LEGISLATIVE PROPOSALS TO REDUCE 

GREENHOUSE GAS EMISSIONS: AN OVERVIEW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND AIR QUALITY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 19, 2008 

Serial No. 110–130 

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56–980 PDF 2008

LEGISLATIVE PROPOSALS TO REDUCE 

GREENHOUSE GAS EMISSIONS: AN OVERVIEW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND AIR QUALITY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 19, 2008 

Serial No. 110–130 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan, Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff 

GREGG A. ROTHSCHILD, Chief Counsel 

SHARON E. DAVIS, Chief Clerk 

BUD ALBRIGHT, Minority Staff Director 

(II) 

(III) 

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

RICK BOUCHER, Virginia, Chairman 

G.K. BUTTERFIELD, North Carolina, 

Vice Chairman 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

ALBERT R. WYNN, Maryland 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

DORIS O. MATSUI, California 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

RALPH M. HALL, Texas 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

ROY BLUNT, Missouri 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas (ex officio) 

PROFESSIONAL STAFF

SUE D. SHERIDAN, Chief Counsel 

JOHN W. JIMISON, Counsel 

RACHEL BLESHMAN, Legislative Clerk 

DAVID MCCARTHY, Minority Counsel 

(V) 

C O N T E N T S 

Page 

Hon. Rick Boucher, a Representative in Congress from the Commonwealth 

of Virginia, opening statement ............................................................................ 1 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 2 

Hon. John Barrow, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 5 

Hon. Ralph M. Hall, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 6 

Hon. Mike Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 7 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 8 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 10 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 11 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 12 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 13 

Hon. Doris Matsui, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 14 

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 15 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 16 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 17 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 18 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 20 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 20 

Hon. Mike Rogers, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 21 

Hon. Darlene Hooley, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 23 

Hon. Roy Blunt, a Representative in Congress from the State of Missouri, 

prepared statement .............................................................................................. 185 

Hon. Tom Allen, a Representative in Congress from the Commonwealth of 

Kentucky, prepared statement ............................................................................ 312 

Hon. Mary Bono Mack, a Representative in Congress from the State of 

Tennessee, prepared statement .......................................................................... 312 

WITNESSES

Kraig R. Naasz, President and Chief Executive Officer, National Mining 

Association; Accompanied by Glenn Kelly, Vice President, Government Affairs, National Mining Association ..................................................................... 24 

Prepared statement .......................................................................................... 27 

Michael Goo, Climate Legislative Director, Natural Resources Defense Council ........................................................................................................................... 32 

Prepared statement .......................................................................................... 34 

Answers to submitted questions ...................................................................... 340 

Page

VI 

Alan Reuther, Legislative Director, United Auto Workers .................................. 66 

Prepared statement .......................................................................................... 67 

Lisa Jacobson, Executive Director, Business Counsel for Sustainable Energy .. 73 

Prepared statement .......................................................................................... 75 

Thomas R. Kuhn, President, Edison Electric Institute ........................................ 96 

Prepared statement .......................................................................................... 99 

Answers to submitted questions ...................................................................... 381 

Frank L. Bowman, Admiral, U.S. Navy (retired), President and Chief Executive Officer, Nuclear Energy Institute ................................................................ 139 

Prepared statement .......................................................................................... 140 

Answers to submitted questions ...................................................................... 384 

Mary Minette, Director for Environmental Education and Advocacy, Evangelical Lutheran Church in America .................................................................. 143 

Prepared statement .......................................................................................... 146 

Ford West, President, The Fertilizer Institute ...................................................... 174 

Prepared statement .......................................................................................... 176 

John Felmy, Chief Economist, American Petroleum Institute ............................ 209 

Prepared statement .......................................................................................... 210 

Robert C.Baugh, Executive Director of AFL-CIO Industrial Union Council 

and Chair of AFL-CIO Energy Task Force ........................................................ 224 

Prepared statement .......................................................................................... 226 

Emily Figdor, Director, Federal Global Warming Program, Environment 

America ................................................................................................................. 232 

Prepared statement .......................................................................................... 235 

Answers to submitted questions ...................................................................... 470 

Jason S. Grumet, Executive Director, National Commission on Energy Policy . 246 

Prepared statement .......................................................................................... 249 

Answers to submitted questions ...................................................................... 473 

Douglas Scott, Director, Illionois Environmental Protection Agency .................. 258 

Prepared statement .......................................................................................... 261 

Randal Mullett, Vice President, Government Affairs, Con-way, Inc. .................. 272 

Prepared statement .......................................................................................... 274 

Paul N. Cicio, President, Industrial Energy Consumers of America 1 ................ 303 

Prepared statement .......................................................................................... 303 

Answers to submitted questions ...................................................................... 475 

SUBMITTED MATERIAL

Report, dated May 29, 2008, from Wood Mackenzie ............................................. 314 

Letter of May 16, 2008, from the National Petrochemical & Refiners Association to Messrs. Dingell and Boucher .................................................................. 327 

1 Mr. Cicio did not present an oral statement at the hearing. 

(1) 

LEGISLATIVE PROPOSALS TO REDUCE 

GREENHOUSE GAS EMISSIONS: AN OVERVIEW 

THURSDAY, JUNE 19, 2008 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND AIR QUALITY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:40 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Rick Boucher 

(chairman) presiding. 

Members present: Representatives Boucher, Butterfield, 

Melancon, Barrow, Waxman, Markey, Doyle, Harman, Allen, Inslee, Baldwin, Hooley, Matheson, Matsui, Dingell (ex officio), Upton, 

Hall, Shimkus, Blunt, Bono Mack, Walden, Rogers, Myrick, Sullivan, Burgess, Blackburn, and Barton (ex officio). 

Staff present: Bruce Harris, Lorie Schmid, Laura Vaught, Alex 

Haurek, Chris Treanor, Rachel Bleshman, David McCarthy, Andrea Spring, Amanda Mertens Campbell, and Garrett Golding. 

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. BOUCHER. The subcommittee will come to order. 

We begin this morning by welcoming to the subcommittee a new 

member, both of this subcommittee and also of the full Committee 

on Energy and Commerce. I have known and had the privilege of 

working with the gentlelady from California, Doris Matsui, for a 

number of years, both prior and since her election to the House of 

Representatives, and I can say that she brings to the work of our 

subcommittee an experience that will enlighten our work and further our efforts, and I just want her to know how warmly we welcome her this morning and how much we look forward to working 

with her. 

This morning, the subcommittee continues our climate change 

hearings, which are preparatory for the drafting and approval by 

the committee of a cap-and-trade program for greenhouse gas emissions, and we are planning additional hearings on that subject during the latter part of this summer. 

Today’s hearing focuses on a variety of cap-and-trade proposals 

that have been introduced in both Houses of Congress during the 

course of last year and this year. During the day, interested stakeholders will have an opportunity state their views on the various 

provisions of five currently pending measures, and we will benefit 

2 

from having their views as we draft our own cap-and-trade legislation in this committee. 

Today we are examining H.R. 1590, the Safe Climate Act of 

2007, introduced by Mr. Waxman; H.R. 6186, the Investing in Climate Action and Protection Act, introduced by Mr. Markey; S. 

2191, America’s Climate Security Act of 2008, introduced by Senators Lieberman and Warner; the Senate amendment 4825, introduced by Senator Boxer as a substitute during Floor consideration 

of the Lieberman-Warner measure; and S. 1766, the Low Carbon 

Economy Act of 2007, introduced by Senators Bingaman and Specter. Each of these proposals makes a valuable contribution in the 

effort to address the climate change challenge. While the provisions 

in each of the bills will be subject to ongoing debate, the authors 

are to be commended for their considerable efforts to assemble proposals that advance our understanding of the alternative meals 

through which greenhouse gases can be controlled through the 

market-based mechanisms of cap-and-trade. 

Today’s witnesses will inform the subcommittee of the components of cap-and-trade that are most important to them and the extent of which their core needs either are met or are not met by the 

pending bills. That overview will be tremendously instructive to the 

subcommittee as we prepare to draft our own cap-and-trade measures. 

While all of the bills we are examining rely on cap-and-trade programs to control emissions, they vary greatly in their design and 

in their respective means of operation. They employ, for example, 

different methods for allocating allowances, contain contrasting 

timetables and targets for achieving emission reductions, vary with 

respect to cost containment opportunities including the use of domestic and international credits and offsets, have different definitions of covered entities and varying points of regulation, and proposed varying means of engaging developing nations. The views of 

our witnesses on these and other aspects of the pending bills will 

be welcome this morning. 

Our shared goal is to pass into law a program which achieves the 

needed reductions in greenhouse gas emissions at the least possible 

cost to the public and with the least amount of economic disruption. By commenting on the pending bills, we hope that the witnesses will suggest to us ways that those goals can be achieved. 

That concludes my opening statement. 

Mr. BOUCHER. At this time I am pleased to recognize the ranking 

Republican member of our subcommittee, the gentleman from 

Michigan, Mr. Upton, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. I too want to welcome Doris Matsui to our committee, and look forward to working 

with her on a number of issues as it impacts our great country. 

I want to thank you and Chairman Dingell for holding this hearing, my friend, Mr. Boucher. However, the nature of the bills that 

we are examining today is disappointing. I agree that climate 

change needs to be addressed and I am a strong proponent of reducing greenhouse gas emissions. But I find it hard to believe that 

3 

a cap-and-trade scheme is the only way to address this global problem. 

We are fortunate to be serving on a great committee with some 

of the brightest minds in the Congress. How it is that for an issue 

of paramount importance we can come up with only one approach: 

cap-and-trade? By design, this approach works by increasing energy costs and slowing down economic growth. Rather than making 

energy more expensive and sending American job overseas, we 

should be pursuing an approach that promotes and encourages 

clear energy and builds economic strength through exporting American technology and thus creates jobs rather than exporting those 

same jobs. Climate change policy must adhere to a set of commonsense principles. Legislation must, one, provide a tangible environmental benefit to the American people; two, advance technology 

and provide the opportunity for export; three, provide and protect 

American jobs; four, strengthen U.S. energy security; and five, require global participation. I am sure that every one of us is in 

agreement with many of these principles yet not one of the bills we 

are discussing today would meet the whole test. 

We must take a sector-by-sector approach that cultivates innovation and technology and efficiency rather than arbitrary government mandates. Thoughtful choices need to be made on how we are 

going to meet our ever-increasing energy demand as we keep our 

economy moving. Arbitrary mandates are not sound. Both the 

United States and European Union reduced emissions between 

2005 and 2006 but the United States’ percent reductions were 4.3 

times greater than the EU’s and the EU, of course, has been using 

a cap-and-trade scheme; we haven’t. 

We have a wealth of resources and ingenuity to meet the challenge. By investing in clean coal, providing incentives for renewable power, giving tax credits to businesses to increase their energy 

efficiencies, helping our auto manufacturers develop more fuel-efficient vehicles, and creating a regulatory environment that spurs a 

renaissance in nuclear power, we can drastically reduce greenhouse 

gas emissions. No mandates, no lost jobs, no spike in costs, rather 

just the opposite: cleaner air, more jobs, and stable costs. 

Last week, Mr. Chairman, you and I and Ranking Member Barton, other members from both sides of the aisle took a great step 

in the right direction by introducing legislation that will create a 

carbon capture and storage technology fund. The legislation will 

help reduce greenhouse gas emissions and promote existing and exciting new technologies that will not only keep energy costs down 

for consumers but also foster new jobs and build a stronger economy. With that approach, we will fortify our Nation’s energy supply 

with American-made energy and protect the pocketbooks of our Nation’s consumers, exporting American ingenuity and not the jobs. 

The recent failure in the Senate highlights the many problems 

with cap-and-trade. Members of both parties have repeatedly 

raised objections and the Democratic leadership in the Senate in 

fact withdrew the bill because it failed to garner enough support 

from either party. In fact, my State’s two Democratic Senators expressed serious concerns in a letter signed by other Members of the 

Senate to Majority Leader Reid and Chairwoman Boxer. In their 

correspondence, Senators Levin and Stabenow recognized that the 

4 

‘‘cap-and-trade program developed in the Lieberman-Warner bill 

has the potential to raise over $7 trillion. Much of these funds will 

be indirectly paid for by consumers through increased energy 

prices,’’ is what they wrote, concluding that they could not support 

final passage of the Boxer substitute. The only consensus achieved 

during the Senate debate was that cap-and-trade was not the right 

approach. 

I commend my two Senators for recognizing that the cap-and- trade legislation would cost Michigan families about $7,000 a year 

by 2050 and increase national electricity rates by 44 percent by the 

year 2030. Some analysts see electric rates increasing 115 percent 

to pay for higher fuel costs, building new plants, and recovering 

global warming fees. At a time of economic slowdown, do we really 

need legislation that would cut GDP by some almost $3 trillion? At 

a time when our economy is squeezed by record gas prices, we are 

considering legislation that would increase gas prices another 144 

percent by the year 2030. Under cap-and-trade, we will be unified 

in our longing for the good old days of $4 gasoline. 

On top of the skyrocketing costs for consumer, cap-and-trade legislation will send American jobs in energy-intensive industries 

overseas. Take the steel industry, for example. Here in the United 

States, steel producers are the most efficient in the world. On average, American steel makers emit 1.2 tons of greenhouse gases per 

ton of steel made. Compare that to the Chinese steel emissions estimated to be in the neighborhood of 4 to 5 tons per ton of steel 

produced. We are not helping the environment by sending industries that operate cleanly and efficiently in the United States to a 

regulation-free China. China is the number one emitter in the 

world and their greenhouse gas growth every year equals the current output of Germany. 

In closing, I would like to put the scale of the emissions reductions being called for by these bills in perspective. The proposals 

would mean that the United States cannot emit more in the year 

2050 than we emitted in the year 1910. That is a daunting task, 

considering that in 1910 the United States had only 92 million people compared to some 420 million that we are likely to have by 

2050; and in per capita income in current dollars, it is about 

$6,000. Michigan’s working families are already struggling to get 

by. How in the world can we in good conscience pursue a policy 

that will not only have little environmental benefit but also puts 

the costs squarely on the backs of hardworking American families? 

Not to mention that the only nations in the world today that emit 

at the same level mandated in this bill are poor, developing countries such as Belize, Haiti and Somalia. Shouldn’t our global warming solution actually lower temperatures? Can anyone here say 

today for sure with certainly what the global temperature reductions will be as a result of this legislation? In fact, a strong argument can be made for just the opposite, that these bills would in 

fact worsen the environment. 

I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Upton. 

The gentleman from Georgia, Mr. Barrow, is recognized for 3 

minutes. Before I recognize Mr. Barrow, let me note that in accordance with the rules of the full committee and subcommittee, any 

5 

member who decides to waive an opening statement will have 3 

minutes added to that member’s time to question the first panel of 

witnesses. 

The gentleman from Georgia. 

OPENING STATEMENT OF HON. JOHN BARROW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. BARROW. I thank the Chair. It is ordinarily my custom to 

waive opening but this is too important an opportunity to get my 

two cents in on this. 

First, I want to commend you, Mr. Chairman, and the chairman 

of the full committee, Mr. Dingell, for your leadership in this effort. 

We are reaching something of a milestone in the work of this committee on this subject. We have had up to 20 years in the course 

of this Congress on the subject of climate change. In the course of 

those 20 hearings, we have considered exhaustively the scientific 

evidence of our contribution to the problem and our responsibility 

to do something about it. We have surveyed every sector of the 

economy and every interest group we can in order to get their feedback and now we are getting down to brass tacks. Now we are 

starting to look at specific, concrete pieces of legislation to address 

this issue. While we do that, and I want to acknowledge, everybody 

understands the importance of this issue as it relates to the cars 

they may drive, the appliances they will have to buy, the electric 

bills they are going to have to pay, everybody can feel a connection 

to those things that have to do with their cost of living. 

But I want to put in a word, just one word for the role of agriculture in this whole process. As the only Member of Congress who 

serves on both the Energy and Commerce Committee, on the one 

hand, and the House Ag Committee, on the other, I feel like I have 

not only a unique sensitivity to this issue but a unique responsibility to speak up for incorporating agriculture in this process. The 

EPA estimates that right now agriculture is involved in carbon sequestration activities and agriculture is responsible for sequestering something like 1 percent of the total amount of carbon emissions in our entire economy. The EPA also estimates that if they 

were properly engaged, if agriculture was properly included and 

motivated and incentivized and engaged in this process, they could 

sequester up to 20 percent of all carbon emissions in the entire 

United States economy. Any other sector of the economy that is 

putting out as much carbon and could make a 20-fold increase in 

the solution to the problem ought to get a lot of attention, and I 

want to make sure we don’t lose sight of the role that agriculture 

can play. Whether agriculture is going to be allowed to play a role 

as a big part of the solution as opposed to just a part of the problem is going to depend on whether or not this committee incorporates them properly. I understand the challenges of measuring 

compliance and the role that agriculture can play but we need to 

engage them because there is just too much potential there for 

solving the problem for us to ignore the role of agriculture. 

Finally, I want to make sure that folks understand the importance of us looking into the issue of a safety valve. I know there 

has been a lot of discussion about that. I think it is important that 

we make sure that the mandates don’t get too far out in front of 

6 

the technology and so what I want to do is hear about the advantages and disadvantages of including a safety valve as a part of 

this committee’s work and the legislation byproduct of the committee. 

With that, Mr. Chairman, I want to thank you once again for 

your leadership and I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Mr. Barrow. 

The gentleman from Texas, Mr. Hall, is recognized for 3 minutes. 

OPENING STATEMENT OF HON. RALPH M. HALL, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. HALL. Mr. Chairman, I thank you for that, and I am just 

thinking back here to when global warming and all those conversations started. I don’t remember ever taking a position that there 

is just absolutely nothing to it, like some have, and I have always 

thought we needed to have an eye toward technology and an eye 

toward cleansing the methods of obtaining energy from the fossil 

fuels to nuclear to right on up to all of them, and Mr. Chairman, 

I respect you as chairman of this committee and I know you as one 

of the more reasonable members of this body, and I think Mr. 

Upton said one giant comparison of the population difference from 

the time it all started until today, and the gentleman from Georgia 

spoke of the cars you drive and the effect you have on that. 

Let me caution you about one other thing that it seems most everybody has forgotten, and my speech will be about caution today. 

There is a cash register looming out there. It is larger for some 

people than it is for others. Russia does not recognize it. India will 

not look at the cash register. China ignores it completely except 

contributing to the damage to the earth with their coal thrust and 

every 5 or 6 days starting a new one, and there is just no way you 

can get around the American taxpayer who is going to find out 

sooner or later that you are probably going to raise taxes three or 

four times on everybody in here and everybody you know and 

maybe not know for 50 or 60 years whether it helped or not, and 

I have heard people say, and I think this is not a good statement 

but I have heard it said they are just as worried about global freezing as they are global warming. Now, I would say to you that, and 

I appreciate the careful approach to climate policy that you have 

outlined, Mr. Chairman. 

I want to point out an example of what can happen if we don’t 

take a careful approach. It relates to the treatment of natural gas 

in the Senate’s Lieberman-Warner-Boxer bill, and despite all the 

long-time modeling done by the EPA and private firms, no one apparently thought to ask natural gas processors and producers how 

the gas market really works and whether the long-term models 

could capture near-term effects of the bill, and so the bill was drafted to require that natural gas processors and/or producers pay for 

emission allowances for all of the end-use customers who burn gas. 

Never mind that the processors and producers have no control over 

the end-use emissions. According to an analysis done by one of the 

leading energy consulting firms in the world, Wood Mackenzie, the 

approach could have put more than 30 percent of natural gas supply at risk. In closing, let me say that is because exploration and 

production companies, mainly independent, spending more than 

7 

they earn and all of their cash flow to find and produce gas and 

they have to reduce drilling investment to pay for consumer emissions allowances. This makes no sense, Mr. Chairman. That is why 

we need to be careful, and I would like to submit a news release 

from the American Exploration and Production Council and the 

Wood Mackenzie report for the hearing record and ask unanimous 

consent that they be included. 

Thank you, Mr. Chairman. I yield back my time. 

Mr. BOUCHER. Thank you, Mr. Hall. Without objection, that material will be included in the record. 

Mr. HALL. I thank the chair. 

[The information appears at the conclusion of the hearing.] 

Mr. BOUCHER. The gentleman from Massachusetts, Mr. Markey, 

was here previously and announced his intention to waive an opening statement. The gentleman from Pennsylvania, Mr. Doyle, is 

recognized for 3 minutes. 

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. Mr. Chairman, I am 

happy that we are beginning our examination of the various climate change proposals which have been introduced in this Congress, and while each of these proposals offer constructive suggestions as to the path this subcommittee should follow as we draft 

our legislation, I do not believe any of these proposals in and of 

themselves provide the complete solution we need. Simply put, the 

time is now for Congress to address this problem. The time for scientific discovery is passed and today we have ample evidence that 

this problem is real and that there are actions we can take to address it. The President has acknowledged this reality by transmitting to Congress a plan to address the problem. The EPA is actively implementing their authority to unilaterally regulate greenhouse gases and our power industry is delaying new investment 

until they see the playing field Congress will create. We can no 

longer put our heads in the sand and pretend this is not a problem. 

We must act and we must act now. 

As we move forward toward a achieving a substantial reduction 

in greenhouse gases though, it is important to recognize the reality 

on the ground and not to legislate mandatory reductions that are 

beyond our technical ability to achieve. Instead, we must ensure 

that the funds generated by this bill do not go to the general treasury but instead are reinvested to achieve our dual goal of achieving 

energy independence while combating the threat of global warming. As I have said before, there is no silver bullet that will solve 

this problem for us. We need a broad energy portfolio that increases renewables and new sources of energy while we continue 

to improve the resources we have today. Clean coal and nuclear, 

two energy sources which today power most of America, must continue to play a key role as we move into the carbon-constrained 

world. Simply put, we have many challenges ahead of us. 

I have been working with Congressman Jay Inslee to address the 

very real concerns about international competition and job and 

emission leakage that may occur as a result of our final bill. Our 

8 

policy is narrowly tailored, affecting only those industries which 

are high carbon-intensive and face an internationally set price for 

their goods. This policy, which some of you may know as an outputbased, or benchmark policy, will address the real-world challenges 

these industries face while encouraging them to do their part to reduce our Nation’s greenhouse gas emissions. I look forward to hearing our panelists’ thoughts on this proposal. 

In conclusion, Mr. Chairman, I reiterate my offer to work with 

any member of this committee to construct what I believe will be 

landmark legislation to combat climate change. The time is now. 

The American people have demanded action and I am ready to answer that call with my colleagues. 

I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Mr. Doyle. 

The gentleman from Texas, Mr. Barton, the ranking member of 

the full committee, is recognized for 5 minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. As you know, I am a 

skeptic on this issue, but one thing you and I are in agreement on: 

if anything is going to be done, it should be done in this committee, 

it should start in this subcommittee, so we appreciate the hearing, 

we appreciate the number of witnesses, and we appreciate the attendance of the audience. 

Also on behalf of the Republicans, we wish to welcome our newest member to the Committee, Congresswoman Matsui. We will 

soon have a subcommittee called the California Subcommittee. We 

are delighted to have another representative of the California delegation on our committee. 

Mr. Chairman, we are at the crossroads with this hearing today 

and the debate over whether to constrain carbon dioxide by rationing energy. As we all know, at the beginning of this Congress our 

new Speaker, Speaker Pelosi, announced it was her objective to 

enact a carbon cap-and-trade bill in this Congress. Her intent was 

to establish a price signal on carbon, in other words, a strategy to 

make fossil fuel energy more expensive in America in order to repress or suppress the public demand for it. Let us go back and see 

where we were at the beginning of this Congress in terms of a carbon signal. The price of unleaded gasoline was selling on average 

nationally for $2.30. Today it is $4.07. I would say that is a pretty 

strong signal. Diesel fuel was $2.58 a gallon. Today it is $4.70. Natural gas was $6.60 a thousand cubic feet. It is expected to hit $12 

this fall. Twelve dollar natural gas means home heating will come 

close to doubling. Gas-fired electricity prices will rise significantly 

and industries that rely heavily on natural gas including chemicals, 

fertilizers and others in manufacturing will continue their exodus 

to other countries. We only have two fertilizer manufacturers that 

are still doing business in the United States, for example. Home 

construction has stalled. Auto workers are being laid off by the 

thousands. Food prices are soaring. Airlines are canceling flights 

because they can’t afford to pay for the aviation fuel. Small businesses throughout the United States are failing. I met with a farmer yesterday who told me it cost him over $1,200 to fill up his tracVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
9 

tor, $1,200. How much more of a price signal do we need on carbon? How much greater of a burden must we place on the American people? 

And for what environmental benefit? EPA estimates that if the 

Lieberman-Warner bill would have passed the Senate and been enacted, that it would reduce greenhouse gas emissions by 2050 by 

25 parts per million, 25 parts per million. At that rate, it wouldn’t 

change the temperature one degree, not one degree with temperature change if Lieberman-Warner were to be enacted and be implemented in the 2050 time zone. It would not change global temperatures. It would transform the U.S. economy for the worse. 

If in January 2007 Speaker Pelosi had called for a consumer 

price signal as high as those that we are suffering already today, 

she would have stood virtually alone in her strategy. Those price 

signals are hitting us. They are hurting our economy. We do need 

to do something about them. Enacting a cap-and-trade bill, in my 

opinion, is not the solution. The World Resource Institute says that 

Mr. Waxman’s bill, H.R. 1590, Mr. Inslee’s bill, H.R. 2809, and the 

Sanders-Boxer bill would reduce greenhouse gas emissions in the 

United States by 80 percent below 1990 levels by 2050. Where does 

that number come from? I don’t know. I am told that it is also Senator Obama’s proposal. I do know that if we reduce CO2 by 80 percent below the 1990 level, it is going to take us back to an emission 

level that we last had in 1910, when there were about 40 million 

people in America and two-thirds of them lived on the farm and the 

method of transportation was foot power or animal power. In the 

State of Texas, the average per capita carbon emission today is 31 

tons. In the great State of Vermont, it is zero. I don’t quite understand that since each of us emit a third of a ton of CO2 every year 

just breathing. But whatever it is and whatever part of our great 

nation, going back to 1910 emission levels, in my opinion, makes 

no sense. In Texas alone, the National Association of Manufacturers says that the Lieberman-Warner bill would cost the average 

household $8,000 a year. 

Mr. Chairman, I could go on and on but I think you get the gist 

of what I am trying to say. I believe, as you believe, that we do 

need to look at this issue seriously. That is why I have endorsed 

and I am a cosponsor of your bill to begin a research program on 

how to best capture or convert CO2. That is putting the horse before the cart. That is actually, let us develop the technology, let us 

see what the problem is, let us continue to do research on the 

science but let us don’t take the U.S. economy off the cliff by enacting some of the bills that are before us today. 

With that, Mr. Chairman, I again thank you for the hearing. I 

thank our witnesses. I look forward to hearing their testimony and 

I look forward to hearing our members ask some questions. I yield 

back. 

Mr. BOUCHER. Thank you very much, Mr. Barton, for your 

thoughtful remarks and also for your coauthorship of our legislation to promote the research on carbon capture and storage. 

The gentlelady from California, Ms. Harman, is recognized for 3 

minutes. 

10 

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. HARMAN. Thank you, Mr. Chairman, and welcome to our witnesses and also welcome to my California sister, Doris Matsui. Mr. 

Barton has it partly right. There are lots of Californians on this 

committee and most of them, most of us are women. That is why, 

as I told Chairman Dingell recently, the Committee is doing so 

well, and P.S., California has the largest delegation in Congress, of 

the Democrats from California, a majority are female and both of 

our Senators happen to be female. That is why California is doing 

so well. 

On that subject, as you and I discussed before the hearing, Mr. 

Chairman, one of our Senators, Barbara Boxer, is chairman of the 

Environment and Public Works Committee, as you know. She is 

the author of one of the bills before us. She did ask to testify this 

morning and I gather that there was an issue about the amount 

of time she could spend here and whether she would have time to 

take questions from members. I do appreciate your offer to telephone her and to arrange for her to testify at one of our hearings 

in the near future on this subject. I know we are having many 

hearings. 

Mr. BOUCHER. Will the gentlelady yield? 

Ms. HARMAN. I would be happy to yield to you. 

Mr. BOUCHER. Yes, I will be happy to do that, and I would say 

for those who might be interested, that Senator Boxer was in fact 

invited to testify today under the same circumstances that all other 

members of Congress are invited to testify, and I think her time 

frame perhaps did not permit the potential for answering questions. But we will clarify with her the fact that she is welcome at 

future hearings and hope that she can join us. 

Ms. HARMAN. Well, I appreciate that. Reclaiming my time. I 

want to commend her and the whole Senate for trying to take up 

this subject of cap-and-trade on the Senate floor last week. I think 

there are lessons to be learned from what happened there and I 

would like us to learn them. I do consider this to be the greatest 

legislative committee in the House. Most of the major environmental laws have originated here and I think we can do our work 

well on this subject, and I look forward to this committee authoring 

major cap-and-trade legislation in the near future. 

Let me just make a few points. Number one, the looming likelihood of $5-a-gallon gas has generated the political will to change 

our energy habits. Now we need the political leadership. Number 

two, we are facing two interrelated problems, the dependence on oil 

as our primary fuel, and global climate change. Addressing both is 

an economic and a national security imperative. Number three, 

cap-and-trade is an essential part of the solution but not the only 

part. We need to be creative and look at a variety of short-, 

medium- and long-term measures that foster alternative fuels and 

technologies. This committee has done a very good job on the subject of efficiency. Mr. Upton and I are the light bulb authors. Efficient light bulbs is big part of the answer but so is a creative market-based system to put the right price on carbon and have a trading arrangement so that we reduce the greenhouse gases in our atmosphere. 

11 

I thank you for this hearing and yield back the balance of my 

time. 

Mr. BOUCHER. Thank you very much, Ms. Harman. 

The gentlelady from Tennessee, Ms. Blackburn, is recognized for 

3 minutes. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Ms. BLACKBURN. Thank you, Mr. Chairman. I want to thank you 

for the hearing. I want to thank our witnesses for their preparation 

and for being here with us today and taking the time to come and 

testify on the prospects of a cap-and-trade system, and how they 

feel it would be administered. 

I think that by this point it is no secret to anyone on this committee that I do have some very serious concerns about the carbon 

reduction schemes because I do fear that they would drastically affect this Nation’s energy supply and that they could possibly significantly distort the marketplace. Worse yet, I think that what we 

are beginning to see in some reports of some studies that have 

taken place over the past decade, things in scientific journals that 

show that any recent global warming could or could not be caused 

by humans and could or could not be caused by the sun and other 

natural causes that really have no link to human activity, and I 

found it rather curious that we are seeing data collected by satellites and weather balloons that indicate that global temperatures 

have cooled by 0.7 degrees Celsius over the past 16 months. I think 

that should be instructive to us because this has offset the warming that took place over the past 100 years, but the IPCC models 

that have been presented to us time and again had predicted significant rising in temperatures and no cooling. So that is a little 

bit of a head scratcher there and I think deserves a revisit by this 

committee and those of us who are going to review this issue. 

Now, Mr. Chairman, I know you are aware and some of the others, we made a trip, a fact-finding mission to look at and investigate some of these trading schemes, and what I came away from 

that trip with was a concern, a true concern that the trading system in the scheme was flawed and did have some problems and 

that you didn’t always end up with your goal, which was to reduce 

CO2 emissions, and now what we are seeing is if carbon sequestration and reduction of emissions is your goal, then it would be difficult to achieve that goal and have that outcome if it were only the 

U.S. participating in this and only Europe participating in this. It 

would require worldwide participation and participation by some of 

the countries that are currently the most significant global polluters, and what we also have found out that this type of scheme 

could result in a wealth transfer to those who can gain the market 

and will reduce economic investment to solve more pressing problems such as diseases, malnutrition and water sanitation. A capand-trade system or carbon tax system will likely lead to shuttering power plants that will only make Americans poorer and 

more reliant on foreign energy sources and could have a negligible 

effect on environmental improvement. 

12 

So I am looking forward to hearing from our witnesses today, Mr. 

Chairman. I thank you again for the time. I yield back. 

Mr. BOUCHER. Thank you very much, Ms. Blackburn. 

The Chairman of the full committee, the gentleman from Michigan, Mr. Dingell, is recognized for 5 minutes. 

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. DINGELL. Mr. Chairman, I thank you for holding this hearing. I commend you for your leadership and the vigor with which 

you are addressing perhaps the most difficult, complex issue that 

I have faced on this committee during the time that I have had the 

honor to serve here. 

Before I make my statement, I would like to observe that today 

is the first hearing that is being attended by our new member, 

Mrs. Matsui, and I would like to welcome her this morning. I also 

would like to observe that she is not the first Matsui to serve upon 

this committee. Her dear husband, my good friend, Bob, was a 

member of this committee in earlier days. He was the successor to 

my beloved friend, John Moss from California, and the two of them 

served this Congress and served their State and their districts with 

extraordinary dignity and capability. So welcome to you, Mrs. Matsui. We are honored that you are here with us. 

I also want to thank our witnesses this morning, ladies and gentlemen at the witness table and others who will be appearing before us. Thank you. We need your wisdom and we have given you 

a very difficult task, that is, comparing and commenting on five 

key climate change legislative proposals, a total of more than 1,000 

pages of legislative text which I anticipate as we go forward will 

grow. I also want to express the thanks of the committee for your 

willingness to prepare the thoughtful testimony on this difficult 

and complex issue which, I repeat, is probably the most complex 

and difficult that I have had to confront during my time on this 

committee. 

Since this hearing was announced, we have been asked why we 

are holding a hearing that looks at five different lengthy and complicated legislative proposals. The answer is very simple. As we 

move forward with drafting the climate legislation that this committee will be presenting to the Congress, there is much that we 

can learn from these legislative proposals. We need to know how 

people feel about them, how they are going to impact upon the different industry groups, upon labor and upon every ordinary citizen 

and conservationist and person who does business or who has interest and concerns on these matters. The authors of the bills, including Mr. Waxman and Mr. Markey, have put a great deal of 

thought and effort into their bills. We need to build on these efforts 

to move the legislation forward to understand how we can pass the 

best legislation which will best serve the public interest of this 

country and of the world. 

We also can see that we need to learn from the efforts of the 

other body. The Senate debate revealed a strong bipartisan support 

for addressing climate change with a cap-and-trade program. This 

is an important development. The Senate debate also showed, howVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
13 

ever, that the other body has far from a consensus on what to include in such a program. It also is apparent from that discussion 

that there is small evidence of a consensus in the country on these 

matters. Now, I mean no disrespect to the Senate or to anyone else 

when I say this because as I pointed out, this is an enormously 

complex issue. I have no delusions about the amount of effort that 

it is going to take to first of all come up with proper legislation, 

and second, to create a coalition that will pass a responsible climate change bill, but we must pass such legislation and this committee intends to devote its vigorous effort to achieving that great 

purpose. 

Today’s hearing is designed to give us a beginning of our overview of these key legislative proposals. We will need a large number of additional hearings to delve into the details of the legislation 

because legislation of this complexity and difficulty needs careful 

and thorough attention to achieve the purpose of passing good legislation. 

I look forward to the testimonies of our witnesses today and I 

thank them and congratulate them for their appearance. I also 

want to know what issues are most important to them and I want 

to hear what the witnesses think about these bills and what they 

do right and what they do wrong and what they fail to address and 

what needs addressing and how our legislation can improve upon 

the proposals now before us. Given the number of witnesses appearing before us today, I conclude my statement here and I thank 

you, Mr. Chairman, for your extraordinary leadership in this particular matter, and I commend and thank my colleagues for their 

participation. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Chairman Dingell. 

The gentleman from Oregon, Mr. Walden, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Thank you, Mr. Chairman. I appreciate the hearing and look forward to hearing from the witnesses. I will admit 

up front, I have to step out for a meeting here in a few minutes 

but I do have the testimony and will be back. 

This is an issue I think that we all care a lot about from various 

perspectives. Clearly, I think each of us wants to do the right thing 

for the environment. I mean, I have been fortunate enough to go 

invest in two hybrid vehicles but it still costs me 50 bucks or thereabouts to fill up my Prius here in Washington and certainly about 

that in Oregon to fill up my hybrid Escape. We have passed legislation here that has been helpful and under your jurisdiction. There 

have been provisions I have disagreed with and think we should 

revisit, like on biomass from forests not counting toward renewable 

fuel standards seems to be rather absurd. It either is biomass and 

is a renewable fuel or it is not. It shouldn’t matter from which forest it comes. 

What troubles me, though, today in America and in my district, 

people are having trouble filling up their tanks. I have an orchard 

in my hometown of Hood River known for its famous pear producVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
14 

tion. Their fertilizer costs double year to year. You go talk to people 

about trying to fill up, as the chairman said, a tractor fuel tank, 

or I know we have a witness later that is going to talk about 

$1,400 to fill up a truck tank for diesel, and while we need to do 

the right thing for the environment, we don’t need to kill our economy in the process. And I note there are lots of provisions in some 

of these bills to spend the magical money that comes from no consumer and yet we all know it is the consumer that is going to pay 

the bill here, and there are estimates as high as $6 trillion in costs 

to consumers, and I think we have to be cognizant of that. It is 

very disturbing to me, especially when some of the other major 

emitters in the world would be left out of any framework. They can 

continue to pollute and to create jobs and offshore our jobs to them 

where they will be more competitive, and that is not good for our 

country, especially with the economy we face. 

I met with the CEO of one power company who told me their 

power generation costs under Warner-Lieberman would go up twoand-a-half times. So if you like what has happened at the gas 

pump, if you like what is happening with natural gas prices, you 

are going to love some of these bills if you are a consumer. And the 

biggest advocates for some of these bills are frankly the traders 

and the speculators around the world because they know there is 

a lot of money to be had, and what we have seen in the oil markets 

and all the hearings we have had on speculation in the oil markets 

has led me to believe that if we move down this path, we better 

darn well make sure the regulatory framework is there so that consumers don’t get ripped off by the traders if indeed that could 

occur, and I think we have seen defaults overseas on some of the 

trading markets by some of the traders and we are talking America’s future economy here as well. 

So as we try to work to do the right thing for the environment, 

let us not forget the Wal-Mart moms and the diesel truck driving 

dads out there in America who need fuel now and don’t need higher energy costs now, and there are lots of things we can invest in 

as a government, especially the research side, Mr. Chairman, like 

your bill, make sure we have the technologies in place for the future and I am all for that. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Walden. 

The gentleman from Maine, Mr. Allen, was previously in attendance and announced his intention to waive his opening statement. 

The gentlelady from California, Ms. Matsui, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. DORIS MATSUI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. MATSUI. Thank you, Mr. Chairman. I am so pleased to be 

here today and I want to thank everyone for their very warm welcome. 

Mr. Chairman, the Energy and Commerce Committee has jurisdiction over so many issues that are important for my district, the 

city of Sacramento. Since coming to Congress, I have wanted to be 

a part of this committee and help craft legislation that affects so 

15 

many aspects of our country. I am truly looking forward to working 

with each and every one of you. 

Mr. Chairman, I am encouraged that this committee is further 

examining climate change. Increased droughts, wildfires and Sacramento’s risk of food are daily reminders to my constituents that 

this issue affects them personally. Because global warming is such 

a widespread problem, we must take care to craft responsible and 

intelligent solutions that put us on the right course from the beginning. This committee and subcommittee have been extremely active 

in the 110th Congress. I look forward to joining your efforts and 

continuing to promote sound policy that affects the health, safety 

and welfare of the American people. 

Mr. Chairman, I thank you for your leadership and your commitment to these issues. I look forward to the testimony. I yield back 

the balance of my time. 

Mr. BOUCHER. Thank you very much, Ms. Matsui. 

The gentlelady from North Carolina, Ms. Myrick, is recognized 

for 3 minutes. 

Ms. MYRICK. Well, thank you, Mr. Chairman. I want to welcome 

our witnesses as well and look forward to everyone’s testimony. I 

too will leave for a little while. But actually, Mr. Walden said pretty much everything I was going to say, including support for your 

bill, so with that, I will just yield back. 

Mr. BOUCHER. Thank you very much, Ms. Myrick. 

The gentlelady from Wisconsin, Ms. Baldwin, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN 

Ms. BALDWIN. Thank you, Mr. Chairman. I really appreciate your 

holding this hearing today because I really think it is important 

that we take the time to examine the legislative proposals that 

have been introduced thus far as these proposals will clearly serve 

as guideposts for legislation that this subcommittee will ultimately 

draft and consider over the months to come. 

I commend Mr. Waxman and Mr. Markey as well as our Senate 

colleagues for their contributions and there is no doubt that despite 

the potentially contentious nature of some of the provisions, a lot 

of hard work has gone into ironing out the various proposals that 

we have before us today. As I have said many times, I believe that 

we have a responsibility to our planet and to future generations to 

address climate change with firm, bold, and decisive actions that 

reduce greenhouse gas emissions. We must set a roadmap for repairing the damage we have done to our environment. 

In adopting a cap-and-trade plan, we also have a responsibility 

to the Nation, businesses, workers, and consumers to ensure that 

American industries remain competitive and the production of 

American products remains right here in America, and that prices 

and costs remain reasonable and affordable, and for that reason, it 

is crucial that we evaluate and understand the provisions in these 

bills and the effects that they will have on our planet, on our businesses, and on our constituents. 

16 

I am pleased that we will be hearing from such a wide variety 

of witnesses today who can provide very different perspectives on 

the language of the bills before us. I expect that much of the testimony today will be focused on concerns or criticisms with the legislation but I do hope that we will also hear about the sound provisions, those that industry and environmentalists and labor unions, 

religious leaders believe are necessary to reducing greenhouse gas 

emissions, creating green jobs, boosting our economy, and aiding 

communities and ecosystems vulnerable to harm from global warming. Certainly the process of designing a cap-and-trade bill will not 

be easy and there will be many difficult decisions yet to be made 

but one thing is clear: the costs of inaction are too great for us to 

fail to act. I hope this hearing will show us how we can rise to that 

challenge. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Ms. Baldwin. 

The gentleman from Illinois, Mr. Shimkus, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Mr. Chairman. I do appreciate you 

having this hearing and I want to applaud your efforts so far in 

working in a bipartisan manner to, if we are going to move in this 

direction, to have a system designed that we can address the fossil 

fuel use and carbon capture and sequestration, which is critical. I 

am also optimistic that if you remain at the helm here along with 

Chairman Dingell, if we move in this direction, which I am not a 

fervent believer we should do so, but if we do, that we won’t destroy our economy in the process, and that is my commitment to 

you. I really do believe this is one of the greatest opportunities for 

harm in the economy of this country that we have seen in a long 

time. 

The Senate did a great job last week bringing up the climate bill 

when we had historical high energy prices, and that is the debate 

that we have been trying to have in this committee for the past 

year-and-a-half, and we have moved the environmental community 

to accept the principle that this will cost. Now, how much it will 

cost is up for debate. I think from my perspective, people have to 

understand that I represent southern Illinois. The Clean Air Act 

was a great benefit to clean air and emissions but it disproportionately harmed and destroyed the economy of southern Illinois. There 

will be winners and there will be losers, and if we don’t identify 

that fact, then we are doing—we will be going down a path. 

I am not embarrassed about the internal combustion engine in 

this country. It has provided jobs and the economy and a standard 

of living unrivaled in the world today, and I am not going to back 

down from the benefits. Why do you think the Chinese are building 

a coal-fired power plant every 2 weeks? They want to have the 

standard of living that we have. Why do you think they are not 

moving down to climate change? Because they want to have the 

standard that we are going to have, that we have today, and at 

$136 a barrel of crude oil today and $4.07 for a gallon of gas, the 

costs as Chairman Dingell pointed out earlier in this Congress, 50 

17 

cents additional gallon of gas. So that would be $4.57 for climate 

change for no environmental benefit because we know India and 

China are not going to go there. Chairman Boucher and I sat 

across from a Chinese official who said it is our turn to reap the 

benefits of fossil fuels in this world, and we are going to do it. We 

asked him twice. 

So let us be careful, let us be diligent, first do no harm. I yield 

back. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus, and I appreciate those thoughtful remarks. 

The gentleman from Washington State, Mr. Inslee, is recognized 

for 3 minutes. 

OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON 

Mr. INSLEE. Inaction here will damage the U.S. economy as the 

Midwest changes its climatic system and severe storms sweep and 

health problems arise due to global warming. Action will improve 

the U.S. economy when we become the clean energy supplier to the 

world. Pessimism will hurt us here. Optimism is the name of the 

game to rely on the innovative spirit of America to solve this problem. 

I want to focus on the necessity of auctioning off the permits 

under this bill and I want to do it because of four reasons: it will 

help the U.S. economy. Could we put up chart number one? 

[Chart shown.] 

Mr. INSLEE. We have to radically increase our innovation, our 

pace of innovation towards clean energy in this country, and I want 

to show a chart here of the research and development budgets of 

the United States. On the left, far left, is energy, a pittance, a peppercorn, as they used to say in law school. In the middle is the 

graph for our health R&D, and on the right is our research budget 

for military expenditures. We have gone down significantly. We are 

hurting. You look at it, it is a pathetic research and development 

budget. We need to use the revenues from the auction proceeds to 

increase this budget dramatically to capture the clean energy technology so we can sell it to China and sell it to India and make 

green money in America. Next chart, please. 

[Chart shown.] 

Mr. INSLEE. We need to do what we have done in the past in this 

country when we had a major—could we go to the next chart up, 

please? 

[Chart shown.] 

Mr. INSLEE. This shows what we have done in the past with our 

research budgets when we have had major national challenges. On 

the left is what we did with our research budget in the Manhattan 

Project. Next is what we did in the R&D budget in the Apollo 

Project. The next is the rise in the defense budget in the last several decades. The second to the right is the War on Terror, and if 

we do an auction and use the proceeds for R&D and have a five 

or ten times increase in our research budget, we can develop the 

solutions it will take to have a clean energy decarbonized economy 

in the United States, perhaps with clean coal and other assortments. 

18 

The right shows a vision for America that is based on optimism 

and our ability to develop a clean energy technology and it is dependent upon the revenues from the auction of these permits. That 

is not the only reason to do that. The second reason is, we should 

not give away a public resource that belongs to the citizens of the 

United States worth billions of dollars based on largesse decisions 

by the U.S. Congress. The market should decide who gets those 

permits. The second reason why it makes sense, if you are a capitalist, you ought to favor auction. And third, what we learned in 

Europe is if you don’t do an auction, you get massive windfall profits by utilities who take the value of these non-auction permits, 

pass the cost down to your consumers and increase utility bills. 

So for four reasons, we have got to have auction, we have got to 

do it as soon as possible. I look forward to this. I think we ought 

to approach this with a little humility because if we don’t get this 

right, the planet isn’t going to be around the way we know it, so 

I hope we do. 

Mr. BOUCHER. Thank you very much, Mr. Markey—I am sorry, 

Mr. Inslee. 

Mr. MARKEY. I never looked so good. 

Mr. BOUCHER. Well, I was actually thinking about Al Gore. You 

know, a slide show, if converted into a documentary, can take you 

a long way, and maybe this is the beginning of something big. 

Thank you, Mr. Inslee. 

The gentleman from Texas, Mr. Burgess, is recognized for 3 minutes. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman, and thank you for holding this hearing today. 

I appreciate the legislative proposals that the Committee has 

under consideration and recognize that each is the product of good 

intentions. Some of them vary on scope, the targets and the baseline emissions and allocations of credits but the inherent property 

in each of the regimens before us today is, there will be a cost, 

there will be consequences and, of necessity, there will be restrictions. The point of any carbon control program is to assign carbon 

a monetary value and then make individuals decide if they are 

willing to pay the price for changed behavior. I can tell you that 

most of America and certainly the Americans in my district are not 

ready to pay the high cost of carbon compliance and their behavior 

has already changed. High transportation fuel costs have already 

forced American families to adjust their budgets and their lives due 

to their energy costs. With any of the proposals before us today, 

there will be additional costs and there will be additional restrictions. 

Mr. Chairman, I might also point out that the law of unintended 

consequences not yet been repealed but what we have seen in the 

past 18 months is, it used to be the sins of the father were visited 

upon the son so it took a generation for these unintended consequence to come full circle. Now we are seeing them come full circle in a period of as little as four to six months’ time. Witness what 

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19 

pened to food and other commodity prices in May and June and 

that of course was before we had a major earthquake in China, a 

cyclone in Burma, and Iowa was submerged. 

Well, Mr. Chairman, there is a wide range of witnesses here 

today. The fact that it takes such a broad group of individuals to 

help explain these proposals is an indication as to the amount of 

work that you have undertaken, the size and the scope and the impact of this legislation. Unfortunately, carbon cap-and-trade legislation is a consumer compliance arrangement and will have a behavioral control mechanism. So maybe we should take a poll of the Nation and we can ask them, are you willing to pay still more for your 

energy? I will tell you from the letters and phone calls coming into 

my office and my district office right now, people may be optimistic 

because they are Americans and they live in the greatest country 

in the world but they are a little bit mad for that 3 to 4 minutes 

that it takes them to full up their tank and they do that two or 

three times a week. So I think I know the answer for my district, 

are you willing to pay more for energy, the answer is no, and they 

want this Congress to do something and reduce the cost of energy. 

On the issue of selling the carbon on a new exchange or new 

commodities market, there is probably not a person in the country 

who doesn’t wonder if there is some type of market manipulation 

going on right now in the oil futures market and wonders if there 

are not people out there who are betting against America and driving the cost up. Will there not be new opportunities for manipulation in a cap-and-trade scheme and a carbon-traded market? 

Mr. Chairman, there is a great deal more than I know we need 

to go into today. I know we have got a long panel of witnesses. So 

I am going to yield back my time. 

I do think it is a little bit odd that we don’t have more representation from the natural gas industry here. When we think of climate change, my district in Texas in Tarrant and Denton counties 

is one of the richest areas, one of the most prolific areas for drilling 

currently and we are drilling down into the Barnett shale 8,000 

feet below the ground, because we used to be a seabed that was 

rich with small sea creatures that are now responsible for the production of that natural gas. That is climate change on a grand 

scale and we are reaping the benefits of that climate change today 

in my district in Texas. But I do wish we could hear from someone 

from the natural gas industry because I do think they are going to 

play a crucial role in whatever the future holds for this country, 

and I will yield back my time. 

Mr. BOUCHER. Thank you very much, Mr. Burgess, and let me 

assure the gentleman that we will be inviting representatives from 

the natural gas industry to testify at future climate change hearings. 

The gentleman from Massachusetts, Mr. Markey, was here earlier and has now returned and I would ask if he would care to 

make an opening statement. 

Mr. MARKEY. Thank you, Mr. Chairman, very much. 

Mr. BOUCHER. The gentleman is recognized for 3 minutes. 

20 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. And I want to thank you, Mr. Chairman, and 

Chairman Dingell for holding this hearing to consider proposed climate legislation including the Investment in Climate Action and 

Protection Act, or ICAP, which I introduced earlier this month. 

The scientific debate on global warming is over. The chorus for 

action is deafening and the costs of delay grow by the day. We 

must act now to cap heat-trapping pollution and spark a clean energy revolution that will save the planet and return America to a 

position of economic and moral leadership. We can only do that by 

enacting legislation that satisfies four core principles. One, we 

must reduce greenhouse gas emissions quickly and deeply enough 

to avoid dangerous global warming at least 80 percent by 2050. 

Two, we must transition America to a clean energy economy by investing aggressively in efficiency and renewable energy technologies. Three, we must avoid windfalls for polluters and protect 

American consumers and workers using climate legislation as a vehicle to create jobs and grow our economy. And four, we must help 

defend vulnerable communities and ecosystems against those impacts of global warming that unfortunately can no longer be avoided. 

I can only support legislation that satisfies these principles, 

which are set forth in a letter to the Speaker that Mr. Waxman, 

Mr. Inslee, and I have circulated with 80 other members including 

six on this subcommittee. The ICAP bill reflects these principles. 

It sets up a cap and a best system that is science-based, consumerfocused, market-fueled and technology-driven. It reduces covered 

emissions by 85 percent by 2050. It makes polluters pay by auctioning 100 percent of pollution allowances by 2020. ICAP returns 

over half of the proceeds directly to consumers through tax credits 

and rebates. The result: 80 percent of Americans would reduce benefits and two-third of U.S. households would be fully compensated 

for any cost increases from the bill. ICAP invests trillions of dollars 

in efficiency, clean energy technology, and in American farmers, 

workers and communities. Finally, it sets up a system of carrots 

and sticks to ensure that countries like China and India will take 

comparable action. 

I look forward to working with Chairman Dingell, with you, 

Chairman Boucher, and other members of the committee to develop 

climate legislation that is effective and fair. ICAP provides a model 

and I will work to build support for this approach. I thank you and 

I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Mr. Markey. 

The gentleman from North Carolina, Mr. Butterfield, is recognized for 3 minutes. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. I want to thank you, Mr. Chairman, for convening this most important hearing today. We have certainly been 

looking forward to it, and I want to thank you for your leadership 

21 

in this area. You told us a few months ago that you were serious 

about climate change and today is a demonstration of your willingness to tackle head-on this very important issue. 

I also want to thank the eight witnesses who sit in front of us. 

Thank you very much for coming and giving us your testimony 

today. We are going to listen very carefully and review all of your 

written testimony as well. 

But Mr. Chairman, I agree with my colleagues that the question 

with global climate change legislation is not whether Congress 

should act but rather how we move forward in a most responsible 

and expeditious manner. We all agree that this is a very, very fundamental issue that we must address. The world is watching and 

the American people are watching, and I agree that we cannot continue to ignore this issue. We are currently experiencing the disturbing effects of climate change. Most of us now agree with that, 

from the melting of the icecaps to the exacerbation of the hurricane 

season, and I am from North Carolina and certainly we understand 

that, all the way to the substantive evidence and suggesting that 

these problems will continue to grow if we don’t act responsibly. 

And so, Mr. Chairman, it is my hope that we will soon put forward 

carefully constructed policy which addresses this issue in a direct 

but balanced way. We must work together, and I want to pledge 

my cooperation to my friends on the other side of the aisle that we 

will work together on this issue. 

Among the numerous issues essential to the discussion of this 

matter mitigating the cost on low- and middle-income families. 

That is very important. When the cost of reform reaches the many 

low-income residents who I represent, we need to ensure that they 

are not swept away and swept up and away. We must take every 

opportunity to allay the costs and provide a safety net for people 

of modest means. As this discussion moves forward, it is important 

to remember that those who contribute the least to this problem 

should not be forced to shoulder the greater burden. 

And so I thank you, Mr. Chairman, for your vision and for your 

leadership. At this time I am going to yield back the balance of my 

time. 

Mr. BOUCHER. Thank you very much, Mr. Butterworth. The gentleman—— 

Mr. BUTTERFIELD. Butterfield. 

Mr. BOUCHER. I am sorry, Mr. Butterfield. 

Mr. BUTTERFIELD. Thank you, Mr. Barker. 

Mr. BOUCHER. I am just going to recognize somebody else at this 

point. The gentleman from Michigan, Mr. Rogers, is recognized for 

3 minutes. 

OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. ROGERS. Thank you, Mr. Chairman. I am not sure how you 

follow that, but thank you. 

Mr. Chairman, thank you for holding today’s hearing. It is clear 

to me now that there are really two schools of thought on how we 

deal with our energy crisis. The first school of thought is one that 

is represented by most of today’s witnesses is, quite frankly, my 

colleagues’ school of thought on the other side of the aisle. They say 

22 

that high gas prices are a good thing because high gas prices will 

get people to use less. I give Barack Obama credit for having the 

guts to say he likes $4-a-gallon gasoline. At least it is an honest 

answer. It is an answer the American people can appreciate, and 

most of today’s panelists are going to tell us the same version of 

the very same thing: high energy prices are a good thing, high energy prices will get us to consume less, high energy prices will get 

us to switch to other fuels. But I ask, at what cost? 

We know that cap-and-trade is going to cost over $1 trillion in 

new taxes. We also know that every plan before us today will destroy jobs and raise the price of energy. The only questions are how 

many and how much. In my home State of Michigan, we struggled 

with high energy prices, high taxes, and bad policy. The high price 

of natural gas and President Bush’s terrible decision to impose 

steel tariffs has done more to destroy manufacturing jobs in my 

State than anything else. That is a lesson that this committee 

should learn from. When you raise the cost of doing business at 

home and then you make it more expensive to import products, you 

destroy jobs and, quite frankly, you destroy lives. 

We cannot continue down this road. We cannot ignore the pleas 

of working Americans and our middle class to lower gas prices now. 

We certainly cannot support a plan that will bring us $5 or $6-agallon gasoline and electric bills that are twice what they are 

today. I know that some people will say that high prices are important because they send the price signal to the market. I suppose 

that is true. But high energy prices send another signal as well. 

It is a signal to working Americans that Washington simply doesn’t 

care about them, that if you are in the middle class, we may in fact 

ruin your opportunity to stay there. 

It is offensive that we would seriously consider a plan to raise 

gas prices today. It is offensive to the mother who can no longer 

afford to attend her children’s away sports games. It is offensive to 

the independent truckers who are selling their trucks and getting 

out of the business they love because their margins are gone today. 

It is offensive to the airline workers who again are on the precipice 

of bankruptcy. 

Mr. Chairman, there is another way. We can be energy independent. We can be a whole lot cleaner as well. Right now in my 

home State, Michigan researchers are working 24 hours a day to 

produce lithium ion batteries. We can make and unleash the intellectual capital of this country in a better way versus big regulation, 

big mandates and big tax bills. It benefits no one when we charge 

the average American twice as much for their electric bill, twice as 

much for their gasoline, and to the end, we make Wall Street very, 

very rich and the average American much less better off. 

I would urge us to pick innovation over regulation and taxes, Mr. 

Chairman, and I look forward to further discussion of this important debate. 

Mr. BOUCHER. Thank you very much, Mr. Rogers. 

The gentlelady from Oregon, Ms. Hooley, is recognized for 3 minutes. 

23 

OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Ms. HOOLEY. Thank you, Mr. Chair, for holding this important 

hearing and I thank all of our witnesses appearing before us today 

and providing that testimony. 

We have a long day of testimony before us so I won’t take very 

long in my opening remarks. Let me just say over many years in 

Congress, I have sat through dozens of hearings on climate change 

in multiple committees: Science Committee, Budget Committee, 

and this committee. And now comes the really hard work. We are 

going to address climate change but how? How much of our lives 

will change? How much will it cost? Who will be the winners? Do 

we have to have losers? And to me and the many people in Oregon 

that I have talked to about this, striking a balance is key. I met 

with Oregon’s energy producers and major consumer groups, agriculture, forestry, environmental groups, and many kinds of businesses. Almost to a person, they encouraged me to work for legislation that would, number one, take meaningful steps to cut emissions, reduce current carbon levels in the atmosphere, and provide 

opportunities for American businesses to prosper. In addition, they 

said legislation should account for the economic results of addressing climate change for those businesses adversely affected. Legislation should also provide money for ecosystem adaptation. They 

urged me to get Congress to act now. 

Last year I asked scientists from the Intergovernmental Panel on 

Climate Change if it was too late to reverse the effects of climate 

change. Dr. Richard Alley, a lead author of IPCC’s assessment report, Climate Change 2007, stated that the loss of snow pack due 

to global warming will cause summer droughts in the West, which 

could adversely affect farmers and fisherman and the health of our 

salmon stocks. Could it be that we are already seeing that with the 

most recent salmon disasters? 

Through the Bush Administration and prior Congresses, we have 

shown little concern with global climate change. States like Oregon 

and Illinois who are testifying here today have filled that void and 

led the way in many key areas by being aggressive and working 

to curb carbon emissions and setting standards for renewable energy production. As an Oregonian, I am proud of the strides we 

have made as a State to be a leader in this and other environmental matters. However, it is no substitute for gains we can make 

as a country if we establish policies that affect the country as a 

whole, and that is the task before us, and I look forward to your 

testimony. 

Mr. BOUCHER. Thank you very much, Ms. Hooley. 

The gentleman from Louisiana, Mr. Melancon—— 

Mr. WAXMAN. Mr. Chairman, may I just ask—— 

Mr. BOUCHER. Mr. Waxman? 

Mr. WAXMAN. I would like to waive my opening statement and 

reserve that time for questions because I have to go over and chair 

another meeting. I just wanted to make that point. 

Mr. BOUCHER. That is fine. The gentleman will have 3 minutes 

added to his time for questioning the first panel. 

The gentleman from Louisiana, Mr. Melancon, is recognized for 

3 minutes. 

24 

Mr. MELANCON. Thank you, Mr. Boucher. I am not going to take 

the 3 minutes. I would rather have it spent with discussions and 

input from the panel that is here, so I just waive the rest of my 

time. Thank you. 

Mr. BOUCHER. The gentleman waives his opening statement and 

3 minutes will be added to his questioning time. 

We welcome now our first panel of witnesses, and we thank each 

of our guests for their patience this morning. The first witness will 

be Mr. Kraig Naasz, the President and Chief Executive Officer of 

the National Mining Association; Mr. Michael Goo, the Climate 

Legislative Director for the Natural Resources Defense Council; 

Mr. Alan Reuther, Legislative Director of the United Auto Workers, 

Ms. Lisa Jacobson, the Executive Director of the Business Council 

for Sustainable Energy; Mr. Thomas Kuhn, the President of the 

Edison Electric Institute; Ms. Mary Minette, Director of Environmental Education and Advocacy for the Evangelical Lutheran 

Church in America; Admiral Frank Bowman, the President and 

Chief Executive Officer of the Nuclear Energy Institute; and Mr. 

Ford West, the President of the Fertilizer Institute. We welcome 

each of you, and without objection, your prepared written statements will be made a part of the record. We would now welcome 

your oral summaries, and given the number of witnesses we have 

both on this panel and the next, we ask that your oral statements 

be kept to approximately 5 minutes. 

Mr. Naasz, we will be happy to begin with you. 

STATEMENT OF KRAIG R. NAASZ, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL MINING ASSOCIATION; ACCOMPANIED BY GLENN KELLY, VICE PRESIDENT, GOVERNMENT AFFAIRS, NATIONAL MINING ASSOCIATION 

Mr. NAASZ. Thank you, Mr. Chairman. Chairman Boucher, Ranking Member Upton and members of the subcommittee, I appreciate 

this opportunity to testify this morning. 

As you mentioned, my name is Kraig Naasz. I am President and 

CEO of the National Mining Association. NMA represents coal producers, mineral producers and mining equipment manufacturers 

with combined annual sales of $200 billion. 

NMA is committed to playing a constructive role in the development of policies to address global climate change and to meet our 

Nation’s growing demand for energy. We stand ready to assist you 

to achieve these important and inextricably linked objectives. 

Coal is a prime source of energy in the United States and 

throughout the world and is likely to remain so as global energy 

demand continues to increase. Coal presently fuels 40 percent of 

the world’s electricity generation. In the United States, 50 percent 

of our electricity is generated from coal and the Energy Information 

Administration projects that number will grow to 54 percent by 

2030. EIA also estimates that the demand for electricity will increase by 30 percent over the next 2 decades to meet the needs of 

a growing population and expanding economy. 

As such, meaningful efforts to address climate change in a sustainable manner will depend upon the development and deployment of advanced clean coal and carbon capture and storage technologies. To that end, NMA commends Chairman Boucher, RepVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
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resentatives Barton, Upton, Doyle, Matheson, Whitfield, and 

Shimkus, among others, for introducing the Carbon Capture and 

Storage Early Deployment Act. This important legislation, while 

not the subject of today’s hearing, will help to reduce greenhouse 

gas emissions by providing the funding needed to bring CCS technologies to commercial fruition. NMA looks forward to working 

with you, Mr. Chairman, in support of this important legislation’s 

enactment. 

In developing federal climate change legislation, it is essential 

that Congress gets it right. The consequences for getting it wrong 

are starkly described in the National Energy Technology Laboratory’s recent analysis wherein NETL finds that dramatic shifts 

away from coal will lead to, and I quote, ‘‘Spectacular price increases for households and industry with serious and damaging implications for the reliability of electricity supply and the viability 

of the U.S. economy.’’ 

Furthermore, the National Electric Reliability Council has 

warned that many regions of our country face an imminent shortage of capacity to generate and transmit electricity. 

The good news is that 27 coal-based generating units and plants 

representing more than 15,000 megawatts of electricity are currently being constructed throughout the United States. Given the 

demand forecast, even more facilities would likely be underwent 

were it not for the uncertainty regarding the form and timing of 

efforts to reduce greenhouse gas emissions. 

With these considerations in mind, NMA supports the adoption 

of federal climate legislation that promotes America’s continued 

economic and energy security. We believe such legislation should 

promote the continued use of our Nation’s abundant coal resources 

as a critical part of a diverse and affordable supply of energy, that 

it should promote the accelerated development and deployment of 

advanced clean coal and CCS technologies, establish a uniform 

legal framework for long-term carbon storage, encourage energy efficiency, harmonize emission reduction expectations with the commercial deployment of cost-effective emissions control technology, 

ensure an economy-wide approach that supports economic growth 

and the global competitiveness of energy-intensive industries, and 

include appropriate participation by developed and developing 

countries. 

Regrettably, the Boxer-Lieberman-Warner Climate Security Act 

failed to meet these objectives and the Senate was not provided 

with an opportunity to consider any substantive amendments. As 

such, NMA strongly opposed the Climate Security Act as crafted. 

In our view, neither the Safe Climate Act nor the Investing in Climate Action and Protection Act addresses the principles we view 

as necessary to sustain affordable and reliable energy for American 

families and businesses. 

The Low Carbon Economy Act sponsored by Senators Bingaman 

and Specter represents a more workable framework that with appropriate modification could promote the development of technologies needed to achieve its proposed emissions reductions. However, significant modification would be required to address our industry’s other major objectives. In our assessment, each of these 

legislative proposals falls well short of balancing our environmental 

26 

aspirations with our energy needs. However, I wish to underscore 

that NMA remains committed to working with you to develop legislation that addresses climate concerns while providing continued 

economic and energy security. 

Mr. Chairman, this concludes my oral remarks. Again, I appreciate this opportunity to appear before you this morning and I look 

forward to answering your questions. 

[The prepared statement of Mr. Naasz follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Naasz. 

Mr. Goo, we will be happy to hear from you. 

STATEMENT OF MICHAEL GOO, CLIMATE LEGISLATIVE 

DIRECTOR, NATURAL RESOURCES DEFENSE COUNCIL 

Mr. GOO. Thank you, Chairman Boucher and Ranking Member 

Upton for the opportunity to testify and for holding this hearing on 

legislative proposals to reduce greenhouse gas emissions. My name 

is Michael Goo. I am the Climate Legislative Director for the Natural Resources Defense Council. 

To begin my testimony, I will emphasize but not belabor the 

point that global warming is upon us now. As dramatic satellite 

photos show—see page 2 of my testimony—since 1979, the extent 

of summertime arctic ice has declined by 40 percent. Last night at 

1:38 a.m., I received an e-mail, and I will emphasize that at NRDC, 

we do work 24 hours a day on global warming. The BlackBerry 

uses a little electricity but we try and make sure it is renewable 

energy. Anyway, the e-mail forwarded an article from the BBC 

from a colleague in California and it said that some researchers are 

predicting that the arctic ice could be gone in the summertime by 

2013. Now, most of the bills before you begin to take action in 

2012. That is just one year before the arctic ice would be gone, too 

late to save the arctic ice. We need action. We need it now. 

You are going to hear a lot about costs today. The first point to 

remember about cost is that the cost of inaction is much larger 

than any possible cost of action. Lord Nicholas Stern in a study 

commissioned by the British government has estimated that the 

cost of inaction globally will be 5 to 11 percent of global GDP. 

Building on that work, researchers at Tufts University has recently 

analyzed the cost of inaction for the U.S. economy and found that 

doing nothing will cost the United States more than $3.8 trillion 

annually by 2100. 

The second point is that these bills are not, contrary to the arguments of some, economy killers. Cost models analyzing the entire 

U.S. economy uniformly predict the GDP will increase with climate 

legislation in place. I repeat, GDP will increase, it will continue to 

rise with climate legislation just a little bit more slowly. EIA, the 

Energy Information Agency, for instance, predicts that between 

2007 and 2030, 23 years, GDP will increase by 74.9 percent without the Lieberman-Warner bill, and by 73.5 to 74 percent with the 

Lieberman-Warner bill. That is a difference of just 1.6 percent over 

23 years. 

As the Congressional Research Service has explained, the GDP 

per capita impact of S. 2191 is within the noise of the reference 

cases. We need to recognize that with regard to our energy future, 

the die is not yet cast. cap-and-trade bills can dramatically affect 

that outcome in a positive fashion, especially if revenues are recycled to fund new technologies and mitigate impacts on consumers. 

Models that predict very high cost impacts for specific energy systems often ignore the vast untapped reserves we have for energy 

efficiency. They assume that low carbon technologies will not advance or will advance very slowly and they ignore the impacts of 

new policies like the recently enacted CAFE provisions. In short, 

they predict for at least the next decade a static energy picture 

33 

using mostly outdated energy technologies and ignoring the possibility of funding sources worth hundreds of billions of dollars. That 

need not be the future if this committee acts now. 

An analysis by Michael J. Bradley Associates makes clear that 

reducing emissions to close to the level in the Lieberman-Warner 

bill can be done without massive switching to natural gas and another undesirable effects. The limits, a 20 percent reduction by 

2025, can be met with just a 10 percent increase in energy efficiency, deployment of renewable energy at twice the current rate, 

and 6 gigawatts of carbon capture and sequestration per year between 2015 and 2025. That is not a moon shot. It is eminently doable. 

Of all the committees in the Congress, this committee is uniquely 

suited to dealing with the problem of global warming. It has a deep 

reservoir of expertise and experience, both in the environmental 

area and in the energy field. And many of its members participated 

in the 1990 Clean Air Act amendments including Chairman Boucher, Congressman Dingell, and many other members of this committee. The bills now before you provide many excellent examples 

of ways in which global warming legislation can reduce emissions 

consistent with scientifically-based targets while helping to limit 

costs, create jobs, grow our economy, increase our energy independence, and spur new energy technologies for export to the world at 

large. But none of them are perfect. 

We urge you to act now to draft legislation as soon as possible 

and to seek to report such legislation to the full Committee on Energy and Commerce and to the full House of Representatives. We 

cannot afford to wait any longer. 

Thank you for the opportunity to testify. 

[The prepared statement of Mr. Goo follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Goo, and let me note, 

following your testimony, that Mr. Goo did serve as one of the 

counsels for this subcommittee for a number of years and provided 

highly valuable service, and we are delighted to have you return 

today in a different capacity and thank you for your remarks. Mr. 

Goo mentioned Sir Isaac Stern. He will be the lead witness at a 

hearing this subcommittee will conduct one week from today and 

so those who are interested in his report and some of the conclusions that it reaches are welcome to attend that session. 

Mr. Reuther, we will be happy to hear from you. 

STATEMENT OF ALAN REUTHER, LEGISLATIVE DIRECTOR, 

UNITED AUTO WORKERS 

Mr. REUTHER. Thank you, Mr. Chairman. My name is Alan Reuther. I am the legislative director for the UAW. The UAW appreciates the opportunity to testify before this subcommittee on legislative proposals to reduce greenhouse gas emissions. We applaud 

the Boxer-Lieberman-Warner, the Markey, the Bingaman-Specter 

and the Waxman bills for all establishing an economy-wide capand-trade program to reduce greenhouse gas emissions from the 

major sources of emissions in the United States. We are also 

pleased that most of these bills cover the fossil fuels and transportation sectors on an upstream basis. This minimizes regulation, 

promotes economic efficiency and ensures that all sectors are required to participate in reducing greenhouse gas emissions. 

The UAW opposes the provisions in the Waxman bill that would 

require EPA to regulate greenhouse gas emissions from light-duty 

vehicles. This would simply relax the pressure from the federal cap 

on other sectors without producing any additional reduction in 

greenhouse gas emissions beyond the level mandated by the federal 

cap. Thus, the only result of the EPA regulations would be to shift 

the burden of reducing greenhouse gas emissions from the relatively low cost electric power sector to the much higher cost auto 

sector. The UAW supports the safety valve cost containment provisions in the Bingaman-Specter bill. However, we also welcome the 

approach set forth in the Boxer-Lieberman-Warner bill, which 

would permit a pool of allowances to be borrowed from the future 

and auctioned to parties at set prices. 

The UAW applauds the Boxer-Lieberman-Warner, the Bingaman-Specter and the Markey bills for including provisions designed 

to protect American businesses and workers from being placed at 

a competitive disadvantage by imposing carbon allowance requirements on certain imports from other nations that do not adopt comparable programs to reduce greenhouse gas emissions. However, 

these provisions need to be strengthened by making it clear that 

finished products such as automobiles and auto parts are covered 

under the international carbon allowance requirements. 

The UAW would especially like to commend the BoxerLieberman-Warner and the Bingaman-Specter bills for using a portion of the revenues from the auction of carbon allowances to finance a program to encourage auto manufacturers and parts companies to retool facilities in the United States to produce advanced 

technology vehicles and their key components. This program can 

help to speed up the introduction of these vehicles, thereby reducVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
67 

ing oil consumption and greenhouse gas emissions. At the same 

time, it can create tens of thousands of jobs for American workers. 

The UAW strongly opposes the provisions in the BoxerLieberman-Warner, Markey and Waxman bills that would allow 

the EPA to retain residual authority under the Clean Air Act to 

regulate CO2 emissions. This means that EPA could supersede key 

decisions that Congress will make in enacting a federal cap-andtrade program concerning the timetable for reductions in CO2 emissions, the appropriate point of regulation and the distribution of 

economic burdens. We believe this would be inappropriate and untenable. 

The UAW also strongly opposes the provisions in the BoxerLieberman-Warner and Markey bills that would supersede pending 

litigation over whether California and other States may regulate 

auto CO2 tailpipe emissions. We believe the courts should be allowed to resolve whether these regulations are tantamount to regulating fuel economy and are preempted by the federal CAFE program. 

In addition, the Boxer-Lieberman-Warner, Markey, and Waxman 

bills all fail to deal with the important issue of how State climate 

change measures will interface with the federal cap-and-trade program. Because of this critical deficiency, State climate change 

measures would result in zero additional reduction in greenhouse 

gas emissions beyond the level already mandated by the federal 

cap-and-trade programs established by these bills. Although State 

measures could reduce emissions from a particular sector, this 

would simply relax the pressure from the federal cap on other sectors without providing any net environmental benefit. To avoid this 

nonsensical result, the UAW submits that any entities regulated by 

State climate change measures must be allowed to purchase and 

retire allowances from the federal cap-and-trade program to satisfy 

the State standards to the extent they are more stringent than 

comparable federal standards. This would guarantee that State 

measures actually produce additional reductions in greenhouse gas 

emissions while also allowing this to be accomplished in the most 

economically efficient manner. 

In conclusion, the UAW appreciates the opportunity to testify before this subcommittee. We look forward to working with the members of this subcommittee, the entire Congress and a new Administration to pass strong federal legislation that can achieve reductions in greenhouse gas emissions necessary to combat climate 

change while at the same time enhancing prospects for economic 

growth and the creation of jobs for American workers. Thank you. 

[The prepared statement of Mr. Reuther follows:] 

STATEMENT OF ALAN REUTHER

INTRODUCTION

Mr. Chairman, my name is Alan Reuther. I am the Legislative Director for the 

International Union, United Automobile, Aerospace & Agricultural Implement 

Workers of America (UAW). The UAW represents over one million active and retired 

workers across the country, many of whom work or receive retirement benefits from 

auto manufacturers and parts companies. The UAW appreciates the opportunity to 

testify before this Subcommittee on legislative proposals to reduce greenhouse gas 

emissions. We will focus on comments on the Climate Security Act of 2008 (S. 3036) 

sponsored by Senators Boxer, Lieberman, and Warner; the Investing In Climate AcVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
68 

tion and Protection Act (H.R. 6186) sponsored by Representative Markey; the Safe 

Climate Act (H.R. 1590) sponsored by Representative Waxman; and the Low Carbon 

Economy Act (S. 1766) sponsored by Senators Bingaman and Specter. 

The UAW shares the growing national concern about climate change. Scientific 

studies have confirmed that human use of fossil fuels is contributing to global 

warming. These studies underscore the major environmental challenges posed by 

global warming, including rising sea levels, changes in climate patterns, and threats 

to coastal areas. To avoid these dangers, we believe the growth in greenhouse gas 

emissions must be reduced and ultimately reversed. 

To address the problem of global warming in a meaningful way, the UAW believes 

we need a broad, comprehensive policy that will require all sectors of the economy 

to come to the table to help reduce our nation’s greenhouse gas emissions. This includes stationary sources, such as power plants and factories. It includes our fossil 

fuels, such as coal, oil, and natural gas. And it includes all mobile sources, such as 

planes, trains, buses, and ships, as well as light duty vehicles, which have already 

had their carbon emissions reduced through the reformed CAFE program that was 

enacted last year. 

We believe each sector should be required to contribute to the reduction of greenhouse gases in a proportionate manner. No sector should enjoy a free ride or be exempted. No sector should be required to bear a disproportionate burden, or to shoulder costs that would have a devastating impact on its operations or employment. 

To achieve these objectives, the UAW strongly supports the establishment of an 

economy-wide mandatory tradable-permits program that will slow the growth of, 

and eventually reduce greenhouse gas emissions in the United States. We believe 

this type of ‘‘cap-and-trade’’ program should mostly be done on an ‘‘up-stream’’ basis 

in order to minimize regulation and to ensure that all sectors of the economy participate in reducing greenhouse gas emissions. We also believe this program should 

include mechanisms to ensure that no sector is hit with unacceptable spikes in the 

price of carbon permits or burdens that would have a negative impact on economic 

growth and jobs. In addition, this program should include measures to ensure that 

our businesses and workers are not placed at an unfair competitive disadvantage 

with U.S. trading partners and developing countries. Finally, this program should 

carefully delineate the authority of the Environmental Protection Agency (EPA), as 

well as the authority of the states, and ensure that any state climate change measures are integrated with the federal program in a way that leads to further reductions in greenhouse gas emissions in an economically efficient manner. 

STRUCTURE OF CAP-AND-TRADE PROGRAMS

The UAW applauds all of the legislative proposals for establishing economy-wide 

cap-and-trade programs to reduce greenhouse gas emissions. By covering the electric 

power, industrial, transportation and fossil fuels sectors, these bills effectively address the major sources of greenhouse gas emissions in the United States. 

The UAW also applauds the Boxer-Lieberman-Warner, Markey and BingamanSpecter bills for covering the fossil fuels and transportation sectors on an ‘‘upstream’’ basis. This minimizes regulation, promotes economic efficiency, and also ensures that all sectors are required to participate in reducing greenhouse gas emissions. In contrast, we oppose the approach in the Waxman bill that simply leaves 

key decisions about the point of regulation and operation of the cap-and-trade program to the discretion of the Environmental Protection Agency (EPA). In our judgment, these critically important policy decisions should be made by Congress, not 

left to the discretion of a federal agency. 

The UAW also opposes the provisions in the Waxman bill that would direct EPA 

to regulate greenhouse gas emissions from light duty vehicles. We believe it is 

wrong to focus exclusively on light duty vehicles, and exclude other parts of the 

transportation sector. Furthermore, because the Waxman bill establishes a cap-andtrade program covering the transportation sector, EPA regulations dealing with 

light duty vehicles would not produce any additional reduction in greenhouse gases 

beyond the level mandated by the federal cap. Although the EPA regulations would 

reduce greenhouse gas emissions from the auto sector, this would relax the pressure 

from the federal cap on other sectors, especially the electric power sector. In the 

end, there would not be any net environmental benefit. The only result of the EPA 

regulations would be to shift the burden of achieving greenhouse gas reductions 

from the relatively low cost electric power sector ($20–30 per ton) to the much higher cost auto sector ($90–100$ ton). See ‘‘Bringing Transportation into a Cap-andTrade Regime.’’ A. Denny Ellerman, Henry D. Jacoby, and Martin B. Zimmerman. 

MIT Joint Program on the Science and Policy of Global Change, Report No. 136, 

69 

pps. 7–11, June 2006. This directly contradicts the fundamental tenet underlying 

the establishment of an economy-wide cap-and-trade program. 

We would note that various industries—such as airlines and steel—have already 

put forward amendments to exempt the coal or oil that they use from the requirements of the cap-and-trade programs. We oppose such ‘‘carve outs’’ for specific industries. To the extent any industries are exempted, this will only serve to increase 

the pressure on the rest of the industries and sectors that are still covered under 

the cap-and-trade programs. In the end, this could unravel the prospects of enacting 

any meaningful federal program to combat climate change, which in our judgment 

must be premised on an equitable distribution of the resulting economic burdens. 

COST CONTAINMENT

The UAW believes it is essential that any cap-and-trade program include an effective mechanism for preventing price spikes and ensuring that no sector of the economy is forced to bear disproportionate costs or burdens that would have a negative 

impact on employment. In our judgment, the failure of the Markey and Waxman 

bills to include such provisions represents a serious deficiency. 

The UAW supports the ‘‘safety value’’ contained in the Bingaman-Specter bill. 

However, we also welcome the approach set forth in the Boxer-Lieberman-Warner 

bill, which would permit a pool of allowances to be borrowed from the future and 

auctioned to parties at set prices. In our judgment this could provide a workable 

mechanism for containing costs. However, we believe more work needs to be done 

to ensure that any pool of allowances is sufficiently large and is made available at 

acceptable prices. 

INTERNATIONAL COMPETITION

The UAW applauds the Boxer-Lieberman-Warner, Bingaman-Specter, and Markey 

bills for including provisions designed to ensure that American businesses and 

workers are not placed at a competitive disadvantage with our trading partners and 

developing nations. In particular, we welcome the provisions that would impose carbon allowance requirements on certain imports from other nations that do not adopt 

comparable programs to reduce greenhouse gas emissions. 

However, in our judgment these provisions still need to be strengthened in a number of respects. Most importantly, we are concerned that finished products, such as 

automobiles and auto parts, may not be covered under the international carbon allowance requirements. This would pose a major threat to the jobs of American workers, especially as China and India continue to ramp up their auto industries for export to the United States. Failing to extend the international carbon allowance requirements to finished products made from energy-intense materials will drive the 

production of these products off-shore. It also will undermine the protection of U.S. 

suppliers of energy-intense materials by removing the international allowance requirements from these materials once they are formed into finished products. 

The UAW regrets that the Waxman bill does not appear to include any provisions 

to deal with the critically important issue of international competition. 

INVESTING IN NEW TECHNOLOGIES AND JOBS

The UAW is pleased that all of the proposals would reinvest revenues raised from 

the auctioning of carbon allowances to spur research and development of advanced, 

low carbon technologies, and to promote the deployment of these technologies 

throughout our nation. This can be critically important in ensuring that our economy continues to grow and that we create the jobs of the future in this country. 

The UAW would especially like to commend the Boxer-Lieberman-Warner and 

Bingaman-Specter bills for including robust provisions that would use a portion of 

the revenues from the auction of carbon allowances to finance a program to encourage auto manufacturers and parts companies to retool facilities in the United States 

to produce advanced technology vehicles (hybrids, plug-in hybrids, clean diesels) and 

their key components. This type of program can help to speed up the introduction 

of these advanced technology vehicles, thereby reducing oil consumption and greenhouse gas emissions. At the same time, it will provide a significant incentive for 

auto and parts manufacturers to retool facilities in this country to produce these vehicles of the future and their key components. This can create tens of thousands 

of jobs for American workers. 

70 

RESIDUAL EPA AUTHORITY TO REGULATE CO2 EMISSIONS

Even though the Boxer-Lieberman-Warner, Markey, and Waxman bills establish 

an economy-wide cap-and-trade program to reduce greenhouse gases, they would 

also allow the EPA to retain residual authority under the Clean Air Act to regulate 

CO2 emissions. This effectively means that EPA would be free to disregard key decisions that Congress will make in considering these bills concerning the timetable 

for reductions in CO2 emissions, the appropriate point of regulation, and the distribution of economic burdens. Instead, EPA would be free to regulate CO2 emissions from the electric power, industrial, transportation and fuels sectors in ways 

that differ fundamentally from these bills. The UAW submits that it is inappropriate and untenable to allow a federal agency to supersede decisions by Congress 

in this manner. 

In the absence of any federal cap-and-trade program, the UAW understands the 

importance of EPA’s existing authority to regulate CO2 emissions. But if Congress 

is going to take the difficult step of enacting a comprehensive federal cap-and-trade 

program to combat climate change, we do not believe it makes any sense to allow 

EPA to proceed in ways that differ from this program. 

STATE AUTHORITY

The Boxer-Lieberman-Warner, Markey, and Waxman bills all preserve existing 

state authority to regulate greenhouse gases. However, the Boxer-Lieberman-Warner and Markey bills also supersede pending litigation over the scope of that authority, and make it clear that California and other states may regulate auto CO2 tailpipe emissions. The UAW strongly opposes these provisions as unnecessary and 

overreaching. We believe the courts should be allowed to resolve the contentious 

issue of whether the states may regulate auto CO2 tailpipe emissions, or whether 

this is tantamount to regulating fuel economy and is preempted by the CAFE program. Attached to this testimony is an addendum setting forth the reasons why we 

believe the California auto CO2 tailpipe emissions standard is both pre-empted and 

seriously flawed. 

In addition, the Boxer-Lieberman-Warner, Markey and Waxman bills all fail to 

deal with the important issue of how state climate change measures—whatever 

their scope—will interface with the federal cap-and-trade program. Because of this 

critical omission, the unfortunate reality is that state climate change measures 

would result in ZERO additional reduction in greenhouse gas emissions beyond the 

level already mandated by the federal cap-and-trade programs established by these 

bills. Although state measures could reduce emissions from a particular sector, this 

would simply relax the pressure from the federal cap on other sectors, without providing any net environmental benefit. See ‘‘Bringing Transportation into a Cap-andTrade Regime.’’ A. Denny Ellerman, Henry D. Jacoby and Martin B. Zimmerman. 

MIT Joint Program on the Science and Policy of Global Change, Report No. 136, 

pps. 7–11, June 2006. 

The UAW submits that this is a nonsensical result. If the states are going to be 

allowed to implement climate change measures that impose significant economic 

burdens on particular industries, a mechanism should be established to ensure that 

these state measures can interface with the federal cap-and-trade program in an appropriate manner, and thereby provide additional reductions in greenhouse gas 

emissions. 

The UAW believes this can easily be accomplished by allowing entities regulated 

by state climate change measures to purchase and retire allowances from the federal program to satisfy the state standards (to the extent they are more stringent 

than comparable federal standards). This would guarantee that the state measures 

actually provide an environmental benefit through additional reductions in greenhouse gas emissions, while also allowing this to be accomplished in the most economically efficient manner in keeping with the fundamental premise of the federal 

cap-and-trade program. 

CONCLUSION

The UAW appreciates the opportunity to testify before this Subcommittee on various legislative proposals for reducing greenhouse gas emissions. These proposals 

have many positive features, and therefore represent an important first step in the 

effort by Congress to deal effectively with the threat posed by global warming. At 

the same time, there are still many serious problems and issues that need to be resolved. The UAW looks forward to working with the Members of this Subcommittee, 

the entire Congress, and a new administration to pass strong federal legislation establishing an economy-wide cap-and-trade program to reduce greenhouse gas emisVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
71 

sions. If this is done correctly, it can achieve the reductions necessary to combat climate change, while at the same time enhancing prospects for economic growth and 

the creation of jobs for American workers. 

ADDENDUM 

STATE AUTO CO2 TAILPIPE EMISSIONS STANDARDS

For a number of reasons, the UAW strongly opposes the provisions in the BoxerLieberman-Warner and Markey bills that would supersede pending litigation concerning the scope of state authority to regulate greenhouse gas emissions, and make 

it clear that California and other states may regulate auto CO2 tailpipe emissions 

First, these provisions would directly interfere with the ongoing litigation in the 

federal courts over whether the state CO2 tailpipe emissions regulations are preempted. In our judgment, the courts should be allowed to determine whether current law forbids the states from making such regulations. Although several lower 

federal courts have issued decisions on this issue, so far there has not been a definitive ruling by a Court of Appeals or the Supreme Court. Specifically, in Massachusetts v. EPA the Supreme Court did not consider the issue of whether state regulations regulating CO2 tailpipe emissions from automobiles are preempted by the Energy Policy and Conservation Act (EPCA). 

When higher federal courts do consider this issue, the UAW believes they will 

conclude that state CO2 tailpipe emissions regulations are indeed preempted. EPCA 

expressly preempts state standards that are ‘‘related to’’ the federal corporate average fuel economy standards (CAFE). 29 U.S.C. 32919 Congress made this judgment 

when it established the CAFE program because it wanted to avoid the negative economic consequences on the auto industry of a multitude of different state standards. 

As a scientific matter, there is no dispute that reducing CO2 tailpipe emissions 

from automobiles is directly and overwhelmingly related to their fuel economy. The 

only way to significantly reduce CO2 tailpipe emissions is to substantially increase 

fuel economy through the adoption of engine, transmission and other vehicle technologies that increase fuel economy. There is a direct and indisputable correlation 

between the CO2 tailpipe emissions and fuel economy. As a result, statements by 

the California Air Resources Board (CARB) and the leading congressional advocates 

of the California CO2 tailpipe emissions standard all refer to the fuel economy (mpg) 

target achieved by that standard. 

Second, it is important to recognize that the California CO2 tailpipe emissions 

standard directly conflicts with the new reformed CAFE program enacted by Congress in the Energy Independence and Security Act of 2007 (EISA). Specifically, the 

California standard: 

• Is not based on an attribute-based system like the reformed CAFE program. Instead, it applies the same rigid formula to all manufacturers, regardless of their 

product mix. This undercuts the effectiveness of the standard, since companies producing towards the smaller end of the passenger car and light truck markets will 

not have to make as great an effort to reduce the CO2 emissions and to increase 

the fuel economy of their fleets. In effect, it significantly discriminates against full 

line manufacturers. 

• Does not maintain separate standards for passenger cars and light trucks. As 

a result, it discriminates against and penalizes companies whose product mix is 

more oriented towards the light truck market. 

• Exempts auto manufacturers whose production is below a certain threshold. This 

also undercuts the effort to reduce CO2 emissions and improve fuel economy. And 

it gives a major competitive advance to newer entrants into the auto market. 

Third, granting a waiver to California will not simply result in two standards for 

vehicles, a federal standard and a more stringent California standard adopted by 

many states. Instead, in order to comply with the CO2 tailpipe emissions standards 

adopted by California and other states, auto manufacturers would have to make 

sure that the vehicles they sell in each state satisfy this stringent standard. Because 

of product mix differences in different states, it would be virtually impossible for the 

auto manufacturers to satisfy this compliance burden. Even though a manufacturer 

is selling the same type of vehicles with the same technologies in each state, as a 

result of product mix differences the manufacturer might be in compliance in one 

state, but flunk the same standard in another state. 

Fourth, the reduction in greenhouse gas emissions and improvement in fuel economy which proponents of the California standard hope to achieve will be significantly offset by increased CO2 tailpipe emissions and decreased fuel economy in 

states that have not adopted this standard. The new federal CAFE standard established by Congress in EISA simply requires the auto manufacturers to comply with 

72 

stiffer fuel economy targets for their entire nationwide fleets of passenger cars and 

light trucks. To the extent that California and other states impose more stringent 

fuel economy/CO2 standards on the vehicles sold by manufacturers in those states, 

this simply relaxes the fuel economy target that the manufacturers will have to 

meet in the rest of the country to remain in compliance with the new CAFE standard. In effect, the manufacturers will be able to increase the number of larger, less 

fuel efficient passenger cars and light trucks that they sell in the states that have 

not adopted the California CO2 tailpipe emissions standard. 

Fifth, allowing states to proceed with CO2 tailpipe emissions standards would 

raise the prospect of states seeking to combat global warming through measures 

that place the economic burden on the economies of other states. In our judgment, 

this type of ‘‘economic warfare’’ raises troubling constitutional issues. 

SUMMARY 

The UAW applauds all of the legislative proposals on climate change for establishing economy-wide cap-and-trade programs to reduce greenhouse gas emissions. 

We also commend the Boxer-Lieberman-Warner, Markey and Bingaman-Specter 

bills for covering the fossil fuels and transportation sectors on an ‘‘upstream’’ basis, 

which will minimize regulation and ensure that all sectors are required to participate in reducing greenhouse gas emissions. 

The UAW supports the provisions in the Bingaman-Specter bill that would establish a ‘‘safety value’’ to contain costs. But we also welcome the provisions in the 

Boxer-Lieberman-Warner bill that seek to achieve the same objective by creating a 

pool of allowances that could be borrowed from the future and auctioned at set 

prices. 

The UAW applauds the Boxer-Lieberman-Warner, Bingaman-Specter, and Markey 

bills for including provisions to ensure that American businesses and workers are 

not placed at a competitive disadvantage with our trading partners, by imposing 

carbon allowance requirements on imports from other nations that do not adopt 

comparable programs to reduce greenhouse gas emissions. However, we believe 

these provisions need to be strengthened to make it clear that certain finished products, such as automobiles and auto parts, are covered by these protections. 

The UAW commends the Boxer-Lieberman-Warner and Bingaman-Specter bills 

for including robust provisions that would use a portion of the revenues from the 

auction of the carbon allowances to finance a program to encourage auto manufacturers and parts companies to retool facilities in the United States to produce advanced technology vehicles and their key components. This would help to reduce 

greenhouse gas emissions, while creating tens of thousands of jobs for American 

workers. 

The UAW strongly opposes the provisions in the Boxer-Lieberman-Warner, Markey and Waxman bills that would allow the EPA to retain residual authority under 

the Clean Air Act to regulate CO2 emissions. This would effectively allow EPA to 

disregard key decisions that Congress will make concerning the timetable for reductions in CO2 emissions, the appropriate point of regulation, and the distribution of 

economic burdens. 

The UAW also strongly opposes the provisions in the Boxer-Lieberman-Warner 

and Markey bills that would supersede pending litigation over whether the California auto CO2 tailpipe emission standard is tantamount to regulating fuel economy and is preempted by the CAFE program. This contentious issue should be left 

for the courts to resolve. 

In addition, the Boxer-Lieberman-Warner, Markey and Waxman bills all fail to 

deal with the important issue of how state climate change measures will interface 

with the federal cap-and-trade program. Because of this omission, state climate 

change measures would result in ZERO additional reduction in greenhouse gas 

emissions beyond the level already mandated by the federal cap-and-trade programs 

established by these bills. Although state measures can reduce emissions from a 

particular sector, this would simply relax the pressure from the federal cap on other 

sectors, without providing any net environmental benefit. 

The UAW believes this fundamental defect in the three bills can easily be solved 

by allowing entities regulated by state climate change measures to purchase and retire allowances from the federal program to satisfy the state standards (to the extent they are more stringent than comparable federal standards). This would guarantee that the state measures actually provide an environmental benefit through 

additional reductions in greenhouse gas emissions, while also allowing this to be accomplished in the most economically efficient manner. 

73 

Mr. BOUCHER. Thank you very much, Mr. Reuther. 

Ms. Jacobson. 

STATEMENT OF LISA JACOBSON, EXECUTIVE DIRECTOR, 

BUSINESS COUNSEL FOR SUSTAINABLE ENERGY 

Ms. JACOBSON. Thank you, Mr. Chairman and members of the 

subcommittee for the opportunity to share views of clean energy 

businesses in the United States. Our industries are actively investing capital and creating jobs that help our Nation reduce greenhouse gas emissions. They include advanced batteries, biomass, 

biogas, fuel cells, geothermal, hydropower including new waterpower resources such as ocean, tidal and in-stream hydrokinetic, 

natural gas, solar, wind, and supply-side and demand-side energy 

efficiency. I have provided more detailed perspectives on the five 

legislative proposals in my written testimony so I will use my time 

this morning to describe why existing clean energy technologies 

need to be the centerpiece of any federal response to climate 

change and provide recommendations on how specific elements are 

needed in the legislation to stimulate these investments. 

The Council’s members are businesses and we support federal action to address climate change. We therefore commend the bill’s 

sponsors and committee members for their leadership in the development of national climate change legislation and we appreciate 

the thoughtful work that this committee has also put into the issue 

to date. As businesses, we support market-based approaches such 

as cap-and-trade. We think that offers a chance to effectively and 

cost-effectively reduce emissions and stimulate investment that we 

will need for our future energy sources. 

The Council feels strongly that we do not need to wait to begin 

to reduce greenhouse gas emissions. We have technologies that are 

readily available today and many of them are cost-effective to reduce greenhouse gas emissions. According to a March 2008 report 

by McKinsey and Company, the Nation can reduce greenhouse gas 

emissions in 2030 by 3 to 4-and-a-half gigatons. That is up to 28 

percent below 2005 levels by using existing tested approaches and 

high-potential emerging technologies. McKinsey estimates that the 

total needed investments to achieve this is 1.5 percent of the investments the U.S. economy is expected to make over this period. 

Deploying existing clean energy technology as soon as possible will 

ease this transition to a future carbon-constrained economy. Starting early pays clear dividends. This is even more urgent in the period leading up to 2020 as the United States faces electric demand 

growth and regulatory uncertainty on climate change policy is 

stalling some domestic sector investments. Existing technologies 

can help smooth out this transition. 

Further, deployment of existing technologies creates high-paying 

U.S. jobs and increases our economic prosperity. Every State can 

benefit and these jobs are not easily outsourced. Therefore, existing 

clean energy technology deployment represents the vital first phase 

of a U.S. climate change program. 

In order for clean energy technologies to be able to play their role 

in reducing emissions, a federal climate change program must do 

several things. First, it must send clear, predictable signals to the 

market to invest in these sectors over the short, medium, and long 

74 

term. Businesses need to know where to invest their capital. Second, it must ensure that financial mechanisms such as allocation 

policy and auction proceeds are directed at near-term emission reduction. These provisions also send signals to the market and can 

drive significant market growth in existing clean tech sectors. 

Third, it must address regulatory and market barriers in the power 

sector, providing incentives and policy direction that shifts our Nation to less emitting energy generation, distribution, and use. The 

Council has released a package of energy policies and incentives 

under the Clean Energy Deployment Path to Climate Solutions Act 

that can be adopted by Congress immediately. This will deploy existing technology and start us down the path to reduce emissions. 

Fourth, it should include a robust offset program as a vehicle to deploy technology in sectors that are not under a cap and to lower 

the cost of compliance. However, integrity in this offset program is 

critical. Finally, we support credit for early action to recognize 

businesses and other entities that take steps now to reduce emissions. This will also deploy technology. 

As with other major economy-wide proposals, the details will be 

critical. We need to ensure that there is clarity in the markets and 

we start forward with the first phase of a U.S. climate change program ensuring that existing clean energy technology is deployed. 

Thank you very much for your time and your consideration. 

[The prepared statement of Ms. Jacobson follows:] 

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Mr. BOUCHER. Thank you very much, Ms. Jacobson. 

Mr. Kuhn. 

STATEMENT OF THOMAS R. KUHN, PRESIDENT, EDISON 

ELECTRIC INSTITUTE 

Mr. KUHN. Thank you, Chairman Boucher and members of the 

Committee. My name is Tom Kuhn, president of Edison Electric Institute, and I would first like to commend the Committee for their 

thorough and very inclusive work that they have done on this particular issue. I think that the white papers and the many, many 

hearings you have are designed to address the difficulty and complexity of this issue. 

The electric industry has been a leader in reductions of greenhouse gas emissions since 1994. We established a program to do 

that and we are responsible for about two-thirds of the overall 

emissions reductions that have been reported to the Federal Government at this point in time. More than a year ago, our board of 

directors did take a unanimous position that indicated we would 

support legislation to achieve greater reductions in greenhouse gas 

emissions and to establish a price of carbon, either by a tax or a 

cap-and-trade. 

I would first like to mention the magnitude of that challenge 

though. With population economic growth, the Energy Information 

Administration estimates that by the year 2030, electricity growth 

will grow by 30 percent and that is after factoring in the very significant provisions that you passed in the Energy Policy Act of 

2007 for energy efficiency. Electricity is the lifeblood of the economy so our main job to supply electricity and to make sure it is 

reliable and there when people need it. 

In order to do this job to reduce greenhouse gas emissions where 

you are going to have to increase the electricity supply and at the 

same time reduce emissions, we are going to need the full suite of 

technologies to accomplish this issue, and I would like to talk a little bit about—turn to a slide that we have that was done by the 

Electric Power Research Institute that talks about again the challenges of this task. 

[Slide shown.] 

The EPRI put up a—did a thorough, exhaustive study and we 

have complemented it by a tremendous amount of work by our 

CEO team over the past year and a half to look at all the technologies that we would need to deal with the global climate issue, 

and I might emphasize that this work talks about the technological 

feasibility of these technologies so that we are really pushing the 

envelope on them and would need significant public policy support 

in order to accomplish it. 

First, we start out with energy efficiency, which we call the fifth 

fuel, and I think we have done a great deal over the past decades, 

several decades on energy efficiency but we do believe we can do 

a great deal more and we can do it with the help of major new 

technologies such as advanced meters and information systems and 

new technologies in the building efficiency and appliance efficiency 

that can enable us to achieve a lot more. The Congress is talking 

about policies that would reduce the depreciation for advanced meters. That would help very much. Incidentally, on that target, I 

97 

might point out that electricity growth for the past 10 years has 

been over 2 percent. The Energy Information Administration talks 

about it declining to somewhere in the neighborhood of 1 percent 

and EPRI is talking about the possibility of going to .7 percent. So 

again, that talks about the magnitude that we are looking to to 

achieve in the area of energy efficiency. 

In the area of renewables, the industry has been strongly supportive of additional renewables. In fact, wind is one of the fastest 

growing fuels that we see. But once again, we estimate here, the 

Energy Information Administration talks about a doubling of renewables between now and the year 2030. EPRI is pushing for a 

quadrupling of those renewables. Right now renewables produce 

about 2 percent of our overall electric generation so if we do that, 

we will get a lot more and it will be very necessary but it still 

would not produce a significant percentage of the overall generation. In order to get more renewables, we are going to need transmission policies that will allow us to get the transmission to where 

the renewables are needed, and we certainly also need tax support 

that would entail extension of the production tax credits and the 

investment tax credits for renewables. 

Nuclear generation—every CEO of electric utilities around the 

world who are members of our organization will indicate that if you 

are going to make the goals that you want to make with global climate change, you will need additional nuclear power plants. We 

now have about 118 gigawatts of nuclear energy in this country. 

The Energy Information Administration talks about many additional nuclear power plants that would be brought on board by the 

year 2030. We are talking about the possibility of bringing 64 

gigawatts of new nuclear plants on by that period of time, and that 

again is a huge challenge but one that will be necessary. 

New clean coal technologies and carbon capture and storage— 

again, if you see that chart, you see the big bar that is going to 

be necessary for us to bring on carbon capture and storage and new 

clean coal technologies that will enable us to remove the carbon 

from—or capture and sequester and remove the carbon from coal 

power plants. This is a huge task and one that we need to advance 

with a great deal of funding for these new technologies in the near 

term. 

Finally, plug-in hybrid electric vehicles. We think the PHEVs can 

provide a great deal not only in the energy and security side but 

on the environmental side as these vehicles come in and reduce our 

dependence on oil and also allow us to reduce greenhouse gas emissions in a major way. 

All of these things are ambitious targets, and if we have overly 

ambitious targets, particularly in the near term, it will entail us 

moving toward more use of natural gas and that would further 

drive up natural gas prices and would certainly hurt our ability to 

make the long-term goals. We believe that need every one of these 

technologies. There is no silver bullet. You can’t pick out energy efficiency and renewables and said that will do it all. You can’t pick 

out nuclear and say that will do it all. We need everything in order 

to get it done. 

We do have four additional major principles that I would just 

like to say, first—— 

98 

Mr. BOUCHER. Mr. Kuhn, your time is about 2 minutes over at 

this point and—— 

Mr. KUHN. Cost containment mechanisms are going to be very 

important, like a safety valve. Offsets will be very important to reduce the cost. We need all nations to participate and we certainly 

need to harmonize the federal and state policies in order for us to 

do this thing with an overall national policy. 

I very much appreciate the opportunity to testify, Mr. Chairman. 

[The prepared statement of Mr. Kuhn follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Kuhn. 

Admiral Bowman. 

STATEMENT OF ADMIRAL FRANK L. BOWMAN, U.S. NAVY (RETIRED), PRESIDENT AND CHIEF EXECUTIVE OFFICER, NUCLEAR ENERGY INSTITUTE 

Admiral BOWMAN. Thank you, Mr. Chairman, Ranking Member 

Upton and Ranking Member Barton. Thank you very much to the 

committee for allowing me this opportunity to represent the nuclear energy industry at this hearing to discuss these legislative 

proposals. I am retired Admiral Skip Bowman, president and chief 

executive officer of the Nuclear Energy Institute. 

NEI has taken no specific position on the various legislative proposals currently before Congress. Nonetheless, NEI is deeply engaged in and committed to the debate over climate policy. A year 

ago the NEI executive committee endorsed a set of principles establishing the nuclear industry’s policy on climate change. Those principles included support for federal action or legislation to reduce 

greenhouse gas emissions. NEI and I personally believe that federal action through legislation cannot wait for completion of the 

technologies needed to mitigate carbon emissions and that federal 

action must be implemented now but must place immediate emphasis on approaches and technologies that can be deployed in the 

early years. 

Let me address two issues that should be recognized and reflected in any legislative initiative to control carbon. First, we see 

a growing consensus that any credible program to reduce greenhouse gas emissions in the United States and worldwide will require a portfolio of technologies similar to what Mr. Kuhn just said, 

technologies and approaches and that nuclear energy is an indispensable part of that portfolio. This conclusion that nuclear power 

is an essential component of any carbon reduction initiative is unambiguous, it is beyond question and is supported by an impressive 

body of mainstream research and analysis. I just counted eight of 

these recent reports including a report from the National Academies of Sciences of 13 countries just last week, including the 

United States and indeed all of the G8 countries. 

Second, we believe it is imperative to address the major investment challenge facing the electric power sector as it seeks to develop and deploy the low-carbon and zero-carbon technologies necessary to reduce greenhouse gas emissions. Federal climate legislation must obviously include targets and timetables for carbon reduction but legislation must also help industry be provided with 

the technology and the means to achieve those targets and timetables. In our view, that will require an aggressive program of financing support; more aggressive and ambitious than anything in 

place today. 

Analyses of the various legislative proposals the subcommittee is 

considering today, including the modeling conducted by the Environmental Protection Agency and the Energy Information Administration, all show that nuclear plant construction must accelerate in 

a carbon-constrained world. In NEI’s analysis of the LiebermanWarner bill, the model forecasts more new nuclear capacity than 

could realistically be built, and in those modeling runs where nuVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00147 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
140 

clear energy expansion is constrained, carbon emissions and carbon 

prices are higher, electric sector consumption of natural gas soars, 

electricity and gas prices are higher, and GDP losses are much 

greater. Let me assure you that the U.S. nuclear industry hears 

this call to action and is moving forward as quickly as we can to 

license, finance and build new nuclear plants in the United States. 

Seventeen companies or groups of companies are preparing license 

applications for as many as 31 new reactors, nine applications for 

construction and operating license are currently under review by 

the Nuclear Regulatory Commission for a total of 15 new plants. 

But for new nuclear plant construction, one of the most significant financing challenges is the cost of these projects relative to the 

size, market value, and financing capability of the companies that 

will build them. New nuclear power plants are expected to cost as 

least $6 to $7 billion in today’s money. U.S. electric power companies simply do not have the size, the financing capability, or the 

financial strength to finance these projects on balance sheets on 

their own. These first projects must have financing support, either 

loan guarantees from the Federal Government or assurance of investment recovery from State governments, or both. We should not 

confuse those loan guarantees with subsidies. They are not. Every 

penny of the cost is borne by the industry. The modest loan guarantee program authorized by the 2005 Energy Policy Act was a 

small step in the right direction but it does not represent a sufficient response to the urgent need to rebuild our critical electric infrastructure. Limits imposed by appropriations report language 

have resulted in loan guarantee volumes that will not begin to 

cover the project cost. Time limits imposed by that report language 

have introduced uncertainty into the process. We believe the 

United States will need something similar to the clean energy bank 

concept now under consideration by a number of members of Congress. Creation of this financing entity should be an integral part 

of any climate change legislation. 

Mr. Chairman, I appreciate the opportunity to testify and look 

forward to questions. 

[The prepared statement of Admiral Bowman follows:] 

STATEMENT OF FRANK L. BOWMAN

On behalf of the nuclear energy industry, the Nuclear Energy Institute (NEI) appreciates the opportunity to discuss legislative proposals to reduce greenhouse gas 

emissions. 

NEI is responsible for defining and implementing nuclear industry policy on generic regulatory, financial, technical and legislative issues. NEI members include all 

companies licensed to operate commercial nuclear power plants in the United 

States, and hundreds of other companies and organizations that provide equipment, 

fuel and services to the nuclear energy industry. 

NEI has taken no position on the specific legislative proposals currently before 

Congress. We leave to others the complex policy issues of how best to structure a 

program to reduce carbon emissions. Nonetheless, NEI is deeply engaged in, and 

committed to, the debate over climate policy. A year ago, the NEI Executive Committee endorsed a set of principles establishing nuclear industry policy on climate 

change. Those principles included support for federal action or legislation to reduce 

greenhouse gas emissions. 

In this statement let me address two issues that should, we believe, be recognized 

and reflected in any legislative initiative to control carbon emissions. 

First, we see a growing consensus that any credible program to reduce greenhouse 

gas emissions in the U.S. and worldwide will require a portfolio of technologies and 

141 

approaches, and that nuclear energy is an indispensable part of that portfolio. This 

conclusion is supported by an impressive body of mainstream research and analysis. 

And second, we believe it is imperative to address the major investment challenge 

facing the electric power sector as it seeks to develop and deploy the low-carbon and 

zero-carbon technologies necessary to reduce greenhouse gas emissions. Federal legislation must obviously include targets and timetables for carbon reduction, but legislation must also help provide industry the technology and the means to achieve 

those targets and timetables. In our view, that will require an aggressive program 

of financing support-more aggressive and ambitious than anything in place today. 

The growing body of mainstream research and analysis shows that nuclear power 

is an important part of the portfolio required to reduce carbon emissions. The most 

recent came from the Organization for Economic Cooperation and Development 

(OECD)’s International Energy Agency (IEA) last week. The IEA’s 2008 Energy 

Technologies Perspective asserts that ‘‘A global revolution is needed in ways that 

energy is supplied and used. Far greater energy efficiency is a core requirement. Renewables, nuclear power, and CO2 capture and storage must be deployed on a massive scale.’’ 

Last week’s IEA report amplifies the findings in its World Energy Outlook, the 

pre-eminent global energy forecast, which was published earlier this year. In the 

2008 edition of that forecast, the IEA analyzed what must be done to stabilize the 

concentration of CO2 in the atmosphere at 450 parts per million (ppm)—the level 

judged necessary by the Intergovernmental Panel on Climate Change to avoid irreversible damage. In that scenario, world nuclear generating capacity more than doubles—from 368 gigawatts today to 833 gigawatts in 2030. Even with this ambitious 

growth, the additional nuclear capacity does not shoulder the entire carbon reduction load: end-use energy efficiency, improved efficiency of coal-fired power plants, 

and major gains in CO2 capture and storage are also necessary. 

This conclusion—that nuclear power is an essential component of any carbon reduction initiative—is unambiguous and beyond question. It is shared by leaders and 

governments around the world, including Yvo de Boer, Executive Secretary of the 

United Nations Framework Convention on Climate Change. Mr. de Boer said last 

July that he had never seen a credible scenario for reducing carbon emissions that 

did not include nuclear energy. 

In addition to policy leaders, the world’s scientific community agrees that nuclear 

energy must play a significant role in meeting the dual challenges of electricity production and greenhouse gas reduction. The most recent assessment report from the 

Intergovernmental Panel on Climate Change identifies nuclear energy as one of the 

‘‘key mitigation technologies.’’ 

Closer to home, analyses of the various legislative proposals that have come before Congress, including the modeling conducted by the Environmental Protection 

Agency and the Energy Information Administration, all show that nuclear plant 

construction must accelerate in a carbon-constrained world. In EIA’s analysis of the 

Lieberman-Warner legislation, the model forecasts more new nuclear capacity than 

could realistically be built during the forecast period. And in those modeling runs 

where nuclear energy expansion is constrained, carbon emissions and carbon prices 

are higher, electric sector consumption of natural gas soars, electricity and gas 

prices are higher, and GDP losses are greater. 

Given that additional nuclear power is essential, what then must we do to ensure 

development and deployment of nuclear energy and the other clean energy technologies necessary to address the climate challenge? 

We must start by facing the facts. The United States is increasingly dependent 

on older, less efficient, more costly generating capacity. We have roughly one million 

megawatts of electric generating capacity today, and almost one-half of that is more 

than 30 years old. Almost 20 percent is more than 40 years old. Continuing to operate that older, less efficient, generating capacity, continuing to defer capital investment in newer, cleaner, more efficient generating technologies, is frustrating our 

ability to achieve cleaner air and reduce carbon emissions, and will continue to do 

so. 

Consensus estimates show that the electric sector must invest at least $1 trillion 

between now and 2020 for new generating capacity, new transmission and distribution, efficiency programs, and environmental controls. That is more than the book 

value of the entire existing electric power supply and delivery system, and it does 

not include the cost of carbon controls. Addressing this investment challenge—and 

we must address this problem—will require innovative approaches to financing. 

Meeting these investment needs will require a partnership between the private 

sector and the public sector. The times demand innovative approaches, combining 

all the financing capabilities and tools available to the private sector, the Federal 

Government and State governments. 

142 

In terms of new nuclear plant construction, one of the most significant financing 

challenges is the cost of these projects relative to the size, market value and financing capability of the companies that will build them. 

New nuclear power plants are expected to cost at least $6 to 7 billion. U.S. electric 

power companies do not have the size, financing capability or financial strength to 

finance new nuclear power projects on balance sheet, on their own-particularly at 

a time when they are investing heavily in other generating capacity, transmission 

and distribution infrastructure, and environmental controls. These first projects 

must have financing support-—either loan guarantees from the Federal Government 

or assurance of investment recovery from State governments, or both. 

The states are doing their part. Throughout the South and Southeast, state governments have enacted legislation or implemented new regulations to encourage 

new nuclear plant construction. Comparable Federal Government commitment is essential. 

The modest loan guarantee program authorized by the 2005 Energy Policy Act 

was a small step in the right direction, but it does not represent a sufficient response to the urgent need to rebuild our critical electric power infrastructure. We 

believe the United States will need something similar to the Clean Energy Bank 

concept now under consideration by a number of members of Congress—a government corporation, modeled on the Export-Import Bank and the Overseas Private Investment Corporation, to provide loan guarantees and other forms of financing support to ensure that capital flows to clean technology deployment in the electric sector. Creation of such a financing entity should be an integral component of any climate change legislation. 

Such a concept serves at least two national imperatives. 

First, it addresses the challenge mentioned earlier—the disparity between the size 

of these projects relative to the size of the companies that will build them. In the 

absence of a concept like a Clean Energy Bank, new nuclear plants and other clean 

energy projects will certainly be built, but in smaller numbers over a longer period 

of time. 

Second, federal loan guarantees provide a substantial consumer benefit. A loan 

guarantee allows more leverage in a project’s capital structure, which reduces the 

cost of capital, in turn reducing the cost of electricity from the project. Electricity 

consumers—residential, commercial and industrial—are already struggling with increases in oil, natural gas and electricity prices. The high cost of energy and fuel 

price volatility has already compromised the competitive position of American industry. We know that the next generation of clean energy technologies will be more 

costly than the capital stock in place today. In this environment, we see a compelling case for federal financing support that would reduce consumer costs. 

If it is structured like the loan guarantee program authorized by Title XVII of the 

2005 Energy Policy Act, in which project sponsors are expected to pay the cost of 

the loan guarantee, such a program would be revenue-neutral and would not represent a subsidy. 

The public benefits associated with a robust energy loan guarantee program— 

lower cost electricity, deployment of clean energy technologies at the scale necessary 

to reduce carbon emissions-are significant. That is why the U.S. government routinely uses loan guarantee programs to support activities that serve the public good 

and the national interest—including shipbuilding, steelmaking, student loans, rural 

electrification, affordable housing, construction of critical transportation infrastructure, and for many other purposes. 

Achieving significant expansion of nuclear power in the United States will require 

stable and sustained federal and state government policies relating to nuclear energy. The new nuclear power projects now in the early stages of development will 

not enter service until the 2016–2020. Like all other advanced energy technologies, 

continued progress requires sustained policy and political support. 

In closing let me assure you that the U.S. nuclear industry is moving forward as 

quickly as we are able to license, finance and build new nuclear plants in the United 

States. Seventeen companies or groups of companies are preparing license applications for as many as 31 new reactors. Nine applications for construction and operating licenses are currently under review by the Nuclear Regulatory Commission for 

a total of 15 new plants. 

We expect four to eight new U.S. nuclear plants in operation by 2016 or so. Assuming those first plants are meeting their construction schedules and cost estimates, the rate of construction would accelerate thereafter. With the necessary investment stimulus and financing support, we could see approximately 20,000 MW 

of new nuclear capacity (that would be about 15 plants) on line in the 2020 to 2022 

time frame, and 65,000 to 70,000 megawatts (or 45 to 50 plants) by 2030. 

143 

These plants will produce clean, safe, reliable electricity, around the clock, at a 

stable price, immune to price volatility in the oil and natural gas markets. 

But construction of these new nuclear plants will have other benefits too. At the 

peak of construction, a nuclear plant will employ 2300 skilled workers and, on completion, approximately 700 workers to operate and maintain the plant. New nuclear 

plant construction will also lead to new investment in the supply chain—in new 

manufacturing facilities to produce pumps, valves, pipe, electrical cable, and other 

equipment and components. That will create more jobs, new opportunities and higher economic growth, and allow the United States to reclaim economic opportunity 

that has moved overseas over the last several decades. 

Mr. BOUCHER. Thank you, Admiral Bowman. 

We have a series of four votes pending on the Floor of the House, 

and experience tells us that completing that work will take approximately 45 minutes, and so we have two additional witnesses 

to testify on this panel followed by questions from members here 

and then an entire second panel of witnesses following that. With 

apologies to our witnesses and with the hope that you can be patient for a bit longer, we are going to recess the subcommittee and 

reconvene here at about 12:15. So with that said, the subcommittee 

stands in recess. 

[Recess.] 

Mr. BOUCHER. The subcommittee will come to order, and with 

the apologies of the Chair for our delay, I want to thank everyone 

here for their patience. We had concluded Admiral Bowman’s testimony at the time of the recess of the subcommittee, and Ms. Minette is next, so we will be very pleased to receive your oral summary. 

STATEMENT OF MARY MINETTE, DIRECTOR FOR ENVIRONMENTAL EDUCATION AND ADVOCACY, EVANGELICAL LUTHERAN CHURCH IN AMERICA 

Ms. MINETTE. Thank you, Mr. Chairman, and thank you to the 

Subcommittee. I am here today representing the Evangelical Lutheran Church in America, which is the spiritual home to about 4.9 

million Lutherans around the country, and also the National Council of Churches, which represents 35 Christian denominations including my own. 

As members of the NCC, we may not agree on how to take communion on Sunday but we all agree that climate change is one of 

the most pressing issues facing God’s creation. As Christians who 

are called to protect God’s planet and God’s people, we are obligated to speak and to act in response to this moral crisis. Christ 

taught us to seek justice, to care for our neighbor and to provide 

special care and consideration for the least of these, those living in 

poverty. Our response to climate change must reflect this call to 

justice, particularly for those living in poverty around the world 

who are least responsible for climate change and most likely to suffer greatly from its impacts if we do not act now. God’s first command to us in the book of Genesis was to tell and tend what God 

had made. The language there is about stewardship, caring for resources that are not your own and recognizing that humans are 

part of a network of creation. 

In early 2006, the NCC and our interfaith partners developed a 

set of principles based on justice and stewardship that we have 

used as a lens to evaluate each of the legislative proposals that 

144 

have been introduced in the 110th Congress and that this committee is considering today. We have identified three main policy 

priorities which must be included in legislation in order to protect 

God’s creation and God’s people. 

First, as a matter of stewardship, we must acknowledge the recommendations of the scientific community and work to ensure that 

the average global temperature does not increase by more than 2 

degrees Celsius. Recent reports indicate that to meet this goal, we 

must reduce our emissions by 15 to 20 percent by 2020 and at least 

80 percent by 2050. Next, we know that inaction on climate change 

will harm those living in poverty the most but we also must ensure 

as a matter of justice that low-income consumers are not pushed 

further into poverty by the burden of higher energy costs due to climate legislation. Finally, justice requires that we acknowledge our 

role as a nation in contributing to climate change and calls for 

international adaptation assistance for vulnerable developing nations who are least responsible for climate change yet are already 

suffering from its effects. Adaptation assistance would allow these 

countries to develop plans to prevent the most serious devastation 

while also providing financial support for disaster relief. 

America’s Climate Security Act, the legislation sponsored by Senators Lieberman and Warner, calls for 15 percent emissions reduction by 2020 and 65 percent by 2050, which falls short of our longterm goals. The bill would provide financial assistance to low-income consumers but would not provide enough funding in the bill’s 

early years to offset rising costs for people in poverty and only 30 

percent of the bill’s consumer assistance funds are set aside for 

low-income consumers. The legislation also includes international 

adaptation assistance for developing nations. The faith community 

worked closely with Senator Warner on this program and we applaud his leadership and the leadership of Senator Boxer, who 

worked to expand funding for adaptation assistance in the substitute bill. 

The Low Carbon Economy Act, sponsored by Senators Bingaman 

and Specter, fails to meet the criteria established by our faith principles. With relatively low emissions reduction, minimal assistance 

to low-income consumers and no funding for international adaptation assistance, the faith community has concerns about the impacts of this legislation on God’s creation and God’s people. 

House legislation includes the Safe Climate Act, introduced by 

Congressman Waxman, long a leader on the issue of climate 

change. The bill calls for strong emissions reductions that meet our 

faith principles. However, it does not specifically address domestic 

energy assistance or international adaptation assistance. Congressman Markey introduced the Investing in Climate Action and Protection Act, ICAP, in June, which requires the United States to reduce its greenhouse gas emissions to 85 percent below 2005 levels 

by 2050, meeting the standards set in our faith principles. In addition, it provides for a tax refund and energy rebates that will help 

80 percent of Americans with energy costs including low-income 

Americans. The legislation also provides adaptation assistance to 

developing nations of about $180 billion over the life of the bill. 

I also would like to briefly mention a bill that we were not asked 

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145 

duced just this week by Congressman Doggett, which we feel also 

meets our call for stewardship and justice, calling for strong emissions reductions, financial assistance to low-income and middle-income families suffering from rising energy costs, and international 

adaptation assistance. 

All of these bills are important. They may take different approaches and we may have different perspectives on their ultimate 

effectiveness but each of them represents real leadership on the 

part of their sponsors and cosponsors. The legislators who have introduced these bills are those who see our change in climate, and 

from their different political perspectives want to do something 

about it to protect our common future and the future of this plant. 

I urge the members of the subcommittee to join them in working 

for stewardship of God’s good creation and justice for people in poverty. The urgency of this issue cannot be overstated and our obligation cannot be ignored. 

Thank you very much for your time. 

[The prepared statement of Ms. Minette follows:] 

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Mr. BOUCHER. Thank you very much, Ms. Minette. 

Mr. West. 

STATEMENT OF FORD WEST, PRESIDENT, THE FERTILIZER 

INSTITUTE 

Mr. WEST. Chairman Boucher, Ranking Member Upton, thank 

you and members of the committee. 

The fertilizer industry encompasses the production and distribution of the three basic nutrients required for plant growth: nitrogen, phosphate, and potash. These are commodities that are traded 

as commodities in the worldwide market. Natural gas is the feedstock or the raw material to produce nitrogen fertilizer. We take nitrogen from the air, combine it with hydrogen from natural gas and 

produce ammonia, which is the basic building block for all nitrogen 

fertilizer. There is no economic substitute for producing nitrogen 

fertilizer other than the use of natural gas, and that makes nitrogen fertilizer uniquely sensitive to the price of natural gas and to 

public policy that affects the supply and demand and use of natural 

gas. Phosphate and potash are minerals. We mine those. Certainly 

climate change will have a direct and indirect effect on those businesses, but today I want to focus my comments on nitrogen production, and it is the most vulnerable fertilizer of the impact of capand-trade systems. Nitrogen fertilizer is essential to the United 

States and world food production. The majority of nitrogen products produced are sold for crop production and fertilizer nutrients, 

they produce the food and the feed that nourishes the world. Forty 

to 60 percent of the world’s food production is tied to the use of fertilizer. 

Another critical use of nitrogen products is to scrub nitric oxide 

emissions from coal-burning facilities, diesel engines and natural 

gas-fired turbines. In 2007, nitrogen products, ammonia and urea, 

were used in this manner to remove 650,000 tons of NOx from the 

U.S. skies with no byproducts. 

Soaring natural gas prices have exacted a heavy toll on America’s nitrogen fertilizer producers and farmer customers they supply. Since 1999, the U.S. nitrogen industry has closed 26 nitrogen 

fertilizer production facilities due primarily to high natural gas 

prices, and I think this is one of the unintended consequences of 

the Clean Air Act we passed in 1990 when we declared that natural gas is the environmental fuel of choice, and the utilities began 

using natural gas to burn to produce electricity. Currently, there 

are only 30 nitrogen plants operating in the United States and over 

half of the nitrogen we use in the United States is imported and 

it is imported from countries with weaker environmental standards, no climate change policies, and the majority of these countries are those from whom we are striving for energy independence. 

The result is, the United States is increasingly becoming dependent 

on foreign sources for nitrogen from places that charge very low or 

no cost for the natural gas. Examples of these are the Middle East, 

China, Russia, Venezuela. Last year we imported over 300,000 tons 

of nitrogen from Libya, 477,000 tons from Egypt, 1.8 million tons 

from the Middle East, and over 3 million tons from the former Soviet Union, and if this trend continues and if we have public policy 

175 

that drives natural gas prices higher, then America’s food security 

and by our extension our natural security will be jeopardized. 

Within the climate change debate, the fertilizer industry has 

some grave concerns that the remaining nitrogen production facilities will be severely impacted during any transition period that we 

have as utilities continue to fuel switch to natural gas for generating electricity. Fuel switching has already caused the price of 

natural gas to go very high and it is causing—and if it continues 

and we are above $12 today, it will cause additional U.S. production to move offshore. In climate change, we are trying to do this 

at a time we are having kind of what is called the world food crisis 

of 2008. The world demand for food is an all-time high. It is causing an all-time high in fertilizer prices, and any decline in our domestic production for fertilizer will even cause higher production 

cost for farmers. The fertilizer industry commissioned a study on 

the impact of high energy costs resulting from climate change from 

higher energy costs. Using the Lieberman-Warner bill, the Doane 

Advisory Services measured the production costs increases for eight 

commodities. Doane economists found that the Lieberman-Warner 

legislation would add somewhere between $6 to $12 billion to the 

total production costs leading to significant decline in farm income, 

and these estimates may be low because we used the energy price 

forests from the Department of Energy and they have been roundly 

criticized as being too low. Mr. Barrow brought up about agriculture. Certainly agriculture has to be part of this solution on climate change. 

The record demand for food in this world food crisis that we are 

in has resulted in record demand for fertilizer. The surge in world 

demand has meant that U.S. farmers and farmers around the 

world are paying the highest prices they have ever paid for fertilizer. With food demand levels predicted to stay high and fertilizer prices predicted to stay high, Congress must really tread 

cautiously and consider all the ramifications and unintended consequences of such sweeping policy as climate change, especially if 

it forces the utilities to use more natural gas to produce electricity. 

Any climate change policy must take into account essential industries such as fertilizer, which we believe is a strategic commodity 

to our national security, and it is frightening to imagine what the 

uncertainties would be like if we have to import all our fertilizer 

to meet our food production goals. Currently at the natural gas 

prices we have today, 90 percent of the cost of production of a ton 

of ammonia is tied to natural gas. We produced 11 million tons of 

ammonia last year using 33 million BTUs per ton and every dollar 

increase in natural gas costs our industry $400 in increased production costs, and that figure far exceeds any other American industry. Complicating the climate change, we are limiting where we 

can look for supply of gas. That is a complicating factor here as we 

look at climate change. 

I just want to end by sending that critical to our food production 

is to maintain our current domestic production of fertilizer, nitrogen phosphate and potash, and I will be glad to answer any questions. 

[The prepared statement of Mr. West follows:] 

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Mr. BOUCHER. Thank you very much, Mr. West, and I want to 

express appreciation to all of the members of this panel for their 

thoughtful testimony here this morning and this afternoon. 

I am going to begin my questions with the first witness, although 

the first witness has been replaced by a stand-in, and we want to 

welcome to the panel Mr. Glenn Kelly, who is vice president for 

government affairs of the National Mining Association. Mr. Naasz, 

I think is not feeling particularly well today and had to leave for 

that purpose. Mr. Kelly, we thank you for standing in in his stead. 

In Kraig’s testimony, he stressed the need for a uniform legal 

framework in order to govern the storage of carbon dioxide on a 

permanent basis. You have reviewed the five bills that we are 

hearing today. Do you see in any of those five bills the kinds of regulatory certainty contained in a legal framework that would encourage the carbon capture and storage projects to move forward? 

Mr. KELLY. The simple answer, Mr. Chairman, is no, not in any 

of the five legislative proposals that we have examined for the purpose of this hearing. In fact, during consideration in the Senate of 

the Lieberman-Warner legislation, we offered, or attempted to secure an amendment to that legislation that would put in place ultimately the legal and liability framework that we foresee as necessary for the treatment of—— 

Mr. BOUCHER. Do you have—has your industry worked with others to develop a proposal for what that framework ought to be? 

Mr. KELLY. We have. We have specific legislative text that we 

showed to a number of Senators. 

Mr. BOUCHER. So you have developed that. Let me ask you this 

question. The European Union at the present time is formulating 

regulatory framework for carbon capture and storage. Have you 

made reference to that at all or looked at it for comparative purposes as you developed your position? 

Mr. KELLY. I don’t believe we have. 

Mr. BOUCHER. Thank you very much. 

Mr. Goo, let me turn to you. I notice in the testimony of NRDC 

that you addressed the presence of various forms of safety valves 

in the five bills that we have under consideration here, and as I 

interpret your testimony, you have strong objection to a kind of an 

unlimited safety valve that would release potentially an infinite 

number of additional emission allowances into the market upon the 

triggering of a certain price level but you have a somewhat greater 

level of comfort with more circumscribed kinds of safety valve provisions. Could you describe for us what kind of provision you would 

be more comfortable with if we had a strategic reserve of allowances, for example, that had a quantified number so that that 

number of allowances would be the maximum that could be released? I guess it might be possible for the financial market to 

price that better than a potentially unlimited release. Is that the 

kind of approach that you think would make sense and could you 

elaborate on that? 

Mr. GOO. Thank you, Mr. Chairman. Absolutely, we do oppose 

the classic safety valve because that allows emissions to be released into the atmosphere for a said cost. We also don’t necessarily think that a price trigger is necessary. We think that 

banking, borrowing, offsets and other means of cost containment 

181 

should be looked at first but in the end, NRDC’s concern is integrity of the emissions cap. In the Senate proposal, the substitute 

amendment proposed by Senator Boxer, there is a proposal worked 

on by the Nicholas Institute and the National Commission on Energy Policy and many other interest groups that NRDC was able 

to support. This takes a reserve of allowances from the years 2030 

to 2050. It would be approximately one year’s worth of allowances, 

or 6 million tons. It would allow release of those allowances in 

years prior at a set price between $22 and $30 per ton with the 

price set by the President, and an amount of 450 million tons per 

year or a little less than 10 percent. We think that that is a cost 

containment solution that would limit volatility in the market 

while nevertheless maintaining the integrity of the emissions cap, 

and we think it is something that the Congress should look at. 

Mr. BOUCHER. Thank you, a very thorough answer. 

Mr. Kuhn and Mr. West, let me conclude my questions with you. 

Both of you have made reference to the potential economic disruption that could occur if coal-fired electric utilities are required because of the early schedule for greenhouse gas emissions reductions 

to surrender using coal and to fall to some other fuel. Mr. West 

made the point, and I think he is right, that if they are required 

to default to another fuel, it is very likely to be natural gas, which 

is the next least expensive fuel, and both of you have pointed to 

economic disruption that could occur in the event that that occurs. 

So my question to both of you is this: do you believe that it is possible from the effective date of a cap-and-trade program until the 

time when carbon capture and sequestration technologies are available, affordable, and reliable that the utilities could be required to 

take reductions, and if so, how would they be able to achieve those 

reductions consistently with their continued ability to use coal? 

Mr. KUHN. Mr. Chairman, this is a very, very critical question, 

and I think it relates to the importance of moving carbon capture 

and storage technology demonstration projections, which is incorporated in your legislation, but I think that it is going to be extremely important to align the dates and timetables that you have 

in the bill with the ability to bring on carbon capture and storage 

and nuclear plants so that we don’t have this massive switching to 

natural gas. We have already seen tremendously high prices for 

natural gas, questions about supply and availability. I think Mr. 

Goo mentioned that he expects carbon capture and storage projects 

to be able to come in place by 2015 and at 6 gigawatts a year. I 

don’t see that substantiated by any other analysis. MIT, the Coal 

Utilization Resource Council, et cetera, all talk about the availability of carbon capture and storage sometime in the 2020 to 2025 

range, and that is when they are available. The deployment would 

follow that maybe 5, 10 years afterwards. We both are in total 

agreement that we need to move this as fast as possible. If we can 

make it happen faster, God bless us, but we need to be realistic 

when we set these targets and timetables. 

Mr. BOUCHER. Well, my time is expired. Let me just ask a leading question, which I try to refrain from doing, but not getting the 

answer I was seeking initially, would you agree that between the 

effective date of the law and the time when carbon capture and 

storage technologies become available and are ready to use, that 

182 

the coal-fired utilities and other emitters in the economy could be 

required to take reductions that could be achieved by installing efficiency, by purchasing offsets and credits, either domestically or 

internationally or by other kinds of cost containment means? 

Mr. KUHN. I fully agree with that. I think that—— 

Mr. BOUCHER. And your organization would not oppose an approach that requires that reduction to be taken early on as long as 

they are achievable through those kinds of mechanisms? 

Mr. KUHN. Early reductions are going to come from energy efficiency and renewables. The mid-term reductions will come from nuclear plants and coal plants with carbon capture and storage. 

Mr. BOUCHER. All right. Thank you, Mr. Kuhn. 

Mr. Upton. 

Mr. UPTON. Thank you all. I know that the entire country is of 

course very concerned about the high gas prices that we are experiencing and I don’t know how many of you might have seen USA 

Today’s front-page story earlier this week, headlined ‘‘Utilities 

Raising Price of Power.’’ Here is a shocker: electricity bills are 

heading up, way up. It goes on to say that the price of coal which 

fires half of the U.S. power plants has doubled since last year, 

largely because of surging energy use in countries such as China 

and India. Natural gas prices are up nearly 50 percent on high 

U.S. demand. Cost to build a power plant has also gone up more 

than doubling since the year 2000, and South Carolina Electric and 

Gas wants to boost rates some 37 percent by 2019 to cover its 

share of two nuclear reactors covering $10 billion and goes on to 

talk about other increases as well, and I just would say particularly, Mr. Kuhn, independent of the need to reduce emissions, how 

much investment is going to be needed over the next 30 years to 

maintain the current electricity infrastructure and keep up with 

the demand to ensure the reliability of the grid? What are your estimates? 

Mr. KUHN. Our estimates and those of others are in excess of $1 

trillion. We are very concerned also about increasing prices for fuel 

that are causing electricity prices to increase and this emphasizes 

even more the need for bringing on new technologies and additional 

technologies that can give us the fuel diversity we need and the 

supply to help keep those prices down. 

Mr. UPTON. Mr. Kelly, what impact will the cancellation, as have 

seen over the last year, the cancellation of dozens of coal-fired 

plants have on electricity rates and the reliability of the grid? 

Mr. KELLY. From the coal production point of view, we have concerns that increasing pressure at the local level that has led to cancellation of a number of these plants is going to potentially force 

generators to look for an alternative fuel source, namely principally 

natural gas, which would result in higher demands for gas and ultimately higher prices. We believe that given the fact we have got 

a 240-year-plus supply of affordable domestic coal, that we ought 

to be using that as a resource in conjunction with all the other 

sources. We are going to need—given the pace of the growing demand for electricity in this country, we are going to need all 

sources of energy and that is nuclear, renewables, gas, and coal. 

Mr. UPTON. I want to spend a little time on nuclear. Admiral 

Bowman, the proponents of cap-and-trade often rely heavily on the 

183 

assumptions of new nuclear power plants to keep the costs of the 

program down and achieve the emission reductions. What is your 

realistic estimate of how many new nuclear plants we might be 

able to bring online by the year 2030, and then again maybe by 

2050? 

Admiral BOWMAN. Mr. Upton, we are doing this slowly intentionally so that we do it correctly this time around. Let me start 

in a little bit shorter term. By 2016, 2017, we believe we will have 

four to eight new nuclear plants online. 

Mr. UPTON. Some of us would like it to be 48. 

Admiral BOWMAN. I am one of them. But we are going slowly. We 

are doing it cautiously. We are doing it so that it comes out right. 

Based on the experience at that first wave of four to eight plants 

experiences as they are going along in the regulatory process and 

the construction process, we believe we could see as many as 20 

plants online by 2020, and then our target for 2030 certainly depends on so many factors that it would be difficult for me to say 

but I believe achievable that 68 gigawatts that Tom Kuhn talked 

about earlier from the Electric Power Research Institute, 64 

gigawatts is achievable. That means we are talking on the order 

of 30 to 50 new plants by 2030. 

Mr. UPTON. So it is my understanding that of course we use 

about 20 percent of our power today is generated from nuclear. To 

maintain 20 percent by the year 2030, we have to have 52 new 

plants on line is the estimate that I have seen. Is that correct? 

Admiral BOWMAN. Our number says more around 30,000 

megawatts, which would be closer to 25 to 30 plants, just to maintain the 20 percent portfolio share. 

Mr. UPTON. Now, in my remaining time, Mr. Goo, as you know, 

nuclear power is responsible for about 70 percent of our Nation’s 

zero-emission power. What role do you see for the NRDC as it relates to nuclear power? 

Mr. GOO. Nuclear power will continue to be part of the mix of 

our energy supply for the foreseeable future, and under a carbonconstrained world, nuclear power will undoubtedly receive a benefit 

because of the fact, as you mentioned, that it is essentially a lower 

or zero-carbon source of energy. We have traditionally had a history of opposing nuclear power because of safety, waste and numerous other reasons. However, as far as a carbon cap system is concerned, we believe that nuclear power need not receive any further 

subsidies and that it should compete in the marketplace on its own. 

Mr. UPTON. My time is expired but I would just like to put into 

the record a letter from the National Petrochemical and Refineries, 

if I might. 

Mr. BOUCHER. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. BOUCHER. The gentleman from Pennsylvania, Mr. Doyle, is 

recognized for 5 minutes. 

Mr. DOYLE. Thank you, Mr. Chairman. 

Mr. Goo, welcome back to the Committee. Good to have you here. 

As you know, I share your organization’s goals of establishing a national policy to reduce greenhouse gases and like you, I believe we 

can do it without deindustrializing the American economy. But one 

of the particular areas that I do haves some concerns with is the 

184 

issue of international competition and job leakage and emission 

leakage that may occur as a result of this policy we are looking at. 

As you know, Congressman Inslee and I have proposed a new approach known as output-based or benchmark approach to addressing some of these very real concerns, and we believe that this approach, which essentially pays for the increased costs these industries will face as a result of these policies will not only help us address the competition and leakage issues but will also help us bring 

industries like steel and cement and other carbon-intensive industries forward in a new carbon-constrained world. I would just like 

you to share your thoughts on that proposal and how you see that 

as being advantaged or disadvantaged compared to other proposals 

that are before the committee. 

Mr. GOO. Well, thank you, Congressman Doyle. I appreciate your 

interest in the issue and I appreciate your work with Congressman 

Inslee. It is a formidable duo, the two of you working on something 

together. So there are proposals in the existing bills to deal with 

the international competitiveness issue. They have made a substantial advance in that regard in terms of border tax adjustments 

and those kinds of things. But those provisions as they were considered in the Senate, I think people felt that they did need further 

work, that they didn’t necessarily meet the goals. There are trade 

issues associated with them under the World Trade Organization 

rules and those kinds of things. Your proposal, which we have not 

had a chance to examine in detail, adds further progress to that, 

to consideration of that issue. We look forward to working with you 

on it. I think it is, looking across the industries you correctly identified that are vulnerable to competition because of their energy 

impacts and looking at their output and how that relates to the 

output of similar industries in other countries, it looks like the 

right way to go. 

Mr. DOYLE. Thank you very much. 

Mr. Kelly, as Mr. Naasz had said in his statement, I am one of 

the cosponsors with Chairman Boucher for the Carbon Capture and 

Storage Early Deployment Act, because I believe coal is going to 

continue to play a strong role in providing energy to our country, 

and I think it is important, as the chairman does, that we move 

down this path to carbon sequestration as quickly as possible. But 

I also think it is critical that we don’t duplicate efforts as we create 

this new fund and we look at the role of the National Energy Technology Lab and their role in carbon capture and CCS and this new 

bill that the chairman is moving forward. I wonder if you could 

comment on two things. What do you see as the critical components 

in a successful CCS program? What do we need to do to take these 

estimates from 2020 to 2025 and accelerate them? You know, what 

isn’t being done or what needs to be done to accelerate the deployment of carbon capture technology? And then secondly, what role 

do you think the NETL should play in concert with this proposal 

that is being advanced by Chairman Boucher so that there isn’t a 

duplication of efforts? 

Mr. KELLY. Thank you, Congressman, and thank you again for 

your support of the legislation. The mining association believes it 

is absolutely critical that we move forward as quickly as possible 

on trying to fund accelerated development of carbon capture and 

185 

storage technology. With regard to the first question about what 

would constitute the components of a successful program and what 

can be done to accelerate it, our analysis that we have looked at 

indicates one of the reasons why I think Tom Kuhn indicated the 

time frame for expected delivery and availability and commercial 

deployment of carbon capture and storage is at the 2020 to 2025 

and maybe slightly beyond range is, in the process of developing 

the technologies which have never been tested on the scale that 

will be required to achieve the emission reductions that we are all 

contemplating, it would require, first, sufficient demonstration, 

that we know that the carbon in some shape or form can be captured but the long-term requirement to demonstrate that once it is 

stored and capped in a facility, whether it is underground or where 

that might be, in order to gain public confidence, it is going to require some time to be able to demonstrate that it is safe and secure 

and that we understand exactly what is happening in the geologic 

formation and so forth. That is several years. So the key is to do 

a number of these demonstration projects in different formations, 

using different techniques to see which ones are most successful 

and which ones can be brought on to scale commercial deployment 

in the future. So we think that is absolutely critical. 

In terms of what can be done to accelerate the type of reductions, 

the Coal Utilization Research Council has promoted something 

they call the near-term plan, and that is very much focused on energy efficiencies, but it also would help support the development of 

the type of basic research that would be necessary for CCS technologies. And then lastly, Congressman, with regard to the question on NETL, the system, the way your legislation would operate, 

applicants would be able to seek support from the fund in order to 

conduct the research and conduct demonstrations and develop the 

technology, and I think NETL would be a key partner in that process if not an outright recipient of that type of support. So we very 

much see them as a key partner and very much involved in the 

process looking further down the road. 

Mr. DOYLE. Thank you. 

Mr. Chairman, I see my time is up. I would just like to say, Mr. 

Kuhn, I think that the full portfolio approach is right on the 

money. I enjoyed a lot of remarks in your testimony and wish I had 

more time to speak to you about it, but I see my time is up. 

Mr. BOUCHER. Thank you very much, Mr. Doyle. 

We are honored to have as a member of the subcommittee the 

Minority Whip of the House, the gentleman from Missouri, Mr. 

Blunt, and I am pleased to recognize him for 5 minutes. 

Mr. BLUNT. Thank you, Chairman Boucher, and thank you for 

holding this hearing. I have an opening statement that I will just 

insert into the record. 

[The prepared statement of Mr. Blunt follows:] 

STATEMENT OF HON. ROY BLUNT

This hearing focuses on five bills, each of which establishes a cap-and-trade program intended to achieve substantial decreases in greenhouse gas emissions. 

The environmental community and some members here have urged the U.S. to 

reduce its greenhouse gas emissions (GHG) to at least 60–80% below 2005 levels by 

2050. 

186 

The EPA, MIT, CRA International and others have analyzed the economic impact 

of several of these bills. All of these models show substantially higher electricity, 

gasoline, diesel and natural gas prices, along with a corresponding decline in economic activity. 

I would like to put that in perspective: 

In 2006 the U.S. emitted 5.8 billion metric tons of carbon dioxide, or just under 

20 tons per capita. An 80% reduction in these emissions from 1990 levels means 

that the U.S. cannot emit more than about one billion metric tons of CO2 in 2050. 

Were man-made carbon dioxide emissions in this country ever that low? The answer is probably yes—from historical energy data it is possible to estimate that the 

U.S. last emitted one billion metric tons around 1910. But in 1910, the U.S. had 

92 million people, and per capita income, in current dollars, was about $6,000. 

By the year 2050, the Census Bureau projects that our population will be around 

420 million. This means per capita emissions will have to fall to about 2.5 tons in 

order to meet the goal of 80% reduction. 

The only nations in the world today that emit at this low of a level are poor developing nations, such as Belize, Jordan, Haiti and Somalia. 

Even France and Switzerland, compact nations that generate almost all of their 

electricity from non-fossil fuel sources (nuclear for France, hydro for Switzerland) 

emit about 6.5 metric tons of CO2 per capita. 

EPA estimates that in 2006, approximately 34% of greenhouse gas emissions were 

from electric power plants, 28% from the transportation sector, 19% from industry 

and the remaining 19% from the residential, agriculture and commercial sectors. 

So to put the enormity of the reduction goal into an understandable context, if 

100% of GHG emissions were eliminated from the electric and transportation sectors, it would still leave the United States approximately 18% short of the 80% goal, 

even assuming no increases in the years ahead. 

Right now our cars and trucks consume about 180 billion gallons of motor fuel. 

To meet the 2050 target, we shall have to limit consumption of gasoline to about 

31 billion gallons, unless a genuine carbon-neutral liquid fuel can be produced. To 

show how unrealistic this is, if the entire nation drove nothing but Toyota Priuses 

in 2050, we’d still overshoot the transportation emissions target by 40%. 

Such a goal envisions a massive overhaul of our infrastructure and economy, an 

overhaul perhaps larger and certainly more difficult and costly than the electrification of our economy in the early part of the last century. The cost of such an overhaul, should it even be technically feasible, easily with be in the many trillions of 

dollars. 

Even if the United States were to reduce its GHG emissions substantially, this 

alone would make a negligible contribution to global GHG concentrations. 

Unilateral action by any one country will simply serve to transfer jobs, economic 

activity and GHG emissions to other countries that do not have similar emissions 

reduction requirements. 

Unless China and India, two of the fastest growing GHG emitters, and other developing countries are brought into a regulatory regime, global GHG concentrations 

will not decline materially regardless of what the United States does. 

Any action on Climate Change must achieve meaningful environmental benefits, 

and should rely on technological advancements and consumer choices rather than 

government mandates and more layers of bureaucracy. 

A technology-based approach will reduce emissions, keep jobs in America, and 

strengthen America’s energy security by encouraging clean, affordable, and reliable 

supplies of American energy for consumers. 

Climate change is a global problem and it requires a global solution. Therefore, 

any U.S. action must also require comparable action by developing countries, such 

as China, whose carbon emissions have already exceeded those in the U.S. Without 

joint international action, jobs and emissions will simply shift overseas, to countries 

that require few, if any, environmental protections, harming the global environment 

as well as the U.S. economy. 

Finally, the American public deserves transparency in the process. We must fully 

engage the American people and keep them informed about potential choices and 

the impacts that those choices will have on their daily lives. 

I believe the bills that we are focusing on here today, if enacted, will be detrimental to the U.S. economy driving up the costs of electricity, gasoline, diesel and 

natural gas prices at a time when American consumers are already paying too 

much. 

Mr. Chairman, we need meaningful, practical emissions reductions that result in 

a cleaner, healthier environment, not those that merely tax consumers and shift 

emissions overseas. 

Thank you Mr. Chairman. 

187 

REPUBLICAN CLIMATE CHANGE PRINCIPLES

Any action to reduce greenhouse gas emissions should: 1) provides tangible environmental benefits to the American people; 2) advances technology and provides the 

opportunity to export; 3) protect U.S. jobs; 4) strengthen U.S. energy security; and 

5) require global participation. 

PROVIDE TANGIBLE ENVIRONMENTAL BENEFITS: 

• We need meaningful, practical emissions reductions that result in a cleaner, 

healthier environment, not those that merely shift emissions overseas to other countries. 

ADVANCE AND INVEST IN TECHNOLOGY: 

• We should promote technologies that reduce emissions, increase America’s energy security, and keep prices for consumers affordable; 

• Need advancement of alternative forms of energy such as clean coal technologies 

to increase the use of America’s vast supply of coal, to reduce emissions, and to keep 

America’s coal-dependent communities strong; 

• We need expansion of emissions-free nuclear power, including policies that encourage construction of new nuclear power plants and timely completion of the long 

term nuclear waste storage site; 

• We need to promote increases in energy efficiency by removing bureaucratic barriers that prevent businesses from using innovative technologies that produce cleaner energy. 

PROTECTING JOBS HERE IN THE UNITED STATES: 

• I believe Americans should know the costs they will bear to reduce greenhouse 

gas emissions and the environmental benefits those reductions will provide; 

• Our actions need to promote economic growth and expansion keeping and increasing jobs in the United States. 

STRENGTHENING U.S. ENERGY SECURITY: 

• We need to reduce America’s dependence on energy from unfriendly and unstable foreign governments by producing more American Energy; 

• I support a diverse U.S. energy portfolio. 

REQUIRING GLOBAL PARTICIPATION AND PROMOTING INTERNATIONAL COOPERATION: 

• We need policies that create a level playing field for American workers in the 

global market place. 

• China, India, and similar countries must agree to meaningful emissions reductions before Congress imposes carbon mandates on American workers. 

Mr. BLUNT. And thanks for putting this panel together, a broad 

diversity of views, some of which I didn’t get to hear earlier but I 

have been listening and looking through the comments that have 

been made already. I have just a few questions here. 

Mr. West, clearly we are in what I think you described and others are describing as this world food crisis, which seems more of 

a crisis because of the world food opportunities we have gotten 

used to for so long, but in that regard, we are now very dependent 

on places like Russia and Libya and Egypt. What is the difference 

in that kind of dependency and the dependency we used to have 

on places like North Carolina and Louisiana and other places to get 

our fertilizer and what happens if that trend continues? 

Mr. WEST. Well, I think currently world food demand has driven 

the price of fertilizer off the charts. Farmers are paying the highest 

prices they ever paid for fertilizer, and the difference is, our distribution system is much longer now. Farmers have traditionally 

been used to setting their planting date, going to their fertilizer 

188 

dealer and saying I am planting tomorrow, get the fertilizer there. 

Today that is not true. The farmers have to start planning much 

longer now than they ever have, and because the logistics of bringing urea fertilizer from Qatar is 45 days on the seas, 20 days coming up the river. So it is a lot longer logistic system. And I think 

in this tight supply, every ton of fertilizer that is produced in the 

world today is being bid on by three or four countries, India, China, 

Brazil, and that fertilizer doesn’t necessarily have to come to the 

United States, and that is the difference. 

Mr. BLUNT. In that regard, the increase in price of fertilizer, is 

it being driven—give me some percentage of how much it is being 

driven by cost of natural gas and other energy and how much it 

is being driven by demand. 

Mr. WEST. Today it is being driven by demand, and that is why 

we are able to continue to produce nitrogen fertilizer in this country at $12 gas. Now, if you look since 1999, I said we closed all 

these plants. We closed 13 plants when natural gas averaged $4. 

By the time it got to $7, we had shut down 25 plants. It is world 

demand for food that is driving fertilizer prices around the world 

that has allowed us to keep producing nitrogen fertilizer today in 

the United States. 

Mr. BLUNT. And 10 or 15 years ago, who was the biggest nitrogen exporter in the world? What country? 

Mr. WEST. Russia has always played a big role in nitrogen export 

and when they—when the fall of the Soviet Union, the world fertilizer use fell 17 percent, and Russia has never really caught up 

with their use of fertilizer. They still import 50 percent of their 

food, and their production of fertilizer is to the world market and 

they have always been a major player. 

Mr. BLUNT. So this is another case where the world market is 

truly driving the price. 

Mr. WEST. Yes, sir. 

Mr. BLUNT. And food generally probably relates to another day 

but for purposes of this committee, I think that, you know, ethanol 

is one of the easiest things to blame for cost of food as opposed to 

energy, competition for food, bad weather conditions, lots of things 

have kind of come all at once that created this crisis. 

Admiral Bowman, Mr. Barton and Mr. Upton both have legislation on spent fuel, and I wonder if you have looked at that and if 

your group or you personally have taken a position on that bill. 

Admiral BOWMAN. Mr. Blunt, the nuclear industry recognizes 

that the disposal of used nuclear fuel is and never has been a technical issue. It has always been a political issue. We really have two 

means available today that are perfectly satisfactory from a safety 

and security point of view. One is to do exactly what we have been 

forced to do that, and that is, hold it on site where it was produced. 

The second is to continue down the path required by U.S. law to 

license and open and operate Yucca Mountain. Those two means 

both would satisfactorily address the method of disposal of—— 

Mr. BLUNT. What about spent fuel recycling? 

Admiral BOWMAN. That is used fuel. However, we think that 

there is a better way, and it is that, sir. It is rather than bury in 

a way up to 90 percent of the energy content of the rods, rather 

to look into an advanced reprocessing system that does not conVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00196 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
189 

tribute to proliferation risk, proliferation concerns in this country, 

and we the nuclear industry very much support that way of doing 

business, that is, an interim storage method at one or two sites, 

three sites centralized, followed by a robust research and development approach to develop an advanced reprocessing capability that 

does not produce pure plutonium as a byproduct and then determine what type of end product is left and achieve the proper disposal of that end product at that time. It doesn’t have to happen 

today. We don’t have to determine the disposal of that end product 

today because we don’t know what it is until we complete this 

R&D. 

Mr. BLUNT. Is it safe to assume, looking at what other countries 

have done, that that end product becomes a much smaller issue to 

deal with in terms of size and storage and all than the non-recycled 

product we have now? Would that be right? 

Admiral BOWMAN. To a certain extent, it is correct, sir. The other 

countries that are reprocessing today are using the method that 

the United States developed specifically for the production of nuclear weapons. It is called plutonium-uranium extraction, PUREX. 

The downside of that process is that it does produce a pure stream 

of plutonium as a byproduct. I think the United States will not and 

should not go back to that method of reprocessing. I think that 

there is a method to reprocess that would combine that plutonium 

with the other long-lived radioactive elements and then fission that 

entire group to really reduce the volume requirements of a repository. Today in France, for instance, the reprocessing technique reduces the volume required for high-level waste disposal by about 

60 percent, 66 percent, but it doesn’t reduce the repository requirements because the repository requirements are based on the heat 

load of the product. So we need to go the next step in this country. 

If we are going to reprocess, we need to do it smarter than what 

is being done in the world today. 

Mr. BLUNT. Now, essentially in France—I see I am about to run 

out and I am not a good enough attender at this committee to assume I should have much more time than anybody else has, I am 

absolutely confident of that. The technology they are using in 

France, for instance, was largely developed by us as military technology and then converted. Is that what I heard you say? 

Admiral BOWMAN. Yes, sir, not just largely, completely developed 

by the United States for the specific—— 

Mr. BLUNT. A number of staffers from this committee visited 

some French nuclear sites within the last few months and were reminded over and over again that every bit of technology that was 

making that system work, at least the people in France that were 

making the system work, over and over again reminded them that 

that technology was developed by us, not by them, and they are the 

ones using it and using it to great advantage in a great renewable 

source. 

Thank you, Chairman. I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Blunt, and I would say 

for your benefit that we will be looking at a range of nuclear issues 

including the potential for reprocessing as part of our subcommittee’s work in a future month. 

190 

The gentlelady from Wisconsin, Ms. Baldwin, is recognized for 5 

minutes. 

Ms. BALDWIN. Thank you, Mr. Chairman. 

As the months go by and given the Senate debate last week, it 

is becoming ever more likely that we will not be passing into law 

a comprehensive cap-and-trade bill this year. And given those political facts, I have spent a lot of time considering what steps Congress could take this session to get a head start, if you will. For 

instance, most of the bills that we are looking at today have greenhouse gas registry provisions, and one of the things that we 

learned from the phase I implementation of the European cap-andtrade system was the importance of having high-quality data about 

emissions on hand in order to assure that appropriate distribution 

of allocations occurred, and essentially that means having sectors 

and/or facilities report their greenhouse gas emissions. As you may 

all know, a tiny provision in the 2008 consolidated appropriations 

bill requires the EPA to establish a registry so that we can begin 

gathering greenhouse gas emissions data and so that we don’t 

make the same missteps that the European Union did in implementing phase I and phase II of their cap-and-trade program. 

I want to actually ask a few questions to explore the adequacy 

of the current registry provisions and about potential modifications 

we could make at this juncture. I wanted to start with Mr. Goo and 

Mr. Kuhn. Are you both familiar with the EPA’s efforts and have 

you been invited at all to participate in their process of establishing 

a registry, and if so, could you elaborate on some of the suggestions 

that you have made to design a registry and recognizing of course 

that we already are doing emissions registry in the electrical sector. Mr. Goo first. 

Mr. GOO. Thank you for the question. We actually—as you know, 

EPA is now working on a registry because of the appropriations 

language and we have been talking to them about it. There is a 

registry provision in the Lieberman-Warner bill. It is title I of the 

Lieberman-Warner bill, and we support that as well. So I guess if 

you are going to work on a registry provision, which we encourage 

you to do, we would like to work with you on that to make sure 

that what is happening at EPA fits in with what you are doing. So 

registry is extremely important, that we get good information form 

all the sectors now in advance of a cap-and-trade system so that 

the system will work well. As you have noted, the European system 

didn’t work well because of that precise issue. So again, it is an important issue and we look forward to working with you on it. 

Ms. BALDWIN. Mr. Kuhn? 

Mr. KUHN. Congresswoman, thank you for the question. We 

strongly support a registry. As I mentioned in my testimony, we 

have been reporting for 14 years now and we believe that the registry has to be complete. It has to be—the emissions reductions obviously have to be verifiable. We do think that there should be 

credit for early actions. That was mentioned by somebody else this 

morning. I think that those companies and organizations that are 

out doing reductions on a company basis, on an industry basis are 

to be commended for their early actions. 

Ms. BALDWIN. Thank you. 

191 

I have three related questions to the registry, and I would also 

invite other panelists if you have a comment, I would welcome all 

comments on this, but I will start again with Mr. Goo. These are 

the three questions. A, do you believe that EPA is currently operating under enough guidance to establish the registry? Secondly, 

greenhouse gas registries in the bills that we are examining today 

differ based on whether they cover—whether they look at covered 

facility or entity. For example, the Boxer substitute, I think, follows 

the facility approach and the Markey bill looks at effective entities 

and I would like to hear your thoughts on which direction we 

should go. And then lastly, it is my understanding that EPA in 

their rulemaking is operating under authority in the Clean Air Act 

to set up the greenhouse gas registry and it is my understanding 

that the registry designed in the Markey bill also establishes its 

framework within the Clean Air Act. But I wonder if you have any 

thoughts about whether the Clean Air Act provides the appropriate 

authority or whether it might be more appropriate to set up a registry under the Emergency Planning and Community Right to 

Know Act because as we know, the Community Right to Know Act 

already contains a registry, the Toxic Release Inventory, that requires public disclosure of toxic releases and I just wondered if you 

had comments on those three questions starting with Mr. Goo. 

Mr. GOO. Thank you. The first question, do I think EPA has adequate guidance, EPA has a long history of dealing with these issues 

so they tend to know what they are doing but the guidance that 

was provided by Congress in the appropriations act is really fairly 

sparse so it certainly would not hurt to direct them with more specificity and a more comprehensive system. I think that makes sense. 

The next question is whether or not EPA should use a covered 

facility or a covered entity definition. I think that the finer grain 

definition that we have, the easier it is going to be to know what 

we are doing. I actually am not prepared now to address the differences between the Markey bill versus the Boxer and how those 

different definitions work, especially under the Clean Air Act, but 

we will take a look at that and get back to you. 

The final question, Emergency Planning and Community Right 

to Know, obviously it is very important that the public have transparency. That is the basis of the Emergency Planning and Community Right to Know Act. It is also important that under the Clean 

Air Act, there is already an existing system for enforcement as Mr. 

Kuhn has noted, that the power industry has been reporting under 

the Clean Air Act for a number of years. I think we probably need 

to look to see which of those two statutes or maybe a combination 

of those two statutes would work. 

Mr. KUHN. I think Mr. Goo said it all. I really think we would 

look forward to working closely with you on those specific questions 

but I think the general drift of what he said was correct. 

Mr. WEST. I would just say from a fertilizer perspective, EPA is 

pretty knowledgeable about our emissions because they have studied our industry for years, and we don’t have any problems with 

the registry and working with the registry. 

Mr. BOUCHER. Thank you, Ms. Baldwin. 

At this time, we are pleased to recognize the gentleman from Oregon, Mr. Walden, for 5 minutes. 

192 

Mr. WALDEN. Thank you very much, Mr. Chairman. 

Mr. Kelly, I want to go to you first because we are talking a lot 

about creating a system that would rely upon carbon sequestration, 

compression and storage. Is there technology in place, in operation 

today that does all three of those things? 

Mr. KELLY. Currently, not on the scale that we are talking about 

for electric generation. There is currently, what I understand, and 

I am certainly no expert on, in enhanced oil recovery, limited 

amounts of carbon dioxide are used to facilitate that process. However, again, I am not qualified to really—— 

Mr. WALDEN. Mr. Kuhn, can I go to you maybe from the electric 

institute? Talk to me about that. Is there proven technology today, 

commercially available, to sequester, compress and then store carbon from power generation? 

Mr. KUHN. Maybe the key here to your question is proven. Once 

again, on the capture side, we have a number of technologies that 

are being worked on right now. 

Mr. WALDEN. Commercially available? 

Mr. KUHN. I think they are more in the demonstration side, and 

there is no CO2 capture technology that is right of the shelf right 

now. 

Mr. WALDEN. And when you capture, then don’t you also have to 

compress before you can store? 

Mr. KUHN. Well, that is the other—the situation is, you need a 

major addition to the pipeline capacity. You would need to replicate 

a lot of pipelines in this country to get the gas to where you want 

to store it and then there is the sequestration question. 

Mr. WALDEN. So you would have to build all new, a bunch of new 

pipelines across the country. Is that correct? 

Mr. KUHN. Yes. 

Mr. WALDEN. And then when you go to store it, isn’t carbon a 

pollutant now? Isn’t it described as a pollutant under the Clean Air 

Act? 

Mr. KUHN. Under the Supreme Court finding. 

Mr. WALDEN. Right. And is it legal to put a pollutant in the 

ground? 

Mr. KUHN. I think the legality is that you would have licensing 

questions, you would have public acceptance questions, you would 

have liability questions and those are, I think as we look at the, 

again, what we call the technical issues and the non-technical 

issues, the non-technical issues are every bit as challenging as the 

technical issues. 

Mr. WALDEN. And I think the technical issues about having the 

technology in place to do what is called for under this legislation, 

we aren’t quite there yet. But we need to—I understand, but we 

need to invest and get there and make sure it is also commercially 

available and affordable. Now, in February of 2007, you talked 

about principles for carbon signals in the market. Gasoline is now 

double what it was then. Natural gas is now double what it was 

then. There are some estimates that electricity costs are going to 

be up 29 percent this year because of increased cost of coal. How 

high a price signal in addition to the current market do you think 

is necessary to reduce carbon demand? 

193 

Mr. KUHN. Well, I think a price signal that would be based on 

a carbon cap-and-trade system or a tax or whatever would be carbon specific as opposed to the—— 

Mr. WALDEN. So how high does that need to be? Our chairman 

had a sort of draft proposal out there of an additional 50-cent-agallon tax, carbon tax, and he has since withdrawn that. Is that 

what you think it would take? How big a signal? 

Mr. KUHN. We think several things are very important. Number 

one, the price initially should be moderate and—— 

Mr. WALDEN. What does that mean? 

Mr. KUHN. To make sure that it does not harm the economy. I 

think that is a question of—— 

Mr. WALDEN. So in addition to the current market price, you still 

think there needs to be additional cost? 

Mr. KUHN. Well, I think that if you are going to establish a capand-trade system, there certainly would be an additional cost on 

there. I think it is important to have a safety valve to make sure 

that the price does not go—— 

Mr. WALDEN. And I hate to cut you off. I have got a minute and 

13. 

Mr. West, I represent 70,000 square miles of the most beautiful 

patch of the country possible, I may get argument from my colleagues, and a lot of that is agriculture, and you probably heard 

me in my opening comments say, I have got fruit growers that are 

paying double for fertilizer. What is $12 natural gas going to do to 

those folks, and are we going to see your industry continue to go 

offshore, and how do we compete? 

Mr. WEST. Well—— 

Mr. WALDEN. And what kind of price signal do you need, do you 

think is needed for the fertilizer industry and what effect does that 

have on feeding people, which by the way, is a humanitarian issue. 

Mr. WEST. The current price of fertilizer is tied to world food demand. That is what driving the fertilizer price. 

Mr. WALDEN. It is not tied to natural gas prices, sir? 

Mr. WEST. The world food demand is allowing us to continue produce at $12 natural gas in the United States. As I said before, 

we shut down plants when gas was $4, had 25 shut down when gas 

was $7. We are producing fertilizer today at $12 because the world 

demand for food, which has driven up the world demand for fertilizer, and that is why today’s price of fertilizer is at record levels 

and, as you know, commodity prices are also at record levels. We 

went to $22. The reason it did that was because the demand for 

food brought on by weather conditions in Australia and places like 

that. 

Mr. WALDEN. Well, I just raise these issues because I continue 

to—when I look at the cost of what it costs to fill up the tank in 

the tractor or the pickup or the whatever and the effect that is having all the way to the grocery store, and I sit in these hearings and 

hear this isn’t enough, we have got to have additional cap-andtrade system that could equal $6 trillion, this is going to do enormous damage to the Wal-Mart mom and the diesel truck driving 

dad. 

Mr. WEST. If the price of natural gas continues because of the demand generated by the utilities going to natural gas—— 

194 

Mr. WALDEN. Right, away from coal. 

Mr. WEST [continuing]. Then we will close our facilities, have to 

go into the world market and purchase 8 million tons or 11 million 

tons of ammonia. That will drive the world price of fertilizer even 

higher. 

Mr. WALDEN. My time is expired, Mr. Chairman. Thank you for 

your courtesy. 

Mr. BOUCHER. Thank you very much, Mr. Walden. 

The gentleman from Washington State, Mr. Inslee, is recognized 

for 5 minutes. 

Mr. INSLEE. Thank you. 

Just kind of in response to some concerns people have brought 

up today about cost, I just want to note, we are all sort of suffering 

under the tyranny of the status quo and everybody is thinking that 

we are locked in to the technologies we have today and it is very 

frustrating to me, having spend the last couple years getting to 

know the people who are developing the new visions. I had lunch 

with a guy the other day who has a company called Sapphire Energy. It is a California-Washington company. They just raised $50 

million venture capital. They have a technology to use algae to 

produce not biofuel but gasoline with the same ATSM characteristics of gasoline, which would be a net-zero CO2 emitting net technology today. I went to talk to Google the other day, who has made 

a multimillion-dollar investment in a company called Altarock that 

has enhanced geothermal, which where you don’t depend where 

springs are. You punch a hole down 3 kilometers and you bring up 

water at 300 degrees Kelvin and you produce steam, and according 

to the DOE, there is enough energy to produce half the electricity 

in the United States. We had a solar thermal company sign a contract the other day with Ford in California for 400,000 homes, and 

it is frustrating to me that we don’t think of these things that are 

just around the corner of commercialization that the cap-and-trade 

system is pivotal to their commercialization, both by creating a 

fund that I talked about earlier for R&D and for driving demand 

for these products. I just want to note that. If anybody wants to 

make a comment on what I said, feel free. Mr. Kuhn? 

Mr. KUHN. Congressman, in my testimony, I extensively talked 

about our support for just the kinds of technologies you are talking 

about. We definitely need to push energy efficiency to the maximum extent possible, and the good news, as you indicated, is there 

are many technologies. I mentioned the advanced meters and information system, the plug-in hybrid vehicles and things of that nature that can contribute greatly, and I think that we need to have 

the public policies that will help support and make them happen. 

Additionally, on the renewable side of the equation, we have many 

things happening there as well and we need to have the public policies that will support that but I would say, the conclusion that they 

can do it all I think is wrong. 

Mr. INSLEE. No, no, I want to make sure you understand. I am 

not suggesting they can do it. I totally believe in a portfolio approach, a smorgasbord, spreading our risk. Any portfolio diversifies. I believe we should be doing research on any single CO2-emitting technology possible that is available to us. But I want to ask 

you this question. In dividing up the research dollars and what we 

195 

do, this is a bill we are not considering but it has been proposed. 

We have sort of a wires charge to finance clean coal sequestration 

technology research, and I support research on clean coal sequestration. I think it is worthy of research to see if there a way we 

can sequester CO2 and make that a commercially viable technology. I think it is a little bit of a long shot but I think it is worthy of that. But I think it is critical that we don’t allow that to 

swallow the research budget with all the other technologies that we 

have. How would you suggest, Mr. Kuhn, and I will ask the others, 

how do we divide up the R&D pie or the loan guarantee pie 

amongst all of these potential technologies, between solar thermal, 

advanced biofuels, enhanced geothermal, transmission grid improvements, nuclear, clean coal. How should we make sense of this 

to divide that up? Does anybody have any general ideas in that regard? I am presuming everybody agrees that everyone should be involved, every technology, but do you have any other suggestions? 

Mr. KUHN. I just might say, you have to look at each technology 

specifically and see what is most needed. The carbon capture and 

storage issue is a demonstration issue and needs a great deal of 

funds to help move those demonstrations. In the House Appropriations Committee, I think the other day there was a doubling of the 

funds in there for energy efficiency and renewables, and certainly 

I think that is a good thing, but in addition, on the renewable side, 

you need some of those production tax credits and investment tax 

credits as well so on the nuclear side, it is mostly about loan guarantees so there are different approaches that are needed for each 

of the technologies and you have to approach it that way. 

Mr. INSLEE. Right. Let me ask one quick question. I hope all of 

you will share your thoughts, but what Mr. Doyle and I are working on, a way to reduce the impact of this on energy-intensive industries that might be exposed to international competition. I will 

look forward to your thoughts about that. Also, Ms. Baldwin was 

talking about this early registration bill that I am very interested 

in. I have actually introduced a bill last year about this. I would 

appreciate any of your thoughts about that, how to do that. Does 

anyone think it is a bad idea to pass a registration and data-gathering bill this year? Would anybody be opposed to doing that this 

year so we can get out of the gate at least gathering data? 

Mr. GOO. Congressman, let me just address a few things that you 

have mentioned. First of all, a registry bill this year would be great 

but a full cap-and-trade bill would be even better so we can get 

that done as soon as possible. That is really the primary goal. We 

do have registry efforts already in place, and as I explained to Congresswoman Baldwin, it is important to do more in that area and 

we would support work there. But I couldn’t agree with you more 

about the transforming effect of the allowance revenue on our economy and the need to not look at our economy and particularly our 

energy economy as a static picture. That doesn’t have to be the 

case. And what you need is, you need a push from below, the 

money from below you also need to pull, that is the price signal 

from above. CBO has made that quite clear, that you can’t get 

these technologies into the marketplace if you don’t have the push 

and the pull. 

196 

Now, with regard to how the money should be divided up, there 

are really sort of two main needs. One is the technology need and 

the other is the need to mitigate the impacts on the lowest income 

producers and wage earners in our society. So that is the first 

thing. But when we get to the technology pie, we should look at 

things like performance-based standards for giving the money. We 

should look at things like reverse auctions for giving the money. 

Those are the—I see your time is up. 

Mr. INSLEE. Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Inslee. Thank you, Mr. 

Goo. 

The gentleman from Illinois, Mr. Shimkus, is recognized for 5 

minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I know Ms. Bono Mack 

wants to do a unanimous consent to submit some questions for the 

record because I imagine you might be ending this with votes with 

his panel. Is that true? 

Mr. BOUCHER. If it is at all possible to do so. Ms. Bono Mack, 

would you like to make a unanimous consent request? 

Ms. BONO MACK. I am sorry, yes, please, if we could just submit 

questions for the record. 

Mr. BOUCHER. Without objection, the record will remain open for 

a period of 2 weeks in order for questions to be submitted and responses to be received from the witnesses. 

Ms. BONO MACK. I thank the chair. 

Mr. BOUCHER. Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I just want to register 

a complaint, Mr. Chairman. You are playing the Lutheran card on 

me, and that is unfair. I would note that the Evangelical Lutheran 

Church in America is a little more moderate than my brand but 

we want to welcome you here, and come in and see me and we can 

talk about really the harm that is going to be done to the people 

you are hoping to address. That is where a lot of this debate is 

coming from. 

Who can tell me what the number one issue on the public mind 

is today? Anyone want to guess? National polls are pretty clear, no 

surprise to anybody. Mr. Kuhn? 

Mr. KUHN. High energy prices probably. 

Mr. SHIMKUS. High energy prices. It should be no surprise to 

anybody. In January of 2007, crude oil price was about $58 a barrel. Today it is $134 a barrel. Gasoline prices have gone from—it 

is up $1.75 actually in just one year. Now, I would like to ask everybody in traditional Chairman Dingell yes or no, will movement 

on a climate bill increase the cost of gasoline? Mr. Kelly, yes or no? 

Mr. KELLY. It depends. 

Mr. SHIMKUS. Be brave. What do you mean, it depends? 

Mr. KELLY. I think the expectation is yes. 

Mr. SHIMKUS. Mr. Goo? 

Mr. GOO. As a percentage of household income, your energy 

prices will be lower. 

Mr. SHIMKUS. The question is, will the gallon of gasoline be more 

expensive under a climate change regime? 

Mr. GOO. Perhaps slightly. 

197 

Mr. SHIMKUS. That is about the best as I am going to get so I 

will take it. Thank you. 

Mr. REUTHER. Yes. 

Mr. SHIMKUS. Thank you. 

Ms. Jacobson? 

Ms. JACOBSON. Certainly it is possible but the key is the policies 

in place that will help mitigate that for consumers. 

Mr. SHIMKUS. Certainly it is possible? We are the politicians 

here. You are the expert. 

Ms. JACOBSON. Well, not on fuels, on the power sector, but—— 

Mr. SHIMKUS. Well, we are going to get to that. Just prepare for 

question number two. 

Mr. Kuhn? 

Mr. KUHN. Yes. 

Mr. SHIMKUS. Admiral Bowman? 

Admiral BOWMAN. Yes, sir. Let me quickly add, if the impetus 

draws us to plug-in hybrids fed from nuclear power plants, I think 

we can make it neutral. 

Mr. SHIMKUS. And actually we are very excited about that opportunity. We are going to talk about plug-in hybrids a little bit if I 

have time but I don’t think I have a lot of time. 

Ms. Minette? 

Ms. MINETTE. I am no expert but I would say probably yes. 

Mr. SHIMKUS. That is a good guess. 

Mr. West? 

Mr. WEST. Yes. 

Mr. SHIMKUS. Great. Now, let us go to electricity. Any climate 

bill present will increase the cost of electricity. Mr. Kelly? 

Mr. KELLY. All five bills that we studied for this hearing would 

lead to price increases. 

Mr. SHIMKUS. Do you have a percentage? 

Mr. KELLY. We have got analysis that we have done from CRA 

International, which I would be happy to supply, that would show 

the projected price increases for the Lieberman-Warner legislation. 

Mr. SHIMKUS. What is the increase? 

Mr. KELLY. By 2030—— 

Mr. SHIMKUS. If Kraig was there, he could give it to me. 

Mr. KELLY. That is quite possible. I will have to get back to you 

on that, sir. 

Mr. SHIMKUS. All right. Thank you. 

Mr. Goo? But it is going to increase. 

Mr. GOO. If revenues are recycled as in the Markey bill, the cost 

impacts to the lowest wage earners in the American public can be 

mitigated entirely. 

Mr. SHIMKUS. OK, but that is not in line with the GAO report. 

Is that correct? 

Mr. GOO. That is again—— 

Mr. SHIMKUS. My time is running. Mr. Reuther? 

Mr. REUTHER. Yes. 

Mr. SHIMKUS. Ms. Jacobson, my expert. 

Ms. JACOBSON. Many of the studies confirm that there will be 

some increases, but if you do more efficiency like ACEE reports 

shows—— 

Mr. SHIMKUS. The answer is yes, there—— 

198 

Ms. JACOBSON. Well, there are a variety of studies on this so I 

think we don’t quite know yet because we don’t know what the legislation is going to look like. 

Mr. SHIMKUS. Mr. Kuhn? 

Mr. KUHN. If this is another issue which is high on the minds 

of the American people, we need to solve, the answer is yes, it certainly will have a cost. 

Mr. SHIMKUS. Admiral Bowman? 

Admiral BOWMAN. The answer is yes but less so if nuclear is a 

part of the program. 

Mr. SHIMKUS. Ms. Minette? 

Ms. MINETTE. Again, I am not an expert but what I have read 

is in the short term, yes, in the long term, perhaps not as much. 

Mr. SHIMKUS. And I think most people worry about immediate 

cost escalations to get kids to school. Mr. West? 

Mr. WEST. Yes. 

Mr. SHIMKUS. Of course, I appreciate your testimony because I 

represent rural America and fertilizers. 

Let me just say, Mr. Chairman, that everyone at this panel concurred that climate change legislation will increase gas prices and 

electricity prices. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus. I think that 

point was made. 

We have another series of recorded votes on the Floor of the 

House and 6 minutes, 42 seconds in which to respond to those. Mr. 

Waxman, if you want to attempt your questions, I will be happy 

to stay here with you. 

Mr. WAXMAN. I will try to make it less than the time allotted to 

me. 

Mr. BOUCHER. You have a total of 8 minutes. 

Mr. WAXMAN. Let me just see if I can do it in 3. 

Mr. BOUCHER. That will be fine. 

Mr. WAXMAN. As this committee and the Congress develop legislation to tackle global warming, it is essential we get the fundamentals right. We are confronting a looming crisis with very little time to avoid catastrophe. Unless we adopt a real and comprehensive response based on what the science says is necessary, 

our efforts will be in vain. That is the foundation for my legislation, 

the Safe Climate Act, and I am pleased that 152 of my colleagues 

have joined me on this bill to date. I have also worked with two 

members of this committee, Mr. Markey and Mr. Inslee, to develop 

a set of broad principles for global warming legislation, which complement and supplement the Safe Climate Act. Over 80 of our colleagues have joined with us on those principles, and we expect to 

expand that support. 

We believe there are four key goals for global warming legislation. One, reduce emissions to avoid dangerous global warming; 

two, transition America to a clean energy economy; three, recognize 

and minimize any economic impacts from global warming legislation; and four, aid communities and ecosystems vulnerable to harm 

from global warming. I would like to ask if any of the witnesses 

disagree with these goals and presumably you would support those 

goals, unless you disagree. Yes? 

199 

Mr. KUHN. Mr. Waxman, certainly it is easy to support those 

goals. I think that with respect to the economic impacts, we strongly believe that any legislation needs a safety valve and—— 

Mr. WAXMAN. Well, my goal was recognize and minimize any economic impacts. 

Mr. KUHN. I certainly agree with that goal. I am just talking 

about things that might help us get there. 

Mr. WAXMAN. Now, I would like to know if this panel agrees that 

climate legislation must reduce emissions to the degree science 

tells us is necessary. Does anybody disagree with that idea? 

Mr. KUHN. Consistent with the availability of technology to get 

us there, and certainly we agree with your long-term goals. 

Mr. WAXMAN. I would like to be informed whether you agree, this 

panel, that the Intergovernmental Panel on Climate Change is the 

preeminent scientific body on this matter and we should look to it 

to understand what emissions reductions are necessary. Anybody 

disagree with that? 

And I would be interested to know if you agree that to protect 

our environment, economy, energy security and national security, 

we need to transition America to a clean energy economy. Anybody 

disagree with that? Thank you for your lack of agreement, or at 

least lack of disagreement. 

I have been working on legislation to address global warming 

since 1992. There is now a widespread call for congressional action 

although, as today’s testimony shows, not everyone is on the same 

page yet. That is why this committee must exercise leadership. We 

must have clear vision for our Nation’s energy future and we must 

make that vision a reality. It won’t be easy but I know it can be 

done, and it must be done soon, and I look forward to working with 

the chairman and members of this committee, the interests represented here today and many others to adopt strong global warming legislation that meets the principles I have outlined today before it is too late. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Waxman. 

We do have some other members who want to propose questions, 

Mr. Barton is here, for example, and so I am going to ask this 

panel to remain, if you don’t mind doing so. If it is not possible for 

you, we understand. We have a series of four votes pending, and 

that will take approximately 45 minutes. So pending the conclusion 

of those votes, the subcommittee stands in recess. 

Mr. BARTON. Mr. Chairman, my questions will be very easy so 

I hope they will stay. 

Mr. BOUCHER. Well, potentially they will be enticed by that assurance to remain here. 

Mr. BARTON. They won’t be mean. 

[Recess.] 

Mr. BOUCHER. The subcommittee will reconvene. Well, my apologies to the veterans of panel number one, and thank you for your 

tremendous patience. 

The gentleman from Texas, Mr. Barton, the ranking member of 

the full committee, is recognized for his questions. 

Mr. BARTON. Well, thank you, Mr. Chairman. The person I wanted to ask the first question to is just now sitting down, so as soon 

as Mr. Kuhn gets seated. If we will have the media capability, I 

200 

would like for Mr. Kuhn to put his chart back up that talked about 

2008 prism of solutions, something like that. It showed the amount 

of emissions, CO2 emissions by year from 1990 up to 2050 and various scenarios, how various bills and policies would impact that. 

No, not that one. It is more of a graph. It shows by year and then 

strategies, technologies to ameliorate. It had a heading, 2008, and 

I think prism something. No, that is not either. That is it. 

[Chart shown.] 

Mr. BARTON. You can’t see that very well from here but I studied 

it when it was up. The vertical graph is tons of U.S. emissions and 

the horizontal graph is timeline, and Mr. Kuhn, in 1990 that chart 

I think shows total U.S. emissions were about 1,800 gigatons. Is 

that correct? 

Mr. KUHN. That is correct. 

Mr. BARTON. OK. Right answer. Now, most of the proposals that 

we are looking at today for reductions, and put aside for a second 

whether I think we need to reduce or not. I am still skeptical that 

CO2 is a pollutant, but let us assume that we do need to reduce 

emissions. Most of the bills today require emissions order of magnitude in the 80 percent range. What is an 80 percent reduction 

from 1,800? 

Mr. KUHN. Congressman, an 80 percent reduction from 1,800, I 

am not sure I have got the math there—— 

Mr. BARTON. About 4.6? 

Mr. KUHN. Right. 

Mr. BARTON. We would reduce the number of tons down to actually 360 gigatons for the entire U.S. economy. 

Mr. KUHN. Congressman, this chart only goes through 2030. It 

is not taking us out to 2050, but—— 

Mr. BARTON. OK. I am going to get to my point. The point I am 

trying to get at it is, at 360 gigatons for the whole U.S. economy 

in 2050, we are probably going to have around 400 million Americans, that is either 1 ton per American or maybe 10. I don’t have 

a slide rule with me. But as I said earlier, in Texas right now, per 

capita tons of CO2 emissions is 31 tons. I don’t think we have a 

concept of what 80 percent off of 1,800 is but it is a very small 

number and I do know that just me talking up here in Congress, 

respiring in and out, inhaling, is a third of a ton a year. What kind 

of economy do we have if we go from the baseline of 1,800 gigatons 

in the U.S. economy to 360 gigatons? 

Mr. KUHN. Well, Congressman, I warned in my testimony about 

picking out targets and timetables that didn’t mesh with our ability 

to get the technologies available. Again, I think it is very easy to 

pick out a target and timetable. It is a whole other question if you 

want to ask how we are going to do this, and I think the how we 

are going to do this question really needs to be considered before 

you pick out the target and timetable, and I think in many cases, 

that is not being done. If you extrapolate that chart out to 2050, 

again, I think what we would be saying is if you had the full suite 

of technologies in play at that point in time, including nuclear, 

which is a zero carbon, carbon capture and storage on coal plants, 

at least on new coal plants, and have been putting them on from 

the 2030 time frame on, and that you have renewables and that 

you have energy efficiency and you have plug-in hybrid vehicles, 

201 

you would essentially be in a much lower carbon fuel supply situation. But I think when some people arbitrarily will pick out numbers and just say, well, let us go 10 percent higher, let us go 10 

percent higher than that, it does become more of a wishful thinking 

than a real—— 

Mr. BARTON. Well, my point is that we throw these numbers 

around and the public and members just take them on faith, but 

an 80 percent reduction from a 1990 baseline is a huge reduction. 

Now, I want to ask Mr. Goo a question. He used to work around 

here and he is now doing a good job at the National Resources Defense Council. He was a bright fellow when he worked for Chairman Dingell before so I am assuming he is still a bright fellow. Do 

you know—and if you don’t, it is OK, because I don’t—how many 

tons does the average car emit out of the tailpipe? I was going to 

ask this to Mr. Reuther but he is not here. How much does the average vehicle emit in tons of CO2 each year if you drive it the average number of miles, which I think is around 18,000 miles? 

Mr. GOO. I don’t want to give you the impression I am not that 

bright but I actually—— 

Mr. BARTON. Well, no, I don’t—— 

Mr. GOO [continuing]. Know the answer off the top of my head. 

Mr. BARTON. I thought you might actually know. That is the only 

reason I asked you. 

Mr. GOO. Yes, I apologize. 

Mr. BARTON. Well, I want to say, and again, I could be wrong, 

and I have been many times, as Mr. Boucher would tell you, but 

I think it is around 3 tons. If it around 3 tons, and we add a third 

of a ton just by breathing, we have almost used up the 80 percent 

number reduction in breathing and driving, and we are not talking 

about heating or cooling or cooking or anything like that. My last 

question—— 

Mr. GOO. Congressman, could I just—— 

Mr. BARTON. Yes, sir. 

Mr. GOO. We were not actually going to be covering human emissions. We are not going to be trying to reduce emissions from humans, so—— 

Mr. BARTON. I know, but you have a cap. 

Mr. GOO. The cap doesn’t apply to human emissions. 

Mr. BARTON. It applies to total emissions? 

Mr. GOO. It doesn’t apply to human emissions. It would apply to 

emissions from so-called covered sources, so—— 

Mr. BARTON. I know, but the whole point of the cap is to reduce 

the total number of emissions. Isn’t that correct? 

Mr. GOO. That is correct, but from covered sources, not from humans. 

Mr. BARTON. I understand that. I am not saying you are going 

to tell us we have to breathe every other minute or something. I 

am not saying that. Only every person can breathe on alternate 

days, I am not saying that. But if you have a cap and you are reducing total emissions and we are part of the emissions, even 

though we are not covered, you have to reduce more emissions from 

what is covered. I mean, that is just—that is a fact. 

Mr. GOO. No, the cap doesn’t cover those emissions. 

Mr. BARTON. So—— 

202 

Mr. GOO. They are outside the cap. 

Mr. BARTON. OK. We are going to pass a law that—— 

Mr. GOO. Allows us to breathe. 

Mr. UPTON. Mr. Goo, I think what he is trying to ask is, if Texas 

chili is going to be still allowed or not. 

Mr. GOO. Texas chili and Dr. Pepper will still be allowed. 

Mr. BARTON. Well, my time is expired and I need to yield back 

to the very gracious chairman. I understand that two-thirds of CO2

is noncontrollable, it is not covered, to use Mr. Goo’s term, but if 

you set that number up there is a total emissions, that is not manmade emissions, it is total. If you set the total, you reduce it, you 

have to reduce that which is covered. 

Mr. GOO. None of the bills that this committee is considering 

now would cap those emissions. 

Mr. BARTON. I understand that. 

Mr. GOO. The 80 percent reduction would only apply to basically 

industrial sources and other sources. 

Mr. BARTON. Oh, you are saying the 80 percent number doesn’t 

apply to the total? 

Mr. GOO. Yes, that is right. It doesn’t apply to the total. It 

doesn’t apply from trees. It doesn’t apply from soil. It doesn’t apply 

from people. 

Mr. BARTON. It only applies to that which is controllable? 

Mr. GOO. That is right. 

Mr. BARTON. All right. That even reinforces my point. If that is 

the case, Mr. Goo, tell me what the temperature change if we met 

that goal in the year—— 

Mr. GOO. The temperature change that we need to avoid is a 2- 

degree Celsius temperature change. 

Mr. BARTON. No, I asked what the temperature change effect 

would be. 

Mr. GOO. The temperature change effect with action from other 

countries, comparable action—— 

Mr. BARTON. No, that is not what I asked. If we meet the goal 

in these bills, what is the temperature impact worldwide? And the 

answer is zero. 

Mr. GOO. It is slightly above zero but it is not sufficient to avoid 

catastrophic global warming. 

Mr. BARTON. It is zero, or close to zero. 

Mr. Chairman, I yield back. 

Mr. BOUCHER. As much as I am enjoying this exchange—— 

Mr. BARTON. I understand. 

Mr. BOUCHER. Let me say the gentleman’s time is expired 

and—— 

Mr. BARTON. It did. 

Mr. BOUCHER [continuing]. I thank him for his questions. 

The gentleman from Massachusetts, Mr. Markey, is recognized 

for 5 minutes. 

Mr. MARKEY. Thank you, Mr. Chairman, very much. 

Mr. Shimkus asked earlier whether climate legislation would 

raise gasoline and electricity prices. I am convinced that my legislation, the ICAP legislation, cap and invest, will unleash a technological revolution and actually put money back in consumers’ pockets because of the lower priced goods that will ultimately save 

203 

them energy. But let us be clear about these bills and how they 

work. ICAP, for example, in my bill, there is a 100 percent auction 

of pollution allowances and it returns over half of the proceeds to 

low- and middle-income consumers through tax credits and rebates. 

Eighty percent of Americans under my approach would receive benefits and two-thirds of all households would be fully compensated 

for any additional costs resulting from the bill, increased gasoline 

or electricity prices. Mr. Shimkus’s district, for example, over 96 

percent of his constituents would receive benefits and over 70 percent would be held completely harmless under my ICAP legislation. 

So I would like to ask quickly each one of the people on the panel, 

do you believe, yes or no, that that kind of mechanism, some kind 

of mechanism like that is an essential element in climate legislation, that we take care of consumers? Mr. Kelly? 

Mr. KELLY. We would advocate that climate legislation should 

address the—— 

Mr. MARKEY. Yes or no, please. 

Mr. KELLY [continuing]. Issues at hand, so it would have to address the question of emissions. 

Mr. MARKEY. Right, but should there be rebates, yes or no, rebates and tax breaks for the consumers who are affected in these 

groups that I was just mentioning? 

Mr. KELLY. We don’t have policy on that but I suspect the answer would be no. 

Mr. MARKEY. Would be no. OK. Thank you. 

Mr. Goo? 

Mr. GOO. Emphatically yes. 

Mr. MARKEY. Thank you. 

Ms. Jacobson? 

Ms. JACOBSON. Yes, of course, and if I may, I would like to also 

acknowledge the large energy efficiency and renewable energy investments your legislation has, which also will help mitigate price 

impacts. 

Mr. MARKEY. Thank you. 

Mr. Kuhn? 

Mr. KUHN. We think there should be allowances that would go 

to customers through their local distribution companies as an alternative way that you would do that and would be based on a formula but also I think you have to worry about the economic competitiveness. So you are worried about the industries and things of 

that nature and the impacts of the prices that they might incur. 

Mr. MARKEY. But you would support rebates to consumers. 

Thank you. 

Admiral Bowman? 

Admiral BOWMAN. I have two yesses, yes for the consumers but 

also a part of that should be delivered to generating the required 

technologies and the low-carbon ability to generate electricity. 

Mr. MARKEY. Thank you. 

Ms. Minette? 

Ms. MINETTE. Absolutely, and we very much like the approach—— 

Mr. MARKEY. Absolutely yes? 

Ms. MINETTE. Absolutely yes. 

Mr. MARKEY. OK. Good. Thank you. 

204 

Mr. West? 

Mr. WEST. Who am I to disagree with the Lutheran Church? Of 

course. 

Mr. MARKEY. Beautiful. Now, we have heard a lot of doom and 

gloom today about why we can’t act now to save the planet. We 

don’t have the technology, it will ruin the economy. Those are the 

very same arguments that were used by the technology community, 

the telecommunications community, that wanted to hold onto the 

black rotary dial phone for 80 more years, and when we broke up, 

all those monopolies, when we passed the 1996 Telecommunications Act, who would have thought we would all be carrying 

around BlackBerries and iPods and broadband service just 10 years 

later? A revolution unimaginable really to those that really wanted 

to hold onto the black rotary dial phone. I think the same kind of 

revolution is about to occur: lowering the costs, improving our lives. 

Mr. Goo, could you tell us how you think these new technologies 

are going to meet these challenges? 

Mr. GOO. Absolutely. I completely agree with your comments 

about the state of computer technology just 30 years ago, and most 

of the models that we see predict a very static energy situation. We 

think that the billions and billions of dollars that will be created 

under a cap-and-trade system can be used to incentivize these technologies and encourage their development and we are going to see 

a low-carbon future under which we are more energy independent 

and we have more business opportunities and more jobs, green 

jobs, good green jobs in America. 

Mr. MARKEY. And one final question to you and Ms. Minette. Ms. 

Minette, your testimony highlights the importance of auctioning 

pollution allowances rather than giving them away free to polluters. Isn’t it true that giving allowances for free to polluters will 

not in most cases reduce costs to American consumers and instead 

result in windfall profits for the polluters themselves? 

Ms. MINETTE. That is our position, yes. 

Mr. MARKEY. Mr. Goo? 

Mr. GOO. Yes, it is absolutely the case. It is interesting, if you 

give somebody $1, they don’t give it back to you unless you give 

them something worth something. If you give pollution allowances 

to these companies, they will keep them and they will charge more 

for the electricity, and interestingly enough, they will actually 

charge you for that carbon allowance that they receive for free. 

Mr. KUHN. Mr. Markey, I—— 

Mr. MARKEY. If the chairman would allow? Yes, Mr. Kuhn? 

Mr. KUHN. I would totally disagree with that, and I think if we 

are not talking about giving them to the companies, we are talking 

about giving them to the consumers, and rather than putting the 

money back in the government and having it given to a whole lot 

of different interests, we are trying to decide what the difference 

is between low-income and middle-income. We are talking about 

exactly the way that this was impacted to the consumers, in other 

words, if the utility industry is responsible for 34 percent of the 

emissions, those allowances can go back. We are regulated industries and I guarantee, the regulators are going to make sure this 

money gets back to the consumers. 

205 

Mr. MARKEY. We just have to avoid the fiasco that unfolded in 

Europe. Otherwise we are just going to engage in repetition syndrome and we have to take note of what did happen there. Thank 

you, Mr. Kuhn. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Markey 

The gentleman from Texas, Mr. Burgess, is recognized for 5 minutes. 

Mr. BURGESS. Mr. Kuhn, if you wouldn’t mind just expanding on 

that a little bit, I am not sure you had enough time to adequately 

answer the question or weigh in on your observation of the answers 

that were given previously. In a regulated environment, how would 

that money actually devolve then to the consumer? 

Mr. KUHN. Well, number one, we are talking about cost containment mechanisms because I think we have all agreed that this is 

going to be—any kind of legislation will impact the consumer, electricity consumers, and we are just talking about the electricity segment here, but under that situation, this is why we feel very 

strongly that there needs to be a safety valve, particularly to prevent the volatility of a market that is occurring in Europe right 

now and economic harm to the economy, so I think the safety valve 

is a major cost containment mechanism that needs to be put in 

place. We think that ample use of offsets need to be put in place 

because that is where you will probably get the most cost-effective 

emissions reductions from offsets, at least in the early years. And 

thirdly, on the allowance side of the question, we don’t have an 

agreed-upon position in our industry in terms of how the allowances should be allocated from the standpoint of customers that 

may be most effective because they are receiving their power from 

coal or whether or not customers that might be affected by they are 

already receiving electricity from clean power sources but we do 

know that all those allowances we believe should go back to the 

local distribution companies and should be—and with the work of 

the regulators would ensure that they go back to the customers. I 

think it has been misinterpreted. In Germany, for example—and it 

is not all the EU but in Germany in particular, there was a situation where allowances went to the companies and did not get to the 

customers because they have a different regulatory situation. So it 

is—— 

Mr. BURGESS. How would that work in a State where deregulation of the electrical utility has occurred? 

Mr. KUHN. I think that in restructured States, particularly—— 

Mr. BURGESS. Texas, for example. 

Mr. KUHN. Texas, for example. In Texas, for example, if the allowances went to the LDC, they would be sure to get back to the 

customers, and again, you could have a formula based on an input 

formula and an output formula and figure out how that should be 

divided, but make sure that it goes back to the LDC and that ensures it going back to the customers. 

Mr. BURGESS. I think in your testimony you talked about advances in technology, things like net metering that would make a 

difference in the future. Is that correct? 

Mr. KUHN. That is correct. 

206 

Mr. BURGESS. Now, in Texas, we do have net metering but I have 

encountered constituents who have attempted to do their own thing 

with either solar panels, windmills, and have encountered having 

to purchase a rather large liability policy in order to have the electric meter flow both ways. Is that in fact common for the consumer 

to have to buy a liability policy when they want to engage in net 

metering? 

Mr. KUHN. Well, I think the issue about specifically how net metering might be done in different States, their regulation is done 

on a State level and so it certainly differs from place to place. 

Mr. BURGESS. It seems to me if we want to foster that, which 

sounds like a good idea when you brought it up in your testimony, 

I do agree with you that advances in technology will make the distribution and use of electricity much more efficient in the future, 

but there must be some way we can allow either by capping liability or by some method so that these rather large liability policies 

won’t be stock and trade in the future. 

Admiral Bowman, can I ask you, what are some of the obstacles 

right now to getting America back on its feet as far as the evolution of nuclear power? It just seems like it takes so long and it 

is so expensive and we did do some things in 2005 and the reason 

we put the time limits on there was because we didn’t want people 

sitting on the sidelines until you know what froze over. I forgot it 

is going the other way but nevertheless, that was the reason for 

putting those timelines on there. What are the major obstacles to 

getting nuclear power up and going? 

Admiral BOWMAN. The major obstacle is the one that I addressed 

in both my written and oral testimony, and it is the financing of 

this. These plants are expensive. I would dare say that on a megawatt-hour basis, they are not any more expensive than any of the 

new power plants that we are going to see coming down the line. 

We have done a great deal of work on granularity of exactly how 

much it is going to cost to build a new nuclear plant. 

Mr. BURGESS. Are advances in technology helping bring that 

price down or are they actually contributing to the cost increase? 

Admiral BOWMAN. The advances in technology are not so revolutionary that we don’t understand them. They are more evolutionary 

off existing systems that we have today but in each case, we have 

a different way to ensure a little bit more safety in this new generation of power plants but the single thing that is an impediment 

today is the loan guarantee program and financing these large, 

high-cost nuclear plants on a relatively small market capitalization 

business so that if you put it on the balance sheet of a $7 billion 

business. If you put a $7 billion project on a $7 billion business, 

Wall Street will have a field day with lowering the debt rating. 

Mr. BURGESS. Is there any difficulty in getting the actual reactors and materials that are needed to build the plant? 

Admiral BOWMAN. That has not become a problem. We are certainly aware of the bottlenecks in the infrastructure because we 

haven’t built in a long time. We are aware that the rest of the 

world is going in this direction. Those people who are in that first 

wave that I discussed earlier, those four to eight plants that might 

be online by 2016, are already buying long lead time components. 

In some cases, those long lead time components have been delivVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00214 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
207 

ered. If they aren’t delivered, the companies are in the queue. So 

that is not causing the difficulty. 

Mr. BOUCHER. Thank you very much, Mr. Burgess, Admiral Bowman. 

The gentleman from Utah, Mr. Matheson, is recognized for 5 

minutes. 

Mr. MATHESON. Well, I thank the chairman and I thank the 

panel. It has been a long day, and assuming no one walks in the 

door, I think I am the cleanup batter today. 

I want to talk a little bit in the context of cost containment about 

how allowances can help mitigate that issue, and it seems to me 

that the ability to bank credits and to have some flexibility in how 

allowances are used assists in that effort as a tool to help with cost 

containment or cost mitigation. Does anyone on the panel have a 

problem with legislation that permits the banking of allowances? 

Mr. KUHN. Congressman, we feel strongly that you need something stronger than just the banking and borrowing. Number one, 

if you do borrow, you are going to be borrowing from future allowances, which most likely are going to be much more expensive in 

the future and I think that is going to cause problems, at least in 

the beginning years when you are putting in place the largest trading system that has ever been established in the world, a multitrillion-dollar trading system. We all know the challenges we have had 

with a lot of trading systems. You can go back to the Enron situation or mortgage-backed securities or whatever. There has been a 

lot of volatility in a lot of trading systems. There has been a lot 

of manipulation. And we think that you need a strong safety valve 

or collar that would ensure that the economy doesn’t get harmed, 

that the price does not go over a particular level, or perhaps maybe 

even a collar that doesn’t go below a certain level so that it might 

not incent new technologies because banking and borrowing, at 

least in the beginning years, is not going to be enough. 

Mr. MATHESON. Well, I was going to split it into two questions. 

You already anticipated the second one. Because the first was 

about banking allowances, which I think in terms of environmental 

effect, I am assuming you get it either way. So I didn’t anticipate 

anyone would have a problem necessarily with the banking. But 

now I want to ask about the borrowing and I want to see if that 

is something that people support or not support, and I would mention two things. One, in response to what you said, Mr. Kuhn, I am 

assuming if the market develops, you are going to have a forward 

price. That is the whole point of markets and futures. If some capand-trade legislation is put in place and it sets caps over the years 

that the marketplace is going to price those allowances out over 

time. It won’t do it perfectly in the start-up, I understand that, but 

I do think that there will be a differential in price that will reflect 

those more expensive in future years, so if you want to borrow 

against them, I would think the borrowing would reflect that premium. And secondly, I know at least one of the legislative proposals that has been put out has an interest rate, if you will, a 1.1 

percent cost if you borrow for the future. So I want to ask the people on the panel how they feel about borrowing allowances in general and if the interest rate associated with borrowing, if the 1.1 

is reasonable or if that is a reasonable approach to have an interest 

208 

rate. I just want to see if people on the panel have any comments 

on that structure. 

Mr. GOO. We strongly support borrowing. We think it is a way 

to have some cost containment without breaking the emissions cap. 

We also support the interest rate. The 10 percent interest rate that 

was in the Lieberman-Warner bill is something we support. If we 

borrow, there are some consequences from too much borrowing because the climate is warming. We just can’t borrow willy-nilly and 

we don’t want to put ourselves in a situation we can’t pay back. 

But we support borrowing. 

Mr. MATHESON. So would you say there should be some overall 

boundaries set on how much could be borrowed? 

Mr. GOO. We support—in the Lieberman-Warner bill, there is a 

15 percent limit on borrowing. We support that. 

Mr. MATHESON. Anybody else have any comments on borrowing 

or banking? 

Mr. KELLY. Congressman, I would be happy to. We did some 

analysis on this that was included in analysis of Lieberman-Warner impact that CRI conducted for us and they found that all the 

incentives were actually for banking as opposed to borrowing. We 

would be happy to supply this to you and your office. 

Mr. MATHESON. I appreciate that. One other thing I will just 

mention real quick. I just recently was told about a proposal that 

the notion of writing a provision in the legislation that would allow 

allowances to be turned in, instead of being turned in every quarter 

or every year, it would be over a 2-year period and allow a little 

more flexibility for people in terms of a compliance period. Has 

anyone on the panel thought about that and have any opinion on 

having a 2-year compliance period instead of a 1-year compliance 

period for allowances? 

Mr. GOO. We think that is an interesting idea and that it may 

help ease some of the volatility in the market. It is sort of like having businesses can choose their own tax year so if you are having 

a hard year or you have a growth in a particular year, then all the 

allowances don’t come due at December of the year causing an interest in prices, so we think it is an interesting concept. 

Mr. MATHESON. Thanks, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Matheson, and our 

thanks to all of the panel members. We appreciate your patience 

and the long time that you have spent with us today. The information we have gained from you is tremendously valuable and has 

well justified your long-term presence here. So with our thanks, 

this panel is excused and we welcome now our second panel of witnesses: Dr. John Felmy, the Chief Economist for the American Petroleum Institute; Mr. Robert Baugh, the Executive Director of the 

AFL-CIO Industrial Union Council and Chair of the AFL-CIO Energy Task Force; Mr. Joseph Hart, Vice President of the American 

Trucking Association; Ms. Emily Figdor, the Director for the Federal Global Warming Program of Environment America; Mr. Jason 

Grumet, the Executive Director of the National Commission on Energy Policy; and Mr. Douglas Scott, the Director of the Illinois Environmental Protection Agency. 

Without objection, the prepared written statement of each of our 

witnesses will be made a part of the record. We would welcome 

209 

your oral summaries and ask that they be kept to approximately 

5 minutes. 

Dr. Felmy, we will be happy to begin with you. 

STATEMENT OF JOHN FELMY, CHIEF ECONOMIST, AMERICAN 

PETROLEUM INSTITUTE 

Mr. FELMY. Thank you, Mr. Chairman and Ranking Member 

Upton. My name is John Felmy. I am the chief economist of API, 

the national trade association of the U.S. oil and natural gas industry. API represents nearly 400 companies involved in all aspects of 

the oil and natural gas industry including exploration and production, refining, marketing and transportation as well as the service 

companies that support our industry. 

API believes it is important to address global climate change. We 

are committed to working with Members of Congress on policies 

that are environmentally effective, economically sustainable, and 

fair. Good policies can help contain costs and enhance our competitiveness while tackling the hard issue of managing greenhouse gas 

emissions. 

We all have a role to play in addressing climate change, and the 

U.S. oil and natural gas industry has been trying to do its part. 

Companies have invested in alternative fuels and refinery efficiency improvements, which reduce emissions. Through API, they 

have developed tools for tracking emissions, which are needed to 

measure our progress, and these companies have 4 decades of experience capturing and storing CO2 to enhance domestic oil production and reduce our reliance on imports. Virtually 100 percent of 

the natural gas produced by API members is with companies participating in EPA’s Natural Gas STAR program. 

Between 200 and 2006, the U.S. oil and natural gas industry invested $42 billion in carbon mitigation technologies. This is 45 percent of the total for all U.S. companies and the Federal Government combined. Nearly $3.5 billion of that was in non-hydrocarbon 

technologies including wind, biomass, solar, and geothermal. 

We believe climate legislation should meet some basic criteria for 

a robust, cost-efficient national policy for long-term reductions in 

greenhouse gases. These criteria including balancing reasonable 

cost burdens, encouraging low-carbon technologies, providing a uniform national policy, and finding the most cost-effective way to reduce emissions without choosing winners and losers. The 

Lieberman-Warner bill fails to meet these criteria. For example, it 

would have imposed disproportionate costs on the supply of natural 

gas, gasoline, diesel, aviation fuel, and other petroleum products 

such as heating oil. This unbalanced cost burden is the consequence of providing only 3 percent of the needed emissions allowances for fuels and natural gas sectors. 

These costs could have contributed to increases in consumer 

prices according to analysis by the U.S. Energy Information Administration and the Congressional Budget Office. Our own supply-side 

study estimated that the legislation could have seriously affected 

supplies of both natural gas and fuels. 

Clean-burning natural gas has low levels of greenhouse gas emissions. According to a Natural Gas Council study, climate legislation 

is likely to increase the demand for natural gas. A sound climate 

210 

policy should enable more supply of natural gas, not less. However, 

a study by ICF International commissioned by API and included 

with my testimony estimates the Lieberman-Warner bill would 

have reduced natural gas supplies by 12 percent. The estimated 

fall in natural gas supplies is because of the added costs of production and gas processing. A Wood Mackenzie study estimates even 

greater supply reductions. Our ICF study also estimates that the 

legislation would shift refinery capacity overseas by 3 million barrels a day, or 17 percent of U.S. capacity. The estimated shift in 

refinery capacity would have also meant lost jobs and the export 

of emissions overseas. 

From our review of the Lieberman-Warner bill, we have identified additional shortcomings. It fails to establish a uniform national 

policy that coordinates with other legislation, Federal and State, to 

reduce redundancy and inefficiency. It fails to safeguard against 

potentially triggering overlapping federal regulations for greenhouse gases under the Clean Air Act, NEPA and the Endangered 

Species Act. The bill locks in an inflexible 40-year schedule of allowance allocations that fails to allow for midcourse corrections, 

and it does not provide a sufficiently transparent signal of cost 

which weakens the impact on consumer behavior. 

In conclusion, managing greenhouse gas emissions will require 

new energy technologies and sensible policies. A sound approach 

involves investment, equitable cost, consistent national policies, 

transparent signals for consumers and development of all sources 

of energy including coal, nuclear, oil, natural gas, and new alternatives. We hope to work with you and your colleagues to help develop sound policy. 

That concludes my remarks, which have focused on the analysis 

of the Lieberman-Warner legislation. API is still examining the 

other bills you are considering today. I would like to submit for the 

record the executive summary of our ICF study, which is the first 

to focus on supply-side impacts of the legislation. I would also like 

to submit an analysis we commissioned of the financial investments into climate mitigation technologies. I would be happy to answer your questions. Thank you. 

[The prepared statement of Mr. Felmy follows:] 

STATEMENT OF JOHN FELMY

I am John Felmy, chief economist of API, the national trade association of the 

U.S. oil and natural gas industry. API represents nearly 400 companies involved in 

all aspects of the oil and natural gas industry, including exploration and production, 

refining, marketing, and transportation, as well as the service companies that support our industry. 

API believes it is important to address global climate change and manage greenhouse gas emissions. We are committed to working with Members of Congress on 

policies that are environmentally effective, economically sustainable, and fair. Good 

policies can help contain costs and enhance our competitiveness while tackling the 

hard issue of greenhouse gas emissions. 

We all have a role to play addressing the climate change challenge, and the U.S. 

oil and natural gas industry has been trying to do its part. Companies have invested 

in alternative fuels and refinery efficiency improvements, which has reduced emissions. Working with EPA and others, they’ve reduced natural gas flaring and virtually 100% of the natural gas produced by API members is from companies participating in EPA’s Natural Gas STAR program. Through API, they’ve developed a 

suite of tools for estimating and tracking emissions, without which any progress will 

be hard to measure. And, for many years now, they’ve been building experience capVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00218 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
211 

turing and storing CO2, boosting domestic oil production in the process and reducing 

our reliance on imports. 

Between 2000 and 2006, the U.S. oil and natural gas industry invested $42 billion 

in carbon mitigation technologies, more than either than the Federal Government 

or all other businesses and industries combined. Nearly $3.5 billion of that was in 

non-hydrocarbon technologies, including wind, biomass, solar and geothermal. 

One climate change proposal that was considered by the Senate earlier this month 

fell short of meeting what we believe are the essential criteria for a robust, costefficient national policy for long-term reductions in greenhouse gases. These criteria 

include balancing reasonable cost burdens; encouraging low-carbon technologies; 

providing a uniform national policy; and finding the most cost-effective ways to reduce emissions without choosing winners and losers. 

For example, the Lieberman-Warner bill would have imposed disproportionate 

costs on the supply of natural gas, gasoline, diesel, aviation fuel, and other petroleum products such as heating oil. This is the consequence of providing only three 

percent of the needed emission allowances for the fuels and natural gas sectors 

while granting some other sources of emissions as much as 300 percent of their 

needed allowances. 

These costs would have helped raise consumer prices, according to analyses by the 

U.S. Energy Information Administration and the Congressional Budget Office. And 

they would have seriously affected natural gas supplies and fuel production. A study 

by ICF International commissioned by API estimates the legislation would have reduced natural gas supplies by 12 percent and driven overseas some three million 

barrels per day or 17 percent of our refinery capacity. The shift in refinery capacity 

would also have meant lost jobs. A Wood Mackenzie study estimates greater reductions in natural gas supplies. 

The projected fall in natural gas supplies is troubling. Natural gas is relatively 

clean-burning. It produces barely half the greenhouse gas emissions of coal. A rational climate change policy should encourage more use of natural gas, not less. Indeed, the legislation, while at the same time it could reduce supplies, would also 

have spurred demand for natural gas, according to a recent Natural Gas Council 

study. 

The shifting of refinery capacity overseas also would have meant exporting rather 

than controlling some emissions. 

From our review of the Lieberman-Warner bill, we’ve identified additional shortcomings: 

It fails to establish a uniform national policy that coordinates with other legislation, Federal and State, to reduce redundancy and inefficiency. For example, it fails 

to safeguard against potentially triggering overlapping federal regulations for greenhouse gases under the Clean Air Act, NEPA, and the Endangered Species Act. 

It locks into an inflexible 40-year schedule of allowance allocations that fail to 

allow for mid-course corrections. 

And, it does not provide a sufficiently transparent signal of all the costs, which 

weakens the impact on consumer behavior. 

In short, a sound approach to managing greenhouse gas emissions that involves 

investment, equitable costs, consistent policies, and understandable signals still remains to be advanced. We hope to work with all of you and your colleagues to help 

make that happen. 

That concludes my remarks. I’d like to submit for the record two studies API commissioned on supply-side impacts of legislation and a report on investments into climate mitigation technologies. I would be happy to answer your questions. 

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Mr. BOUCHER. Thank you, Dr. Felmy. Those documents may be 

submitted as a part of your prepared statement and will appear in 

the record. 

Mr. Baugh. 

STATEMENT OF ROBERT C. BAUGH, EXECUTIVE DIRECTOR OF 

AFL-CIO INDUSTRIAL UNION COUNCIL AND CHAIR OF AFLCIO ENERGY TASK FORCE 

Mr. BAUGH. Thank you, Chairman Boucher. I would like to say 

on behalf of the 9 million members of the AFL-CIO, thank you for 

the opportunity to testify here today. We have been engaged in this 

process over the last 18 months with our energy task force working 

with the business community, the environmental community, community organizations and Members of the House and the Senate to 

work our way through and understand this and come to some conclusions, and we have. We found your white papers quite helpful 

that you issued from this committee. 

The AFL-CIO believes it is time for our Nation to take bold steps 

to meet the 21st century challenges related to climate change. We 

believe it is real. We believe something needs to be done and we 

support a new environmental economic development policy, both 

policies come together, it is not one or the other, with a balanced 

approach that ensures diverse, abundant, affordable energy supplies and creates good jobs for American workers that improves the 

environment. We do support a cap-and-trade program that is transparent and economy-wide, and note that the legislations under consideration do do that. We also believe they have to have timetables 

and standards that are sensitive to development and deployment of 

new technology and we think there is a problem there, and I will 

talk more about that in a second. 

We also believe there should be an economic development policy 

from cap-and-trade that has principles to it, one that domestic investment of the auction proceeds, we need to be sure of that, that 

do create jobs here, the capturing of cutting-edge technologies and 

the discouraging of the offshoring of the manufacturing and production of this work. I think the idea is—that is why it is economic 

development—to reinvest these dollars in our economy. And these 

investments need to be supported by an international component 

that provides both incentives and a border mechanism enforced 

through trade regime to encourage the rest of the world to engage 

in similar activities around climate change, and there must be adequate resources to address the needs of displaced workers and the 

communities that may be affected by this as well as low- and moderate-income relief from the cost of any such programs. 

We support a robust investment portfolio that includes carbon 

capture and sequestration technology, advanced technology vehicles, renewable energy and biomass, the electrical grid modernization, relief for low- and moderate-income workers, worker training 

and more, and the Senate bill certainly reflects that investment 

portfolio and we recognize that the Markey bill has similar investment portfolio pieces into it. It is not as spelled out as much in the 

Waxman legislation. 

225 

I want to make one statement. There is an immediate need that 

has been said by the previous panels for the investments in CCS 

technology, and I want to applaud this committee and the chairman and the members of this committee who have supported the 

carbon capture and storage early deployment act. This has to happen now. We can’t wait 2, 3, 4 years for the implementation of auction monies to come down the road, a very important step forward, 

and we applaud your actions on this. We are fully supportive of 

that. 

In the short term, there is a wide variety of actions that can be 

taken to capture the difference between the technology gap that exists here and the standards and timelines that are being proposed, 

and this includes the modernization of the grid, the retrofit of 

buildings, what we do about mass transit and home weatherization 

are all things that are technologies that are there that we can 

move on and make a difference to cut the demand. It is not going 

to solve the complete gap between the technology and the timeline. 

We supported caps and timetables in the Bingaman-Specter bill. 

There they come in shorter than the other ones that we were looking at in the other three pieces of legislation which are more stringent. I think those bills fail to recognize the technology gap that 

has been addressed here by other people, especially in the 2020 

time frame. That is where the big push is, and our concern is that 

that time frame and that standard and timeline will actually push 

the issue of fuel switching that has been discussed earlier on the 

panels this morning. 

We also support a very limited market approach with price control mechanisms. We did support the safety valve that has been 

talked about in the Bingaman-Specter bill. We have also looked 

with interest upon the emergency off ramp, as it was called, in the 

Lieberman-Warner legislation that was proposed that used borrowing and other mechanisms to address the idea that this is a 

cost control mechanism. 

We very much recommend a regulated and restricted trading system. We remain deeply, deeply troubled with a simple market-only 

approach that is open to speculation and windfall profits by individuals and entities such as hedge funds that are never going to 

use these carbon credits. We believe it should be restricted that the 

people actually have to buy them and use them. 

In addition, we are very concerned about the use of offsets. We 

should approach this cautiously. The international allowances need 

to be approached again with caution. We need to be sure that they 

can be verifiable and that they are actually permanent, and in fact, 

I met with two EU commissioners on their energy commission recently and discussed this issue, and in their phase II reform, they 

limited offsets to 15 percent. Their concern was that if they made 

them too readily available, their domestic industries would not 

make the investments in their own industries to make the changes 

that need to be made, a very interesting approach that I didn’t 

really realize what they had done until I had the chance to sit 

down and go through this with them. We want viable, competitive 

domestic industries. We want them to make those investments. 

We believe Congress needs to be better informed about the impact of cap-and-trade and the performance on energy-intensive inVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00233 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
226 

dustries. We have worked with the National Commission on Energy Policy. They are completing four studies of four major industries, steel, aluminum, chemical, part of the chemical industry, and 

paper, to really better understand the impact of a cap-and-trade 

program on these. Frankly, we have been operating with too little 

information about these impacts. We really look forward to these 

reports, which should be available in the next couple of weeks, is 

my understanding. 

We do support the inclusion of the international language that 

was in the Boxer-Lieberman-Warner package and the BingamanSpecter bill has been raised in the other legislation and we think 

it is an important step forward to addressing the part. We think 

there is additional steps that could be needed around that. We are 

very open to discussion on this but we think the international component is important in terms of sending the right signals that the 

whole world has go to do their part in this, and we shouldn’t move 

forward without that. 

We believe Congress also needs to take action to address the conflict between a State and Federal cap-and-trade programs, Alan 

Reuther mentioned in his testimony this morning. We fully concur 

that that is something that needs to be addressed. 

We have learned a lot as a committee, as a trade union over the 

last 18 months. We do believe there will be some price impacts to 

this. We believe they can be addressed. We also view this with optimism as we learned the rest of the world did when we participated 

in the negotiations in Bali that within crisis, there is opportunity, 

and we tried to take that point of view, and that is why we so 

strongly the investment portfolio that offers a view of how we invest in new technologies, in renewable energies, in our existing 

technologies to re-engineer them so that we do have clean coal. 

There is another way to do this and we do believe it is possible. 

Our only hurdle in this is the standards and timelines, the technology gap and the steps we take both to mitigate that and to move 

ahead for the future. 

Thank you. 

[The prepared statement of Mr. Baugh follows:] 

STATEMENT OF ROBERT C. BAUGH

Chairman Boucher, on behalf of the 9 million members of the AFL-CIO, I want 

to thank you and the members of the Subcommittee on Energy and Air Quality of 

the House Energy and Commerce Committee for the opportunity to testify this 

afternoon on this important subject. Our comments will focus on the Federation’s 

climate change initiatives in relation to the Climate Security Act of 2008 (S. 3036). 

Sponsored by Senators Boxer, Lieberman, and Warner; the Investing In Climate Action and Protection Act (H.R. 6186) sponsored by Representative Markey; the Safe 

Climate Act (H.R. 1590) sponsored by Representative Waxman; and the Low Carbon 

Economy Act (S. 1766) sponsored by Senators Bingaman and Specter. 

The AFL-CIO believes it is time for our Nation to take bold steps to meet the 21st 

Century challenges related to climate change. Scientific evidence has confirmed that 

human use of fossil fuels is undisputedly contributing to global warming, causing 

rising sea levels, changes in climate patterns and threats to coastal areas. Unrestrained growth in greenhouse gas emissions poses critical economic and environmental issues. This challenge is an opportunity to enact an energy policy that will 

result in a cleaner planet, greater energy efficiency, and the revitalization of our 

manufacturing base. 

The world is looking to the United States for leadership because we are the most 

energy-intensive nation in the world and one of its leading emitters of greenhouse 

227 

gas. Our Nation can lead a new technological revolution in the way energy is generated and used that can be of benefit to the world as a whole and serve as a foundation for the revival of the middle class in the United States. But to accomplish 

this, we need a strategic approach centered on domestic investment in new technologies and good jobs. And we need to lead in fostering a shared international response to this issue. 

POLICY AND PRINCIPLES

Over the past 18 months, our interaction with Congress and many other businesses, industry, environmental and international labor organizations, has helped 

evolve and sharpen the thinking of the AFL-CIO Energy Task Force. 

The February 2007 report by the AFL-CIO Energy Task Force recognized that ‘‘reliable and affordable electrical energy, is the lifeblood of the manufacturing, transportation, construction and service industries;’’ .and that we must ‘‘maintain diversity in the electric utility industry, by retaining all current generating options, including fossil fuels, nuclear, hydro and renewables, to ensure a stable, reliable and 

low-cost supply of electricity for the United States.’’ 

That report was also driven by our belief that a strong and diverse manufacturing 

base is in the national interest. This sector is in a deep and ongoing crisis. Since 

1998, some 3.9 million manufacturing jobs were lost and 35,000 manufacturing facilities closed while the nation amassed trillion of dollars in trade deficits. The 

offshoring of skilled work, R&D, design, engineering and more continues to erode 

our innovative and technical capacities. Solving the climate change crisis is an opportunity to address the manufacturing crisis. 

The AFL-CIO supports a new industrial policy, and an environmental economic 

development policy, which places manufacturing and trade at the center of a green 

economy program. New investment in a sustainable energy infrastructure must be 

structured to create good jobs and ensure stable energy prices. These must be supported by effective trade policies. Without these key elements, there is a serious risk 

of driving good jobs offshore into nations without emission regimes and far less carbon efficient production. 

A set of environmental economic development principles has helped guide the 

Federation’s efforts: 

1) Our Nation should embrace a balanced approach that ensures diverse, abundant, affordable energy supplies, creates good jobs for America’s workers, and improves the environment. 

2) Our Nation should adopt an economy-wide cap-and-trade program that is transparent and requires all sectors to come to the table to reduce their carbon emissions. 

It should have timetables and standards that allow for the development and deployment of new technology and should help finance the new technologies that can provide clean energy at prices close to conventional sources. 

3) Energy incentives and investments by the Federal Government must be based 

on a set of economic development principles that clean the environment and create 

jobs but will not encourage offshoring of manufacturing jobs. 

4) Investments must be used to identify, develop and capture cutting-edge technologies and to manufacture and build these technologies here for domestic use and 

export. 

5) The international component of any climate change cap-and-trade program 

must provide both incentives and a border mechanism enforced through a trade regime, to ensure that major developing nations, such as China and India, participate. 

6) There must be adequate resources to both address the transition needs of workers and communities adversely affected by legislation, as well as, financial assistance to assist low- and moderate-income families. 

The AFL-CIO is here today to reinforce these principles with the Energy and Air 

Quality Subcommittee, just as we have in every discussion held with staff and Members of Congress. 

INVESTING FOR THE FUTURE: GREENING THE ECONOMY

Meeting the future energy needs of the Nation while reducing our carbon footprint 

offers difficult choices and huge opportunities. It requires a commitment to major 

long-term investments, that these be invested domestically and that the technology 

and products resulting from the investments be produced domestically. In this way 

the Nation can maximize the outcomes from its investments by assuring that those 

dollars recirculate through the domestic economy. This is environmental and industrial policy working in harmony. All the legislation we are addressing today took 

steps in this direction. 

228 

The Markey and Waxman bills and Boxer-Lieberman-Warner and BingamanSpecter legislation all provided for an investment portfolio based on auction proceeds. The Waxman bill does not provide the level of detail that appears in the other 

bills. The AFL-CIO was most deeply engaged in the Senate stakeholder process that 

developed a robust portfolio in both bills. This included carbon capture and sequestration technology (CCS), advanced technology vehicles, renewable energy and biomass, electric grid modernization, relief for low- and moderate-income families, 

worker and community transition, worker training, and more. These investments 

were bolstered by domestic investment requirements and international provisions 

regarding the participation of developing nations, including a border mechanism. 

While the climate change bills all invest in CCS technology, those investments 

may be years away. There is an immediate need for investment in CCS technology. 

The AFL-CIO applauds the introduction of the Carbon Capture and Storage Early 

Deployment Act by Chairman Boucher. This legislation will create a non-governmental fund and entity to accelerate the deployment of carbon capture and storage 

technologies. This is an investment that needs to be made now so that the technology is available as soon as possible to meet the carbon emission standards of the 

future. 

In the short term, there are a wide variety of options for emissions reduction that 

can help bridge some of the gap between the coal technology of today and the carbon 

capture and sequestration technology of the future. There is also an enormous potential for energy savings and good jobs in making our economy more energy-efficient. The modernization of the 160,000 miles of high transmission lines that make 

up the electrical grid and the retrofitting public, industrial and commercial buildings and home weatherization also increase energy efficiency and create jobs. The 

expansion and increased usage of mass transit and passenger rail offers similar opportunities for the economy and the environment. 

Another important investment policy incorporated in the Senate legislation was 

to impede the ability of manufacturing firms to game the system simply for financial 

gain or to drive them offshore. Firms cannot collect credits for reductions achieved 

through closures, cutbacks, or outsourcing work. Only actively operating manufacturing facilities (including new facilities) receive allowances, and their allocation is 

based on the number of production employees at those U.S. facilities. The point of 

the system was to encourage a positive change in the domestic behavior of energy 

producers and manufacturers while retaining jobs and our technical capability to 

produce goods. 

The Bingaman-Specter, Boxer-Lieberman-Warner and Markey legislation all identified worker and community transition and worker training as critical investments. 

The Boxer-Lieberman-Warner identified major areas of worker investment, one of 

which corresponds with previous House legislation on green jobs. The worker and 

community transition is modeled after the best elements of TAA legislation and previous displaced worker legislation over the past 25 years. In addition to strong 

training, education, and counseling benefits it provides for wage replacement, health 

care, retirement bridges, and other forms of economic and social assistance. It also 

recognizes the burdens that may fall on communities heavily dependent upon an affected industry and offers community planning and other forms of economic development assistance. The green jobs training program is modeled after House legislation 

that encourages collaborative community and labor-management initiatives. 

CAP AND TRADE, TIMELINES AND COST CONTAINMENT

A cap and trade system begins with the actual cap and an emission standards 

timeline The AFL-CIO supported the standards and timeline within the BingamanSpecter bill. These were reasonable and recognized the linkage between standards 

and technical capability for mass deployment of new CCS technology. The caps and 

timetables established in the Boxer-Lieberman-Warner, Markey, and Waxman bills 

are more stringent. These fail to take into account the actual state of technology 

development and deployment necessary to achieve their proposed standards. 

The AFL-CIO believes that any approach for addressing greenhouse gas emissions 

must be done upstream on an economy-wide level, with contributions from each sector in proportion to the greenhouse gas emissions of that sector. Also, any auction 

of carbon permits should be reasonable in scope and must assure that no sector is 

disproportionately burdened. The Boxer-Lieberman-Warner, Bingaman-Specter, and 

Markey bills do take an upstream approach with the burden being shared across 

sectors. 

The AFL-CIO supports a limited market approach to cap and trade, with regulatory mechanisms that act as a price control to prevent any serious long-term damage to the economy. The Bingaman-Specter legislation contained a safety valve and 

229 

the Boxer-Lieberman-Warner legislation offered an alternative approach to controlling price spikes through a borrowing from the future mechanism with set pricing. 

The Waxman and Markey bills fail to provide similar protections. 

Carbon pricing has a direct relationship to fuel switching (from coal to natural 

gas) and that has serious consequences for the economy. The goal should be to encourage the adoption of new technologies like carbon capture and storage and discourage fuel switching. The AFL-CIO worked with the NCEP and members of the 

environmental community to identify the price triggers for fuel switching and ways 

to avoid this scenario. The Boxer-Lieberman-Warner bill did take this concern into 

account. 

Fuel switching is directly related to our ongoing concern over the cost containment measures, and any legislation’s timetable and standards for emission reductions in the 2020 period. While the Boxer-Lieberman-Warner bill offers one form of 

cost control it does not solve the problem of the 2020 standards in theirs and the 

Waxman and Markey bills. The stringent timelines will act as a trigger for massive 

fuel switching. It is in the 2020-2030 period that CCS technology should become 

available for mass deployment. But, the early aggressive targets will have already 

triggered the investment decisions for compliance. We urge that there be greater 

flexibility in the standards and timetable. 

MARKET FUNCTIONALITY

The Stern Commission cited climate change as the greatest market failure in history. Today, open and unregulated markets have left the Nation in a housing crisis, 

soaring food costs, world capital markets in turmoil, and still dealing with the fallout of Enron. Even as this testimony is being delivered Congress is looking into the 

role speculation and futures contracts are playing in oil, grain and commodities 

markets. Thus, we remain deeply troubled with a simple market-only approach that 

is open to speculation and windfall profits by individuals and entities that have 

nothing to do with carbon emissions. 

The open and ‘‘unlimited trading’’ initially proposed in legislation means that anyone, can buy allowances from a limited and declining pool. With well over 10,000 

firms needing allowances, we reject the notion that letting additional speculators 

(those not needing to use carbon emission credit) into the market to create more liquidity is neither necessary nor desired. However, letting these speculators in will 

create windfall profits and drive prices higher leaving consumers and industry to 

pay the price. 

In addition, the ability of purchasers to bank these allowances in perpetuity creates additional risks. While some would argue that unlimited banking might help 

business decision making, it also may lend itself to uncompetitive behavior in search 

of windfall profits or market advantage. 

Open access and unlimited banking leaves the system open to predatory and speculative trading practices, the hoarding of allowances and windfall profits that will 

fuel volatile pricing in the market. This will have a direct and detrimental pricing 

impact on the public, utilities sector, and energy-intensive industries. 

The AFL-CIO believes that the goal of any climate change legislation with a cap 

and trade program is to move industries and consumers to change behavior and 

lower carbon emissions. The Federation recommends a regulated and restricted approach to the trading of allowances. We believe that: • Market participation (as purchasers not sellers) should be limited to firms that 

intend to use the allowances. With an accurate carbon footprint and a declining pool 

of allowances, available prices will rise but not be artificially inflated by speculators. •The banking of allowances should be limited and regulated to avoid non-competitive and speculative behavior. There needs to be a limit on the amount of allowances 

any particular firm can bank related to its actual needs. In addition, there should 

be a ‘‘time certain’’ by which a firm must use the allowances or revert back to the 

auction pool. A firm would always be able to reenter the market and bank a limited 

amount for a limited duration. These steps will help create a more certain, less speculative, trading environment. •The allowances and market will be created for buyers and sellers who need to 

use them. Purchasing and retirement of allowances should be limited to entities regulated by state performance or efficiency standards in any sectors covered under the 

federal cap-and-trade program seeking to meet state standards more stringent than 

any comparable Federal standards, by purchasing and retiring Federal allowances. 

OFFSETS AND INTERNATIONAL ALLOWANCES

The use of offsets and international allowances as tools for cost containment needs 

to be approached with caution so that the outcomes sought for the long run, a cleanVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00237 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
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er planet and viable competitive domestic industries, are achieved. It is in our interest to assure that domestic industry makes the needed investments in transformational technology. Our concern is that these investments will be deferred with 

the easy availability of less expensive offsets and allowances. This would be a formula for business closure in future years. 

In recent meetings with EU officials and European traders, the AFL-CIO has 

learned that the EU had the same concerns in mind with their recently implemented phase II reform. Under their system, offsets are limited on average to 15% 

because they fear that too many easily obtained offsets will undermine efforts to assure that domestic investments for mitigation are made. They want viable competitive clean industries in their countries. The EU does not have domestic offsets only 

international offsets. To date their experience with international offsets has been 

problematical and filled with concerns over the validity of these offsets. 

The AFL-CIO remains concerned about the ability to monitor the legitimacy of domestic and foreign offsets. The Boxer-Lieberman-Warner legislation recognized 

these concerns and took steps to assure their legitimacy. However, this bears further examination. Project based international offsets may interfere with the adoption of a systematic carbon emission regime in the Nation selling the offsets. Additionally, offsets must be both verifiable and there must be enforcement mechanisms 

in place to assure that investments into allowable offsets actually result in the reductions of green house gasses. 

The idea should be to use these tools to help a firm balance that transition, but 

not to avoid making needed industry investments. The need for flexibility in the use 

of offsets and international allowances should be tempered with requirements that 

the purchasers must also be making progress with domestic investments to improve 

carbon emission performance. This needs to be made explicit in the legislation. 

ENERGY INTENSIVE INDUSTRIES

There is far too little known about the impact of a cap-and-trade program on energy intensive industries such as steel, aluminum, paper, chemicals, airlines and 

others. The AFL-CIO has raised this issue consistently through the stakeholder 

process on the Senate bills. The Federation encouraged a set of economic impact 

studies that the National Commission on Energy Policy has commissioned for the 

steel, aluminum, paper, and chemical industries. These will be finished within the 

next few weeks. The Boxer-Lieberman-Warner legislation recognized this concern by 

making additional free allocations of allowances available for these sectors. The 

NCEP studies will be a valuable source of data to help inform future decision-making. 

There needs to be additional analysis of the economic impact on other sectors such 

as the aviation industry. The Airline Pilots Association points out the acute situation of this sector and its price sensitivity. Record fuel prices have wreaked havoc 

on the airline sector with four air carriers having ceased operations and more than 

9,000 airline employees having lost their jobs this year and thousands more facing 

furlough this fall. The industry like others has a record of accomplishments in reducing GHG and conserving fuel, but fuel costs, industry consolidation, and a weakening economy will continue to threaten our national aviation system for the foreseeable future. Congress needs to be better informed on the impact of cap and trade 

and performance of energy intensive industries so that these factors can be taken 

into consideration when crafting legislation. 

INTERNATIONAL ASPECTS: THE NEED FOR A GLOBAL SOLUTION

The inclusion of an international section in the Boxer-Lieberman-Warner, Bingaman-Specter, and Markey bills to assure that our industries and workers are not 

put at a competitive disadvantage with our trading partners is an important step 

forward. The Waxman bill does not address this concern. It has been a critical issue 

for our support of any legislation. The AFL-CIO believes that having a dynamic and 

healthy industrial base is in the best interest of the Nation and we must do our 

best to cut our carbon emissions. However, this cannot be a go it alone proposition. 

The participation of developing nations is critical to solving this problem, while 

assuring the competitiveness of U.S.-based manufacturing. Mexico and Brazil account for more than half the emissions from Central and South America. Deforestation is estimated to account for 20–30 percent of carbon emissions with the burning 

of forests in the Amazon basin acting as a major contributor. 

In 2007 China passed the United States in carbon emissions. They have a new 

‘‘1950’s technology’’ coal plant coming online every week with 500 plants being 

planned. They are dirty but cheap to build. Unabated, by 2030 China’s emission will 

grow 139 percent and make up 26 percent of the world’s total. They and other major 

231 

developing nations must be part of the solution or everything we the EU and other 

nations do to cut carbon emissions will be for naught. 

There is a second economic implication of the non-participation of these nations. 

China and other rapidly developing countries are already a magnet for manufacturers seeking to avoid labor, environmental, currency, and other standards. Seventy 

percent of China’s foreign direct investment is in manufacturing, with heavy concentration in export-oriented companies and advanced technology sectors. Much of 

this energy resource will be dedicated to China’s manufacturing export platforms, 

which already account for nearly 40 percent of Chinese GDP. 

To put it bluntly, it is not in our national interest to see our efforts to reduce carbon emissions become yet another advantage that a developing nation uses to attract business. However, it is in our interest and the worlds interest to have developing nations become part of the solution because the problem cannot be solved 

without them. 

While we applaud the inclusion of international language in the Senate and Markey bills there is more that can be done to strengthen them. For example, the coverage should include more finished products. The AFL-CIO stands ready to work 

with Congress to address the critical issue of international competitiveness. 

FEDERAL AND STATE ISSUES

Many states have enacted or are considering measures to reduce greenhouse gas 

emissions. This includes state or regional cap-and-trade programs, performance or 

efficiency standards relating to autos, utilities, fuels and other sectors covered under 

the cap in the federal legislation, as well as, initiatives in areas outside of the cap 

(e.g. building codes, conservation, transportation planning). 

The Boxer-Lieberman-Warner, Markey and Waxman bills all preserve existing 

state authority to regulate greenhouse gases. However, the Boxer-Lieberman-Warner and Markey bills also supersede pending litigation over the scope of that authority, and make it clear that California and other states may regulate auto CO2 tailpipe emissions. In addition, the Boxer-Lieberman-Warner, Markey and Waxman 

bills all fail to deal with the important issue of how state climate change measures—whatever their scope—will interface with the federal cap-and-trade program 

In exchange for the establishment of the federal cap-and-trade program, the states 

should be pre-empted from having state or regional cap-and-trade programs affecting the sectors covered under Federal legislation. This would prohibit state programs that cap emissions from the electric power, transportation or industrial sectors, or require the purchase, sale or retirement of allowances in these sectors. This 

is necessary to prevent regulated entities from having to submit duplicative allowances for the same ton of carbon, and to establish a level national playing field for 

an economy-wide emissions trading program. 

The Federal cap-and-trade program should be the exclusive Federal authority for 

dealing with greenhouse gas emissions from those sectors covered under the cap. 

This is necessary to prevent EPA from issuing regulations that impact these sectors 

and have the effect of overriding the decisions made by Congress in the cap-andtrade program concerning the stringency of the federal cap, the point of regulation, 

and the distribution of economic burdens. EPA should retain any existing authority 

it may now have under the Clean Air Act to regulate in sectors that are outside 

the cap. 

CONCLUSION

The AFL-CIO believes climate change is both a crisis and an opportunity for our 

nation. By taking the right legislative steps—timelines, standards and a safety 

valve sensitive to the economic impacts on business, workers and communities, assuring that our investments capture the intellectual property of cutting edge technology, by producing these new technologies and goods domestically, and engaging 

the developing world in the solution -- we can have a cleaner planet, greater energy 

efficiency and a revitalized manufacturing base. 

The Federation looks forward to working with Congress to achieve these goals. 

SUMMARY

The AFL-CIO believes it is time for our Nation to take bold steps to meet the 21st 

century challenges related to climate change. We support a new environmental economic development policy with a balanced approach that ensures diverse, abundant, 

affordable energy supplies, creates good jobs for America’s workers and improves the 

environment. We support a cap and trade program that is transparent, economyVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00239 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
232 

wide with timetables and standards sensitive to development and deployment of 

new technology. 

Investments from cap-and-trade should be based on a set of economic development 

principles: domestic investment of auction proceeds, job creation, capturing cuttingedge technologies and discouraging offshoring. These investments need to be supported by an international component that provides both incentives and a border 

mechanism enforced through a trade regime. And, there must be adequate resources 

for displaced workers and their communities and for low and moderate-income families. 

The AFL-CIO supports a robust investment portfolio that includes: carbon capture 

and sequestration technology (CCS), advanced technology vehicles, renewable energy and biomass, electric grid modernization, relief for low- and moderate-income 

families, worker, and community transition, worker training and more. There is an 

immediate need for investment in CCS technology. We applaud the Carbon Capture 

and Storage Early Deployment Act by Chairman Boucher. In the short term, there 

are a wide variety of options for emissions reduction that can help bridge the technology gap: modernization of the electrical grid, building retrofits, home weatherization, improved mass transit, and the renewable energy and biofuels initiatives already underway. 

The Federation supported the caps and timetables in Bingaman-Specter. The 

other bills are more stringent and fail to recognize the technology gap that exists 

especially in the 2020 timeframe. This can trigger fuel switching. Also, we support 

a limited market approach with price control mechanisms, i.e., the safety valve in 

Bingaman-Specter. The Boxer-Lieberman-Warner legislation offered an alternative 

approach. 

The Federation recommends a regulated and restricted trading system. We remain deeply troubled with a simple market-only approach that is open to speculation and windfall profits by individuals and entities like hedge funds. In addition, 

the use of offsets and international allowances needs to be approached with caution 

so that the outcomes sought for the long run, a cleaner planet, and viable competitive domestic industries, are achieved 

Congress needs to be better informed on the impact of cap and trade and performance of energy intensive industries. The inclusion of international language in the 

Boxer-Lieberman-Warner, Bingaman-Specter, and Markey is an important step forward in addressing part of that concern but additional steps are needed. Congress 

also needs to take action to address the conflict between State and Federal cap and 

trade programs. 

The AFL-CIO believes climate change is both a crisis and an opportunity for our 

nation. The Federation looks forward to working with Congress on this landmark 

legislation. 

Mr. BOUCHER. Thank you very much, Mr. Baugh. 

Ms. Figdor. 

STATEMENT OF EMILY FIGDOR, DIRECTOR, FEDERAL GLOBAL 

WARMING PROGRAM, ENVIRONMENT AMERICA 

Ms. FIGDOR. Thank you for the opportunity to share my views regarding these legislative proposals. My name is Emily Figdor and 

I am the director of the Federal Global Warming Program at Environment America. Environment America is the new home of U.S. 

PIRG’s environmental work. We are a federation of State-based, 

citizen-funded environmental advocacy organizations. 

My testimony today outlines three principles for strong, effective 

and fair global warming legislation and provides an overview of 

how well five major House and Senate bills fulfill those principles. 

Twenty years ago this summer, NASA scientist James Hansen 

appeared before Congress for the first time to warn the American 

people of the dangers posed by global warming. Today thousands 

of families in the Midwest are struggling to recover from devastating floods. The extreme rainstorms that caused those floods 

have become more common over the last 60 years and scientists 

predict they will become even more common in a warming world. 

233 

These events remind us that inaction has consequences. It is vital, 

therefore, that we listen to what scientists are telling us today. 

They say that the United States and the world must begin reducing global warming pollution now and achieve steep reductions 

soon if we hope to avoid the most catastrophic impacts of global 

warming. 

While achieving these reductions is a challenge of historic scale, 

the United States has the energy efficiency and renewable energy 

technologies to reduce emissions. A 2006 Environment America 

analysis found that the United States could reduce its emissions by 

nearly 20 percent by 2020 by taking just five technologically feasible steps to improve energy efficiency and use more renewable energy, and these solutions would also make America more energy 

independent, reinvigorate our economy and create good, new jobs 

here at home. 

To get us there, Congress must pass global warming legislation 

that fulfills three principles. First, the legislation must be strong 

enough to get the job done, meaning that it must be able to deliver 

the domestic emission reductions that science tells us are necessary 

to prevent the worst effects of global warming. That means reducing total U.S. global warming emissions by at least 15 to 20 percent by 2020 and by at least 80 percent by 2050. Second, the legislation must accelerate the transition to clean energy economy. Capping global warming pollution while subsidizing polluters is like 

gunning the engine of a car while riding the brake. By contrast, 

smart climate policies that pair a carbon cap with investments in 

clean energy technology and infrastructure can shift America’s energy transition into high gear. Finally, the legislation must maximize the benefits of our investments in clean technologies and minimize societal costs. 

Any response to global warming will have an impact on American families. All Americans will benefit from a cleaner and more 

efficient economy that is less dependent on foreign oil. But some 

families may also experience increased burdens. It is important 

therefore that any climate policy is designed to maximize the benefits American families will reap in terms of cleaner air, improved 

energy efficiency and greater energy independence and minimize 

the costly experience in terms of higher energy bills. Studies including one released just yesterday by CBO show that auctioning 

emission allowances and returning some or all of the auction revenue to the American people reduces the societal cost of the capand-trade program. By auctioning allowances, we can assure that 

precious dollars are not siphoned away to unjustly pad the profits 

of Big Oil and other fossil fuel industries. At the same time, we can 

redirect those dollars towards the achievement of two very important goals: helping Americans make the transition to a clean energy economy and making that transition easier by returning some 

of the money to Americans who face the greatest burden from energy costs. 

Turning to the legislation before us today, Congressman Waxman’s Safe Climate Act and Congressman Markey’s ICAP bill meet 

these three principles for strong, effective and fair climate legislation. Unfortunately, the Senate bills do not. First and foremost, the 

Senate bills would not achieve the degree of emission reductions 

234 

demanded by the science. Two of the bills have weak emission reduction targets and all three include mechanisms that undermine 

the ability of the legislation to achieve their targets. These mechanisms include a price cap, a cost containment auction and largescale offset programs. These mechanisms are designed to contain 

costs. However, there are other ways to contain costs in cap-andtrade programs that will enhance rather than jeopardize the environmental integrity of the legislation. An analysis conducted for 

the Regional Greenhouse Gas Initiative shows that increasing investments in energy efficiency can significantly reduce allowance 

price as well as overall increases in energy prices that result from 

the cap-and-trade program. Legislation that incorporates improved 

energy efficiency standards, the removal of non-market barriers to 

energy efficiency improvements and vigorous financial support for 

energy efficiency would reduce compliance costs while preserving 

the program’s environmental integrity. 

Thank you for the opportunity to present these views today. I 

look forward to working with the subcommittee and the full committee to craft strong, effective and fair global warming legislation. 

[The prepared statement of Ms. Figdor follows:] 

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Mr. BOUCHER. Thank you very much, Ms. Figdor. 

Mr. Grumet. 

STATEMENT OF JASON S. GRUMET, EXECUTIVE DIRECTOR, 

NATIONAL COMMISSION ON ENERGY POLICY 

Mr. GRUMET. Thank you very much, Chairman Boucher, Ranking 

Member Upton and Mr. Barton. On behalf of the National Commission of Energy Policy, I appreciate the opportunity to be here with 

you today and I appreciate the three of you sticking with us. It is 

a testament to your commitment to this tough discussion. 

Mr. Chairman, in 2001, the National Commission on Energy Policy brought together a group of 20 diverse leaders, diverse both in 

expertise, in ideology and political history. We brought together an 

aggressively bipartisan group of leaders from the energy industry, 

from organized labor, leaders in the environmental advocacy, consumer advocacy communities and officials from the past three Administrations, and our goal was simple. It was to develop a set of 

principled, detailed, and pragmatic compromises across the energy 

policy debate. On climate change, as you can imagine, we had some 

spirited, at times contentious discussions but I was pleased that in 

December of 2004 we were able to release a set of recommendations which were unanimous. Our group concluded that the problem was real and that there was an imperative to act. We also concluded that it was possible, in fact, to develop a well-designed program that had a mandatory economy-wide cap on greenhouse gas 

emissions that would achieve our environmental imperatives while 

at the same time accelerating necessary technology and protecting 

the economy. We elaborated those recommendations in a report in 

2004 and updated recommendations in 2007, and we have appreciated the interest of this committee in our work to date. 

Mr. Chairman, the differing views reflected here today are evidence of the work that we have yet to do. At the same time, the 

work of this committee, the bills before this testimony and the testimony that I think we have all heard is a sign of some optimism 

because it reveals that there is a growing center of gravity around 

a number of key themes. I believe that we see that the discussion 

is moving towards support for an economy-wide cap that is upstream in the energy food chain and that targets investments to 

clean technologies and towards consumer protection. I also believe 

it is clear that we are going to have to have a program that limits 

costs and links the actions of the United States to what happens 

in the rest of the world. 

I want to commend Chairman Dingell and his staff and staff of 

the committee for the white papers on costs, on international competitiveness and on the Federal-State relationship because we on 

the Energy Commission believe that these in fact are the three key 

issues that are going to have to be resolved in order to build the 

kind of bipartisan consensus that we need for action, and I guess 

I would like to just follow the lead of the committee and try to telegraph where we see some of the kernels of optimism for the kinds 

of principal compromise that we think are both possible and necessary. 

Mr. Chairman, first on cost, while acknowledging the problem, 

there are some who still would argue that we should solve this 

247 

problem at no cost. There are others who argue that the imperative 

is so great that we should do whatever is necessary regardless of 

cost. I think our commission believes, and it is, I think, a rather 

obvious conclusion, that of course there has to be a middle ground, 

a middle ground that allows the market to work, that creates real 

incentives for the economy to innovate but that provides predictable and transparent costs at the outset of a program. Within our 

organization and our commission, we found very sincere and intelligent people reach incredibly distinct and different positions on the 

expected costs of climate action based on a number of reasonable 

and different assumptions. We found after a year of having ‘‘my 

modeler is smarter than your modeler’’ discussions, there was a 

better way forward and it was a way that allowed people to have 

their disagreements and still in fact advance a mandatory program. 

It was to have an agreement that didn’t at the end of the day require one side to say trust me to the other side. We think that a 

safety valve is the most transparent and obvious way to do that. 

We have worked with folks in the Senate to find other mechanisms 

that we think can provide the same kind of predictable and transparent cost containment and we believe that it is going to have to 

be part of the ultimate solution. 

On the important issue of international competitiveness, the 

entry points in this discussion, I think, are well known. They are 

a decade old. It is the Kyoto fight. It is the on one hand, America, 

go fix it, and on the other hand, let us wait to be led by others. 

Again, of course, this is not where the solution lies. The Energy 

Commission recognizes that this is global warming and not American warming. We recognize that we cannot afford to design a program that is going to export jobs and import carbon. We have to 

link what we do here in the United States to what happens or 

doesn’t happen in the rest of the world. 

At the same time, the story of our country is not waiting to be 

led by others to solve problems that we believe are real. We believe 

this problem is real and we believe the U.S. is going to have to 

take real action. The solution, we believe, is a combination of positive incentives for technology investment, both here and overseas, 

and countervailing trade measures that will ensure that if other 

major nations, major emitters and trade partners, do not take in 

fact real action, that there will be consequences. We are, I think, 

appreciate of the work that our friends in organized labor have 

done along these lines and think that this provides a pathway for 

future discussion. 

Finally, on the question of the great federal republic in which we 

live, the relationship between Federal Government and States in 

solving this problem again, the outlines of the debates are simple. 

Some would argue that Federal action has to provide a complete 

and total preemption of all State activities, otherwise chaos would 

reign. Others say that because of States’ rights, States should be 

able to do whatever in fact they want and have what would ultimately be duplicative regulation. Of course, the answer is somewhere in the middle. We believe that there has to be and is a path 

forward that would acknowledge the leadership that States have 

taken to date that provides both tolerance and incentives for States 

to take on complimentary efforts that achieve energy efficiency and 

248 

address what they have unique ability to do, but ensure that State 

efforts do not create a muddle of currencies. We have to have a consistency across the program that allows for a single national currency for the market to function if we are going to protect the environment and protect the economy. 

So let me just close with one more point of optimism and that 

is to recognize that this committee has quite a history of both fullthroated and active debate but also tackling incredibly complicated 

issues like the Clean Air Act and bringing forth a compromise that 

not only has the substantive integrity but the political pragmatism 

to move the legislation. It is that kind of leadership that we are 

going to have to rely on here. The National Commission on Energy 

Policy, our parent organization, the Bipartisan Policy Center, is 

eager to continue to work with you as a resource along the way. 

Thank you for your time. 

[The prepared statement of Mr. Grumet follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Grumet. 

Mr. Scott. 

STATEMENT OF DOUGLAS SCOTT, DIRECTOR, ILLINOIS 

ENVIRONMENTAL PROTECTION AGENCY 

Mr. SCOTT. Thank you very much, Chairman Boucher, Ranking 

Member Upton, Ranking Member Barton, Congressman Burgess. 

My name is Doug Scott. I am director of the Illinois Environmental 

Protection Agency. On behalf of Governor Blagojevich, I appreciate 

the opportunity to speak to you today, and let me also add my 

thanks for the work that this committee has done and will continue 

to do, not just today but the white papers have been very good 

about teeing up a lot of the issues that all of us are facing, so we 

appreciate that. 

I have had the opportunity in my position to work on this issue 

from a number of different perspectives. First, in Illinois, we studied the issue. I chaired a taskforce that made 24 separate recommendations to the governor as to how we could reduce greenhouse gas emissions in Illinois back to 1990 levels by the year 

2020. I have served as vice chairman of the Climate Registry, 

which is 39 States, nine Canadian provinces, six Mexican states 

and three Native American tribes which have gotten together 

working on developing and have developed a voluntary protocol for 

greenhouse gas registry and now we are working on coordinating 

that with States that have mandatory reporting jurisdictions as 

well. I chair the Air Committee for the Environmental Council of 

the States, which has passed a resolution on this very issue about 

the States’ role in federal climate legislation. Illinois is part of the 

Midwestern Governors’ Association Greenhouse Gas Accord. Six 

Midwestern States and the province of Manitoba are working to develop right now a Midwestern cap-and-trade program similar to the 

initiatives going on with the Western Climate Initiative and the 

Regional Greenhouse Gas Initiative, and finally, Illinois was one of 

18 signatories to the Governors’ Declaration on Climate Change, 

which was presented 2 months ago at Yale University, and that 

document sets forth some guiding principles to help develop a State 

and federal partnership on climate change. 

I set all those initiatives out just as a way of trying to demonstrate all of the commitments that States are making towards 

addressing this issue and have been making for some time, but 

rather than all of those things being at odds with each other, there 

actually are some fairly unifying principles through all of those different organizations. 

First is the assertion that there needs to be a meaningful greenhouse gas emission reduction plan, and for it be effective, States 

will have to play a major partnership role with the Federal Government, an that role also needs to be carefully and robustly delineated in whatever legislation comes from Washington. There is the 

practical necessity of having States implement pieces of the program, whether that is permitting or monitoring as we do in so 

many other major environmental policies, and the reality that 

States and localities are uniquely situated to best implement portions of plans. Things like renewable portfolio standards, land use 

and building codes come to mind. But in addition, there is also the 

259 

realization, and we have heard it expressed already today, that federal cap-and-trade legislation by itself may not go far enough to 

reach the levels of reductions that are ultimately needed. States 

will be in the position to implement complementary programs to 

help provide further reductions. 

But beyond that, States have been working on this issue, some 

of them for years, and have already developed programs that are 

working to provide significant reductions. In addition, the debate 

on the Senate floor 2 weeks ago highlighted issues and we have 

heard a lot of them here today as well that have already been studied in a lot of the States. Many of us have researched what reduction strategies mean to us, to our economies, to our employment 

outlook, and all of this information we believe can help inform and 

shape the federal debate. For example, in Illinois, modeling done 

in conjunction with our climate change advisory group demonstrated that implementing a comprehensive set of reduction 

strategies could actually provide economic gains as compared to a 

business-as-usual strategy. 

And second, because there has been and continues to be so much 

effort by the States and regions, national policy should reward that 

early action and provide incentives to promote future State innovation and action. As a manner of achieving this goal, funding that 

results from revenues raised through a cap-and-trade system 

should in part be directed towards specifically targeted objectives 

that result in greenhouse gas reductions, be they implemented 

through the States or through the Federal Government. 

Third, funding for new and innovative technologies is critical. In 

Illinois, we have had the experience of dealing with FutureGen, a 

project that we worked very hard to advance, only to have the 

funding pulled by DOE after a location in Illinois was selected for 

construction. We obviously continue to be strong supporters of that 

project and we are supportive of funding being targeted to help 

bring new technologies to commercial application. For instance, we 

have permitted an IGCC plan in Illinois that is capable of carbon 

capture and sequestration but to have commercial viability, there 

are other incentives that are going to be necessary, and I appreciate the work, Chairman Boucher, that you have done in recognizing that and introducing your legislation along with many cosponsors to provide a mechanism to fund innovative technologies. 

Fourth, we believe a federal program should utilize the work of 

the Climate Registry in developing a national greenhouse gas registry, and finally, legislation should acknowledge the ability of the 

States to go beyond federal requirements, a framework that has 

served us well in numerous major initiatives including the Clean 

Air Act and the Clean Water Act. We believe that this can be accomplished without interfering with federal cap-and-trade programs and other important federal greenhouse gas strategies. For 

example, States are not interested, I don’t believe, in having different currencies for greenhouse gases nor are they interested in 

charging businesses twice for the same ton of greenhouse gas. 

I thank you for allowing me to share these thoughts. We have 

a tremendous opportunity to work together and do something historic here, and I look forward to the opportunity to work with you. 

Thank you again. 

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[The prepared statement of Mr. Scott follows:] 

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Mr. BOUCHER. Thank you, Mr. Scott. 

Mr. Mullett. 

STATEMENT OF RANDAL MULLETT, VICE PRESIDENT, 

GOVERNMENT AFFAIRS, CON-WAY, INC. 

Mr. MULLETT. Thank you, Mr. Chairman. My name is Randal Mullett. I am a vice president with Con-way. It is a $4.7 billion 

trucking and logistics company. We employ 30,000 people at nearly 

500 locations across the United States. We operate 11,000 tractors, 

40,000 trailers, and we run about a billion miles every year on the 

Nation’s highways and roads. Today I am also representing the 

American Trucking Association, where I serve as vice chair of their 

environmental and energy policy committee. 

While cap-and-trade continues to be the primary mechanism 

being discussed to promote carbon reductions, it is much more effective when applied to stationary sources rather than extremely 

diversified mobile sources such as trucking. We appreciate that the 

committee has taken the time to examine and address the uniqueness of the transportation industry in its white paper, Scope of a 

cap-and-trade System. 

As you know, commercial trucks are used for goods movement, 

not pleasure. There are very few discretionary miles. We are very 

concerned about the effect that any cap-and-trade system will have 

on our ability to deliver the Nation’s freight. There are no commercially viable hybrid line-haul trucks and truck fuel economy has remained stagnant for some time, leaving us few options. ATA will 

be working closely with the U.S. DOT and the National Academy 

of Sciences in the evaluation of fuel economy and fuel efficiency 

standards as directed under the Energy Information Security Act 

of 2007. 

The trucking industry is concerned about what a cap-and-trade 

system will do to the price of fuel. At today’s diesel prices, it costs 

over $1,400 to refuel a typical truck. Over 1,000 trucking companies failed and over 10,000 independent operators, drivers and employees lost their jobs in the first quarter of this year alone, and 

there is a direct correlation between these failures and the price of 

fuel. Significant fuel cost increases resulting from cap-and-trade 

will only exacerbate this problem. 

The trucking industry also supports safeguards that ensure carbon regulations do not inadvertently disrupt fuel supplies for the 

commercial transportation sector. As you know, we cannot choose 

the fuel we use to transport goods and we cannot decouple economic growth from the growth of freight transportation. If not anticipated and safeguards not included in legislative proposals, a 

cap-and-trade on mobile sources could disrupt the amount of diesel 

fuel available to motor carriers. This may happen if the current 

mix of mid-level distillates that includes diesel fuel, jet fuel, home 

heating oil, and kerosene is changed or it lags behind demand or 

it is diverted to other uses. We fear that a cap-and-trade may also 

have the effect of reducing domestic refining capacity and shifting 

it to regions outside the country, further increasing costs, and putting the supply of on-road diesel at risk. 

The trucking industry supports federal preemption of State, local 

and regional climate change laws to avert a regulatory patchwork 

273 

which would hamper the efficient delivery of the Nation’s goods. In 

the absence of federal guidance, other governmental entities are 

taking independent action. If federal preemption is not enabled, 

ATA would ask that the Congress exempt entities involved in the 

interstate transport of goods. 

The trucking industry is keenly aware of the need to find real 

solutions to reduce carbon emissions. We have recently unveiled a 

bold sustainability program that will have an immediate impact on 

the environment, reducing fuel consumption by 86 billion gallons 

and reducing the carbon footprint of all vehicles by nearly a billion 

tons over the next 10 years without restricting the deliver of the 

Nation’s goods or placing undue economic hardship and regulatory 

burden on the trucking industry. 

ATA’s recommendations set out real solutions, though low-tech, 

for our industry that are achievable today to significantly reduce 

greenhouse gas emissions. The six key recommendations set out in 

the ATA program are: enact a national 65-mile-an-hour speed limit 

and govern new truck speeds to 68 miles per hour, decrease idling, 

reduce highway congestion through highway infrastructure improvements, increase fuel efficiency through participation in EPA’s 

SmartWay programs, promote the use of more productive truck 

combinations, and support a national fuel economy standard for 

medium- and heavy-duty trucks. 

In closing, ATA requests that Congress consider funding research 

and development in the areas of new engine technologies, truck 

aerodynamics, low-carbon fuels, tires, batteries, hybrids, and other 

energy-saving technologies that are specific to the operation of linehaul trucks. Technology advancements have been stalled for many 

years and an infusion of funding incentives is critical to developing 

the next generation of more efficient and lower- carbon-emitting 

trucks. We as an industry look forward to working with you to help 

reduce our carbon footprint. Thank you. 

[The prepared statement of Mr. Mullett follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Mullett, and the committee’s thanks to all of the witnesses for their testimony this 

afternoon. 

Mr. Baugh, let me begin with you, and thank you first of all for 

the endorsements you provided a few moments ago for the special 

fund that Mr. Upton and I and several other members, Mr. Barton, 

are proposing in order to accelerate the arrival of carbon capture 

and sequestration technologies. We appreciate very much that 

strong statement of support and your assistance with that. It will 

be most welcome. 

I want to question you for a moment about the statements you 

made during your testimony about that critical early schedule for 

taking greenhouse gas reductions and the time frame in question 

is the time between the effective date of the legislation and the 

time when carbon capture and sequestration technologies become 

available. During that time frame, if the schedule for required reductions is too rapid and too severe, coal-fired electric utilities 

would have no way to meet that schedule through regular cost containment mechanisms. They could not meet it by installing efficiency or by purchasing credits or offsets, borrowing from the future or other similar kinds of means. If they were forced because 

of a very rapid required schedule for reductions to stop using coal, 

they would naturally default to the next cheapest fuel, which is 

natural gas, and in your testimony you talk about economic dislocation that would occur rather broadly across the country should that 

fuel switch occur, and my question to you is whether or not you 

have done any estimates of job losses that might come in the manufacturing sector or perhaps other sectors of the economy where 

you have an opportunity to represent the workers that might happen if that schedule in the early years is too severe and dramatic 

fuel switching from coal to natural gas takes place. 

Mr. BAUGH. Mr. Chairman, no, we have not. We have worked, as 

I said, with the National Commission on Energy Policy and urged 

them, and they have done so to look at the impact of this on energy-intensive industries, of how cap-and-trade impacts that. I 

think the point is that we are concerned about the fuel switching. 

I mean, we believe CCS is a viable technology and we really need 

to move it and we need to speed up the timeline as much as possible but everything I hear from the science and the industry and 

looking at it says that chart we saw earlier really reflects that it 

won’t—2020, 2025 is when you can get to the era of mass deployment and it just doesn’t match up with these. We don’t want to 

trigger the fuel switching. That has other cost consequences in and 

of itself. We have not done any estimates, and I am not making 

claims about the displacement of workers or industries relating to 

it but that is not an answer in terms of where we need to go to 

solve this problem. 

Mr. BOUCHER. I noticed that from your testimony that you are 

working, I think, with Mr. Grumet on a series of economic studies. 

What do those studies target? Are they targeting what happens in 

the absence of proper border adjustments? Are they targeting the 

effect on jobs in the United States of various cap-and-trade scenarios? What are the questions you are asking in your studies? 

288 

Mr. BAUGH. I don’t want to speak for Mr. Grumet. They are really his studies. 

Mr. BOUCHER. Oh, all right. 

Mr. BAUGH. But I know what we were trying to get when we 

began to ask, we said we really—there has been so much talk 

about the impacts of this legislation and we really looked around 

and found very little information in terms of how it affects these 

energy-intensive industries, and there is more than four but we 

looked at four big ones. The four that happen to be mentioned in 

the international trade component of the language as it turns out 

is energy-intensive industries. We really wanted to understand various scenarios of cap-and-trade and how it may impact those. What 

is the job impact, will it lead it displacement, will these industries 

remain competitive, some fundamental questions. 

Mr. BOUCHER. All right. Mr. Grumet, do you know when those 

studies might be forthcoming and can you tell us if you intend to 

make any recommendations for the Congress based on them? 

Mr. GRUMET. I appreciate Bob’s confidence that they will be 

ready in a couple of weeks. I hope he is correct, and of course, we 

would be eager to share those with you. These studies are not explicitly focused on making policy recommendations. I think Bob 

laid out—the question is right, and that is, I think we all recognize 

that sound carbon policy has to make sure that we are not in fact, 

as we said, exporting jobs and importing carbon, and so the first 

question is, well, what would the impacts actually be on internationally competitive energy-intensive industries? I think there is 

a lot of anxiety about that but there wasn’t a lot of data about it, 

and so we are working together to really try to drill down some of 

these key industries and understand what is in fact the actual 

magnitude of those competitive impacts, and then the second desire 

is to figure out, well, what could you do about them because I think 

in almost all of the legislation, there is a shared sense that these 

are serious issues that have to be attended to and there are opportunities by targeting allowances to those industries to ameliorate 

those cost impacts, so the desire is to figure out how much that is 

and how to move those resources. 

Mr. BOUCHER. Thank you, Mr. Grumet. 

Dr. Felmy, if I may, I would like to question you for a moment 

about your statement, I think in your prepared written testimony, 

about the number of allowances as a percent of the total assigned 

in one of the Senate bills, and I presume it was Lieberman-Warner 

that you were analyzing, to the petroleum sector and potentially 

also to the natural gas sector, and I think the number that you 

used was 3 percent of the nationwide total being targeted towards 

you. Do you know if that 3 percent represented allowances that 

were assigned to you based on your stationary source emissions, 

that would be refinery emissions, or were these allowances both for 

your stationary sources and also for the fuel that contains the carbon which is then sold downstream? Is it one of those or both of 

those? 

Mr. FELMY. Mr. Chairman, it was both of them. 

Mr. BOUCHER. And so what do you think an appropriate level of 

allocation would be given the emissions that today emanate from 

289 

refineries and also are contained in the carbon that would be sold 

downstream? 

Mr. FELMY. Well, I think that the answer to that I can’t give you 

but what I would propose is that as we go forward on this, that 

we develop an equitable amount of allowances. Of course, we as 

one industry cannot call the tune for everyone and so as the process goes forward, we would propose that it would be equitable 

across all industries, just in terms of equity across all areas and 

so on should also be considered. 

Mr. BOUCHER. Do you happen to know what percent of the total 

CO2 emissions arises from refinery operations? 

Mr. FELMY. I believe it is roughly about 200 million tons from 

refinery operations. Total industry emissions are roughly about 2 

billion tons out of the total of roughly 6 billion tons for the total 

economy. 

Mr. BOUCHER. OK. So do the math for me. Is 3 percent compensatory to you for that or not? 

Mr. FELMY. In terms of the refinery operations, 200 divided by 

6,000 gets you roughly on the order of about 3 percent for just the 

refinery operations. 

Mr. BOUCHER. So it sounds like that 3 percent was really targeted for your stationary source emissions? 

Mr. FELMY. That is entirely possible. I am not sure how it is developed, Mr. Chairman. 

Mr. BOUCHER. All right. My time is expired. Thank you very 

much. 

Mr. Upton from Michigan. 

Mr. UPTON. Thank you, Mr. Chairman. I appreciate everyone’s 

testimony. 

Mr. Mullett, I just want to say a couple things at the start, and 

that is, I sat down with some of my truckers this last week and 

I am very concerned about them but also the people that work for 

them because they are losing their jobs and particularly in rural 

areas. It is really tough. I have got a number of counties and often 

you will see an independent operator, maybe it is just him or her 

and that truck is just parked along the side. I was one that supported an increase in CAFE, and that was a pretty tough vote coming from Michigan, but at the same time, I said I don’t want it to 

be an unfunded mandate, that we need to help the industry. In 

fact, I hope that we might have a hearing later on this year, maybe 

this fall, when things perhaps shut down a little bit on the House 

floor in terms of how the industry is going to meet those targets 

as they struggle to do that. It is one of the ideas that Mr. Boucher 

has, Boucher and myself and Mr. Barton and Shimkus and others 

with the Carbon Capture, Storage Early Deployment Act. We are 

going to try to help the industry get there in terms of offering an 

actual fund where we can capture this carbon and really help and 

I want to see that happen with the auto industry. I have Eaton in 

my district, and they are doing a terrific job at develop some hybrid 

technology, and when I went out there last summer, we brought 

the secretary of EPA and the administrator, or the administrator 

rather of EPA, and literally we found that the technology that they 

have now can save the average UPS truck 1,000 gallons that they 

don’t have to use just on the idling technology and other things and 

290 

I would like to think that whether it be this committee or Ways 

and Means, we can help with legislation to promote that, to help 

the industry, and I would just urge you to talk to your colleagues 

at ATA to see what we can do. We think it is a bipartisan bill to 

try and push those incentives so you don’t have those unfunded 

mandates as we struggle with these prices that clearly are not 

going to be going down. I just was struck by that in your testimony 

about all the truckers, literally 10,000 operations that are out of 

work just this year because of the increase. 

Mr. Felmy, how does the environmental regulations on domestic 

refineries compare to refineries overseas or not in this country? I 

have been to a couple refineries in Texas and other places. We have 

one close to my district. It is in Peter Visclosky’s district in Whiting, Indiana. There is another one in Toledo, Ohio, close to Michigan. How do those refineries in terms of the regulations overseas 

compare to the United States? 

Mr. FELMY. Well, there are two aspects of that. First of all is the 

environmental regulations of the facilities themselves in terms of 

emissions, and I have no personal experience with one refinery 

versus over abroad but at least from suggestions that we have very 

rigorous environmental regulations, we have continually reduced 

emissions from our refineries, and then the second aspect is in 

terms of the fuels coming out of the facilities, and our fuels are 

very clean compared to the rest of the world, very low-sulfur gasoline, ultra low-sulfur diesel, which we are at 15 parts per million, 

for example, and Europe is 50. You know, and so the investments 

that we made for the last 10 years for the refinery system alone 

are about $55 billion for reduced emissions. 

Mr. UPTON. But are we doing a much better job in terms of fewer 

emissions, having cleaner emissions than—— 

Mr. FELMY. I really can’t—— 

Mr. UPTON. I think Aruba has the largest refinery. Is that right, 

largest operating refinery in the world? Is it not in Aruba? 

Mr. FELMY. That is entirely possible. It is very large. I can’t give 

you a definitive answer in terms of the specific emissions rates and 

so on to be able to give you a quantitative comparison. 

Mr. UPTON. Well, because in your testimony you state that the 

cap-and-trade bills would send perhaps as much as 17 percent of 

our refinery capacity overseas, so I have to believe that that will 

have an impact, be transferring that carbon emission from here to 

someplace else and they won’t have the same technology that we 

impose on ourselves and in fact you would increase then at the end 

of the day the emissions by having a cap-and-trade system. 

Mr. FELMY. There is no question that could certainly happen. If 

you do export industry to areas with less environmental restrictions, that could be an outcome, and as you see from the study we 

had done by ICF, you see the reduction in refinery capacity in the 

United States. 

Mr. UPTON. My time is quickly winding down. I wanted to ask 

just a simple question of both Mr. Grumet and Ms. Figdor. Something that I care a lot about is the expansion of nuclear energy and 

I just to know where your organizations or your thoughts are as 

it relates to that. 

291 

Mr. GRUMET. I am not sure I would call that a simple question, 

sir, but I will give you a quick answer if I can. Nuclear energy—— 

Mr. UPTON. Yes is good. Yes is all—— 

Mr. GRUMET. Nuclear energy needs to be part of the mix going 

forward. It is 70 percent of our non-carbon energy. The Commission 

believes that there are some real challenges and that we have to 

have real effort to specifically address the issues associated with 

waste and proliferation and we think that we have to have as an 

aggressive effort there as we do with other non-carbon forms of energy. 

Mr. UPTON. Ms. Figdor? 

Ms. FIGDOR. We think there are many problems with nuclear 

power but one of them is the timing. It would take many years to 

get new nuclear power plants up and running when we need to 

make deep and real reductions in emissions now and so we need 

to invest in the technologies and reap the benefits from the technologies that are already available like energy efficiency and clean 

renewable energy. 

Mr. UPTON. I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Upton. 

Mr. Matheson, if you are ready, we will recognize you for 5 minutes. 

Mr. MATHESON. Well, thank you, Mr. Chairman. I am sorry, I 

had a series of meetings where I had to step out for a few minutes. 

I hope you haven’t covered it too much already but I just wanted 

to raise the issue of international participation for a moment. I 

wanted to know, I have been focused on this issue because I am 

having trouble getting my arms around it, how we are going to 

make progress on this issue, and I am concerned about WTO 

issues. I am concerned about just practical issues, and I am wondering if any of you have comments to offer regarding the four legislative proposals that have been put out there in terms of if they 

have realistic starting points in terms of addressing international 

participation in this issue. So I don’t direct that to anyone in particular but does anyone have comments on that? 

Mr. BAUGH. Mr. Chairman, I will take the question on since we 

are the ones that have been pushing hard for it. We believe it really is a starting point, and we supported the international legislation that appeared in the Bingaman-Specter bill. We worked 

through the changes of that that then appeared in the BoxerLieberman-Warner bill. The attorneys we worked with are the top 

environmental attorneys and trade attorneys in the country, and 

they assured us that it is WTO compliant. Now, we absolutely 

know that no matter what we do, there is going to be a WTO test 

of it, but from our point of view, we think these steps we have been 

taking are WTO compliant. There are additional suggestions that 

have come in that were being proposed in the Senate. They weren’t 

taken in the bill but I am certainly it is going to be discussed in 

the House, and we are willing to look at that. We are actually willing to look at that and other means. I know Mr. Inslee has talked 

about an input-output solution that I have not really had the 

chance to examine—we haven’t had the chance to look at. We believe in redundancy but we strongly support international steps 

around that. We believe that it is compliant, and sort of the proof 

292 

in the pudding is, what we have proposed, the EU has actually 

threatened to implement on two occasions in the last year. The discussion is very live in Europe about it. They have a cap-and-trade 

program and they have had it in place 3 years, and basically the 

first rule for the WTO is that you have to be doing it to yourself 

before you can apply it to somebody else, and the proposal we put 

together mirrors that. It says OK, we have a cap-and-trade, we are 

asking other developed countries and others to participate. It is not 

going to be exactly the same but they have to have something comparable to do that, and if not, if they choose not to, then there 

would be a cost to that, and so it is exactly as the EU has talked 

about, employing that in the European Union it would actually 

apply to us because we don’t have a comparable system at this 

point. But I think that is something we have to do and we have 

to talk about these issues together. We can’t ignore them. It is 

very, very important. 

Mr. MATHESON. Does anybody else have any comment? 

Mr. GRUMET. Mr. Matheson, just to add to that a little bit, I 

think that going back now almost 20 years to the Rio Summit in 

1990, this notion of differentiated commitments was on the table 

and it was the idea that the developed world, the United States, 

was going to have to lead to the solution but we couldn’t be 

chumps, right? In other words, we can’t solve this problem without 

in fact a meaningful, equitable and efficient global program, and 

the framework that I think now is gathering appropriate momentum is recognition that we are going to have to take a first step, 

a real step in this country. It is going to have to be measured. We 

are going to have to have certain constraints to make sure that we 

protect our economy as we move forward and there is going to be 

an inflection point, 7 years, 10 years out. In other words, the idea 

that Congress can legislate a trajectory for 4 years without a 

course correction, we don’t think is particularly realistic. We need 

to set a long-term goal but we have to acknowledge that we are 

going to take a first step, we are going to have to make sure that 

there are real incentives and both positive and negative incentives 

for other countries to join with us, and at a certain point several 

years in the future, we are going to have a gut check, not just as 

a country but as a world, are we going to solve this problem or not, 

and at that point that would be the point where we would believe 

that the kind of cost containment measures and others would be 

I think traded in for the kind of ultimate ecological endpoint but 

that is going to be contingent upon a president determining that 

all of our major trading partners are making in fact commensurate 

efforts to solve the problem. 

My last point I guess would be that it is the developing countries 

that are going to suffer the impacts of climate change, frankly, 

much more severely than we in the developed world. Our ability to 

adapt is much greater than that in China and other places. The 

leaders of those countries recognize that they have a real challenge 

here. 

Mr. MATHESON. Do you think the concept of a look-back or a gut 

check, as you called it, provision should be put in, not just for 

international participation but across the board on all aspects of 

climate change legislation? 

293 

Mr. GRUMET. I am not sure of—my view of what encompasses all 

aspects, I guess I am not certain—— 

Mr. MATHESON. Just whatever it is in the bill, should there be 

a requirement, a reauthorization, to see how things are going? I 

mean—— 

Mr. GRUMET. I think whether it is mandated or not, that will be 

the reality. Congress is going to have to be revisiting this decision 

and I think in a number of different bills there is an explicit requirement for the president to make a determination. On the basis 

of that determination then a series of actions flow from it. I think 

that is the appropriate way to proceed. 

Mr. MATHESON. Thanks, Mr. Chairman. I will yield back. 

Mr. BOUCHER. Thank you, Mr. Matheson, a perfectly riveting set 

of questions. 

The gentleman from Texas, Mr. Barton, for 5 minutes. 

Mr. BARTON. Thank you. Mr. Chairman, looking around the 

room, seeing the membership present, I am tempted to ask consent 

to suspend the rules, ask the bills before us to be considered as 

read, considered en bloc, move the previous question and call for 

a 3-minute vote. I think we could dispose of this issue in a very 

timely fashion. But knowing that is not in the spirit of this hearing, I am not going to do that. I do want to ask some questions. 

Mr. Baugh, you talked not directly but briefly in response to an 

answer to a question about the European cap-and-trade program. 

Are emissions going up or down in Europe because of that cap-andtrade program? 

Mr. BAUGH. The cap-and-trade program didn’t work, and I can 

tell you why. They did a footprint three times too large, they had 

too many emissions so that when it started off, the prices stayed 

low—— 

Mr. BARTON. All I need is the answer, which you gave me honestly. 

Mr. BAUGH. It didn’t work. They have done a phase II reform 

they just implemented that is looking much more like what we are 

doing here and will have a footprint that is correct and will have 

a different outcome than the first time. 

Mr. BARTON. And so far it hasn’t worked. I will give you a chance 

to—do you think these changes that they are going to implement 

will make it work? 

Mr. BAUGH. I think yes, I already believe it is having an impact 

to make it work differently. We have actually cautioned them not 

to make the mistake the United States is making in looking at this 

with an open, unrestricted market approach. We have serious concerns about that when this Congress is actually investigating the 

use of derivatives in futures markets and the impact they are having on oil and commodities and food, and we are setting up, as 

somebody noted, the largest trading system around. We think it 

should be a much more focused market. 

Mr. BARTON. If I had 10 minutes, I would let you answer that 

a little more fully but I have got just 3 more minutes. 

Mr. Grumet, is that correct? 

Mr. GRUMET. I know you are talking to me, but it is Grumet. 

Mr. BARTON. Grumet. I am sorry. I am not trying to be facetious. 

I want to get your name right. Mr. Grumet, you talked about that 

294 

we need to take the first step regardless of what the developing 

world does. Have you ever directly negotiated with the Chinese? 

Mr. GRUMET. Well, actually, I was in China and I bought some 

good stuff at a dirt market so, yes, I have. 

Mr. BARTON. Well, that is a great answer to that question. Let 

me rephrase it. Have you ever tried to directly negotiate with them 

on emission reductions? 

Mr. GRUMET. Sir, I have never had the pleasure of representing 

the U.S. government in any of those discussions. 

Mr. BARTON. Well, I have. Now, this is a dated story, and their 

view may have changed. I am not going to say it is still their current view but I think it is. When we went to Kyoto under the leadership of Chairman Dingell as the congressional observer delegation, we met directly with the Chinese, and Chairman Dingell 

asked the question, and this is 12 years ago or whenever the Kyoto 

Accord was signed or at least implemented, but China’s position 

was that they couldn’t sign on to Kyoto because they were developing. Chairman Dingell said well, do you think you will be able 

to do it in maybe 20 years? No, we don’t think so. Well, what about 

50 years? No, we don’t think so. Well, what about 100 years? Well, 

we don’t think so. Well, will you ever sign on to it? Well, we don’t 

think so. 

Now, China is putting in play a 500-megawatt coal-fired power 

plant every other week, and they are either now exceeding U.S. 

emissions of greenhouse gases or will next year. I don’t think it is 

conceivable in the real world that they are ever going to sign on 

anything except take our technology if we develop it for free. I 

think they will accept our plants if we adopt some rigidity of regulation that causes the remaining industry in this country to shut 

down. They will take our power plants. They will take our steel 

plants. They will take our chemical plants. They will take anything 

that we ship over and they will produce those goods and then ship 

the goods back to us but they are not going to because we adopt 

something. If they were going to do that, they would have already 

begun to do it because of what Europe is trying to do. You know, 

Europe’s economy collectively is as large as the United States economy, not individually by nation but collectively, so I just respectfully disagree that us taking a unilateral first step is going to be 

met by a reciprocal action on the part of countries like the Chinese. 

My last question, Mr. Chairman, because I want to go to the gentleman that represents the trucking industry. Repeat for us how 

many trucking companies have already gone out of business this 

year. 

Mr. MULLETT. I believe the figures that I gave were over 1,000 

and over 10,000 employees and owner-operators. That was the first 

quarter. In the second quarter, there were some pretty significant 

bankruptcies as well. 

Mr. BARTON. Now, if we were to adopt—the position right now 

I think of these bills before us, if we adopt some sort of a cap-andtrade regime, it does affect mobile sources. There is no current 

technology that I am aware of that cost-effectively reduces emissions of mobile sources. How many more trucking companies would 

go out of business just generically if we adopt one of these bills? 

Do you have any estimate of that? 

295 

Mr. MULLETT. I do not but I can assure you that there is a direct 

causal relationship between the price of fuel and these failures, and 

there is also a causal relationship between these failures and the 

strength of the overall U.S. economy. 

Mr. BARTON. Mr. Chairman, my time is expired. I appreciate 

your graciousness and I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Barton. 

The gentleman from Washington State, Mr. Inslee, is recognized 

for 5 minutes. 

Mr. INSLEE. Thank you. 

Mr. Grumet, I don’t know if you were here to hear some comments I made about R&D needs for the United States, and I would 

just like to ask your thoughts on what the scope of that effort 

ought to be, how we should define that, and I would also like your 

thoughts on how, assuming we do create a pool of revenues associated with a cap-and-trade auction, how should that be managed 

and invested? To what degree should Congress be making decisions 

about allocations between solar thermal and clean coal and algaebased fuels? Should there be some new structure formed independent of Congress that we haven’t seen before to do that? Some 

people have suggested some sort of public-private partnership arrangements. I would appreciate your thoughts on those subjects. 

Mr. GRUMET. Thank you for the question and thank you for your 

leadership on this set of issues. Let me just agree with the original 

premise of your presentation which I did see, and that is that 

based on the heroic scale of the challenges we face from both environmental implications and energy security implications, the public 

investment in research and development is actually quite anemic. 

We are investing one-third in real dollars today of what we were 

investing 30 years ago, and so fundamentally, we do need as a 

country to be devoting more resources to these challenges. I think 

it is important also to separate between the challenges of kind of 

pure R&D and the challenges of deployment. Our commission proposed that we needed to triple the resources going into direct R&D. 

We think that the current structures at DOE with the national 

labs and universities, especially in the public-private partnerships, 

work quite well there. 

Where we think there really has been a tremendous lack of investment and focus is on the deployment, the acceleration of these 

new technologies. There is a wonderfully dramatic term, the valley 

of death in the R&D world, one of the neatest things we get to say 

in energy geekery, and this is the idea where new, neat ideas basically go to die or go overseas to get commercialized, and fundamentally, that is a place where we believe government needs to be playing a more significant role. I think that the efforts of this committee and this Congress in the last couple of energy bills has been 

a step in the right direction. The focus on loan guarantees is a significant and important way to take the risk capital out of those decisions and advance that discussion. I think there has been a sense 

that we need to do more of that. I believe that there is also an important challenge to think about these kinds of mechanisms because while there might be a general consensus that we need to 

plus up the resources, I do believe that there has to be much greatVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00303 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
296 

er transparency and accountability in terms of how we do that, and 

let me close with one or two thoughts on mechanism. 

One is that it is very tough for the good people at the Department of Energy to venture risks because if you are going to have 

an R&D portfolio that is going to be creative, you are going to have 

tremendous successes and you are going to have significant failures, and we have a culture which enjoys those successes but really 

doesn’t enjoy or like to tolerate those failures and so we create a 

culture of caution in our decision making which does not match the 

challenges that we face. So the idea of bringing together the kind 

of private sector venture capital ideal which recognizes that if you 

have one giant win and three medium losses, you are a rock star, 

we need to bring that culture into this discussion and so I think 

the idea of public-private partnerships, greater reliance on these 

credos is a real opportunity going forward. 

I guess the one last point I would make, and this goes back to 

something Mr. Barton was saying, is on the international collaboration. We need to be careful to make sure that we don’t wind up importing CCS technology, importing renewable technology, importing 

smart metering technology from China and India because I certainly agree that while we are going to have a real challenge in 

getting those countries to take commitments, they are investing in 

these kinds of technologies. 

Mr. INSLEE. And may I add, not just the technology but the products as well, so that is another issue. Thank you. I appreciate that. 

Mr. GRUMET. And my last thought is that having a dedicated 

revenue stream makes this a lot easier but I want to commend 

Chairman Boucher for the focus on moving quickly on CCS. I think 

also Mr. Upton pointed out the important opportunity to invest tax 

credits in retooling domestic vehicle facilities and I think we do not 

have time to wait. 

Mr. INSLEE. And we hope those brilliant ideas will be applied in 

other technologies in addition to CCS, and the whole smorgasbord 

that we want to talk about. 

Mr. Scott, could you give us some advice on a Federal register? 

Many of us believe, some of us believe, at least, that we should 

move a bill this year that really moves forward with a registry and 

data collection, even prefatory to a cap-and-trade system. Could 

you give us any thoughts on how to structure that, anything we 

should avoid? 

Mr. SCOTT. Well, I think first of all, I would hardly recommend 

going and using the work that has already been done by this coalition of the States that has worked with private industry, a large 

stakeholder process that worked on a protocol for that. So rather 

than reinvent the wheel, I would suggest using that work that has 

already happened and engaging and trying to work with both mandatory and with voluntary protocols, which is what the Climate 

Registry has done. So there are many, many, very detailed, very 

technical issues, as you know, with that that we have worked 

through over the course of the last year. We have got over 240 voluntary reporters who have come on board now with the Climate 

Registry this quickly, so we think the work we have done has been 

done very well and would hardly hold that out to you as a good 

place to start. 

297 

Mr. INSLEE. Well, we will plagiarize as much as we can. 

Mr. Baugh, talking to a blue and green forum about the green 

collar job possibilities of these new developing industries, do you 

have any message you want me to deliver from Washington, D.C., 

to them? 

Mr. BAUGH. Yes, I think that green jobs are not just jobs in renewable energy. Green jobs are any job that go to cut the carbon 

emissions, and if that is doing advanced automotive technology, if 

that is doing CCS technology, that is what green jobs are all about 

and it is not just all new jobs, it is about changing the way certain 

jobs work. You may be producing new things, you may acquire new 

skills to produce those things. It is a combination of some new job 

opportunities, changing job opportunities, getting our manufacturers to produce some of those 40,000 parts that go into a wind turbine that they are not producing today and the huge opportunities 

that are coming at us. So I think it is about seizing the moment, 

directing our investments towards this job creation opportunity, 

making sure this legislation is economic development and legislation and requires the money be spent domestically so that we actually generate these new energies. And I want to remind everybody 

in this room, we were here in 1980. We were here in 1980. We led 

the world in photovoltaics, wind turbine technology, battery technology, geothermal technology, and all of this developed with government investment and money and we blew it when we walked 

away from it in the 1980s because the Germans, the Spanish, the 

Brazilians with the biofuels, the Netherlands all took our technologies that sat on a shelf that was developed in this country and 

ran with it and invested in it as nations as an industrial policy and 

today, Congressman, we are shipping barges of parts from the 

Netherlands to the wind turbine development that is going on in 

Hood River. I want that stuff made back in those aluminum plants 

that are closed along with Columbia Gorge. 

Mr. INSLEE. We are going to work with you and Mr. Doyle with 

this output-based rebate program to try to make sure we have domestic production. Thank you. I thank the whole panel. 

Mr. BOUCHER. Thank you, Mr. Inslee. 

The gentleman from Oregon, Mr. Walden. 

Mr. WALDEN. Thank you very much, Mr. Chairman. 

Mr. Baugh, I couldn’t agree more that I would like to see those 

aluminum plants reopen too. Unfortunately, pressures in the region were such and worldwide economy that they couldn’t sustain, 

and Enron, although I would hasten to say I think Northwest Aluminum was down before Enron, plus they had the power contrast 

with BPA that escaped that so I don’t think that was exactly— 

Enron was a huge problem and a huge issue and a huge scam and 

this committee investigated all that, so—but I fully concur, although there are probably members of this committee that would 

disagree with both of us on this notion of keeping manufacturing 

in this country. And there were emissions associated with those 

plants and all of that. 

I want to go to Dr. Felmy from API. You made a comment that 

if some of these cap-and-trade proposals were in place—I want to 

make sure I get this right—17 percent of domestic refinery capacity 

could be shoved overseas. Is that what you indicated? 

298 

Mr. FELMY. That is the result of the ICF International study of 

the Lieberman-Warner proposal. 

Mr. WALDEN. Seventeen percent. How many barrels—— 

Mr. FELMY. Three million barrels a day. 

Mr. WALDEN. How many? 

Mr. FELMY. Three million barrels a day. 

Mr. WALDEN. And what is the U.S. consumption of gasoline per 

day? 

Mr. FELMY. U.S. consumption of gasoline is—well, total oil consumption is 20.6. 

Mr. WALDEN. In the United States? 

Mr. FELMY. In the United States, million barrels a day. Gasoline 

is roughly around 9, 9.2 million barrels a day. 

Mr. WALDEN. So is the equivalent then 3 million barrels of gasoline a day, or oil? 

Mr. FELMY. No, the typical yields from a barrel are about 50 percent gasoline, 24 percent heating oil and diesel, 10 percent—— 

Mr. WALDEN. So the long and short of it though, we drive 17 percent overseas and then we get to pay somebody else to bring it 

back? 

Mr. FELMY. Short of a demand reduction, that is what would 

happen. 

Mr. WALDEN. And I am all for some level of demand reduction 

but not the kind we are seeing out there in America today, which 

is people are going broke and our economy is going upside down 

with this type of demand reduction. We send $160 million a day 

to Hugo Chavez. Isn’t it true that 95 percent of the world’s oil supply is controlled by governments and government-owned entities? 

Mr. FELMY. Well, the numbers are a little more complex than 

that. If you look, roughly 77 percent are government oil companies. 

Then you have a collection of other entities such as Russian companies that you have to decide what you want to call them. Ultimately it comes down to in terms of the integrated oil companies, 

roughly only about 6 percent—— 

Mr. WALDEN. And we have heard about the Brazilian model that 

they have become pretty much energy independent, in part because 

they have developed sugar-based ethanol, which has had an effect 

on forests, I think, as they expand, but didn’t they also develop 

their offshore resource? 

Mr. FELMY. Absolutely. If you look, I believe the numbers are in 

1980, Brazil produced about 244,000 barrels a day of oil, and now 

they are over 2 million, and when they announced energy independence, the president did it on an oil platform. 

Mr. WALDEN. And that was because of what? How much is ethanol and how much is crude oil? 

Mr. FELMY. Well, roughly ethanol, I believe, the consumption in 

Brazil is about 260,000 barrels a day and so oil production is in excess of 2 million barrels a day. 

Mr. WALDEN. So 9, 10 times, something like that? 

Mr. FELMY. That is correct. 

Mr. WALDEN. What would happen in this country and what 

would happen to the market, the oil market globally, if we were to 

pass legislation opening up either ANWR or the OCS? Would it 

have a positive effect for consumers? 

299 

Mr. FELMY. Well, as an economist, we believe firmly that increasing supplies helps consumers, and so being able to produce more 

oil, of course, will take some time. 

Mr. WALDEN. Absolutely. I understand that. 

Mr. FELMY. But it also will telegraph to the world that the country is serious about supply and demand situation so that would 

help in terms of what the market assessment would be perhaps 

further out in the futures market, for example. 

Mr. WALDEN. I want to switch topics for just a minute and ask 

our panelists the same question. That is, I have had a real passion 

for dealing with forest health and some panelists today have referenced that in their testimony about the role of forests. We certainly see the decline of forests in the industrializing world and we 

see the destruction of the forests here due to fire, a record 9 million 

acres last year alone. Half the Forest Service budget is consumed 

fighting fire. That has to be enormous emissions into the atmosphere. The Forest Service for at least 10 or 20 years has done research on climate change and has come to the conclusion, and don’t 

hold me to this but I think they said it would take 10,000 years 

for the trees to migrate to the point north where the temperature 

will get in 100 years, which means that you are going to have increased disease, infestation of bugs, drought and forest fire. Now, 

some of the very organizations that support climate change legislation also oppose active management of our Federal forests and I 

just wonder from you all, do you share that view that we just leave 

the Federal forests the way they are today or do you support 

changing Federal law to actually actively manage them to cope 

with what we see coming with higher temperatures, disease, bug 

infestation, overstocking? Dr. Felmy, do you have any comment on 

that? 

Mr. FELMY. I don’t have a position on that. 

Mr. WALDEN. Mr. Baugh, are you going to make any more 

woodies, you know? You might need—— 

Mr. BAUGH. Since I once served on the Oregon Board of Forestry, 

forest management is important. I can’t answer the bigger question 

you are asking here but I do know you address it in terms of the 

pine beetle infestations, which we used to deal with in eastern Oregon, where there were choices to be made. Do you just let them 

stand once they have been infested or do you go and cut them down 

and replant, and that is the kind of forestry management that does 

make some sense. 

Mr. WALDEN. And I concur with you. 

Ms. Figdor? 

Ms. FIGDOR. I am not sure of your question with regard to forestry management and a climate policy. 

Mr. WALDEN. Sure. 

Ms. FIGDOR. If so, I think there is a role for carbon sequestration, 

biological sequestration in forests, but we need to be careful in 

making sure that we can accurately quantify those. 

Mr. WALDEN. As we work on that though, do you support active 

management of the forest to reduce them where they are overstocked and deal with the disease and bug infestations so we can 

reduce the opportunity for catastrophic fire? 

300 

Ms. FIGDOR. We support protecting our national forests and ensuring that they remain the wild places that—— 

Mr. WALDEN. So you don’t support active management? 

Ms. FIGDOR. We do not. 

Mr. WALDEN. OK. 

Mr. BOUCHER. Mr. Walden, our time is about expired here. You 

are about 2 minutes over. We will give Mr. Grumet an opportunity 

to make a response. 

Mr. WALDEN. Thank you, Mr. Chairman. 

Mr. GRUMET. I don’t want to belabor this but I think that adaptation has to be an active part of the climate debate and forests 

have to be part of adaptation. 

Mr. WALDEN. Perfect. Thank you. 

Thank you, Mr. Chairman. I apologize. 

Mr. BOUCHER. That ended on a pleasant note from your vantage 

point, I think. 

Mr. Burgess is recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. Let me just note for 

the record that within my congressional district, we do have solar 

research development at Entech. We have a large windmill blade 

manufacturer in Gainesville, Texas, probably one of the largest in 

the country, and I would just encourage anyone who is following 

the course of these hearings, don’t buy those cheap Brazilian blades 

that cost so much money to bring to this country and always break 

in that fierce Texas wind. Get your blades from Gainesville, Texas. 

But while I am concerned about those two industries in my district, I have a lot more truckers in my district than I have people 

who work at solar research and development and even the good 

people who work at MFG up in Gainesville, so I am very concerned, 

Mr. Mullett, about the problems and the numbers that you have 

shared with us today. They seem pretty stark. Is there one thing 

that you have in mind—and I apologize, I was in and out while the 

testimony was being given but is there one thing that you have in 

mind that might be of some immediate help to the truckers in your 

industry that are so put upon right now? 

Mr. MULLETT. Well, I think that there are a couple of different 

things. Number one, the six items that we referenced in our sustainability initiative which, while low tech and mostly policy decisions, can be quickly implemented at little cost and will have real 

meaningful effect quickly for the use of fuel. The second thing I 

think we can do from an industry point of view is send a pretty 

strong signal to the rest of the world that we are serious about 

maintaining our own energy supplies, whether this has to do with 

drilling, investigating the futures markets, something that sends a 

signal back to the rest of the world and speculators that we are not 

going to tolerate these increases in price that are not a direct result 

of supply-demand constraints. 

Mr. BURGESS. And I actually could not agree with you more on 

that. In fact, 2 or 3 weeks ago, we had a vote on the House Floor 

to stop filing the Strategic Petroleum Reserve, and I realize that 

it is a proverbial drop in the bucket, but at least for the first time 

on the floor of the House of Representatives in a bipartisan fashion, 

we said supply matters, and I think if we are willing to admit that 

supply matters, even in that very little bit that we did, some of the 

301 

other things you referenced will be extremely important. There was 

a move afoot right toward the end of the spring for perhaps a rollback on the federal excise tax on gasoline, but my understanding 

is that the federal excise tax on diesel is actually a bigger hit than 

the 18.34 cents on a gallon of gasoline, diesel federal excise taxes 

being about 6 cents higher than that. So what about a proposal to 

roll back the federal excise tax on diesel, offsetting that, if you will, 

with ceasing the tax break for ethanol and giving the break to the 

truckers while your industry is in so much peril? I realize at 68- 

mile-per-hour governor may be a great idea going forward but you 

need some help today. 

Mr. MULLETT. I would be irresponsible if I said any immediate 

relief for a lot of our industry would not be helpful. That having 

been said, we would not want to take money out of the highway 

trust fund that is in so much jeopardy right now because we are 

actually fearful that further degradation of the road systems, increased congestion and things like that may more than offset any 

savings that we would get out of that. 

Mr. BURGESS. But now if you offset that money that would not 

going to the highway trust fund from diesel excise tax, if you offset 

that by, my opinion, the appropriate tax going on the ethanol to the 

federal highway trust fund, perhaps we could strike a balance 

there. I will just leave that there for your thoughts. There is a bill 

out there, 5986, expertly crafted, and leave it for your consideration. 

But Mr. Grumet, let me just ask you, in Mr. Mullett’s testimony, 

he references cap-and-trade as not well suited to mobile source applications. So in your world with your National Commission on Energy Policy, how do you reconcile that? 

Mr. GRUMET. Well, Mr. Burgess, I think that I entirely agree 

that in the early years, the dominant reaction to a cap-and-trade 

bill is going to come out of the energy production sector, particularly the coal sector. A penny-a-gallon gasoline translated or diesel 

is about $1 a ton of CO2. So if we have a carbon price in the $15 

or $20 range, which is what I am imagining the ultimate outcome 

would be, that would pass through across to 15 cents or so to the 

American consumer. I don’t think any of us believe, based on what 

we have seen over the last 2 years, that that in and of itself is 

going to dramatically change the operation or choices we make on 

the motor vehicle transportation side. So our commission believes 

that while we should have an economy-wide program, there are 

more effective and direct ways to address the energy security challenges that we face because we are relying on petroleum for 97 percent of all of our transportation so we supported the reform and 

strengthening of vehicle fuel economy standards that Congress 

acted on. We are actively looking into the low-carbon fuel standard, 

and I think there is a real active discussion about whether in fact 

you should focus those kinds of direct measures on the transportation sector or whether it is better served to have it all lumped 

together under one national cap. 

Mr. BURGESS. It seems like they are directly focused on the 

transportation sector right now. I mean, you talked about a price 

signal for carbon. I think we are there. Now, we did hear testimony 

on this committee right after Hurricane Katrina that gasoline 

302 

would have to get up to $6 a gallon before you would actually influence consumption. 

Mr. GRUMET. We are seeing—— 

Mr. BURGESS. We are seeing it in my district at $3.85. 

Mr. GRUMET. And significant pain, and I think the question is, 

are we going to ride along as the victims of that or are we going 

to kind of seize that choice going forward. In the past the problem 

has been the volatility of prices. 

Mr. BURGESS. Let me ask you this. On the pricing, do you agree 

with our friend at the end that supply does matter? 

Mr. GRUMET. Absolutely. The Commission believes that we can 

neither drill nor conserve our way out of this problem. We have to 

do both. 

Mr. BURGESS. And I am happy to hear you say that because 

when we had a lot of the debate on the Energy Policy Act of 2005 

in this committee, a lot of it was, there was a lot of criticism directed at the Energy Subcommittee because we refused to just simply go in a direction of conservation and alternatives. I come from 

a couple of counties back home where there is probably more active 

drilling into the Barnett shale than anywhere else in the world 

right now, and although we are all happy to sell our natural gas 

at $12 or $14 per million cubic feet, I do recognize the pain that 

it is causing the country and look forward to the day when those 

prices are in fact reduced, and I think the ‘‘drill now, drill here, pay 

less’’ philosophy certainly in my part of the world, that makes a lot 

of sense. 

Mr. Chairman, you have been very generous with time and I will 

yield back. 

Mr. BOUCHER. Thank you, Mr. Burgess. Thank you very much. 

Well, this has been a very long day and I want to express the 

Committee’s appreciation to this panel you’re your endurance and 

for the excellent testimony that you provided to us. There may be 

some additional questions coming to you in written form from some 

of the panel members. If so, your rapid response to those would be 

much appreciated. The record shall remain open for 2 weeks for 

that purpose. 

So with the committee’s thanks, this panel is excused and the 

hearing is adjourned. 

[Whereupon, at 4:35 p.m., the subcommittee was adjourned.] 

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STATEMENT OF HON. TOM ALLEN

Chairman Boucher, thank you for holding this hearing on this important topic. 

Thank you also to all of the witnesses here before us today. I look forward to your 

testimony. 

Climate change is perhaps the most important environmental issues facing our 

planet today. As a leading emitter of greenhouse gases, the United States must act 

to reduce emissions that are causing significant changes in our climate. 

I am proud that Maine is a leader in combating climate change. My state has 

joined the Regional Greenhouse Gas Initiative, enacted tough new emission standards for automobiles, and is aggressively working to develop new sources of renewable energy. However, climate change remains a global problem, and that requires 

national and international efforts. While Maine is doing the best it can, Maine’s actions are no substitute for effective leadership in Washington. 

All around, we are seeing the continued impacts of climate change: migration patterns are shifting, the ice caps are continuing to melt, and weather patterns are becoming more erratic. 

The time to act is now and we need comprehensive climate change legislation 

with clear goals and objectives. I believe that for climate change legislation to be 

successful it must reduce emissions, facilitate a smooth transition to clean and renewable energies, minimize economic impacts and assist communities impacted by 

global climate change. 

I believe to successfully and efficiently curb carbon emissions we need to cap emissions to ensure an 80 percent decrease below 1990 levels by 2050. Additionally, successful climate change legislation also needs to engage other nations to develop 

binding international standards. This is a global problem that calls for global solutions. 

While capping current emissions is key to slowing the impact of climate change, 

it is only part of the solution. We need to develop long term solutions to facilitate 

the transition from a fossil fuel, carbon intensive economy to an economy of renewable energies and green technologies. Climate change legislation can make this transition possible by reinvesting revenues from allowance auctions into developing 

clean energy technologies. Our options are not limited to capping carbon emissions 

rather we can and should encourage complementary policies including smart growth 

measures, green building policies and efficient electricity policies. 

Whatever legislation we enact, it must not hinder the States ability to go above 

and beyond federal standards. States around the country, Maine being one of them, 

have taken far greater steps than our current Administration to curb carbon emissions. Any federal legislation must set a baseline not a ceiling on states’ ability to 

continue to fight climate change. 

There will be costs associated with climate change legislation. That is undeniable. 

What is crucial is how we choose to manage these costs and minimize impacts on 

consumers. Revenues from auction allowances should be allocated to the public to 

assist low and moderate income households offset possible higher energy costs. Auction revenues should be used to invest in research and development into new green 

technologies. 

This is also a great economic opportunity. I firmly believe that in the long run, 

climate change legislation has the potential to stimulate economic growth. The middle class jobs of the twenty first century will be in the field of energy technology, 

and that industry’s job growth will be driven by policies enacted by Congress to 

combat climate change. 

Finally, we cannot neglect communities that are already facing impacts from 

warming and will continue to do so as the fight over climate legislation drags on. 

New legislation should provide financial assistance to help state and local governments respond and adapt to impacts from sea level rise, intensified droughts, water 

scarcity and additional public health impacts. 

Mr. Chairman, cleaner air and a comprehensive strategy to combat global climate 

change go hand-in-hand with energy independence and in my opinion must be part 

of this Subcommittee’s long-term strategy. I look forward to working with you to 

achieve this goal. 

STATEMENT OF HON. MARY BONO MACK

Mr. Chairman, thank you for this time to provide a few brief comments regarding 

today’s hearing on various climate change policy proposals. 

313 

Let me first say that I recognize the breadth of this issue and the daunting task 

ahead of this Committee in moving forward with eventual legislation. Given other 

proposals being introduced and further refined, I am confident that the proper 

venue for this legislation to be debated and considered is this Committee. We’ve got 

an excellent cross-section of the country represented and have been deeply enmeshed in some of the most intense and difficult energy debates of the past decade; 

it is my hope that this Committee can continue to be the foundation by which any 

policies relating to climate change will be pursued and enacted. 

I know other Members, much like me, have been hearing from residents in their 

districts regarding the price of energy over the last few months. Almost exclusively 

it’s what I’m hearing about when I’m at home on the weekends or in my office here 

in DC when constituents call. What we’re having a hearing on today is definitely 

related to the future prices our residents will see for years to come. That’s one reason why the debate must be extensive, as the passion and focus of our constituents 

is reflected in how the public is affected by rising prices. 

Most of these climate change proposals about which we’ll learn more today have 

within them a fundamental common theme, that is, they will likely raise the price 

of energy in our country. This doesn’t only apply to individual consumers, but to 

various other sectors of our economy, from electric utilities to the transportation industry. 

Representing southern California puts my district at a unique place in this debate, much as the issues or concerns with various approaches affect regions of the 

country differently. As an example, Mr. Chairman, it’s going to get to around 115 

degrees in parts of my district today. The need for air conditioning is clear, and I 

don’t see demand decreasing anytime soon. It’s really a matter of life or death for 

many older residents as well, much like the winter months affect energy needs in 

the northern portions of our country in the winter. 

But this same area of southern California also has great potential already being 

realized in renewable energy sources; wind, solar, and geothermal energy development is likely to rapidly increase, I’d like to think in part thanks to some of the 

provisions we debated with the EPAct legislation a few years ago. Residents come 

to visit, retire, and raise families in this area, and they’re also often initially attracted by the beautiful environment that surrounds them. I’ve been committed on 

their behalf to protecting that unique economic and human health resource ever 

since I came to Congress. 

Because of this, as you may know Mr. Chairman, I am open to examining a system by which we can achieve carbon dioxide emissions reductions. The complexities 

of any solution are going to involve more insight, analysis, and technological projections than nearly any other concept we’ve tackled on this Committee. It’s a complex 

undertaking, but one that we began last year and I think on which we continue to 

take a reasonable approach. 

We know that the consequences of our actions will affect our entire domestic economy, and yet we’ve also got to keep a mind toward how the benefits of any policy 

can be utilized by others. For our efforts to have any real effect, the international 

community must also engage on substantive reforms. 

I know much of our focus today will be on various ‘‘cap and trade’’ approaches, 

and I look forward to hearing the effects they will have on our environment as well 

as our global economy. The facts are pretty clear in our local economy, as I’m hearing about the high price of gasoline and diesel fuel and its effect already on the residents of California’s 45th District. These families are already seeing how increased 

energy prices are forcing them to change the way that they conduct their lives. The 

local industries, including housing construction are also seeing a severe downturn, 

not to mention the fact that Riverside County had the largest number of foreclosed 

homes in the State. Our area’s foreclosure rate was the fifth-highest in the entire 

country last month. It is with this in mind that we must be careful about imposing 

new mandates. 

In the end, hearing the concerns expressed by my constituents lately, from small 

independent truck drivers to school teachers on the effects high energy prices have 

on their lives, my focus remains with a few important factors: the costs to our society, both individual and industrial, the benefits to our global environment, and focusing on solutions that are based in technologies we can deploy effectively and efficiently, from carbon capture to incredible new renewable and alternative energy options. 

Thank you Mr. Chairman and I look forward to hearing from our numerous panelists today. I yield back the balance of my time. 

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THOMAS R. KUHN, ANSWERS TO SUBMITTED QUESTIONS

QUESTIONS SUBMITTED BY HON. EDWARD J. MARKEY

1. The iCAP Act (H.R. 6186) includes a proposal to mitigate costs to consumers of climate legislation by recycling revenues from the auction of allowances back to consumers directly through rebate and tax credits. Would 

this system provide a measure of protection from higher electricity prices 

to consumers? 

Answer 1. Any mandatory GHG reduction program will lead to higher costs to the 

consumers of electricity. It is important to mitigate these impacts, especially during 

a transition period and especially for low-income customers. Auctions may have a 

role in any climate program in the latter years. However, auctions in the short to 

intermediate run may well increase total electricity costs to consumers because the 

electric utility (and its customers) wind up paying twice: once for the right to emit 

up to the cap (auction price) and once for investments in technologies and other 

emissions reductions costs. 

A far more effective and efficient way to mitigate the financial impacts on customers is to rebate or flow-through the benefits of allowances to electricity customers in proportion to their use and emissions. This can be accomplished by allocating the majority of allowances to distribution utilities in the early years of a climate program, with additional allowances to generating companies in competitive 

electricity markets, and a gradual transition from allocations to an auction. To the 

extent there is an auction of allowances, auction proceeds should go toward climate 

technology development and deployment, as well as toward additional measures to 

assist low-income customers. 

In addition to allocation of allowances and auction of allowances for the benefit 

of consumers, there are at least two other kinds of cost-containment mechanisms 

that are necessary to help limit the cost impacts of comprehensive cap-and-trade 

legislation on consumers: a price collar (i.e., floor price and ceiling price, or ‘‘safety 

valve’’) on allowances, and full and robust use of domestic and international offsets. 

See also my response to question 1 from the Honorable Mary Bono Mack. 

2. What, if any, benefit to consumers would result from distributing these 

funds through utility companies? 

Answer 2. Allocating allowances to local distribution companies (LDCs) with appropriate adjustment to address impacts on unregulated generators is the fairest 

and most efficient way to mitigate impacts of higher electricity prices on customers. 

LDCs have the information to assure that the benefits of allowances are rebated to 

customers fairly. LDCs already handle billing and have an infrastructure in place 

to manage the distribution of allocation proceeds. Moreover, an LDC-led process 

would be overseen by state utility regulators. They can assure that LDCs protect 

low-income customers during the transition and provide appropriate incentives to 

promote customer efficiency. 

In comparison, there is no simple correlation between income taxes paid and electricity use or emission levels—especially for business taxpayers—so that a rebate 

system based on income tax payments will be inherently less effective in targeting 

rebates to customers. 

3. What benefits may be achieved by providing funding to utilities to administer energy efficiency programs? 

Answer 3. Utilities have the scope and scale to develop and implement energyefficiency programs that can help customers achieve significant efficiency improvements. In addition, billions of dollars of new utility investments in technologies such 

as the smart grid are needed to support new efficiency measures, facilitate the most 

cost-effective adoption of carbon-reducing plug-in hybrid technologies for vehicles, 

and efficiently incorporate renewable and distributed energy technologies into the 

grid. Utilities must have appropriate business and regulatory incentives to make 

these programs work. Any source of additional funding for such utility programs 

will help promote these measures. 

4. In your experience, has investment by government and by utilities in 

energy efficiency and renewable energy achieved emissions reductions? Do 

you agree that the U.S. could achieve emissions reductions through these 

and other strategies prior to commercial-scale deployment of carbon capture and sequestration technology? 

Answer 4. Yes, investment by government and by utilities in energy efficiency and 

renewable energy can help to achieve emissions reductions. We agree that efficiency 

and renewables are the key to near-term emission reductions. Cost-effective energyefficiency measures are the most direct way to reduce or avoid emissions and can 

382 

be implemented most quickly. However, while efficiency can reduce the growth in 

electricity demand (by approximately 38–48 percent by 2030), efficiency alone will 

not eliminate electricity demand growth. While more costly, renewable energy also 

avoids or reduces emissions, but not necessarily the need for generation capacity 

since most renewables, particularly wind and solar, only operate intermittently and 

require the construction of back-up generating facilities to assure that power is 

available whenever it is needed. In addition, widespread use of renewables, especially wind, will require extensive construction of new transmission facilities, because the best wind sites are usually far from customer locations. We estimate that 

utilities will need to spend $287 billion to construct new transmission facilities by 

2030 to eliminate congestion in the current system, interconnect new renewable resources, and assure reliability and security for the system. 

Ultimately, EEI believes that the full portfolio of technologies and measures will 

be needed to reduce, avoid and sequester GHG emissions in the power sector, as 

follows: • Efficiency and renewables are key to near-term reductions. 

• Maximizing new nuclear is key to mid-to-longer term reductions. 

•The aggressive development and deployment of carbon capture and storage coupled with advanced coal technologies are necessary to preserving the coal option. •Plug-in hybrid electric vehicles can make a major contribution to reducing net 

GHG emissions, as well as to reducing foreign oil dependence and consumer prices 

at the pump. • Other no and low-emitting carbon technologies should be pursued, e.g., the 

smart grid. 

See my testimony of June 19, 2008, to this Committee (pp. 5–9, discussing the 

so-called ‘‘PRISM’’ work of the Electric Power Research Institute and the need for 

a full technology pathway for GHG reduction, avoidance and sequestration). Any one 

of the above-listed sets of technologies and measures will be insufficient in and of 

itself to address power sector GHGs; all are important collectively. Note that the 

time frames for their implementation, or development and deployment, will vary. 

Thus, regarding your last question on implementation time frames, it is likely that 

energy efficiency and renewables will be important in the near term; new nuclear 

energy will be important in the mid-term to long term, beginning around 2016– 

2018; and carbon capture and storage coupled with advanced coal technologies will 

also be important in the mid-term to long-term, with widespread commercial deployment projected around 2025 or later. 

QUESTIONS SUBMITTED BY HON. MARY BONO MACK

1. Mr. Kuhn, thank you for providing testimony at this hearing. The District I represent is reaching hot summer temperatures quickly; it was 

around 115 degrees in some parts the day of our hearing. So, while there’s 

no need to heat the swimming pools, there sure is a lot of energy required 

to keep those air conditioners running. 

Locals facing higher energy bills have asked me about climate change legislation 

we’re debating and how it may increase their utility bills. What kinds of cost-containment mechanisms do you think should be in a comprehensive cap and trade bill 

so we can help ensure prices remain reasonable? 

Answer 1. Assuming a comprehensive cap-and-trade bill is the mandatory GHG 

policy instrument that Congress focuses on, at least three kinds of cost-containment 

mechanisms are necessary to help limit cost impacts on consumers and our customers: allocation of allowances to GHG-intensive industries such as the power sector; a price collar (i.e., floor price and ceiling price, or ‘‘safety valve’’) on allowances; 

and full and robust use of domestic and international offsets. We expound on these 

mechanisms in greater detail in EEI’s ‘‘Working Paper on S. 2191, ‘Lieberman-Warner Climate Security Act of 2007,’’’ May 15, 2008, submitted to several Senate Committees and this Committee (see pp. 8–14). All congressional cap-and-trade bills that 

we have seen to date would result in significant costs to the economy, consumers 

and our customers, and none has included comprehensive and full cost-containment 

mechanisms that would mitigate those costs to the maximum extent possible. 

The economic costs of cap-and-trade legislation are also affected by the stringency 

of targets and timetables and by whether those compliance timetables are harmonized with the expected development and deployment timelines of advanced climate technologies and measures. The full portfolio of technologies and measures will 

be needed to reduce, avoid and sequester GHG emissions in the power sector. See 

my testimony of June 19, 2008, to this Committee (pp. 5–9, discussing the so-called 

‘‘PRISM’’ work of the Electric Power Research Institute and the need for a full technology pathway for GHG reduction, avoidance and sequestration). The cost difVerDate Nov 24 2008 12:34 Jan 06, 2011 Jkt 037690 PO 00000 Frm 00390 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS\110-130 CHRIS
383 

ference between the full portfolio and limited portfolio approaches is vast: 45 percent increase versus 260 percent increase in real electricity prices. See also my response to question number 4 from Representative Edward J. Markey 

2. I’m also trying to get a sense of supply needs we’ll have in the coming 

years. It’s surely going to affect how we can put in place technologies in 

any cap and trade model that can still help to meet demand. What will the 

country need in terms of baseload electric generation and electric utility 

infrastructure by, let’s say, the year 2030? 

Answer 2. You are correct that GHG emissions reductions, avoidances and sequestrations in the power sector must be made against the backdrop of population and 

economic growth. The Energy Information Administration has projected that the net 

demand of electric generation will increase by 30 percent by 2030, even after taking 

into account energy-efficiency improvements due to market-driven efficiency and 

stricter building codes and appliance and other efficiency standards mandated by 

the Energy Independence and Security Act of 2007. The technological transformation of America’s power sector will occur in the face of tremendous capital investment needs in order to meet the electricity needs of a growing population and 

economy. Even with substantial energy-efficiency measures, new and replacement 

power plant capacity is projected to total 150,000 megaWatts and cost $560 billion 

by 2030. Transmission and distribution investment needs are projected to total $900 

billion by 2030. See my testimony of June 19, 2008, to this Committee (p. 2). 

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EMILY FIGDOR, RESPONSES TO QUESTIONS FROM HON. EDWARD J. 

MARKEY

1. What magnitude of emissions reductions do you believe are achievable 

by 2020 and 2025? 

The latest science must dictate the emissions reductions that the United States 

achieves by 2020 and 2025. According to the Intergovernmental Panel on Climate 

Change, to prevent temperatures from rising by more than 2 degrees Celsius, industrialized countries as a whole must reduce emissions by at least 25–40 percent 

below 1990 levels by 2020. The United States must contribute its share of this target by achieving significant domestic reductions as well as by providing funding to 

reduce international deforestation and to transfer clean technology to developing 

countries. 

The United States has many tools that it can apply to the task of reducing domestic emissions, including a history of technological innovation and a growing body of 

policy experience being developed in the states. Indeed, the United States already 

has the technology needed to achieve these near-term emissions reduction targets. 

For example, a 2006 Environment America report found that the United States 

could reduce its global warming emissions by 19 percent below 2004 levels by 2020 

by achieving five simple and technologically feasible targets for energy efficiency 

and renewable energy development (along with keeping emissions of non-carbon dioxide global warming pollutants constant). More recently, a December 2007 report 

by McKinsey & Company found that the United States could reduce its annual 

emissions by as much as 28 percent below 2005 levels by 2030 by relying solely on 

tested approaches and high-potential emerging technologies. 

2. How significant might the role of energy efficiency and renewable energy be in achieving these reductions? 

Energy efficiency and renewable energy are absolutely essential to ensuring that 

global warming emissions reductions are achieved at the least possible cost and with 

the greatest long-term benefits. 

3. What policies would be needed to ensure the deployment of energy efficiency and renewable energy required to achieve significant emissions reductions by 2020 and 2025? 

The key energy efficiency and renewable energy policies needed include the following: 

• A renewable electricity standard that will ensure that America gets at least 25 

percent of its electricity from renewable sources by 2020. 

• An energy efficiency resource standard for electric and gas utilities that requires 

that energy efficiency improvements play an important role in meeting future energy needs. 

• Strong energy efficiency standards for vehicles and appliances. 

• Strong building energy codes designed to improve the efficiency of homes and 

businesses. The Federal Government also should encourage the construction of 

green buildings and zero-energy buildings that go ‘‘beyond code’’ and should adopt 

measures to encourage or require the use of small-scale renewable energy technologies like solar water heaters, geothermal heat pumps, or solar panels on new 

residential and commercial buildings. 

•Transportation and land-use policies that provide Americans with viable alternatives to driving by encouraging the development of compact, walkable neighborhoods where automobile use is an option, not a requirement, and increase investment in modern public transportation. 

•Policies to reduce global warming pollution and promote sustainable practices in 

other parts of the economy, including policies to encourage recycling, efficient use 

of water, sustainable agriculture, and more energy efficient industrial practices. 

4. Is it possible to make significant near-term emissions reductions without significant fuel-switching to natural gas in the electric power sector? 

Yes, if the United States couples aggressive investment in energy efficiency with 

policies that encourage the retirement of older, highly-polluting power plants and 

the addition of new renewable energy capacity. 

5. Is it possible to make significant near-term emissions reductions in the 

absence of proven carbon capture and sequestration technology in the electric power sector? 

Yes, the United States already has the technology needed to achieve the nearterm emissions reductions demanded by the science using energy efficiency and renewable energy alone. 

471 

6. Do you believe we should wait to set mandatory emissions reduction 

targets in the U.S. until carbon capture and sequestration technology is 

proven in the electric power sector? 

No, waiting to reduce U.S. emissions until carbon capture and sequestration technology is proven in the electric power sector almost surely would foreclose our opportunity to stave off catastrophic effects of global warming. According to the IPCC, 

to keep the rise in global temperatures from exceeding 2 degrees Celsius, global 

emissions must peak no later than 2015. The United States has sat on the sidelines 

for far too long already and must begin to achieve real and sustained cuts in emissions immediately. 

7. How would the total cost of implementing a climate regime in the U.S. 

change if we did wait to implement mandatory emission reduction targets 

until carbon capture and sequestration technology is proven in the electric 

power sector? 

Given that carbon dioxide is a persistent gas that can remain in the atmosphere 

for more than 100 years, the longer we allow the pollutant to build up in the atmosphere, the deeper the pollution cuts ultimately will need to be to stabilize greenhouse gas concentrations at a level that avoids dangerous consequences and the 

higher the overall cost of the program. If action to reduce emissions is delayed by 

20 years—the potential time it could take until carbon capture and sequestration 

technology is proven in the electric power sector—the United States would need to 

reduce emissions at an annual rate that is three to nine times greater than would 

be required for immediate action to meet the same temperature target. 

8. Can the aggressive emissions reduction targets recommended in your 

testimony be met without the construction of new nuclear power plants? 

Yes, given an aggressive push to improve energy efficiency and expand the production of renewable energy, the United States could reduce its total domestic emissions by 80 percent by 2050. 

9. How should a carbon cap-and-trade program deal with the nuclear 

power sector? 

The cap-and-trade program should auction 100 percent of pollution allowances 

and preclude any special ‘‘set-asides’’ of emission allowances for non-emitting technologies, such as nuclear power. 

10. Beyond making the nuclear power sector inherently more competitive 

by putting a price on carbon, should a climate regime more directly support nuclear energy deployment? Why or why not? 

No, nuclear power is extraordinarily expensive and would take a decade or more 

to deploy. By contrast, many energy efficiency investments pay economic dividends 

and can be deployed in significant numbers in the near future. Renewable energy 

technologies, such as wind and solar power, have come down in cost significantly 

in recent years, are already cost-competitive with nuclear power in many circumstances, and can be successfully deployed on a time-scale of months to a few 

years. Lavishing even more federal subsidies on a nuclear industry that has already 

consumed tens of billions of taxpayer dollars would reduce the amount of funding 

available for truly clean technologies that can make a difference in the short-term. 

11. In his written testimony, Admiral Frank Bowman from the Nuclear 

Energy Institute made the following statement: ‘‘If it [the loan program] is 

structured like the loan guarantee program authorized by Title XVII of the 

2005 Energy Policy Act, in which project sponsors are expected to pay the 

cost of the loan guarantee, such a program would be revenue neutral and 

would not represent a subsidy.’’ Do you agree with this assessment? 

No. First, the industry would be receiving a loan that private investors have been 

unwilling to provide. Nuclear industry executives have flatly stated that they will 

not proceed with the construction of new reactors without government backed loans. 

Second, the Congressional Budget Office has estimated that there will be a 50 percent default rate on the loans, which will leave taxpayers on the hook for billions 

in failed nuclear loans. 

12. How would you characterize the support the loan guarantee program 

provides to the nuclear industry? 

It is an unwarranted subsidy to the nuclear industry. 

13. Nuclear proponents claim that the environmental dangers of nuclear 

power are overstated and that spent fuel is purely a political issue, not a 

technical one. Do you agree with this assessment? 

No, there is no country on earth which has solved the nuclear waste problem— 

that is, how to isolate it from humans and other living things for at least a quarter 

of a million years. 

14. Assuming the Federal Government establishes an economy-wide capand-trade system, do you believe the Federal Government must assume 

472 

long-term liability for closed carbon capture and sequestration sites to ensure we meet our emissions reduction targets? 

While long-term monitoring of such sites will be critical to ensuring that we meet 

our emission reduction targets, the cost must be paid for by the operators of the 

sites, not taxpayers. 

15. The iCAP bill (H.R. 6186) includes a detailed proposal for a greenhouse gas registry to be created under the Clean Air Act. Do you agree that 

a greenhouse gas registry should be created under the Clean Air Act, and 

do you support the proposal in this bill? 

Yes, a greenhouse gas registry should be created under the Clean Air Act, and 

Environment America supports the greenhouse registry in the iCAP bill. 

16. Do you believe the costs of a cap-and-trade system can be adequately 

contained through strategies that would not compromise science-based 

near-term and long-term emissions reduction targets? Please provide examples of the cost containment strategies that would meet this criteria. 

Yes, to reduce the cost of a cap-and-trade system to the American economy, while 

preserving the environmental integrity of the program, the United States should 

achieve the three objectives detailed below. 

1) Improve the energy efficiency of the U.S. economy. Technically feasible, costeffective improvements in energy efficiency already have the potential to save vast 

amounts of energy in the United States. Energy efficiency provides several important benefits: it reduces demand for imported fossil fuels, keeping money within the 

American economy; it creates domestic jobs; and it reduces the cost of achieving reductions in global warming pollution by reducing demand for energy. Moreover, saving electricity through increased efficiency is often less expensive than building new 

power generation capacity. 

There are many policy tools—including efficiency standards for buildings, vehicles 

and equipment, energy efficiency portfolio standards for electricity providers, and financial incentives for the deployment of energy efficient equipment—that can be 

used to improve energy efficiency in the United States. Mandatory federal energy 

efficiency standards are already playing an important role in saving energy, reducing pollution, and saving money. According to the American Council for an EnergyEfficient Economy, energy efficiency standards saved consumers $50 billion on their 

energy bills between 1990 and 2000, with the benefits of the standards outweighing 

the costs by a factor of 3-to-1. 

Deploying energy efficiency standards and programs as part of an overall climate 

strategy will enable the nation to achieve greater emission reductions at lower cost. 

2) Develop and require the deployment of renewable energy technologies. Policies 

to develop and promote new clean energy technologies play a key role in achieving 

emission reductions cost-effectively. Renewable energy technologies are particularly 

important, as they produce no global warming emissions and are potent domestic 

job-creators. To achieve the steep reductions in global warming emissions that will 

be needed in future years, the United States will need to rely on the nation’s vast 

potential for carbon-free energy production. Public policy can play a key role in 

bringing renewable energy technologies to the point of market readiness via increased federal funding for renewable energy research and development and renewable energy standards for electricity production and vehicle fuels. It is critical that 

public policies communicate a firm, sustained commitment to renewable energy, 

thereby providing investors, utilities, and others with confidence to make long-term 

investments in renewable energy. 

3) Align economic incentives with the goals of climate policy. For decades, fossil 

fuels have received the lion’s share of federal energy subsidies. As of 1999, fossil 

fuels received nearly half of all federal energy subsidies, with renewable energy receiving 18 percent (with most of those subsidies targeted at ethanol production) and 

conservation programs receiving only 4 percent. In addition, a poorly designed capand-trade system in which emission allowances are distributed for free can have 

perverse economic impacts—providing windfall profits for the owners of polluting facilities at the expense of consumers and minimizing incentives for technological innovation. 

By shifting federal subsidies toward clean energy technologies and ensuring that 

any cap-and-trade system provides the proper incentives for clean energy development, the United States can ensure that taxpayer dollars are not used at cross-purposes with the nation’s climate protection goals and minimize the cost of emission 

reductions to consumers. 

17. The iCAP bill (H.R. 6186) includes a proposal to mitigate costs to consumers of climate legislation by recycling the revenue from the auction of 

allowances back to consumers directly through rebates and tax credits. Do 

you believe a system such as this would be an effective way to distribute 

473 

money to citizens? Do you believe there is any benefit to distributing these 

funds through a middle man, such as utility companies? 

Yes, Environment America supports the iCAP bill’s provisions to recycle the revenue from the auction of allowances back to consumers directly through rebates and 

tax credits. Recycling auction revenue to consumers directly is more efficient and 

effective than distributing these funds through a middle man, such as utility companies. 

18. In your testimony, you mention that ‘‘of the five bills [including H.R. 

6186], the Safe Climate Act, which was the first of these bills to be introduced in the Congress, has the strongest science-based framework.’’ Please 

explain. 

The Safe Climate Act covers all sources of U.S. global warming emissions, whereas the iCAP bill covers an estimated 87 percent of U.S. emissions. As a result, the 

iCAP bill’s cap-and-trade system and complementary policies aim to reduce total 

U.S. emissions by an estimated 73–75 percent by 2050. While the bill includes a scientific review mechanism, the science already demands reductions of 80 percent by 

2050. 

JASON GRUMET, RESPONSES TO QUESTIONS FROM HON. JOHN D. 

DINGELL

1. In your testimony you spoke about the research and development ‘‘valley of death.’’ How would you design a technology program to remedy this 

problem? Should such a program be designed to benefit multiple technologies? Why or why not? 

The National Commission on Energy Policy recommends the creation of a serious 

and systematic ‘‘early deployment’’ program for low- and zero-carbon technologies. 

The goal of such a program would be to create effective, accountable, and performance-oriented approaches to accelerate commercialization for promising technologies. 

Although current levels of effort in energy research, development, and demonstration certainly need to be increased, the biggest deficits may well be in efforts to 

bridge the gap, or ‘‘valley of death,’’ between technology demonstration and full commercial competitiveness. Such efforts, in which the government’s role should be concentrated on options promising substantial public benefit, may include government 

procurement programs, reverse auctions for subsidies for specified quantities of energy from advanced options, loan guarantees for ‘‘first movers’’ using new technologies at commercial scale, and tax incentives. While this program should be designed to benefit multiple technologies, there will be policy options that are better 

suited to particular technologies. Not all such interventions will necessarily be expensive for the government; loan guarantees for well chosen options may not be, for 

example, since for such options the probability of the guarantees being called upon 

will be small. 

2. In your testimony you noted that ‘‘over-reliance on offsets could undermine program goals and political support’’ for climate legislation. What 

protections do you believe are needed to ensure offsets are real, additional, 

verifiable, and enforceable? What do you believe should be the maximum 

level of domestic and international offsets allowed into a national cap-andtrade system? 

The Commission believes that a carefully designed offsets provision is a critical 

catalyst for cost-effective measures not otherwise covered by the trading program. 

A credible offset program must reflect the differing levels of certainty and 

verifiability associated with different types of projects. This might be achieved 

through a tiered system whereby the most easily verified project types could use a 

streamlined procedure to apply for allowances while projects that are more difficult 

to verify would require more extensive documentation and review. In addition, a cap 

and trade program might provide allowances from a set-aside within the overall pool 

of available allowances to provide incentives to the agriculture and forestry sectors 

for an important set of greenhouse-gas mitigation options. 

Regarding the maximum level of offsets allowed, the Commission is concerned by 

proposals that rely on offsets as a principal means of near-term cost-containment. 

Although we have not advocated any set limit, the Commission has noted that proposals that expect to achieve significant (>10 percent) compliance through offsets in 

the near term will be obligated to create a substantial enforcement bureaucracy or 

risk an influx of illegitimate credits. Either of these outcomes would badly undermine the viability of a meaningful domestic offset program. 

474 

3. In your testimony you noted the needed to protect low-income households from the costs of climate legislation. The iCAP Act (H.R. 6186) includes a proposal to mitigate costs to consumers by recycling revenues 

from the auction of allowances back to consumers directly through rebates 

and tax credits. Do you believe a system such as this would be an effective 

way to distribute money to citizens? 

We applaud the general approach taken in H.R. 6186, which is consistent with 

our view that steps should be taken to protect low-income households from the costs 

of climate legislation. We think this is a critical issue that needs additional analysis 

as we move forward with legislation. Building on existing work by the Center for 

Budget and Policy Priorities, Resources for the Future, and others, Commission staff 

is beginning an extensive effort to explore how the household costs of different climate policies might be mitigated. We expect to look at a number of issues, including 

how costs vary across regions and how different rebate or tax mechanisms impact 

different income groups. 

4. In your testimony you advocated the use of ‘‘positive inducements’’ in 

addition to ‘‘negative consequences’’ to engage our major trading partners 

and address competitiveness concerns. What ‘‘positive inducements’’ do you 

suggest? Do you support the creation of an international clean technology 

fund like the one proposed in the iCAP Act (H.R. 6186) What benefits do 

you expect would be realized from such a fund? 

An international clean technology fund could be an important component of an 

overall strategy to address emissions in key developing countries. In our 2004 recommendations, the Commission called for a tripling of expenditures to promote and 

participate in cooperative international efforts to advance energy research, development, demonstration, and deployment. More recently, in our 2007 updated recommendations, we advocated creating ‘‘stronger incentives for comparable action on 

the part of key trading partners by using a share of the public revenues generated 

by a greenhouse-gas trading program to provide technical and financial resources 

for the transfer of low-carbon technology.’’ We are still assessing how such a fund 

might be most effective. However, we believe that if such a program is included in 

a domestic climate bill, it should have a strategic framework that ensures that investments are made in technologies that can help transform the energy economies 

of key developing countries. It should also be structured to create incentives for 

China, India, and other major developing countries to take on their own significant 

greenhouse gas reduction commitments. Finally, it might be feasible to design a 

fund to encourage the export of U.S. produced technology to developing countries. 

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