we have not started a nuclear power plant in 30 

years. 

Senator BOXER. Well, let us talk about the loan guarantees. You 

want to talk about that for nuclear? I mean, let us face it—— 

Senator ALEXANDER. I would like us to have a carbon-free electricity standard—— 

Senator BOXER. I love it. 

Senator ALEXANDER. Where all forms of carbon-free energy would 

be treated the same. 

Senator BOXER. That is fine. That is fine. But you forget, what 

you forget every time we have this conversation, which I enjoy, is 

the Price-Anderson Act, you forget about that, you forget about the 

loan guarantees, you forget about a lot of the things. 

I think what we should do, just because it is an intellectual debate, which I think is worthy of our time but probably not now, 

these poor people. But why do we not sit down and I will make a 

list of all the Government subsidies that the nuclear industries get, 

and I will make a list of all that the wind gets—— 

Senator ALEXANDER. Good. 

Senator BOXER. And you do the same. 

Senator ALEXANDER. I will. 

Senator BOXER. And let us sit down and compare. But at the end 

of the day, they are both very important to the future here because 

they are clean, and that is good. 

Senator ALEXANDER. And I had included in the record the other 

day the estimates that over the next, the subsidies for wind are 
918 

about 10 times that for nuclear, and they are much more than any 

other form of renewable energy. 

But I accept your invitation, and I look forward to doing this. I 

just wanted to make sure that it was noticed that the rate payers, 

the cost of wind, according to the National Academy of Sciences, 

the rate payers would pay about the same in each case. 

Senator BOXER. OK, OK. 

Senator ALEXANDER. Now, I would also like to include in the 

record what I think is a pioneering study done by the Nature Conservancy, if I may, Madam Chairman, which is entitled Energy 

Sprawl or Energy Efficiency: Climate Policy Impacts on Natural 

Habitats in the United States of America, and remarks I made on 

the perils of energy sprawl to the Resources for the Future on October 5, 2009. I would like to include that in the record. 

Senator BOXER. Absolutely. 

Senator ALEXANDER. The recommendations of the Nature Conservancy paper, I hope, are something this committee would take 

seriously. They warned that over the next 20 years new energy production, especially biofuels, which we are learning more about, and 

wind power, will consume a land mass larger than the State of Nebraska, and they made some suggestions for how we might deal 

with that. 

The first insight was the size of the [unclear]. The second was 

they noted the widely varying amounts of land consumed by different production, for example, in terms of biomass, to equal the 

production of one nuclear reactor, you would have to continuously 

forest an area the size of the Great Smoky Mountains with hundreds of trucks running up and down the mountain every day with 

wood chips. 

And in terms of when, I would point out, that a row of 50-story 

wind turbines along the entire 2,178 mile Appalachian Trial, 50- 

story wind turbines, would generate the same amount of electricity 

produced by four nuclear reactors on 4 square miles. 

And they suggested site selection was important, talking about 

the impact on wildlife. To Mr. Schweiger, let me ask you. Have you 

thought about the renewable energy sprawl and its effect on wildlife? I think some of the State wildlife commissions may have. 

And specifically, ExxonMobil pleaded guilty in Federal Court to 

killing 85 birds that came into contact with crude oil or pollutants 

that are protected by the Migratory Bird Treaty Act which dates 

back to 1918. They paid $600,000 in fines. 

The wind turbines we have today kills between 75,000 and 

275,000 birds a year, according to the Bird Conservancy. If we 

make 20 percent of our electricity from wind turbines, that would 

be 1.4 million birds per year. What would be the fine for killing 1.4 

million birds per year? At one wind farm near Oakland, California, 

it estimates that its turbines kill 80 Golden Eagles a year. 

Have you thought about that in your Federation, and do you 

think the Migratory Bird Act ought to apply to other forms of energy production? 

Mr. SCHWEIGER. Well, let me answer your first question first. In 

terms of land use impacts, I think we need to be thoughtful and 

careful about where we place those systems so that we avoid destroying the fragile ecosystems that are truly important to overall, 
919 

you know, life on earth. And I think that with some great care 

going into that, we can do that. 

Second, we need to pay very close attention to the types of technology deployed and how they are done. I think there have been 

vast improvements in wind turbines, and I think we need to continue to develop, you know, approaches that avoid bird strikes and 

strikes of bats and other things. 

Senator ALEXANDER. Do you think the Migratory Bird Treaty Act 

ought to apply to other forms of energy production? 

Mr. SCHWEIGER. Well, I think the Migratory Bird Treaty Act 

ought to be enforced wherever it is a problem. 

Senator ALEXANDER. So, if it kills 1 million birds a year, then 

who, the wind developers are responsible for that just as oil developers are for—— 

Mr. SCHWEIGER. I think that we need to be careful of what we 

are doing with wildlife and make sure that we protect birds as a 

resource of this country. 

I would also point out to you that I spent a week in Prince William Sound where Exxon caused the pollution there, and the oil 

that they spilled is still there. It just under the sand about 6 of 8 

inches and I traveled around with some scientists looking at that 

over the entire system. So, it continues to still have a tremendous 

impact on not just birds, but other life as well. I think Exxon got 

away with a lot. 

Senator ALEXANDER. I think the fine was fine. I think they 

should be fined for killing 85 birds. I was just suggestion that 100 

nuclear reactors on 100 square miles might kill fewer birds and 

disturb less wildlife than 186,000 wind turbines and 19,000 new 

miles of transmission lines. 

Senator BOXER. OK. 

Senator Whitehouse. 

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Senator WHITEHOUSE. Thank you, Madam Chair. I was impressed by the examples of the effects that Dr. Frumhoff gave us 

of, essentially the effects that already underway, as a result of 

what we have already released. 

And by your testimony, Mr. Schweiger. Your testimony was 

backed by a considerable number of hunters and fishermen. And I 

was wondering if you had any specifications at this point of which 

games species, or which game species habitats, would be most immediately affected, and what sort of hunters or fishermen are at 

greatest risk of having their, you know, the habitats that they go 

out and hunt and fish in, compromised in some way, and how soon 

all of that is going to happen? When will we see the leading edge 

of that and where? 

Mr. SCHWEIGER. Well, that is a great question. I think we are already seeing the leading edge of it. For example, if you look at the 

natural range of brook trout in the Appalachians, you will see that 

the southern half of the Appalachians have lost a lot of their original brook trout habitat and that habitat that remains is not in 

good shape. It is rated moderate to poor where at one time it was 

actually good habitat, and it had vibrant brook trout. 

So, when you look at the brook trout range, it goes into Pennsylvania and New York. Most of that south of Pennsylvania and New 

York is in bad shape. North of mid-State New York it is in better 

shape. So, you see it. It is compounding from the southern Apps 

going north. 

The other example I use in my book is the pronghorn antelope. 

You know, there is a study now from the University of Oregon that 

suggests that if we continue doing what we are doing now, we will 

see the sage brush step habitats contracted to a few counties in 

Wyoming over the next several decades. And if that happens, 

pronghorn antelope becomes a remnant population in a very small 

place. 

Senator WHITEHOUSE. Thank you. 

Mr. Young, your testimony is particularly important to somebody 

like me from a coastal State. As you have suggested, many of water 

and wastewater treatment facilities are at the coastline and at 

risk. 

We have seen estimates from the Environmental Protection 

Agency that the current deficit of water and wastewater infrastructure in this country is $662 billion, I think between now and 2019, 

if I remember the year correctly. I assume that, at least to your 

knowledge, these additional liabilities of plants at risk either from 

storm surge or sea level rise would be in addition to that built-in 

cost. Do you know that? 

Mr. YOUNG. Yes. That is absolutely correct. And the only range 

of numbers is given as an opportunity, and it is further described 

in details by regions of the United States in the report. But depending on the timeframe in which you actually do address the 

problems, whether you wait until it is longer into the impacts of 

the climate change or whether you begin a proactive program to 

start earlier. 

Senator WHITEHOUSE. One of the reasons I mention that, just peripherally, is that we have a very severe unemployment problem 

and at the same time a water and wastewater deficit, and one 
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would think we could bring those two together and start building 

out our water and wastewater infrastructure now while we need 

the jobs. But I do not necessarily think that is for this committee 

and this hearing right now. 

My last question will be to Dr. Frumhoff from the Union of Concerned Scientists. This will be a question about the science of climate change. 

We are still here in the Senate in an environment in which we 

are still frequently told that there are scientists that disagree with 

the fundamental premise of climate change, that manmade carbon 

emissions are affecting our climate in ways that are adverse for our 

interests. 

How would you characterize the nature of the debate? I am a 

lawyer, and I could find lawyers who will say that the income tax 

is unconstitutional. I can find people who will say that they have 

been taken up in alien spaceships, and they now wear tinfoil over 

their heads. 

In the scientific community, is it just a fringe that is disbelieving 

this? Or is it a real, live actual scientific debate right down the 

middle, evenly balanced on both side, or somewhere in between? 

How would you describe the nature of the debate in the overall scientific community? 

Mr. FRUMHOFF. Thank you, Senator. Well, you can certainly find 

individuals with Ph.Ds. in science who would characterize the 

science of climate change as highly uncertain. But the broadly cast 

consensus in the scientific community is otherwise. 

Probably the best way to represent that for you, Senator, is by 

quoting from a letter that was sent to the Senate from 18 scientific 

societies with relevant expertise in the United States, including the 

American Geophysical Union, the American Meteorological Society, 

the American Association for the Advancement of Science and 15 

other scientific societies. 

‘‘As you consider climate change legislation, we, as leaders of scientific organizations, write to state the consensus scientific view. 

Observations throughout the world make it clear that climate 

change is occurring and that rigorous scientific research demonstrates the greenhouse gases emitted by human activities are the 

primary drivers. These conclusions are based on multiple lines, 

independent lines of evidence, and contrary assertions are inconsistent with an objective assessment of the vast body of peer-reviewed science.’’ 

I could not agree with that statement more. 

Senator WHITEHOUSE. OK. Inconsistent with the—— 

Mr. FRUMHOFF. It was an objective assessment of the vast body 

of peer-reviewed science. 

Senator WHITEHOUSE. Thank you. 

Senator BOXER. Thank you. I think that is important. Can we get 

that letter to put in the record, sir? 

Mr. FRUMHOFF. Absolutely. 

Senator BOXER. Thank you very much. 

[The referenced letter follows:] 
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Senator WHITEHOUSE. Madam Chair, could I ask unanimous consent to put an additional letter in the record? This one is from the 

Reinsurance Association of America regarding the way in which 

they have had to adapt to the effects of climate change in the insurance industry. 

Senator BOXER. Without objection. 

[The referenced letter follows:] 
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Senator BOXER. So, our last questioner is Senator Cardin. 

The floor is yours. 

Senator CARDIN. Well, thank you, Chairman Boxer. I think I 

started off the first round of questioning this morning—— 

Senator BOXER. You did. 

Senator CARDIN. I think it was this morning. 

Senator BOXER. It feels like it has been—— 

Senator CARDIN. It has been a long day with a lot of witnesses 

and a lot of good information to help us in our work, and I just 

think the last exchange between Dr. Frumhoff and Senator 

Whitehouse was particularly important. We want our actions based 

on good science, which is likely to happen. 

I just think of Maryland, my own State, and in my lifetime, I 

have seen the impact of sea level rising in Maryland. In my lifetime. And if Secretary Wilson is correct, and we do not take action, 

and we see a 2.5- to 3.5-foot increase in sea level in the Chesapeake Bay, it is going to have a devastating impact. You do not 

need a Ph.D. degree to understand what is going to happen. We 

have already seen significant flooding at the U.S. Naval Academy. 

Yes, I understand which is the Ocean State here, Senator 

Whitehouse. We have this friendly debate—— 

Senator BOXER. We have an ocean on our side. 

[Laugher.] 

Senator CARDIN. Right. And you do. It is a beautiful ocean. But 

you do not have as much coastline as we do. We have 3,000 miles 

of coastline in Maryland alone. 

Senator BOXER. OK, let us just say we have plenty. 

[Laughter.] 

Senator CARDIN. Right. You have plenty. And you are impacted 

like we are all impacted on the sea level increase. 

Senator BOXER. I just have to remind you of the West Coast 

every once in a while. 

Senator CARDIN. Right. We come out there every once in a while. 

And we do appreciate, Chairman Boxer, you recognition of the adaptation problems of the coastal areas and the allocations that you 

have made. 

I guess my point is that I have been to the developed areas along 

our coast, and I know the vulnerability. I have been to the reserves, Blackwater Reserve, and look at the acreage that we have 

lost because of sea level and erosion. And know that if we do not 

take action, and we lose these assets, it is going to cause irreversible damage to my State of Maryland, to the Chesapeake Bay and 

to your country. 

So, we have got to be judged by good science. But we do know 

the impact of what is happening here, and we have got to take action, and the good part about this bill is that this bill takes action 

to deal with the underlying problem of global climate change by 

setting targets for us to meet. 

But then you also deal with the damage that has been caused as 

a result of global climate change, right here in America and along 

or coastal ways. We thank you for that. 

Secretary Wilson, I want to get you engaged a little bit in some 

of the green infrastructure that we are doing in Maryland, how important that is, some of our programs and dealing with the way 
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that we deal with runoff, and how important is green infrastructure in trying to develop the right strategy to counter the damages 

that are being done as a result of global climate change. 

Ms. WILSON. The green infrastructure is, it ranks right up there 

at the top of adaptation strategies that a State, a coastal State, can 

take to deal with the effects of sea level rise. 

By way of example, with the State of Maryland’s Climate Action 

Plan and the adaptation strategy, we have got some strategy implementation underway already, and one of those strategies is to ensure that we put in place living shorelines instead of hard bulkheads wherever possible. They are better able to absorb sea level 

rise, and they also greatly improve habitat. 

So, for example, with the green infrastructure funded through 

the ARA funding process, we have jump started our living shorelines projects along the shoreline of the Chesapeake Bay. It is a 

critical part of how we can adapt. 

And I think that is the point of the testimony here today is that 

there are things we need to be doing right now to get adaptation 

underway. The 2 to 3.4 feet of sea level rise you mentioned, that 

is in a lowered emissions reduction scenario. So, we know we have 

got these impacts coming, and this act puts in place a procedure 

and a process and a way for the country to get adaptation on the 

ground now, including the green infrastructure projects. 

Senator CARDIN. I think that is a very valuable point. The point 

is that, if we are successful in dealing with global climate change, 

if not only the United States acts but we act at Copenhagen, and 

there is an international commitment, and we in fact meet our 

international standards and reduce our warming, we still have to 

deal with the consequences of global climate change. And this legislation provides the wherewithal by investing in green infrastructure, by dealing with remedial programs, engaging the States. It is 

not all the Federal Government. We need the help our States. We 

need the work in the private sector. It is a team effort. 

I just thank you all for starting. The States, many States, not 

just Maryland, many States, Madam Chairman have really moved 

forward aggressively on this issue in so many different ways, giving us, I think, the blueprint for a national program where America 

can truly be an international leader on preserving our environment 

for future generations. 

And thank you all very much. 

Senator BOXER. So, Senator Cardin, I checked it. California has 

1,340 miles of coastline. 

Senator CARDIN. Well, I think the Chesapeake Bay, somebody 

can correct me, I think the Chesapeake Bay has 3,000 miles. 

Ms. WILSON. Over 3,000. 

Senator BOXER. OK, well that is because you go this way, and 

this way—— 

Senator CARDIN. Right. We have a flow a lot. Look, I really think 

you do deserve one-third the money that we—— 

Senator BOXER. Whoa. OK. You mean, never mind the 40 million 

people. OK, I got it. 

[Laughter.] 

Senator BOXER. Let me say how much I appreciate this panel. 

Terrific, all of you, just terrific. You are going to get some questions 
958 

from colleagues, and we are asking that you really turn them 

around in 24 hours. I know that is difficult. 

Mr. Sims, I had a question, and I did not even want to bother 

you with it. I tried to look it up. Who are the members of the Western Business Roundtable? They are not in, can I just look them up 

in the—— 

Mr. SIMS. I will send them to you. 

Senator BOXER. OK, because they are not in the Web site. 

Mr. SIMS. They are not on the Web site. 

Senator BOXER. So we will officially ask you for that. 

Mr. SIMS. We will send you our membership list. 

Senator BOXER. I appreciate that very much. 

Mr. SIMS. Can I ask just one favor in return? 

Senator BOXER. Yes. 

Mr. SIMS. I did not get a chance to talk about this, but I want 

to enter this in the record if that is OK? 

Senator BOXER. Yes. 

Mr. SIMS. Madam Chairman, you have a reading list that is 

lengthier than any of us, so I hesitate to ask you to really take a 

look at something. But I think you should look at this. It is very 

short. It is an analysis done by one of my members who is an engineer and a very smart one. And what he does is, he simply goes 

through and he does cast some very serious doubt, which I think 

you should pay attention to, the contention that some of these bills, 

it was not specific to this one, would create all of these millions of 

green jobs. I would recommend that you take a look at it. 

Senator BOXER. I will. And I will also put in the record, at the 

same time, the recent studies that have just come out by U.C. 

Berkeley and University of Illinois, and also the Pew Charitable 

Trust that shows, and the Center for American Progress, there are 

just many of them. But we will put them all in together, and of 

course, we are happy to look at you. Who is this person? What is 

his name? 

Mr. SIMS. Kimball Rasmussen, who is the CEO of Deseret Power. 

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Senator BOXER. And what kind of power is it? 

Mr. SIMS. That it is a rural electric cooperative. 

Senator BOXER. Coal? 

Mr. SIMS. Mostly coal, as is most of Utah. 

Senator BOXER. If I could just suggest to you, just in the most 

humble and respectful way to you? 

Mr. SIMS. Sure. 

Senator BOXER. That I really, when I look at a study that is done 

by someone that has a special interest, I think you have to weigh 

that. 

Mr. SIMS. Have your staff look at it. I think you will find it 

is—— 

Senator BOXER. So, therefore, I am just telling you because I do 

not want you to be misled. 

Mr. SIMS. I understand. 

Senator BOXER. When I see studies that are done by special interests about jobs, and it serves their purpose, it does not have as 

much weight with me as independent studies. And I just wanted 

you to know that. 

Mr. SIMS. By other special interests, right? 

Senator BOXER. Well, I do not think that U.C. Berkeley and the 

University of Illinois is a special interest, OK? But we could argue 

that. You worked for Senator Kasten, and I am sure you made 

those distinctions in those days. 

I want to say to all of you how much I appreciate your time, your 

effort, your intelligence, how articulate you are. I am proud to have 

all of you here. It has been a fantastic day. This was kind of like 

the marathon. 

And the last thing I am going to do is put in the record a letter 

which I am very excited about from the Metropolitan Water District of Southern California, written to Senators Kerry and myself. 

As the largest provider of drinking water in the United States, we 

greatly appreciate your efforts and it is a very, very supportive letter of our bill. 

So, this has been really good. And if you have not had enough 

of this, come back tomorrow, because we are going to have another 

four panels starting at 9:30 a.m. 

Thank you. 

We stand adjourned. 

[Whereupon, at 5:33 p.m. the committee was adjourned, to reconvene at 9:30 a.m. the following day.] 

[An additional witness statement submitted for the record follows:] 
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