U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

53–175 PDF 2009

S. HRG. 111–143 

PATHWAYS TO A ‘‘GREEN’’ GLOBAL 

ECONOMIC RECOVERY 

HEARING 

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

MAY 19, 2009 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate 

COMMITTEE ON FOREIGN RELATIONS

JOHN F. KERRY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut 

RUSSELL D. FEINGOLD, Wisconsin 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

BENJAMIN L. CARDIN, Maryland 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

JEANNE SHAHEEN, New Hampshire 

EDWARD E. KAUFMAN, Delaware 

KIRSTEN E. GILLIBRAND, New York 

RICHARD G. LUGAR, Indiana 

Republican Leader designee 

BOB CORKER, Tennessee 

JOHNNY ISAKSON, Georgia 

JAMES E. RISCH, Idaho 

JIM DEMINT, South Carolina 

JOHN BARRASSO, Wyoming 

ROGER F. WICKER, Mississippi 

DAVID MCKean, Staff Director

KENNETH A. MYERS, JR., Republican Staff Director

(II)

C O N T E N T S 

Page 

Kerry, Hon. John F., U.S. Senator from Massachusetts, opening statement ..... 1 

Lugar, Hon. Richard G., U.S. Senator from Indiana, opening statement ........... 4 

Rogers, James E., president and CEO, Duke Energy, Charlotte, NC ................. 13 

Prepared statement .......................................................................................... 15 

Stern, Lord Nicholas, chair of the Grantham Research Institute on Climate 

Change and the Environment, London School of Economics and Political 

Science, London, United Kingdom ...................................................................... 6 

Prepared statement .......................................................................................... 9 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Prepared statement by the staff of the Friends of the Earth, Washington, 

DC .......................................................................................................................... 37

(III)

(1) 

PATHWAYS TO A ‘‘GREEN’’ GLOBAL 

ECONOMIC RECOVERY 

TUESDAY, MAY 19, 2009 

U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. 

The committee met, pursuant to notice, at 2:25 p.m., in room 

SD–419, Dirksen Senate Office Building, Hon. John F. Kerry 

(chairman of the committee) presiding. 

Present: Senators Kerry and Lugar. 

OPENING STATEMENT OF HON. JOHN F. KERRY, 

U.S. SENATOR FROM MASSACHUSETTS 

The CHAIRMAN. This hearing will come to order. I apologize for 

the lateness of our starting, but it is genuinely for circumstances 

beyond both Senator Lugar’s and my control. The Senate chose to 

vote at 2:15, and the caucuses were both going on; both parties had 

their Tuesday caucus, and the result is that folks have been 

delayed there and we have come over from the vote. But, we’re 

really happy to welcome both of you here today. 

It’s very special for us to have two of the world’s leading advocates for decisive action against climate change, Sir Nicholas Stern 

and Jim Rogers. 

Lord Stern’s 2006 report, which is now known throughout the climate policy world simply as the Stern Report, remains the seminal 

document on the global economics of climate change. And Jim Rogers, the CEO of Duke Energy, has confounded many of the naysayers in the industry by continually remaining a very powerful and 

important, courageous advocate for aggressive action. I think ‘‘commonsense advocate’’ ought to be added to that too, because he believes it’s good for our economy and good for business. I might comment that he recently cut Duke Energy’s ties with the National 

Association of Manufacturers, citing, in part, his fundamental differences on climate change policy. 

This hearing comes at a very timely moment in our national climate change debate. The House Energy and Commerce Committee 

is, right now, considering a comprehensive climate change energy 

bill that would reduce emissions by 83 percent by 2050, and it is 

a bill with a real chance of becoming law. We are focused, here in 

the Senate, as never before, on this issue, working continually, 

with weekly meetings, in an effort to advance this. And just earlier 

this afternoon, the President announced a plan to accelerate our 

fuel efficiency standards and goal in the country to 35.5 miles per 

gallon by 2016. I might comment parenthetically, China has actuVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 H:\DOCS\GREEN.TXT BETTY
2 

ally set a more aggressive goal, and they have set the year of implementation for next year. So, it is not something where the 

United States is moving in a lonely way. The President also announced a tailpipe emissions plan that would, for the first time in 

the American economy, set a nationwide carbon dioxide emission 

standard. 

Let me just say, personally, that this is a milestone in the fight 

against climate change. In 2002, Senator McCain and I introduced 

the first major fuel economy legislation, and I’m extremely pleased 

that the Nation is now adopting these aggressive measures, which 

will help ensure that the American automobile industry is viable 

for decades to come. 

As our two witnesses will share, taking action to address climate 

change is not just an urgent scientific imperative, it is also a tremendous economic opportunity. Just this morning, we had several 

witnesses—Chad Holliday, of DuPont Company, and Mark Stiles 

and Liz Warner, of a startup company that is involved in algae production in New Mexico that is producing algae, which can create 

fuel for jet fuel, for diesel, and become a biocreated fuel that is economically viable in the commercial marketplace. 

So, this is a chance to create millions of new jobs here at home. 

It’s a chance to help spark a global recovery that brings clean 

growth to the developing world and lasting benefits to all of us. 

We really have no choice but to undertake these policies at a difficult economic moment. Some people try to argue, ‘‘Well, we’re in 

tough economic times. How do we afford this? We can’t afford to 

do it.’’ But, as we will hear from Sir Nicholas Stern and Jim Rogers, we really can’t afford to delay. That’s where the greater cost 

lies. 

Both our Nation and other countries are, right now, making historic investments that are going to shape priorities and constrain 

spending for years to come. The reality is, though, there will never 

be a better moment than this one to transition the world’s economies on to clean development pathways. As we act to address the 

financial crisis of this day, our challenge is also to use this opportunity to avert the financial crisis of tomorrow. 

We’re taking important steps. In addition to the President’s announcement today, America’s domestic recovery package invested, 

as we—a lot of Americans aren’t aware of this, but in the package 

that we passed, the so-called American Recovery and Reinvestment 

Act of 2009, there’s $80 billion of direct green stimulus measures; 

that is second only to China’s remarkable $200 billion. 

And anybody who wonders whether China is going to be part of 

this ought to just go back and read the New York Times of a couple 

of months ago, where a front-page story carried the news of how 

China is determined to quickly become the world’s leading electric 

car manufacturer. Let me tell you, when the command-control 

economy such as theirs, as we’ve seen with China, decides to move 

in that direction, they will move in that direction. And many people 

who wonder what China is doing today are going to wake up in a 

couple of years and find that the United States is actually chasing 

China, trying to catch up to some of the things they’re doing. 

The fact is that, just last week, the Department of Energy 

announced a $25 million stimulus fund to support a state-of-the-art 

3 

wind-turbine blade testing facility in Charlestown, MA. There is a 

competitive process for determining its location, but obviously I’m 

pleased it is there. It’ll begin in construction this fall; it’ll bring 250 

new jobs to the greater Boston area. And local officials expect the 

facility to become a clean-energy hub that actually attracts new 

businesses and new jobs. 

While the economic recovery package represents America’s largest investment ever in clean energy, this is, frankly, just the first 

step. Congress needs to pass strong, comprehensive climate change 

and energy policy. And as Jim Rogers knows better than anybody, 

climate change is not just something you talk about in the abstract, 

all by itself. The only response to climate change is energy policy. 

Energy policy, whether it’s new and alternative creative fuels or 

alternative renewable energy, or whether it’s energy efficiency, 

those are the ways in which you affect emissions. 

So, emissions are almost secondary, in a funny way, to the economic transformation that is staring us in the face through the 

clean energy jobs that we can win. Economists warn—and we’ll 

hear this from Sir Nicholas Stern today—that to ward off catastrophic climate change—and I say this again and again to people 

who say, ‘‘Well, what about the cost? How much is this going to 

cost?’’ Folks, the costs are negligible. The McKinsey Company 

study shows that, in the first 20 years or so—20 to 30 years—it 

pays for itself through the energy efficiencies to actually make this 

transformation. So, it is not costs up front in that regard, although 

there’s some capital outlay. But, the savings come back to pay for 

themselves. 

But, the costs of not doing anything are going to be far greater. 

And the fact is that the Green Revolution needs to happen three 

times faster than the Industrial Revolution did in order for us to 

be able to meet this challenge. 

The good news is that America has innovated on a massive scale 

before; and with the right incentives, we can do it again. America 

was the engine of the IT revolution. That revolutionized the way 

the world does business today. Today, the IT economy is estimated 

at $1 trillion, without about 1.5 billion users worldwide. Obviously, 

we’re trying to grow those users. But, energy is a $6 trillion market, with 4 billion users worldwide. The opportunities for innovation and growth dwarf any other sector that we can imagine. Until 

now, we have ceded the initiative to other countries. We invented 

the solar photo voltaic cell at Bell Labs in 1954, but it was Germany that put in place strong policy mechanisms to drive investment in solar power and other renewable energy sources. As a 

result, renewable energy uses have tripled, to 16 percent, in Germany, creating 1.7 million jobs. By 2020, Germany’s clean energy 

sector will be the biggest contributor to the nation’s economy. 

Last week, Tony Blair testified before this committee that the 

U.K. already employs far more people in green technologies than 

in traditional sectors, like coal, steel, and shipbuilding, industries 

which the British pioneered. These new jobs are the direct product 

of sustained policy incentives designed to spark private investment. 

We know that with each dollar the government invests, we can 

create 3.5 times as many green jobs as old industry jobs, or as oil 

industry jobs. We also know that green jobs pay 17 percent more 

4 

than the median national income. As unemployment levels continue to rise, this is very simply one more reason why can’t afford 

to wait until the economic downturn passes in order to try to 

implement strong energy policies. Strong energy policies are part 

of the economic recovery. 

And, while the domestic imperative for acting to address climate 

change is huge, make no mistake, this is also a test of America’s 

willingness to lead in meeting global challenges. Our domestic policy—I have heard this with Foreign Minister after Foreign Minister, Environment Minister after Environment Minister, country 

after country, preparing to go to Copenhagen—our domestic policy 

will motivate others to advance their own clean energy priorities, 

and that will, in turn, drive investment globally and open new and 

vibrant markets for the export of U.S. energy technologies. The 

question is not whether the 21st century economy will be the green 

economy; it has to become one. And I believe it will. The question 

is whether America will lead, and whether the world can change 

course fast enough to prevent a climate disaster. 

Our two witnesses today have powerful insights into these economic opportunities and the challenge that is presented. I look forward to hearing their testimony. 

Senator Lugar. 

OPENING STATEMENT OF HON. RICHARD G. LUGAR, 

U.S. SENATOR FROM INDIANA 

Senator LUGAR. Well, I’m pleased to join you, Mr. Chairman, in 

welcoming our distinguished witnesses. They truly offer two unique 

perspectives on the economic consequences of climate change. 

As an economist, Lord Nicholas Stern issued a far-reaching 

report, which you’ve mentioned, in 2006, including that the cost of 

addressing climate change will increase, the longer we delay taking 

action. As a businessman, Jim Rogers of Duke Energy knows firsthand the direct costs of dealing with climate change. 

Steps to address climate change in the United States, as elsewhere, will occur in a political context that will be deeply affected 

by the current recession, by varying perceptions of risk, regional 

differences, and other factors. This would seem to be stating the obvious, but policymakers must continually remind ourselves that, 

even if some type of international agreement on climate change is 

possible, it won’t mean much if the American public and publics 

around the world reject it as unfair or too burdensome. 

American participation in any global agreement on climate 

change is likely to bring profound changes to the American economy and the culture that require achievements of much greater 

consensus than at least I perceive we now have. 

By ‘‘consensus,’’ I’m not speaking just of agreement, on the 

reality of climate change, or even the necessity of taking action. I 

believe we need much broader agreement on how we structure our 

response and what sacrifices will have to be made by the American 

people. Absent a reasonable consensus on these points, implementation of a climate change policy is far more likely to be ineffective, 

economically damaging, and divisive. 

When I discuss, with Hoosiers in Indiana, the threats that the 

United States faces from our over-reliance on foreign oil, they 

5 

understand both the economic and national security risks of our 

situation. When Hoosiers open a new biofuels or geothermal plant, 

or unveil a new windmill, they are proud; but, their interests in 

these technologies is not always academic. They want to know how 

many jobs will be created, how many dollars will be returned by 

the investment in the long run, how the project fits into broader 

efforts to achieve energy independence for our country. Most Hoosiers are pleased that the project also reduces carbon emissions, 

but that is rarely their central motivation for embracing new technologies and conservation measures. 

Now, I’m hopeful that the U.S. climate change response can be 

centered on steps that simultaneously reduce our reliance on foreign oil, promote soil and water conservation, contribute to rural 

development, leverage new energy technologies, and create jobs. 

Public support will be strongest for emissions-cutting measures 

that are seen as contributing to additional U.S. economic or national security priorities. 

As I mentioned during the last hearing on climate change, the 

American political debate on this issue has not progressed on the 

same timetable as international negotiations. I’ve called on the 

Obama administration, both in private and in public, to vastly 

improve and broaden its education campaign on climate change. An 

essential step in this process must be to provide a much clearer 

picture of the overall elements of the problem and the administration’s strategy in structuring a potential agreement. I understand 

that climate talks are fluid, but the American political debate must 

be sufficiently informed to reach some conclusions about what steps 

are economically and politically plausible. 

If negotiations proceed without these public reference points, congressional approval of any climate change agreement will be 

exceedingly difficult, and we will fall far short of the type of consensus that is needed to sustain an effective program. 

I look forward to the insights of our witnesses. As always, I 

appreciate your calling the hearing, Mr. Chairman. 

The CHAIRMAN. Well, thank you, Senator Lugar. And let me just 

say, with respect to those comments, I appreciate them very much. 

You and I were at a conference in Spain together, on the subject 

of the Aspen Institute, and you’ve reflected some of your concerns 

here again today, which is the purpose of this hearing, obviously, 

and of further discussion. And I hope Mr. Rogers, who represents 

one of our largest energy-producing companies in the country, and, 

I think, has a strong voice in manufacturing, can help engage some 

of those people who are wondering about what the impact of this 

will be. So, we look forward to continuing that dialogue, and I 

intend to pass those words on to the administration, to make certain that they hear what you said today. 

Sir Nicholas, would you begin? 

Mr. Rogers, if you don’t mind, I would like to sort of afford our 

guest the opportunity of sharing, sort of, the economic framework 

first, then I think that’ll allow you to come in underneath it with 

a very much more specific piece. Thank you. 

6 

STATEMENT OF LORD NICHOLAS STERN, CHAIR OF THE 

GRANTHAM RESEARCH INSTITUTE ON CLIMATE CHANGE 

AND THE ENVIRONMENT, LONDON SCHOOL OF ECONOMICS 

AND POLITICAL SCIENCE, LONDON, UNITED KINGDOM 

Lord STERN. Thank you very much, Chairman Kerry, and thank 

you very much, Ranking Member Lugar, for inviting me to be with 

you here today. It’s a great privilege to be back, testifying to the 

Senate. And it’s also a pleasure to be on a panel again with such 

a distinguished industrialist as Jim Rogers. 

I’m Nicholas Stern, professor at the London School of Economics. 

I’m a Member of the Upper House in the U.K. Parliament, a lot 

less influential than your distinguished body, Senators. 

Let me start with why we’re doing all this. What are the benefits 

of action? Well, the benefits of action are the other side of the costs 

of inaction. Given where we are, at around 435 parts per million 

of CO2 equivalent concentrations in the atmosphere, and we’re adding around 21⁄2 parts per million a year, and that 21⁄2 parts per million is rising, 100 years of that would put us at well over 750 parts 

per million, and that would give us at least a 50–50 chance as a 

world, sometime at the end of this century, beginning of next, being 

5 degrees Centigrade above preindustrial times. That is truly enormous. The planet hasn’t seen that for 30 million years. It hasn’t 

even seen 3 degrees for 3 million years. And we humans have been 

around for about 100,000, maybe 200,000 if you relax your definition of sapiens in Homo sapiens. We simply don’t know how we 

could cope with that, but what seems certain is that the changing 

pattern of coastlines, of where the deserts are, the absence of snow, 

essentially, in such a world, and ice, hundreds of millions of people 

would have to move, and we would see extended conflict over many 

decades. 

That is the scale of the risks that we run. This isn’t overdramatizing, it’s just simply taking the simple science of where we’re 

likely to get to if we don’t act. If we’re to bring those probabilities 

down to anything like acceptable levels, we as a world are going 

to have to peak in the next 5 or 10 years, which means the rich 

countries have to peak almost immediately, and the poorer countries have to peak by around 2020. Increasingly, you’re seeing Mexico, Brazil, China come in with plans which look as if they could 

achieve peaking in 2020. We all hope they’ll do more. 

What would it cost us to do this as a world? Well, I’ve said 1 or 

2 percent of GDP to cut emissions by—as a world, by 50 percent 

by 2050, which would be what would be necessary to hold emissions concentration—to hold concentrations in the atmosphere 

below 500 parts per million of CO2 equivalent, and then start the 

process of bringing it on down from there. 

Many estimates—Mr. Chairman, you quoted that from McKinsey’s, which is a very good one—are much, much lower than those 

numbers. Those numbers leave a lot of scope for good policy to 

bring those costs down, and they don’t assume much learning. We 

can do much, much better than that, in my view. 

But, there’s actually a rather deeper point, which is that this 

simple calculation of costs in the way that most economists do it— 

you know, What slice of GDP do you have to make out to make 

these changes?—usually the number is small, as I argued, but I 

7 

think that’s the wrong way to look at it. We have to look at it in 

a much more dynamic way. If you just look at this next year or 

two, we can, through a green recovery, have a very powerful force 

for coming out of recession. Roughly speaking, for $10 billion, you 

create 100,000 jobs in weatherproofing. That’s—and the tremendous returns to that, in terms of energy saving. You probably save 

$2 or $3 billion a year simply on energy from that whilst creating 

those jobs. The Peterson Institute’s come up with those numbers; 

they’re quite similar to what we’ve done in the Grantham Institute 

at London School of Economics. So, great returns in the short run. 

We would embark, second, on two or three decades of very powerful growth driven by investment in low carbon technology. We’d 

have a true Schumpeterian story of innovation and investment 

driving growth would be similar—indeed, probably bigger than the 

railways, electricity, the motor car, or IT. There’s a very dynamic 

story of growth there. 

Third, if you run that forward 40 or 50 years, we’ll have low carbon growth. That will be much more attractive than the alternative. It will be cleaner, in the normal sense of less polluting 

locally. It will be much more energy secure. It will be quieter, it 

will be safer, it will be more biodiverse. And further, in a still 

longer period, it’ll dramatically reduce the long-term risks. 

This is an investment program, with returns in years and 

months, and with returns in a few decades, a return in several decades, returns over the century. It is enormously attractive, and a 

narrow view of short-run costs doesn’t pick up that dynamic story. 

And, above all, it’s a growth story. High carbon growth kills 

itself—first, on very high prices of hydrocarbon, and second, on the 

very hostile physical environment it creates. Low carbon growth is 

the only growth story, and the United States is in a tremendous 

position to lead. The constant innovations and new ideas that you 

see, in large measure, come from this country. 

We are, of course, in an economic crisis. That just strengthens 

the arguments still further. The argument of the economic crisis for 

delay is simply confused and wrong. We should surely have learned 

that risks ignored are risks magnified. That must be a lesson from 

this economic crisis. We should surely have learned that you don’t 

come out of one crisis and sow the seeds of the next crisis. I would 

suggest that’s, in part, what we, as a world, did when the dot-com 

bubble burst around the turn of the century; we sowed the seeds 

of the next one. What we must surely do is lay the foundation for 

the real growth story of these next few decades. 

If you just take a narrow view, over this next decade, of the new 

jobs in renewables, it’s probably a few million in the United States 

and a few million in Europe. That’s a very narrow view of renewables. We have to see energy efficiency as pervading the whole construction industry, as pervading the whole of public transport and 

of private transport. If you take that view, I believe you’re going 

to talk about a big slice of our workforce in the new technologies, 

the new construction, the new transport, and so on, that’s coming 

forward. 

So, the challenge, then, is to manage the transition, and to do it 

well. We know the kind of policies that are necessary—prices for 

carbon and regulation, investing in new technologies, public and 

8 

private, promoting energy efficiency, avoiding deforestation, and 

adapting to the carbon—adapting to the changes which will take 

place. We know what we have to look out for—problems of competitiveness and leakage. We can analyze how big they are. 

Joe Aldy and Betty Pizer, a recent paper, have showed that, 

actually, the problem is very small, and, for a reasonable estimate, 

the carbon price in the United States, the change in employment 

in manufacturing would be negligible. 

There’ll be a few areas where it is most important, and we have 

to focus our policy on working out how to manage those. But, I believe, again, there’s a great deal we can do in, for example, adjusting the speed of auctioning permits, which could be different in industries with different challenges. That would be one way of doing 

it. But, of course, much the best way is to work together as a world 

to get everybody along this path, and that’s the opportunity we 

have in Copenhagen. 

I’ve tried, in the book ‘‘Global Deal,’’ which was published here 

in the United States last month, to set out what such a global deal 

would look like. I believe that the United States, China, and the 

European Union will lead that global lead. They’re responsible for 

about half of global emissions. The big story is the relationship 

between the United States, China, and the European Union. That 

will shape where this global deal goes. 

We have to recognize what other people are doing. And you, in 

your introduction, sir, you described very clearly that China is 

moving quickly. The European Union is moving very quickly. I 

spend a lot of time in discussions with European Union leaders and 

with Chinese leaders, and I always try to explain to them what 

United States is doing. But, what I’m saying here is that United 

States position is critical. The technologies that you set as standards will change the world. In the United States, you went from 

leaded to unleaded petrol; everybody else had to follow. And they 

did. At the same time, the action which people will take, themselves, will depend very much on what United States does. So, you 

have a tremendous leadership role, which I believe you are starting 

to take, and you have the ability to have a tremendous multiplier 

effect, not only through your ideas and technologies, which will be 

fundamental, but also in the policies and actions which you make, 

going forward. And I think you’re already seeing the world starting 

to follow where the world thinks United States is likely to go, and 

I think that’s a tremendous move forward. I’m not an American, as 

you can tell from my accent, but looking at United States from outside, I think the leadership that’s emerging is tremendously important. And, of course, if it doesn’t emerge, it would be very damaging for a global agreement. But, I’m much more optimistic now 

than I was before. 

So, thank you very much for the opportunity to be here. 

[The prepared statement of Lord Stern follows:] 

9 

PREPARED STATEMENT OF LORD NICHOLAS STERN, CHAIR OF THE GRANTHAM RESEARCH INSTITUTE ON CLIMATE CHANGE AND THE ENVIRONMENT AND IG PATEL

PROFESSOR OF ECONOMICS AND GOVERNMENT AT LONDON SCHOOL OF ECONOMICS

AND POLITICAL SCIENCE, LONDON, UNITED KINGDOM

OVERVIEW

The world currently faces both an economic crisis and an even deeper climate crisis. This global economic recession, triggered by a major financial crisis, draws into 

sharp focus the economic and social impact of not taking into account the risks of 

our actions. The climate crisis is altogether of a different scale and magnitude. Continuing with current practice will, by the end of the century, take the world to a 

point where eventual global warming of more than 5 °C is more likely than not. 

Temperature increases on this scale would disrupt the climate and the environment 

so severely that there would be enormous consequences for where and how people 

lived their lives. Large scale migration, possible of hundreds of millions of people, 

would probably result in extended conflict. In other words, the current path of high 

carbon growth cannot sustain itself over the long term. Low carbon growth is the 

only sustainable growth path for the future. Moreover, the transition to a low carbon global economy offers substantial opportunities for a surge in economic growth 

led by innovation, investment and job opportunities, whilst supporting energy security and a cleaner, safer, quieter and more biodiverse environment. Many of the necessary technologies are already understood, but new ones will be created along the 

way offering substantial opportunity for investment. Those countries which act early 

are likely to reap significant economic rewards and ensure their growth will be resilient to climate change in future. Those countries who fail to anticipate change will 

be left behind. The United States has a historic opportunity to lead the transition 

to a global low carbon economy, demonstrating that low carbon growth is feasible 

and affordable. Moreover, the United States has a critical role to play if the world 

is to achieve a global deal on climate in Copenhagen in December 2009. 

THE CASE FOR ACTION

The basic science is well understood. The rising concentration of greenhouse gases 

in the atmosphere, due to emissions from a wide range of human activities, is increasing average global temperatures. This process affects the timing, distribution, 

averages and extremes of temperatures as well as the intensity of rainfall, likelihood of extreme weather events and pace of sea level rise. Without strong action 

the world will, in the next decade, commit future generations to a temperature rise 

of at least 2 °C relative to preindustrial levels—a level which many scientists 

already deem too dangerous. A temperature rise of at least 5 °C is unknown territory for humans and greater than the difference between now and the last ice age. 

There would undoubtedly be catastrophic consequences for the planet. 

Climate change is already having an impact in the United States. Increases in 

weather extremes such as storms, floods, droughts, and heat waves have already led 

to significant economic damages in both rural and urban areas and further impacts 

and increasing damages are forecast. Globally, it is the poorest countries and poorest within those countries that will be hit earliest and hardest but these impacts 

will be felt worldwide. The risks of severe hardship and dislocation, water stress, 

mass migration and rising conflict will pose a severe foreign policy challenge for the 

United States in the future. The need to manage risks to United States economic, 

national, and energy security therefore dictates early and strong action on climate 

change. 

Climate change policy is not only sensible risk management. It is also the means 

for boosting growth today whilst laying the foundations of stable and sustainable 

growth for future generations. It is vital that all countries act together in order to 

achieve emissions cuts on the scale required. The United States has an important 

leadership role to play and can lead the world in the transformation to a low carbon 

global economy, generating new investment and employment opportunities and positioning itself as a global leader in new innovative technologies. Policies for a ‘‘green 

recovery’’ will create a pathway for more sustainable growth whilst also sharply 

reducing climate change risks. This is the only growth strategy for the future. 

FUTURE GROWTH MUST BE LOW CARBON GROWTH

1. Economic opportunities in early and strong action on climate change 

The question of what economic opportunities strong action on climate change 

could bring should start with an overview of what the policy framework should look 

like. The following key components make up the essential elements: 

10 

1 ‘‘Towards A Green Global Recovery—Recommendations for Immediate G20 Action,’’ O. Edenhoffer and N. Stern, April 2009. And, ‘‘An Outline of the Case for a Green Stimulus,’’ A. Bowen, 

N. Stern, S. Fankhauser, and D. Zenghelis, February 2009. 

• Placing a price on carbon to correct market failures by making it possible for 

markets to reflect the right signals; • Policies to stimulate the development and deployment of low carbon technologies through addressing market failures and bottle necks; • Encouraging behavioural change, particularly energy efficiency; • Promoting adaptation to climate change that is already unavoidable; • Globally, bringing an end to deforestation. 

If applied in the right way, policies to tackle climate change present both shortterm benefits during the current global recession and underpin large and growing 

investment opportunities for decades to come. For example, pathways for green 

global recovery include short-term policies that can stimulate employment creation 

and investment, all of which can play a vital role in supporting aggregate demand 

and growing out of recession. In the medium to long term there are clear win-wins 

from a strong policy framework to tackle climate change, including the stimulus to 

innovation from structural change, addressing longstanding market failures and 

barriers preventing behavioural change and uptake of new technologies, and important co-benefits such as a cleaner environment and greater energy security. The era 

of low carbon growth promises to be exciting, creative, and transformational. 

For these reasons, the debate around climate change action should not be seen 

purely through the lens of containing and managing economic costs. There will 

indeed be costs of transition, but these can be managed through carefully targeted 

policies and programs. More importantly, there will be investments with very high 

returns. Moreover, taking action today is crucial to avoid the high costs of delay. 

Continuing business as usual emissions will build stocks of CO2 in the atmosphere, 

resulting in higher concentrations and making the starting point for reductions both 

more challenging and more expensive. Slow initial action not only increases the 

chances of going above 2 °C, but also means that low-cost mitigation options are 

missed and high carbon technologies and infrastructure are locked in. It is therefore 

vital to strengthen the understanding among governments, businesses and consumers of how key policies to tackle climate change, both domestically and at a global 

level, can promote and sustain economic recovery and growth in the future. 

The economic arguments that climate change policies can be growth enhancing 

have most recently been debated in the context of the economic stimulus and recovery packages implemented in many of the world’s major economies. At time when 

declining demand in the world economy is driving economic downturn, causing a 

sharp deterioration in the economic outlook, the case for a fiscal stimulus becomes 

clear cut—helping to sustain demand, use otherwise idle resources, save money 

through improved energy efficiency and create jobs. To be effective, however, fiscal 

policies need to be timely (with a significant proportion of expenditures being carried out within the next year), well targeted (with long-term social returns, positive 

lock-in effects and use of underutilized resources) and time-limited without bringing 

into question the long term credibility of the fiscal framework. 

In several recent papers 1 on this issue, public spending aimed at stimulating private investment to reduce green house gas emissions was seen to perform very well 

against these criteria for an effective stimulus, whilst increasing energy efficiency 

and security. Through addressing market failures and stimulating private investment, these measures generally avoid crowding out private sector activity. Such 

policies not only make sense in the current economic context, but also more generally as the drivers of future innovation, job opportunities and to lay the foundations for growth in the future that is far more sustainable than the path the world 

is currently on. Crucially, these policies avoid the risk of locking in high carbon 

infrastructure for the coming decades. 

2. Key areas for investment and action 

A key example of this is in spending to improve energy efficiency. All major economies have the potential for substantial energy efficiency improvements, which in 

total could make up a significant proportion of the emissions reductions required to 

meet global stabilisation targets. Energy efficiency measures have a high multiplier 

effect (raising aggregate demand through fiscal spending) being concentrated in sectors strongly affected by the decline in global demand, such as construction. Furthermore, lower spending on energy costs frees up income that can be spent on the 

products from other sectors of the economy. Energy efficiency measures also lay the 

foundation for a more sustainable future, simultaneously reducing emissions and 

energy costs, cushioning against future resurgent oil prices. In all countries, subVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
11 

2 ‘‘A Clean Energy New Deal: Ensuring Green Growth in a Time of Economic Crisis,’’ December 2008. 

stantial potential for energy efficiency improvements remain. The IEA 2 has identified 25 energy efficiency policies, including in buildings, transport, appliances and 

industrial sectors that can be implemented at low or negative cost impacting economic activity in the short term and reducing consumer energy bills in the future. 

Policies to upgrade physical infrastructure are another good example of measures 

to create short-run benefits whilst laying the foundations for future sustainable 

growth. Investment in infrastructure can have a high multiplier effect in times of 

economic recession. If well targeted, it can also have strong implications for the profile of emissions in the future. This is nowhere truer than in the power sector. Ageing capital stock in industrialized countries presents an excellent investment opportunity, for example in the transmission and distribution grid, storage of electricity 

and other elements of the network to absorb innovative low carbon technologies and 

avoiding lock-in of high carbon systems. Investing in networked technologies to ensure energy is produced, distributed and consumed more efficiently through integrated ‘‘smart’’ systems which monitor and reduce waste also have great potential 

to save money and reduce emissions. Investment in public transport is another 

strong example, contributing to the decarbonisation of infrastructure, for example 

through setting emissions standards for CO2 and local air pollutants and supporting 

the switch from petroleum to electricity. 

Policies to support clean energy technology are a further crucial part of the mix, 

contributing directly to job growth and fostering innovation, creativity and comparative advantage in a key future growth sector. If the world is to put itself on a path 

to achieve the necessary cuts in emissions, a fundamental transformation is 

required in the way energy is produced and consumed. Key technologies including 

renewable energy (solar, wind, hydro, tidal, wave, biomass, and geothermal), nuclear 

and carbon capture and storage for coal will require significant investment for demonstration and deployment if growing world energy demand is to be met. The IEA 

estimates $1 trillion a year in energy supply investment between now and 2030 is 

needed. The difficulties caused by current credit market constraints and other bottlenecks make this challenge even more daunting. Nonetheless, there could be significant economic opportunity for early movers who strive to get ahead of the curve. 

As we learn more about technologies from research and experience and exploit 

economies of scale, costs fall over time. Moreover, the job growth potential in the 

clean energy industry is increasingly clear, with countries such as Denmark and 

Germany amongst many others already reaping rewards. Early investment in low 

carbon technologies also makes clear sense from a cost perspective, reducing a key 

source of uncertainty about the scale of future mitigation costs. Furthermore, it can 

promote energy security through securing against future supply disruptions and 

support resistance to future price shocks. 

These are only three examples of policy areas that can secure the immediate benefits of stimulus and employment creation, whilst laying the foundations for a low 

carbon world. Governments around the world are already taking strong action in 

this direction, evidenced by the $430 billion fiscal resources dedicated to climate 

change investment themes as part of recent stimulus packages. This includes the 

$65 billion committed by the U.S. administration to green energy, through spending 

and tax incentives. In the U.K. 2009 budget, £1.4 billion new spending was 

announced to support the low carbon sector. China and South Korea are also major 

economies with policies for low carbon growth making up an important part of their 

fiscal stimulus packages and approaches to future wealth creation and sustainability. There are many more positive examples at the firm level, where globally 

competitive companies are embedding energy savings and low carbon policies at the 

centre of their business planning. Recent research shows that better managed firms 

generally tend to me more energy efficient, reducing energy usage without hurting 

their employment and output. In the United States, companies such as Cisco, IBM, 

DuPont, Dow Chemical, General Electric, and Duke Energy are at the forefront of 

the climate change debate, recognising that strategic global importance of low carbon growth and energy savings to their business models. 

The current global financial crisis has clearly brought into sharper focus the need 

for an economic recovery which leads to a more sustainable global economy. Action 

currently being taken around the world is only the beginning of the pathway that 

is necessary to achieve a low carbon global economy, consistent with the international targets necessary to avoid dangerous climate change. In future, there is 

both a need and an opportunity to deepen these policies at the national level and 

make them even more impactful through globally coordinated action. Without this, 

it will not be possible to stimulate the global flows of trade and investment that 

12 

3 ‘‘The Competitiveness Impacts of Climate Change Mitigation Policies,’’ J. Aldy and W. Pizer, 

Resources for the Future, May 2009. 

is vital to support deep emissions cuts on the scale required, whilst sustaining economic growth and supporting the international development and diffusion of critical 

low carbon technologies. The United States has a historic opportunity to lead the 

world in the era of low carbon growth, acting early to create new forms of comparative advantage and foster a sustainable growth path for itself and others in the 

future. Leadership has already been shown in some United States States, such as 

California, to introduce regulation, cut emissions and support low carbon industry. 

Furthermore, there is enormous scope for developing the renewable industry in the 

United States, given its natural resource endowments. 

3. Fostering the transition and managing the costs of adjustment 

Like any adjustment process, there will be costs of transition inherent in transforming the economy to a low carbon growth path. Placing a price on carbon, 

whether through cap and trade or a carbon tax, requires the market to readjust. 

There will clearly be winners and losers from this process, as with any adjustment 

process. However, with the right policy framework these costs should be manageable 

and are not a reason to delay strong action. Complementary policies to support adjustment at the firm level, innovation and uptake of new technologies, to encourage 

behavioural change and to enable trading will help support least cost abatement 

potential and keep costs at a manageable level. 

Concerns about competitiveness and carbon leakage are often heard and are important considerations for any government. It is important to understand and quantify these impacts as closely as possible, to ensure they are not overstated and that 

any compensation program can be well targeted. Existing research shows that these 

concerns are mainly relevant to a small number of specific industries and sectors 

rather than the wider economy. In the United States, only 1.6 perecent of GDP and 

1.7 percent of employment are generated from carbon intensive sectors. Moreover, 

the influence of small carbon costs on location decisions is dwarfed by commercially 

more important factors such as access to markets, raw materials, skills, technologies 

and infrastructure. Recent research by the Pew Centre 3 confirms that the competitiveness impacts from a unilateral United States climate policy on domestic manufactures as a whole are small (approximately 0.7 percent) for a $15 per tonne CO2

price. This implies policies are most efficiently targeted at supporting the transition 

in specific industries. Protectionist trade measures should be avoided. They are 

blunt measures and risk affecting unrelated industries if trade dispute results. 

Equally important are the concerns around costs to consumers and households 

through energy price rises, brought about by placing a price on carbon. Whilst cost 

passthrough of the carbon price from industry to the consumer does occur as part 

of the clear price signal that is necessary to incentivise behavioral change, the average cost to household budgets can be contained through careful measures, including 

through compensating low-income households. Moreover, encouraging companies to 

improve their efficiency and allowing companies access to cheaper abatement opportunities abroad would reduce the price of emission permits, leading to lower cost 

being passed through to the consumers. Household energy consumption can also be 

reduced through behavioral change, awareness, low-cost actions, and investment 

decisions. Capturing such opportunities would mean less income spent on energy, 

and hence help keep cost down for vulnerable families. In other words with the right 

flanking measures, a carbon price should not necessarily entail excessively higher 

cost to consumers. 

ACHIEVING A GLOBAL DEAL ON CLIMATE CHANGE—A LEADERSHIP ROLE FOR THE

UNITED STATES

A global deal on climate change is necessary if the world is to achieve the necessary global targets. The timing is urgent, with the negotiations for a post-Kyoto 

framework shortly to get underway in the buildup to Copenhagen 2009. Both developed and developing countries have a role to play in building positive momentum 

for a global deal. This must be global collaboration on a scale never witnessed before 

in our lifetimes. The United States has a historic opportunity to play a crucial international leadership role to achieve this. The world will look to U.S. leadership in 

setting clear and strong mid-term targets for 2020, on a credible pathway to achieve 

its goals by 2050. The rest of the world will watch the domestic debate on U.S. climate legislation more closely than ever before, and if the United States demonstrates strong ambition for its own emissions reductions the rest of the world will 

follow. Moreover, the support which developing countries require to achieve low carVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
13 

bon growth, including vital flows of finance and technology, can only be successfully 

designed and implemented with strong U.S. backing. The chances of achieving a 

credible and enduring global deal on climate change depend on the United States 

playing a central role. 

CONCLUSION

Strong action on climate change is feasible and affordable and creates substantial 

economic opportunity. The economic and climate arguments for the green fiscal 

stimulus have enabled governments around the world to better understand the 

framework for supporting opportunities, whilst managing the economic costs. Fiscal 

stimulus measures for example in energy efficiency, investment in alternative power 

infrastructure, low carbon RDD&D, infrastructure and transport will both enable a 

green recovery and lay the foundations for the future more sustainable growth. This 

is only the beginning of what needs to be done to set the world on a pathway for 

avoiding dangerous climate change. The scale of the challenge is daunting, but full 

of opportunities. The task now rests with Governments to put in place as quickly 

as possible a clear, consistent and credible set of policies and measures to support 

the transition to a global low carbon economy, bound into an international framework. 

The CHAIRMAN. Well, thank you, Sir Nicholas. And we do look 

forward to being able to ask you a few questions. But, your opening 

statement sets a good stage, and we appreciate it very much. 

Mr. Rogers. 

STATEMENT OF JAMES E. ROGERS, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, DUKE ENERGY, CHARLOTTE, NC 

Mr. ROGERS. Mr. Chairman, Ranking Member Senator Lugar, I 

am delighted to be here today to share with you my thoughts on 

how we can work together to drive a green global economic 

recovery. 

My name is Jim Rogers. I’m the CEO of Duke Energy. We provide electric power to more than 11 million people in five States, 

and, as Senator Lugar knows, we’re the largest utility in Indiana. 

We’re also the third-largest electric power generator, based on kilowatt-hour sales, in the Americas, both North and South America. 

We produce electricity from renewables, solar, wind, and biomass, 

coal, nuclear, natural gas, and hydropower. 

As I sit before this committee, I recognize, as you all do, that we 

face two simultaneous and urgent crises: Global climate change 

and a deep financial downturn. There are great similarities 

between them. No one nation or entity can solve either problem. It 

will take policy leaders and businesses from around the world to 

solve both. 

There’s a great opportunity for us in both crises. If we structure 

our approach to climate change effectively, we can address the 

global climate crisis, which will provide a pathway to help address 

the global financial crisis. 

Climate legislation in the United States is not going to be free, 

it’s not going to be easy or quick, but it must be fair, and it must 

be now, to drive a green global economic recovery. 

There are several reasons why action, now, is important. By putting a cap on emissions and a price on carbon, it will allow our 

country to get the best bang for the buck from the green portions 

of the stimulus. This linkage will create a roadmap that will allow 

capital-intensive industries, like my own, to start planning for 

future investments and the creation of 21st century high-tech jobs, 

because the building of new transmission, renewables, nuclear, 

14 

cannot be done overnight; it can be completed over the next 3 to 

10 years. Most importantly—and I want to underscore this—it is 

confidence in this roadmap that will help us all rebound from this 

recession that we find ourself in today. 

I’d further note that, as I look at our own company, as one of the 

largest generators in the country, by 2050 virtually every powerplant we own today will be retired or replaced. And that’s an ‘‘aha’’ 

for me, in the sense that it says that, if we want a low carbon generation fleet in this country, getting about the business now will 

allow us to make this transition in a way that creates jobs and generates advanced technologies. 

The second reason is—action now is important—is because the 

United States, in my judgment, lags behind its global competitors 

in the race to fuel the clean energy future. According to research 

firm New Energy Finance, the value of low carbon energy market 

worldwide is expected to reach $450 billion annually by 2012, rising to $600 billion annually in 2020. Without a U.S. carbon program, we will not be participating in these lucrative markets. 

If you look today at China, you will find that they are investing roughly $221 billion over the next 2 years in clean energy. That’s 

double the U.S. investment in everything from wind to solar to 

advanced batteries. I understand very well the arguments against 

action on energy and climate, with concerns focused on our economy today; but, the reality is, we can’t afford not to act if we hope 

to compete and lead. 

The right—underscore ‘‘right’’—comprehensive carbon legislation 

can provide, not only the certainty and rules of the road by which 

we can plan, build, and compete, they can also protect consumers 

during the transition to this low carbon world. The sooner Congress 

provides a clear set of rules, the sooner investments will be made. 

I strongly believe that one of the most effective approaches to 

solving the climate issue would be to develop a series of public and 

private partnerships with countries and businesses around the 

globe. Through domestic action and international leadership and 

cooperation, we can drive a green economic recovery worldwide. 

For instance, we have an opportunity to establish a new spirit 

of cooperation between China and the United States. The most important long-term issue that both countries face is the same: The 

challenge of responding to climate change while providing for economic growth. It is an issue for which progress would be mutually 

beneficial. Think about it. Both countries rely heavily on coal. Both 

rely on oil, a national security issue for both. Both are at risk, due 

to climate change. Because of these shared concerns, this area is 

ripe for collaborative endeavors that would build additional trust 

between China and the United States. 

It is my judgment, and the recommendation that I would make 

is, that the United States should appoint a senior climate negotiator to work directly with China to build what I would characterize as a ladder of cooperation which engages both the public and 

private sectors. I believe China would respond in kind. And I think 

that’s an important point. This cooperative effort, I believe, would 

be like a living laboratory to further action on electric cars, the 

identification of new energy efficiency capabilities, research and 

deployment of carbon capture and sequestration, which is so key to 

15 

our continued use of coal. I believe that we will be able to scale carbon capture and sequestration faster in China, with their buildout 

of plants, than we can in the United States; and by working 

together, we can do it even faster. It will also lead to work on 

Smart Grid technologies, and are involved, as a company, in some 

of those efforts, and advanced technologies for the monitoring of 

greenhouse gases. These are just some of the areas that we could 

work together with the Chinese on that would advance for both of 

us. 

Cooperation and progress in the development and deployment of 

clean energy technologies are not just important in their own right, 

they also encourage a new spirit of Chinese leadership in United 

Nations climate negotiations. 

It’s my belief that China is better equipped than any other developing country to help the world define pathways for all nations to 

follow toward emission reductions. First, by taking cost-effective 

steps to cut energy waste, and second, by graduating to real and 

enforceable emission limits. Working together on clean energy, the 

United States and China may also be able to show the way to a 

new global agreement on climate change. 

And this idea is not original with me; this idea actually comes 

from former Prime Minister Tony Blair, who talks about the significance of the G2, not just the G8 or the G20, but if the G2 can 

come together, not in a way that—to the exclusion of the rest of 

the world, but because we have these common interests and these 

common issues, that we could help mold a post-Kyoto agreement. 

Our company stands ready to work both with the administration 

and Congress to get this done. 

Thank you very much. 

[The prepared statement of Mr. Rogers follows:] 

PREPARED STATEMENT OF JAMES E. ROGERS, CHAIRMAN, CEO, AND PRESIDENT, DUKE ENERGY CORPORATION, CHARLOTTE, NC 

Mr. Chairman and members of the committee, I am delighted to be here today 

to share with you my thoughts on how we can work together to drive a green global 

economic recovery. My name is Jim Rogers and I am chairman, CEO, and president 

of Duke Energy Corporation. 

Duke Energy provides electric power to more than 11 million people in five States: 

North Carolina, South Carolina, Ohio, Indiana, and Kentucky. We are the thirdlargest electric power holding company in the United States based on kilowatt-hour 

sales. Our diversified generation portfolio of 37,000 megawatts mirrors the mixture 

of supply in the United States as a whole with a blend of coal, nuclear, natural gas, 

and hydropower. 

We have also made sizeable investments in renewables, notably wind where we 

have more than 500 megawatts in operation and another 5,000 megawatts under 

development, and in biomass where we have formed a joint venture that has targeted the construction of at least ten 50-megawatt biopower facilities in the United 

States over the next 5 years. Finally, Duke Energy owns and operates approximately 4,000 megawatts of electric generation facilities in Central and South America. About 75 percent of this capacity is hydroelectric. 

My views on these international challenges are not just shaped by my responsibilities running a large U.S. energy company with significant international operations. 

My perspective has also been formed from my membership and participation in the 

World Economic Forum’s Task Force on Low-Carbon Economic Prosperity, the Club 

of Madrid and U.N. Foundation ‘‘Global Leadership for Climate Action,’’ Globe International, the World Business Council for Sustainable Development, and the Copenhagen Climate Council. We are a founding member of the Joint U.S.-China Cooperation on Clean Energy where we are focused on sharing information, experience, and 

expertise. And we are the only U.S. utility that is a founding member of the China 

Greentech Initiative. Some of the other U.S. members are Dell, Cisco, and GE. 

16 

1 Joel Makower,‘‘ Strategies for the Green Economy.’’ 

2 ‘‘Wasted Energy: How the U.S. Can Reach Its Energy Productivity Potential,’’ McKinsey 

Global Institute, July 2007, available at: http://www.mckinsey.com/mgi/publications/wastedl 

energy/index.asp. 

TWO CRISES, TWO OPPORTUNITIES

Here and around the world we are facing two simultaneous and urgent crises: 

Global climate change and a deep financial downturn. There are great similarities 

between them. No one nation alone can solve either problem. With both, government, NGOs, and business must work together to find the right way forward. 

Yet there are key differences: The economy has sustained a cycle of boom and 

bust for generations, whereas the environment is close to ‘‘bust,’’ and it is not cyclical. We are fast approaching thresholds of irreversible damage to our global climate. 

But the government has the chance to address this great market failure to still minimize its worst impacts. And there is a great opportunity for us in both crises: If 

we structure our approach to climate change effectively, addressing the global climate crisis can also be one of the keys to addressing our global financial crisis. 

I agree with a key point Sir Nicholas Stern has made: We must act now because 

if we don’t, the economic costs, including the cost of our security here at home, will 

be much greater. Moreover, the costs and harm to those who are least able to adapt 

to the impacts of global climate change will rise significantly absent action now— 

and the unjust irony is they have contributed least to the problem. 

CONSUMERS ARE AT RISK: WE MUST GET THIS RIGHT

I might add that my company and my customers are at ground zero for both the 

environmental and economic storms we face. Duke Energy is the third-largest consumer of coal in the United States and we emit around 100 million tons of carbon 

dioxide annually. And as Senator Lugar knows, the Midwest has been particularly 

hard hit by this recession. With so much of this region dependent upon traditional 

coal-fired powerplants, we have to be very careful about how we make the transition 

to a ‘‘decarbonized’’ economy. Yet we also know that new clean technology manufacturing can help restart closed factories as the Gamesa wind turbine facility has in 

Pennsylvania. 

So how do we move forward to capture this economic opportunity here at home 

and globally? We need government leadership to partner with industry to transition 

our economy to be cleaner, more efficient, and more competitive. The WaxmanMarkey bill currently being marked up goes a long way toward providing a solid 

foundation upon which we can build a green global economic recovery. It creates a 

40-year roadmap for U.S. carbon reductions; in our sector, it seeks to minimize consumer impacts and regional disparities by effectively distributing allowances 

directly to consumers of electric power; it creates enormous incentives for renewable 

energy; and it focuses needed resources on the development of the next generation 

of coal powerplants that will include carbon capture and sequestration. 

AMERICAN ECONOMIC OPPORTUNITY

By putting a cap on emissions, encouraging energy efficiency and deployment of 

clean energy technologies, and providing a transition to allow carbon economy, the 

right climate legislation will not only increase our competitiveness by reducing 

energy consumption and reliance on foreign oil, but will also create clean energy 

jobs here at home in engineering, manufacturing, and construction. 

The carbon intensity of the United States has begun to show steady declines on 

a normalized basis—that is greenhouse gas emissions per unit of GDP. Since 1950 

U.S. energy use—measured per dollar of GDP—has declined more than 75 percent, 

from 9.4 British Thermal Units per dollar of GDP to just 2.5 BTUs.1 Yet we have 

much more work to do. 

According to the McKinsey Global Institute, ‘‘each person in the United States 

today consumes the equivalent of almost seven gallons of oil—80 percent more 

energy than Northwestern Europe, 94 percent more than Japan, and seven times 

the level of China.’’ This waste harms our competitiveness. Yet, according to this 

same analysis, by deploying existing technologies that have an investment return 

of 10 percent or more, the United States can increase its energy productivity to cap 

our energy demand at today’s levels.2

Of course one key aspect of this is in the utility industry is the disincentives to 

saving energy. Working as cochair of the National Action Plan on Energy Efficiency, 

which has developed Vision 2025, a plan to increase dramatically energy efficiency 

by 2025, we encouraged States to examine the disincentives to utility energy effiVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
17 

3 ‘‘Global Trends in Sustainable Energy Investment,’’ 2008, New Energy Finance and United 

Nations Environment Program. 4The China Sustainable Energy Program is a joint project of the Packard Foundation and the 

Energy Foundation. 5 Ibid. 

6 Ibid. 

7Lazard research for Kleiner Perkins Caufield and Byers. 

ciency and identified the barriers that consumers have to meeting that energy efficiency goal. 

The United States also lags behind its global competitors in the race to fuel the 

clean energy future. According to the research firm New Energy Finance, the value 

of low carbon energy market is expected to reach $450 billion annually by 2012, rising to $600 billion annually in 2020. In 2007, global investment in sustainable 

energy broke all previous records, with $148.4 billion of new money raised in 2007, 

an increase of 60 percent over 2006. Total financial transactions in sustainable 

energy, including acquisition activity, was $204.9 billion.3

China is Investing in Greentech 

While I recognize that the Chinese market differs substantially than the United 

States, it is still worth noting that China has committed $221 billion over the next 

2 years toward their clean energy economy. That’s double the U.S. investment in 

everything from wind to solar to advanced batteries. China now has renewable energy, energy efficiency, and fuel economy standards that are all more aggressive 

than our own. I also realize that China is developing more coal plants than the 

United States, but the point that should be emphasized is they are also preparing 

to meet new energy challenges. 

According to the Chinese Sustainable Energy Programs: ‘‘By 2008, average Chinese passenger cars had to meet a 36-miles-per-gallon (mpg) fuel efficiency standard. In late 2007, the U.S. standard for passenger vehicles was raised to 35 mpg, 

but not until 2020. China is also in the process of setting fuel economy standards 

for trucks and agricultural vehicles. These policies together are going to reduce China’s GHG emissions by 488 million tons of CO2 by 2030.’’ 4 In comparison, the EU 

commitment under Kyoto is about 300 million tons of CO2 between 1997 and 2012. 

Perhaps most striking, China has established the world’s most aggressive energy 

efficiency target, which calls for a 20-percent reduction in energy intensity between 

2005 and 2010 (which is a nation’s energy consumption per unit of GDP). If fully 

implemented, this target would translate to a reduction of over 1.5 billion tons of 

CO2 in just 5 years. Although China is not yet on track to fully reach this goal, they 

are working toward it and are already taxing the least efficient performers in major 

emitting industries to increase productivity.5

China’s Renewable Energy Law, which came into force in 2005, has set the 

world’s most aggressive renewable energy target. By 2020, 15 percent of all energy 

is to come from wind, biomass, solar and hydropower energy, compared to its current 7 percent. China projects that it will have 137 gigawatts of renewable power 

generation by then, plus vehicle fuels with at least 15 percent renewable energy content. In August 2007, China’s National Development and Reform Commission 

launched its Medium to Long-term Renewable Energy Development Plan. By 2020, 

installed capacity for small hydro, wind, biomass, and solar will reach 75 GW, 

30GW, 30 GW and 1.8 GW, respectively. Estimated total investment needs for realizing these target amounts to nearly US$270 billion. As you know, the United 

States has yet to establish a national renewable energy platform.6

These investments and policies are paying off. This year, China is expected to 

become the world’s largest wind turbine manufacturer. Until the late 1990s, the 

United States dominated the global solar energy market. Now Japan, China, and 

Germany are the leaders. These other countries have policies that have created better markets for clean technologies, so the business opportunities have moved overseas. According to recent research by Lazard, of the world’s top 10 solar, 10 wind, 

and 10 advanced battery manufacturing companies, only five of the 30 are American 

companies.7

Arguments against action on energy and climate suggest we can’t afford to take 

action; yet the reality is we can’t afford not to act if we hope to compete and lead. 

We need comprehensive energy and carbon legislation to provide the certainty and 

rules of the road by which we can plan, build, and compete. The sooner Congress 

provides a clear set of rules, the sooner investments will be made. We must unleash 

the spirit of economic entrepreneurship to tackle this challenge. 

18 

A GLOBAL DEAL TO DRIVE A GREEN ECONOMIC RECOVERY

Internationally, I have been working to develop recommendations and help shape 

the structure of a global agreement through the World Economic Forum’s Gleneagles Dialogue, through Global Leaders for Climate Action (under the auspices of 

the Club of Madrid and the U.N. Foundation), and as a member of the executive 

committee of the World Business Council on Sustainable Development. 

It is clear to me that just as effective comprehensive carbon legislation in the 

United States is what we need to drive our economic recovery, so too can a smart 

global agreement on climate change support global economic prosperity. And there 

are other benefits to agreement: First, the sooner we act, the lower the costs of impacts we will face in the future; second, the opportunities to cooperate on policy and 

technology strategies can improve our relationships; and by reducing global impacts 

from climate change, we will increase stability and improve national security. 

To reach a deal that includes developing countries the United States must demonstrate leadership and reengage in international negotiations. Seventy to eighty 

percent of the existing greenhouse gas concentrations in the atmosphere are from 

developed countries, and the United States continues to emit one-quarter of the 

world’s emissions with only 5 percent of the world’s population. There is a short 

window of opportunity for the United States to show its commitment to resolving 

the climate change challenge through strong action. 

Without a mandatory cap on greenhouse gas emissions here, it is highly unlikely 

that key developing countries like China will make their own commitments. And 

without a new agreement we won’t have the market signals to drive financial flows 

to more efficient, cleaner energy, and greater global productivity. A global deal will 

also expand opportunities to find the lowest cost emission reductions; a global 

approach to emissions reductions allows each dollar to be spent where it can go the 

farthest. 

So to facilitate a truly global deal, we need a strong legislative package of 

medium- and long-term domestic targets, along with a suite of commitments and 

mechanisms to engage internationally. These include: 

—Mandatory domestic reductions of greenhouse gas emissions; 

—Provisions for valuing standing forests and other types of international offsets; 

—Bilateral and multilateral mechanisms to accelerate clean technology deployment 

overseas; 

—Financing for investments in these clean technologies (clean energy and carbon 

mitigation technologies) in developing countries; and 

—Assistance to the most vulnerable populations for adaptation to climate change, 

to reduce climate change’s greatest impacts such as drought, flooding, and sea 

level rise. Oxfam estimates that developing country costs of adaptation will be 

some $50 billion. 

BENEFITS OF A GLOBAL DEAL WITH DEVELOPING COUNTRIES

These provisions also serve America’s interests. Mandatory reductions here drive 

domestic competitiveness and the development of vital new technologies. Carbon reductions from protecting international forests are low cost and have great co-benefits from poverty alleviation, to protection of biodiversity and will bring nations like 

Brazil and Indonesia to the table for the global agreement. Support for clean technology deployment and financing in developing economies benefits American 

innovators because it is these developing economies that can be the greatest market 

opportunities. 

According to New Energy Finance, in 2004–05, developing countries accounted for 

10 percent of global asset finance, which doubled to 20 percent in 2006–07, reflecting a surge in sustainable energy capacity in these countries. In addition, investment in shipping, airline, and auto efficiency and cleaner technologies and fuels also 

reduces our dependence on oil. Finally, adaptation assistance serves America’s 

national security interests as well: As the Center for Naval Analysis has found, climate change is a great potential threat to our national security, undermining our 

stability and efforts to alleviate poverty which also exacerbates global instability. To 

ensure U.S. leadership, I understand that Senator Kerry has informed the Senate 

Budget Committee of his support for a $5 billion reserve fund to assist with the 

implementation of agreements reached at the 15th Conference of the Parties in 

Copenhagen this December. 

Competition and Cooperation With China 

Some have argued that to ensure China and other rapidly industrializing countries make their own commitments, the United States needs to put in place border 

tax adjustments for carbon-intensive imports. However, China and India, the priVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
19 

mary targets of U.S. trade measures in domestic legislation, are not leading suppliers of carbon-intensive exports to the United States. Therefore, U.S. trade measures may not create substantial leverage to shape climate change policies of other 

countries—particularly China and India—even though they could provoke retaliation that hits U.S. exports. 

The United States should consider leading with cooperation, engaging China and 

India in the climate negotiations so as to reach global agreement and contribute to 

cooperative financing and technology arrangements that move all of us to reduce 

carbon emissions. Secretary Clinton has called for the United States and China and 

Japan to collaborate on clean cars and building efficiency. In fact investments in 

efficiency are the cheapest carbon reduction investments we can make. The electrification of transportation will reduce emissions and oil consumption, both leading 

to reduced carbon emissions and better U.S. security as we wean ourselves off massive infusions of foreign oil. 

I strongly believe that one of the most effective approaches to solving the climate 

issue will be to develop a series of public and private partnerships with China. Thus 

we are currently working with several Chinese organizations (and seeking other 

Chinese partnerships) to speed the development of smart grid and carbon capture 

and sequestration technologies. I have also been involved in efforts to have the three 

largest consumers of coal, the United States, China, and Australia, combine their 

efforts to quickly test and deploy advanced coal technologies including facilities with 

carbon capture and sequestration. 

I am proud that Duke is currently building the first ‘‘next generation’’ coal gasification plant at our Edwardsport station in Indiana. We are also working to add carbon capture and sequestration to this project. But with China opening new coal-fired 

powerplants on a monthly basis we have to accelerate our work on not just carbon 

capture from new plants but create retrofit options as well. This is a formidable 

technological and financial challenge. I think it behooves the United States to work 

with the other two ‘‘coal powers,’’ China and Australia, to pool our resources, to 

share data and to develop standard approaches that can quickly move this key solution from conception to commercial installation. 

CONCLUSION: WE MUST LEAD

Through domestic action and international leadership and cooperation, we can 

drive a green economic recovery worldwide. The energy provisions in the stimulus 

package were a downpayment on the transformation of our economy. But we need 

Congress to pass comprehensive climate legislation to build off of the stimulus 

investments, to continue the transition to a cleaner, more prosperous future for this 

country, and to regain our technological and moral leadership on this challenge 

globally. 

We stand ready to work with both the administration and Congress to get it done. 

We can lead. And we must lead. 

The CHAIRMAN. Well, thank you very much, Mr. Rogers. We, as 

I said earlier, greatly appreciate the leadership. 

Lets dig in. I know, Sir Nicholas, you have a plane that you need 

to catch, and we’re sort of dealing with about a 45-minute period, 

here, but I’m confident that Senator Lugar and I will have you out 

of here on time. 

Mr. Rogers, speak to the concerns that, as Senator Lugar has 

pointed out, and some other folks have in their States, about the 

transitional impact, here. What is it that you see, in terms of the 

imperative to move now, and the feasibility of doing so, that some 

other CEOs don’t share with you? And you’ve had a lot of these 

discussions. 

Mr. ROGERS. I’ve had the good fortune to spend the last several 

years working with USCAP. It’s a group of 25 companies and four 

NGOs who have worked to mold what we call a blueprint—— 

The CHAIRMAN. Just for the record’s sake—I know who they are, 

but lay out the companies that are involved in that. 

Mr. ROGERS. Well, I probably can’t name them all, but GE, 

DuPont, some of the major auto industries, ConocoPhillips, Rio 

Tinto, which is the coal business; on the NGO side—— 

20 

The CHAIRMAN. Dow Chemical—I think, Florida Power & Light. 

Mr. ROGERS [continuing]. Florida Power & Light, Public Service 

of New Mexico, PNM, Pacific Gas & Electric, also—— 

The CHAIRMAN. Almost all of them, Fortune 500 companies. 

Mr. ROGERS. All Fortune 500 companies. 

The CHAIRMAN. Right. 

Mr. ROGERS. NRDC, EDF, WRI, the Pew Institute—so, we have 

a—that process, Mr. Chairman, has given me 2 years to work the 

issue and to think through the issue. And we were able to come 

together with a blueprint that I think points the way forward. 

And let me characterize it in my words, because, in Indiana, as 

Senator Lugar knows, 96 percent of our electricity comes from coal, 

and we need to make the transition to the low carbon world without having to pay twice for the transition. So, through USCAP, 

what we’ve found is that we can have aggressive timelines and targets and protect the environmental quality of the legislation. That, 

you put over here on one side. We can achieve that. It’s 80 percent 

type reductions by 2050, it’s milestones in 2030 and 2020. So, we 

have very aggressive targets there. 

But, the other thing that’s recognized is the importance of making the transition. When I said, a few moments ago, it wouldn’t be 

free or easy or quick, but it had to be fair, what I really meant is, 

yes, it’s going to cost more money. There’s no question about that. 

And some regions of the country more than others. Second, and it’s 

not going to be easy, because virtually every way we generate electricity needs advances in technology. Wind needs it, solar needs it, 

coal needs it, with CCS, natural gas needs it, with a way to capture 

carbon, nuclear, with spent fuel. Virtually every way we generate 

electricity, we need advances in technologies. It won’t be quick, 

because, either with CCS, unless we can scale up faster by working 

with the Chinese, could be a decade to 15 years off. 

One of the things that we all came together around is, How do 

you make the transition? And the key to that is really the same 

way we did it under the Clean Air Act amendments in 1990, as you 

may remember, where we adopted cap and trade and we used an 

allowance system to allow companies like ours to continue to generate power from our plants until we could either retire or replace 

or retrofit. That system, I would suggest to you, worked well for 

SO2, will work well for CO2 in this country, and mitigate—and I’m 

looking directly at Senator Lugar when I say this—mitigate the 

cost impact on the consumers in his State, but allow us to make 

that transition to a low carbon world. 

My last point in this. In Indiana, we’re building what will be the 

world’s largest coal gasification plant. We’re building it because it 

will be, from a SOX/NOX, mercury, fine-particulate standpoint, the 

least emissions of any coal plant in the world. Part of that is a 

result of participating in a demonstration project in the early 

1990s, where we got comfortable with the technology. This is a private funding, with some public health. But, here’s the important 

point. We had the capability in Indiana, with that plant, to develop, and we are now investing over $18 million for carbon capture and sequestration, which will become the largest sequestration 

project in the world, done here in the United States. And I think 

21 

it shows leadership on our part, as we move forward, that we can 

deliver electricity and reduce carbon from coal. 

The CHAIRMAN. That’s very helpful. 

Sir Nicholas, what about from your point of view? What do you 

say to the manufacturers or others in coal-burning States where 

they face the potential of an increased cost of the coal itself, or the 

production, because they’ve got to capitalize to put out their new 

technologies or the conversions? What’s the response to that? 

Lord STERN. I think that we have to look to manage that transition process, as Jim Rogers has described. One way in which we 

handled that in European Union when we have different countries 

differentially dependent on coal—and Poland, for example, is very 

dependent on coal—is that you can allow for the process of auctioning to be adjusted over time so that those kinds of areas or 

industries go more slowly toward the fuller auctioning than elsewhere. So, that’s one mechanism of adjustment. 

A second is that any revenues you get from different kinds of 

auctioning systems can be used to protect those people who are hit 

earliest or hit hardest by this story. The MIT work from the Global 

Action Labs described that it should be possible in United States 

to carry out these adjustments, these increases in prices, because 

some electricity must be more expensive. But, it’s possible to carry 

that out in a way where these revenues can be used to protect lowand middle-income households. 

So, part of it is through the way in which you cooperate with the 

companies themselves—for example, through the auction process 

that I described—and second is through the consumers, and—compensate those consumers who might be hardest hit. 

The CHAIRMAN. Then the—— 

Lord STERN. But, at the same time, recognizing that the sums 

involved there, the impact on consumers, are not huge in this story. 

The CHAIRMAN. The plan, as we currently contemplate it, does 

look at a major rebate to taxpayers out of the revenues off the auction, to whatever degree you decide to auction. I personally am in 

favor of as much of it being as close to 100 percent as you can get. 

Now, we’re not going to get 100 percent, we’re going to have allowances in there, and we all understand that. But, if you put those 

revenues back into primarily cushioning any impact on consumers, 

second, into R&D, and third, into some of the things we need to 

do to help less-developed countries do it, you can, I think, patch 

together a pretty good equation here. 

The question that some folks have is, Will this disadvantage 

them in the global marketplace? Will this somehow make them 

noncompetitive? What do you say to that, both of you? 

Mr. ROGERS. First, I would start and, in a very respectful way, 

suggest to you that USCAP said we would evolve to a full auction, 

but that we had to allocate 40 percent of the allowances to the electric sector and start with a high allowance level going directly to 

the LDCs, and then being phased out over time, because that 

proves to be the most cost-effective way—because, take a State like 

Indiana, which is the largest coal-producing State in the country; 

that will keep the rates down. In fact, the steel industry in our 

country is one of the least carbon-intensive steel industries in the 

world. So, keeping the power costs down for these capital-intensive 

22 

or energy-intensive industries is one key way to do it. So, I would 

suggest to you, as you think your way through this, mirroring more 

the approach of the CO2 program will produce better results without administrative costs and without the diversion of money with 

the auctions. 

As a for-instance, there has been great debate, as you know, with 

the notion of 100 percent auction, which has been proposed, which 

is nothing more than a carbon tax; and that money would be 

diverted from the 25 States where more than 50 percent of the 

electricity comes from coal to the coast. And, interestingly enough, 

in Indiana, specifically, the GDP per capita is lower than the 

States on the coast. And this redistribution of wealth would be for 

tax reductions, so maybe specific payments, but the reality is, it 

wouldn’t be to solve this ecological crisis that we face. And I think 

that’s one of the reasons a full auction is flawed from the get-go. 

The other point I would make is—and I say this very respectfully—is that we really pushed hard, in the Kyoto negotiations, Mr. 

Chairman, as you know, for cap and trade. The reason that it 

didn’t work in Europe is because they didn’t really have a baseline 

with respect to that, so it was difficult to make allocations. And 

second, they had a fundamentally different power sector. It had 

been liberalized. As a consequence of it, there were windfalls. 

Given the way our country structures our utility industry, there is 

no potential for windfall, and we have clear baselines. So, whatever 

failures or shortcomings happened there won’t happen here. 

The CHAIRMAN. Well, I happen to completely agree with that. I 

was at—as you know, was part of the negotiations in Kyoto, and 

I remember distinctly—first of all, the Europeans didn’t want to do 

it, because they didn’t believe in it. So, there was an inherent 

resistance to the idea. And I think the early implementation began 

with some of that, with great skepticism about its ability to work. 

Second, there was, as we know, a sort of negative impact on 

selected sectors—cement, a few others—giveaways that took place 

in—without sufficient understanding. 

Europe has now understood that very well, and has moved to correct it. And, in fact, it serves as a terrific baseline of understanding 

what not to do as we approach it, and how to do it right. But, I 

helped write the original bill. As a Lieutenant Governor back in 

1983, I chaired a Governor’s Task Force, and we devised the whole 

concept of trading emissions, and put it in place for CO2. And I 

might comment that the CO2 experience is one which showed that 

all the predictions came in way below the original—everybody’s 

fears—and it happened a lot faster than everybody predicted, and 

with much greater ease. And I am absolutely confident the same 

thing is going to happen here, because technology and the marketplace are just going to take over, and this is going to be a lot easier 

than people think. That would be my judgment. 

Do you want to comment, Sir Nicholas? 

Lord STERN. Yes, Mr. Chairman. On the first question of the 

competitiveness and costs, there’s a tremendous amount that can 

be done on energy efficiency, which actually brings costs down. 

Help firms to focus on that, giving incentives to firms to focus on 

that, setting the right kinds of standards, can actually bring costs 

down. And we see a lot of examples—I’m sure Jim has seen far 

23 

more than I have directly—is that if you help a strong focus in this 

area, it’s really remarkable the kind of results that you can get. 

Second, there will only be a few industries for which the cost 

increases are of any great substance. And I think it’s very important to be analytical and work through and focus where those problems are. 

And, basically, we know what the energy-intensive industries 

are. It’s not a secret. I mean, it’s aluminum and steel and, you 

know, paper and cement. It’s a few; it’s not more than half a dozen 

or so. And there, I think the first challenge would be to try to get 

global agreements on standards in those sectors. And there, I think 

that we’re beginning to see some movement forward on industries 

like steel, which are measuring, in a comparable way now, their 

emissions right across through their international industry associations. 

So, I think the first step is energy efficiency. The second step is 

global agreement, but all on the back of a careful analysis of where 

the problems really are, and how big they are. 

Now, commenting on the question of the European experience in 

cap and trade, actually phase 1, 2005 to 2007, of the European 

Union emissions trading scheme was very much about the kind of 

learning that Jim Rogers has just described. When we came out of 

phase 1—and I think probably the most important thing was the— 

by then, after those 2 or 3 years, we had managed to be able to 

measure much more carefully what was going on, industry by industry. And I think the United States is probably already there, so 

that particular learning phase of understanding what the baseline 

was and, therefore, what the emissions allocations and the permits 

should be, has probably already been done in this country. 

You were also pioneers of the SOX trading scheme. So there’s 

direct experience of that. And probably in Europe we didn’t learn 

enough from the United States, but the mistakes that we did make 

in the early stages, I think, are worth remembering, although they 

are pretty obvious that, if you give out too many permits, you’ll 

crash the price, and you don’t need a degree at London School of 

Economics to work that out. I do not think that there’s any danger, 

really, of your making that mistake in this country. 

I do think that it’s starting to work and showing real results. I 

think, by the end of phase 2, 2012, that emissions will be 9 percent 

lower than they were in 2005, when the trading scheme started. 

So, we’re already starting to see those results on prices which have 

varied between 10 euros and 30 euros per ton of CO2. The exchange rate between the dollar and the euro has moved around 

during that time, all over the place, and I tend to think of one-forone, although I know it’s not exactly one-for-one right now. But, 

you can see though, roughly speaking, what those prices have been. 

I think, as we get a bit more ambitious in Europe, those prices 

will go up, and that will be part of the process of cutting back. But, 

we’ll be getting much more carbon-efficient along the way. And so, 

whilst the price of carbon will go up, its effect on prices and goods 

which are produced will not be anywhere near that much because 

of the learning about how to be much more efficient, relative to energy and to carbon. 

24 

So, I think the cap-and-trade scheme is going well now. You’d 

expect the price to fall a bit during a recession, because demands 

for energy will be less. Probably no bad thing that that happens. 

It’s one of the countercyclical aspects of the price mechanism. But, 

we don’t want too heavy fluctuations. I think strong ambition will 

mean that the price stays steady, and I think it’s important that 

it doesn’t fluctuate too much, although some fluctuation is inevitable and, I believe, acceptable. 

So, I think that your cap-and-trade scheme here, along the lines 

I’ve been reading it as proposed, I think has excellent prospects for 

having the effects that you expect it to have. 

The CHAIRMAN. Thank you very much, sir. 

Senator Lugar. 

Mr. ROGERS. Mr. Chairman, if I may—— 

The CHAIRMAN. Yes. 

Mr. ROGERS [continuing]. Echo Sir Nicholas’ comments in a couple of ways. One, with respect to energy-intensive industry, I think 

what we have learned, there is not that much worldwide trade with 

respect to steel and cement, aluminum, and those areas. There’s 

actually an excellent study, by the World Resources Institute and 

the Peterson Institute, where they get into great detail, in terms 

of how to address these issues, that I would recommend to you. 

Second, with respect to energy efficiency, I have the good fortune 

of having cochaired the National Action Plan on Energy Efficiency, 

and now also cochair the Alliance to Save Energy, here in Washington. And there’s been a tremendous effort made to change the 

regulatory models at every State level to incent utilities to invest 

in residential consumers, in businesses, in industry, to help stimulate productivity gains in the use of electricity. I think we’ve just 

begun with respect to those kind of investments. And I believe if 

we’re able to continue to make it and we’re incented to make it, I 

believe it will happen, and it will play the kind of role that was 

just suggested in dealing with these issues. 

The CHAIRMAN. Very helpful, thank you, sir. 

Senator Lugar. 

Senator LUGAR. Mr. Chairman, let me just begin by saying that 

I come back to the thought that many people who are my constituents in Indiana really are sold on the idea of conserving energy. 

They see the cost savings for their businesses, for themselves. And 

so, that’s important, that there are a great number of public efforts. 

At Ball State University, a week ago, I was the commencement 

speaker, but after we finished, we went out to drill the first hole 

of 3,700 that will make Ball State University campus, several hundred acres, a thermal energy situation, the largest one in the 

United States. And it’s likely to take 4 or 5 years, and probably $41 

to $70 million to do this. But, nevertheless, we described this to the 

graduates, to the 15,000 people that were there. People were very 

proud of the fact that that’s going to occur there in Muncie, 

Indiana. 

Likewise, they’re proud of the fact that their architectural school 

is involved in renovating huge office buildings in New York, in 

addition to small houses in Indiana. There is excitement about this. 

This has been true, although controversies abound, over ethanol. 

Nevertheless, many people have been thoughtful about how we 

25 

replace oil, and there are some savings, when it comes to conservation. They’re interested in what happens in biofuels and hybrid 

cars, and we have hybrid engines being produced. 

Now, this is tremendously important regarding the issue we’re 

talking about today. We have sort of a threshold in which the 

broad use of climate change, as a term, or cap and trade, as a 

mechanism have not caught on. I’ve been looking, maybe in vain, 

for what would be almost a small picturebook of what happens in 

the world as things change due to excessive CO2 in the atmosphere 

or other emissions. Al Gore, when he appeared in this room before 

this committee, had some excellent illustrations in which we saw, 

not only ice melting, but progressive changes of temperatures, year 

by year, at least in the schematics that he had, that would make 

a change, not only in Iceland or up in Greenland, but across various areas of Africa or of the United States. 

Even here, skeptics, say, in Indiana, find this ambiguous. Some 

say, ‘‘Perhaps our growing season would be longer. In fact, corn 

yields might be better.’’ Now, granted that in Sri Lanka things may 

be going very badly, and we’re sorry about that; but, nevertheless, 

we have a major case that this is the catastrophic situation that 

is being portrayed for everybody, maybe for somebody. Now, you’re 

not making that case, either, but you’re saying the dislocations, the 

conflicts that might occur, the suffering in humanity would be 

large, that all of us, as human beings, have some common stake 

in mankind. 

I just come back to the fact that it has been very difficult for me 

to find, just physically, the materials, pieces of paper, small books, 

pictures, schematics. I think you may have had the same problem, 

but if you haven’t, let me say, just as a working politician, this is 

where rubber hits the road right now with regard to all of this. 

Now, fortunately, in our State, Jim Rogers is involved. I pay tribute to him, because, pragmatically, Duke is a large producer of 

power in Indiana. And a year ago or so, when Jim and I had a conversation about the so-called Lieberman-Warner bill, he was 

already informed by USCAP and by conversations as to why he felt 

this was probably not the best piece of legislation to cosponsor and 

to move on, at that point. I’ll not try to reiterate all that conversation, but essentially it came back to considerations that we have in 

our State; namely, a fear that the price of electricity for ordinary 

consumers, a few months after cap and trade is adopted, might go 

up 40 percent. Now, that may have been an exaggeration, but that 

was commonly the figure that was cast about in the press and in 

arguments. And some would say, ‘‘Well, tough luck. You folks are 

using coal. This is dirty. You’re putting the CO2 in the atmosphere. 

You ought to pay for it.’’ If, in fact, you live in New England or 

California, why, that’s their problem. Nevertheless, people come 

back and say, ‘‘But, listen, historically we have 96 percent of our 

electricity from coal. Even if we started changing immediately, who 

all is going to change that immediately? Will Duke Power begin 

tearing down all the installations, and thus, there is no electricity 

available at all to us, or precisely how does the world work in my 

generation or for my grandchildren, what—really, where is the 

scheme?’’ 

26 

The lack of sensitivity toward these arguments led to crash-andburning of Lieberman-Warner, very fast, sort of 1 week of cap and 

trade, and that was it for the year. 

Now, this year it has an expected better run ahead of it. I don’t 

know all the details of the House committee’s deliberations, nor all 

the amendments that may be offered during the markup which will 

be transpiring shortly, but essentially it appears that some Members have tried to meet some of the things you’ve talked about 

today; namely, how rapidly to progress in this. What is the transition period? How can consumers, ordinary people, be compensated 

for what is occurring in industry or the government, in the meanwhile, so that there are not egregious differences between 25 States 

of the Union and the other 25? 

Furthermore, the moneys that are engendered if we were to have 

an auction of any sort, where does it go? Originally, in some budget 

schemes that were proposed, it might have gone to pay for almost 

anything in the world. This has been more narrowed, in terms of 

its focus, as we’ve come on. But, that will be a very critical element. So will be the thoughts that Mr. Rogers presented about the 

carbon sequestration experiment. None of us know how well that 

works, how efficiently, how well it will be adopted by others. But, 

it’s an important step forward; critical, really, if coal is to be utilized, and will probably be utilized for a while in our world. 

I like the idea that has been presented today of international cooperation. This will have to be very sophisticated, because at least 

we are routinely told that the Chinese open up a coal-fired powerplant every week somewhere in China, even while they’re giving 

plans and ideas that are of worldwide significance. Why? Because, 

in a practical way, they would say, a lot of very poor people are 

moving from the farm to the city, heating their houses for the first 

time in life, using cars for the first time. We’ve got to understand 

that, and we try to. But, this is going to require very sophisticated 

international diplomacy. 

Let me just ask this question. What are the metrics that are 

available for any of us to try to gauge, first of all, where we stand 

and where we’re headed? Now, there are, I appreciate, many scientific studies that have made estimates of what type of carbon is 

in the atmosphere presently. That has to be sort of the threshold 

from which we gauge that we’ve made headway. Can this be done 

by nation, by sector? How often is it published? 

In the financial press, why, people who are interested can find 

the Dow Jones Average every day. Now, it may be impractical to 

get a CO2 fix each day, in terms of our understanding, but for most 

of us it’s pretty hard to find it at all, except in journals or abstruse 

documents. And it appears to me, for instance, from the standpoint 

of my constituents, they would say, ‘‘Are we making headway? Are 

the things that we are doing making any difference in all of this, 

given what we feel is the sacrifice and the inconvenience, dislocation of our lives?’’ 

I think the metrics of this will be extremely important, as well 

as a check-and-balance with everybody else in the world as to how 

well all of us are coming along with this thing, how much of the 

sharing and cooperation may be available. 

27 

Do either one of you have any comments about that? That is, the 

measurements currently, the information available, information 

that could be available, and then, finally, this very broadcast situation for rudimentary illustrations so that there is a gut feeling on 

the part of even a majority of people in my State that this is worth 

tackling, quite apart from the personal enthusiasm I would have or 

others, such as yourselves, who wander through our State. 

Lord STERN. If I may go first, as I will have to leave fairly 

shortly. 

I think the communications side of this is absolutely vital, and 

the media, the politicians, the academics, the industrialists, just to 

take categories of people in this room, I think all have a major responsibility here. 

I think the way I like to understand it is the risks of the kind 

of transformation that I described. I mean, 5 degrees Centigrade is 

enormous. It’s way outside human experience. It rewrites the physical geography of the world. In Europe, we would have to see much 

of southern France, Italy, Spain, Portugal start to look like the 

Sahara Desert—— 

Senator LUGAR. Do you have—— 

Lord STERN [continuing]. By the end of this. 

Senator LUGAR [continuing]. Confidence the 5 degree Centigrade 

is right? In other words, that that’s in the ballpark? 

Lord STERN. I am a consumer of the science of—the great science 

that comes out of the center in the United Kingdom, at Princeton, 

et cetera, just to name two of the major centers. And the numbers 

I’m giving, about business as usual for much of this century, taking 

us to a 50–50 chance of being either side of 5 degrees Centigrade 

by the end of this century, early next, comes directly from them. 

And it’s now pretty balanced view across the scientists of the 

world, that you’ll find those kinds of numbers. 

So, people who say we’ve been up and down—we’ve been down 

quite recently; last ice age, 10 or 12,000 years ago. We have never, 

as humans, been anywhere near the kind of range we’re describing, 

and it would transform United States just as much as other countries. But, of course United States, like many of the countries of 

the rich world, would have to deal with massive movements of people. I mean, it would just be a long period, a period that we 

couldn’t see the end of, actually, of movement and conflict. We just 

have to understand the scale. 

But, it’s not just that kind of image. I think it’s also the image 

that the alternative story is actually very attractive. It’s a different 

kind of growth. It drives growth for the next few decades, when we 

get to low carbon growth; it allows growth to continue, and so on. 

And, you know, it’s cleaner, it’s more energy-secure, it’s quieter, it’s 

safer, it’s more biodiverse. 

So, the worrying side is very, very worried, but the different way 

of organizing ourselves, continuing to grow, continuing to move 

around, continuing to heat and cool our homes, all those things we 

can do, but we can do it in a low carbon way, and it will be actually 

attractive, for all sorts of reasons. 

So, I think those arguments have to be made powerfully; as I 

said, by academics, industrialists, politicians, media. There’s very 

good film coming out, being issued round the world, called ‘‘Home,’’ 

28 

made by Yann Arthus-Bertrand, is a very famous sort of French 

photographer and ecologist—that’s coming out next month—which 

has a lot of visual things it can show. But, we need many more 

things like that for the communication. 

On the price side, I mean, I think 40 percent extra for electricity 

consumer is way over the odds of estimates of these kinds of 

things. The extra price for generation, of course, is very different 

from the extra price for delivery, because the price for generation 

is only—it would be generally less than—again, I—some trepidation, with Jim Rogers, on my right—the price for generation 

would generally be less than half of the price actually delivered to 

the consumer. So, you know, you’ve got to make sure that when 

people are talking about prices here, they’re talking about delivered prices to the consumers. 

On the—— 

The CHAIRMAN. Yes, also, that—can I just ask you before you—— 

Lord STERN. Yes. 

The CHAIRMAN [continuing]. Run? In answer to that question of 

Senator Lugar, while prices may go up for the unit of energy 

itself—— 

Lord STERN. Yes. 

The CHAIRMAN [continuing]. The Union of Concerned Scientists 

come out with a report showing that all across the country, sector 

for sector, the consumer gains, because of all the other efficiencies 

that you can actually—— 

Lord STERN. Yes. 

The CHAIRMAN [continuing]. Measure and factor coming into the 

system. So, out-of-pocket family expenses, budget, are, in fact, 

going to see savings, not expense. 

Lord STERN. We are actually in the middle of—well, perhaps not 

the middle of—at the beginning of a revolution in energy efficiency, 

just the kind of light bulbs being developed, they’re changing— 

they’re cutting the usage of electricity by factors of 5 or 10 or 15— 

not percentage—by factors like that. So, the kinds of efficiency 

standards that were being discussed today, if I understand correctly, by President Obama, you’re seeing very big increases in efficiency there. So, one has to set, as it were, the price of the energy 

in the context of the world, through these kinds of pressures and 

schemes and regulations and incentives, are actually driving a 

whole energy-efficiency revolution. I think you described it, yourself, Senator, how excited people get when, in their communities 

and in their institutions and their universities or wherever they 

work, they see those opportunities. 

On CCS, I think we have—because there are so many types of 

geology and so many types of coal, I think what we would like to 

see is, in Europe, some kinds of experiments; United States, some 

kinds of experiments—and we mean, here, commercial-scale plants, 

because we have to find out how they’re going to function and what 

it’s going to cost—and Australia. We have to communicate with 

each other as to which ones we’re doing so that if we have 30 or 

40 round in the world—in the world, in the next 10 years, there 

is sufficient variation that we do enough learning to cover these 

different types of coal, different kinds of technology, different kinds 

of methods of when you capture it in the process. So, I think we 

29 

have to share what we’re doing as a world, and not all do the same, 

because otherwise we’re not going to learn. And that kind of cooperation doesn’t need a worldwide CCS energy council; that’s 

another layer of bureaucracy. It actual needs communication, country by country, and asking, ‘‘What are you doing? OK, we’ll do 

something—we’ll do something different.’’ 

Last, on the counting, Deutsches Bank, in Times Square in New 

York, in about 3 weeks time—I hope I’m not jumping the gun 

here—is going to launch a carbon counter. I just recorded something for that occasion. And it’s going to be running up. And so, at 

any point in time, you go to Times Square—and obviously you get 

there online, as well—and you can watch the carbon concentrations—— 

Senator LUGAR. The concentrations—— 

Lord STERN [continuing]. In the atmosphere—— 

Senator LUGAR [continuing]. Counter up there. 

Lord STERN [continuing]. Going up. So, these are the kinds of 

communications stories—— 

The CHAIRMAN. Great. 

Lord STERN [continuing]. That I think that we’re going to need, 

and we’re all going to have to be involved, in our own ways. 

The CHAIRMAN. They ought to work—— 

Mr. ROGERS. Senator Lugar—— 

The CHAIRMAN [continuing]. Having a carbon counter on every 

face page of every search engine so that it goes up; we should 

really do that, I’m serious. That would save everybody spending 

more time driving it up by going to Times Square to see it. 

[Laughter.] 

We could do it virtually, I think. 

Sir Nicholas, we need to excuse you. I know you’ve got to be in 

a car within 5 minutes to get where you’re going and do what 

you’re doing. So, before Jim answers, if I can just thank you, on 

behalf of the committee, we’re extraordinarily appreciative of the 

contribution you’ve made to this. It is no small feat that your report is sort of the gospel, or whatever other denomination you want 

to attach to it, of guidance in this effort, globally, and I’ve enjoyed 

working with you, as have others, and we look forward to staying 

in touch with you. 

I would like to ask you—we’re going to get a meeting, probably 

in a few weeks, once the House has done something, we’re going 

to sit down with our colleagues on the other side of the aisle and 

really begin the hard-nosed effort, here. It would be wonderful if, 

on your next scheduled visit through here, you’d let us know so we 

could schedule you to come in there. I think it would be really 

great to have you and USCAP members come in, in that context, 

and I want to try to schedule that. 

Lord STERN. Thank you so much. 

Senator LUGAR. Thank you very much, sir. 

The CHAIRMAN. Thank you so much. We appreciate it and wish 

you well in your travels. 

Lord STERN. Thank you very much for having me. 

The CHAIRMAN. We’re delighted. We’re honored. We really are. 

Thank you. 

30 

Mr. ROGERS. Safe travels. We’ve had an opportunity to work 

together a lot, and it’s been a great inspirational for me, and been 

very informative. And thank you so much. 

The CHAIRMAN. Thank you. 

So, if you could answer Senator Lugar, would that great. 

Mr. ROGERS. I would. And, Senator Lugar, I’m going to start by 

saying I come from a perspective—as a guy who started his career 

as a consumer advocate fighting rate increases at utility companies 

in the 1970s. And I’ve spent the last 20 years as a CEO, starting 

in Indiana, as you know well. So, first of all, when I approached 

this, I approached this with—really wearing both hats. 

What I’ve done is really depend on the work of the scientists. 

And the scientists of IPCC really say that the 450 to 550 parts per 

million is where we need to be by 2050, and that means an 80-percent reduction in this country, and that we need to be on that road. 

Now, there’s been additional scientific work done that suggests different numbers, but, quite frankly, those are the numbers that I’m 

comfortable with, mainly because it represents kind of a worldwide 

consensus with respect to this very technical issue. 

I would say that when you—when we look at national averages 

in terms of impact, the fact of the matter is, this falls unevenly 

across our country. The same is true when you look at climate 

change and adaptation. Some parts of the world benefit, other 

parts are hurt, so there’s uneven impact, and even the scientists 

are not clear how that plays out. 

They are clear that the Earth is warming. They’re clear that 

manmade emissions are contributing. There is—not perfect clarity 

around the timeline and the impacts, but more work is being done. 

But, I think there’s enough science that says we need to act. 

The second point I would make—and this really gets to why 

we’re where we are and why we need a fair transition, an equitable 

transition. I happen to remember back, new to Washington after 

being a consumer advocate, working for the Federal Energy Regulatory Commission, and later for a law firm here, that—the passage in 1978 of the National Energy Act. And the important thing 

I remember is that, at that point, 18 percent of the electricity of 

this country came from oil, and we said we must wean ourself from 

oil in energy independence in 1970 standards. We did do several 

things. First, we encouraged the building of coal plants in this 

country, and we encouraged the building of nuclear plants. The second thing we did is, we passed a law that prohibited the burning 

of natural gas. Few people remember that law being passed in 

1978, but it was later repealed, as you know, in 1985, to allow us 

to use natural gas to generate electricity. But, the reality became— 

our mission in the 20th century was to provide universal access, 

affordable, and then, when Three Mile Island happened and we 

had Marble Hill in Indiana, we basically only had one way to provide generation 24-by-7, and that was coal. And so, many States, 

who had to meet the demand in the most affordable way, built coal 

plants, and that was just the reality of national policy. And I’ve 

taken the position, in many forums, that it would be unfair to punish that region of the country for carrying out the national policy 

of the 1970s, in terms of building coal plants, that we need a fair 

transition. 

31 

Now, let me make another point that really answers your question that I think is very important. Even—and this is the motivating point for all Hoosiers—first of all, we’re going to have to retire and replace all of our plants anyway. And so, we need to do 

that in a smart way with advanced technologies. That is just going 

to happen. And there’s a certain reality, even without carbon legislation, that process will drive prices up. And so, that is a certain 

inevitability that I’m unafraid to talk about, because we need to 

talk about it to be straight with the American people and with 

Hoosiers. 

But, the second thing that I think is really important—and this 

is why I’m such an advocate for energy efficiency—between now 

and 2050, the world’s going to go from 61⁄2 billion people to 9 billion 

people. There’s going to be a tremendous battle for scarce resources. I believe that the State or the country that’s the most 

energy efficient in the world are going to be the ones that have the 

highest probability of raising GDP per capita. And even without 

carbon concerns, I think we ought to be on that road, because of 

this battle over scarce resources. 

So, when I add the retirement-and-replacement point and the 

need to—the battle over scarce resources, I combine those two 

facts, and then I look at the need to reduce our carbon footprint— 

all of that comes together, that says we need to act urgently, 

because we’re already in a period, I believe, where we’re beyond 

mitigation, we’re in a period of adaptation, and the only issue is 

what adaptation will occur and what the cost will be. The sooner 

we act, it reduces the probability that we have adaptation costs 

and issues in the future. And I know that if Sir Nicholas was here, 

he would—he has made that argument very persuasively, because 

the sooner that we act, it minimizes the adaptation, going forward. 

So, from my standpoint, we do need to educate consumers. We 

feel like that’s an important role that we have. But, we also need 

to educate them to the—what the worldwide scientists are saying— 

to the inevitability of retirement and replacement, and to the need 

to be energy efficient, because that, over time, not just for us, but 

for our children and grandchildren, will assure that the—increase 

the probability that the GDP per capita for our consumers will 

grow if we’re the most efficient in the world. 

Thank you very much. 

Senator LUGAR. Thank you, sir. 

The CHAIRMAN. Let me follow up on that, if I can. And thank you 

for your terrific answer. 

I want to ask you a couple of toughies that get thrown at us by 

some folks around here as we struggle through this. Some people 

say, ‘‘Well, you know, the utility guys, yeah, they’re—they can be 

for it, because they’re going to get these big allowances, and it’s 

going to help them do exactly what you just described, and they’ll 

get a bunch of money in the pocket, but the other guys are going 

to get hit a little harder, because they don’t have the same capacity 

to grab the allowance, et cetera.’’ What do you say to that? I’m sure 

you’ve heard it. 

Mr. ROGERS [laughing]. Yes, sir. Mr. Chairman, based on the 

way we’re regulated in the five seats we operate—Indiana, Ohio, 

Kentucky, and North and South Carolina—that these allowances, 

32 

they’re the same way the CO2 allowances—go directly to our customers. Directly. And I’m a CEO that would sign in blood that 

these go directly to our customers. And actually, I had a wonderful 

conversation with Larry Summers the other day, talking through 

this and the recognition that—of how regulated utilities work. It 

goes directly to the customers, particularly if you send it directly 

to the local distribution companies, because there are some States 

that have been deregulated, and in those States it still needs to go 

to the LDC, which is regulated by the State Commission. 

So, I think the short answer is, no windfalls. And I think you can 

write that into the legislation. I’d be delighted to sign it, because 

I think that is one reality. So, in a sense of the word, I sit here 

today, not because this is going to affect my investors; I sit here 

today because it’s going to have an adverse impact on my customers, which goes back to the very beginning of my career as an 

assistant attorney general fighting rate increases. 

Because I see prices going up anyway, because our company spent $5 billion retrofitting our plants for SOX and NOX coming out 

of the 1990 amendments, and we’ve been able to do that over time 

at a lower cost, as you suggested, can smooth out the impact on 

consumers, because of the way the allowance system worked. 

The second thing is, is that we’re building out Smart Grid. Smart Grid, we have in our budget, about $1 billion over the next 5 years. 

That will drive prices up. But, the important thing about Smart 

Grid is, that will fundamentally transform several things. It will 

improve our reliability. It will improve our ability to do restoration 

after storms. It will reduce line loss. And probably, Mr. Chairman, 

most importantly, it will enable the next several generations of 

energy efficiency that many of us today can’t imagine. My prediction is, we’ll look back, 5 years from now or 10 years from now, 

and what we’re doing for energy efficiency today will look very 

primitive with respect to what we will do then. And the Smart Grid 

is really the key to being able to enable that. 

The CHAIRMAN. Good answer. And a direct answer. And I appreciate it. 

Let me ask you another sort of question you hear and get asked. 

I think the record’s important to build out, here. If coal-fired 

powerplants are such a danger—and I believe they are—any pulverized coal-fired powerplant that can’t capture and sequester, 

today, is a problem—why are we not creating a greater crash 

project to build nuclear or some other—i.e., solar thermal, concentrated solar thermal or something else in Arizona, et cetera? I 

know you said you’re doing solar, you’re looking at wind, you’re 

doing these other things so are you investigating how to scale this 

up? I would assume you’re balancing that kind of thing as mightily 

as anybody in the business can. 

Mr. ROGERS. Yes, sir. We’re in a unique place. We’re the thirdlargest generator of electricity from coal, but we’re also the thirdlargest generator from nuclear. And we have proposed building a 

2,200-megawatt nuclear plant in Cherokee County, SC, and we’re 

actually exploring the possibility of a nuclear plant in the Midwest. 

The reason that we are looking at nuclear, because we believe 

there will be a need for baseload generation—and, as I sit here 

today, the only technology that exists that provides power 24-byVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 H:\DOCS\GREEN.TXT BETTY
33 

7 with zero greenhouse gas is nuclear—it will allow me to retire 

some of my coal plants. We have not retrofitted every one of our 

coal plants. Some are 40, 50, 60 years old. It didn’t make economic 

sense to retrofit them for SOX and NOX. And, as I look at mountaintop mining, I look at ash ponds, I look at stricter—and I had 

an opportunity yesterday to meet with Administrator Lisa Jackson—— 

The CHAIRMAN. Yes. 

Mr. ROGERS [continuing]. To talk about this. 

The CHAIRMAN. Absolutely. 

Mr. ROGERS. As I see this coming, I believe I need a program to 

retire, as soon as possible, without making incremental investments in, these old plants. So, from my standpoint, I believe that 

the only 24-by-7 product that I can build is nuclear, but I also 

believe—because we have 500 megawatts that we operate today, 

and 5,000 under development—wind will play a role. But, I’m actually coming to the belief—and I’m going to share this in a very 

careful way—that I think that solar will end up playing a much 

bigger role, because—for a variety of different reasons, and one reason is I’m on the Board of Advanced Materials in Santa Clara, 

which is really developing the manufacturing capability to really 

accelerate, in the same way they did for semiconductors, to reduce 

the cost. I believe solar will end up playing a much bigger role, at 

the end of the day, than wind. 

And then when you start to—because it also provides a distributed generation option that wind doesn’t, because wind—the transmission issues are immense, in terms of getting it from where the 

wind is to where the load is, and that’s a long conversation in 

itself—but, the important point is, I think nuclear and wind and 

much cleaner coal—but, I think it’s an open question. 

And the last point I’ll make—and I say this very carefully, and 

I present it to you as a work in process—but, I have come to 

believe addressing the spent-fuel issue for nuclear, with the cask 

system that we have today and with the process—the possibility of 

recycling, might prove to be easier to do and cheaper to do than 

sequestration of carbon, because of the—huge infrastructure will 

have to be built. And a Princeton scientist said it to me in a very 

direct way. He said, ‘‘If you look at all the spent fuel in America, 

you could put it on one football field, 7 feet high.’’ If—contrast that 

geography to the geography of hundreds and hundreds and hundreds of thousands of acres of storing carbon underground. As a 

guy who used to run natural gas storage fields with migration of 

gas and the other issues, I have some sense of some of the technical challenges associated with sequestration. 

But, from a time standpoint, there’s another dimension. As I 

talked to the scientists at MIT, they truly believe that we can 

advance the recycling technology that’s been used in France successfully, where 75 percent of the electricity comes from nuclear, 

that we can do that in the next 25 to 50 years. And the current 

storage that we have in the cask system works. What we really 

need to do is pour money into the recycling. And, quite obviously, 

the proliferation issue is not the same today, when you recognize 

that over 30 nuclear plants are being built around the world, and 

not in the United States. 

34 

The CHAIRMAN. Well, that really sets the stage. I couldn’t agree 

with you more. And I know it’s a little heresy in some quarters to 

say it, but I wrote a book, a year and a half ago, with my wife, in 

which we dedicated a small amount of it to this issue, because it 

wasn’t really about that, alone. But, I allowed—I mean, as a strong 

environmentalist and one who opposed nuclear, you know, 15, 20 

years ago, when I thought we were going to come online faster with 

bigger alternatives. But I look at the predicament we’re in today, 

and, if you accept the science that drives the notion that you have 

to do something about this—and I’ve said, many times, you can’t 

be half pregnant on this—if you accept the science of global climate 

change, and accept the greenhouse, and accept that we’re causing 

it, then you also have to listen very carefully to the scientists who 

tell you, ‘‘This is what’s going to happen, X, Y, and Z,’’ particularly 

when you measure all the science that’s coming in today, all of 

which is coming in at a much faster rate and to a much higher 

quantity, telling us all the things they said were going to happen 

are happening. So, as a public policy, sort of, precautionary point 

of view, I think we have to respond to that. And I would far rather, 

particularly, as you’ve said—I mean, there are going to be nuclear 

plants built all around the world; none are safer than here, and 

none of the waste is safer than here. I would far rather do that 

than build a coal-fired powerplant right now. I don’t think we 

ought to build another one until we know how to capture and 

sequester. 

When people talk about ‘‘clean coal,’’ I accept that. It’s great. We 

can have clean coal, and we can burn it clear, terrific, because we 

have huge supplies, it’s cheap. All of those arguments are real. But, 

I have to tell you, I don’t know quite yet how we’re going to do 

that. 

Vinod Khosla, whom you know and I know, is pursuing an interesting new venture-capital effort that may be a game changer; it 

may show us how we can actually burn coal, take the CO2, turn 

it into a product that you can then sell, and you win on both sides 

of the equation. More power to it. But, until we know we can do 

that and cleanly, we shouldn’t be building more of them. And it 

seems to me that nuclear is an enormously obvious alternative, in 

the near term. Long term, I agree with you 100 percent. Solar, if 

I were in the private sector today, and I was doing this, I’d be racing down that solar road, because there’s just no question in my 

mind of the numbers of places in the world where this is—I just 

came back from Jordan over the weekend. King Abdullah is exploring solar. I was interested to hear that—he’s exploring it with several countries, and I asked him, ‘‘Is the U.S. in this game?’’ He 

said, ‘‘No.’’ And he was a little surprised. And I’m surprised. We’re 

not in the hunt for their solar project. We ought to be. We ought 

to be in the hunt for these projects all over the world. 

So, the sooner we can do this, the better. You know, there are 

more places with more sun that have more ability to translate it 

into electricity in places that don’t have it, where there’s a huge 

market. That’s what I meant by the $6 trillion market. That’s for 

today’s users. There are a bunch of people out there who aren’t 

today’s users, but who want to be. And if you’re talking about an 

electric-car market, you’ve got to find a way to supply electricity 

35 

that is going to power those cars and charge those batteries at 

night, and so forth. 

Another point I’d make is, on the issue of the transmission, that’s 

the second biggest piece of this. And we ought to be doing—and I 

think this is a debate we’ve got to get into quickly—it’s absurd 

that, in the United States of America in 2009, you can produce 

electricity out in California, but you can’t get it to other parts of 

the country. For instance, Texas has its own grid but it won’t connect to New England. If you’re going to produce solar or produce 

wind in these places, it’s not 24–7. Therefore, No. 1 is that you’ve 

got to have some feed into that grid to make up for it; but, two, 

you’ve got to get it from here to there. I am told that the minute 

we deal with that issue, there’s anywhere from $150 to $200 billion 

in the private sector waiting to rush in, that will engage in construction of facilities, because they now know they can get a return 

on the investment by appealing to a larger market. 

So, my hope is that this will be the front—I mean, this ought to 

be the major debate, here. We ought to be grabbing this stuff and 

getting it done. And I do think the experience of Franklin Roosevelt 

and electricity is relevant, because—you know, they put it out 

there for about $5 billion of cost in the 1930s. He made a fundamental policy decision: All of America has got to be connected. And 

within about 4 or 5 years, all of America was connected, and look 

at the difference that it made. This is not unlike the Internet or 

some other thing in the way. We’ve got to get it out there. And 

we’re falling behind on that, too, because we haven’t made the commitment to get broadband to all the parts of our country, so other 

countries are far more wired than we are, and their productivity 

goes up faster. 

So, I think that this is all linked in a funny way, and your leadership, Mr. Rogers, is really critical, you and the rest of the USCAP 

folks, because you can validate this in ways that we elected officials 

just can’t. You know, anybody who employs thousands of people, 

and pays the levels of taxes you do, and has the kind of annual revenues you do, has more ability, I think, to move minds here in 

these next months. So, we’re going to call on you to do that, and 

I would hope we can rely on you to have Washington on your travel 

schedule, you know, a little bit over these next 5, 6 months, 

because you’re going to be a key part of this. 

Mr. ROGERS. Mr. Chairman, I appreciate that, and I will do that. 

But, may I drop a footnote to your last comment? 

The CHAIRMAN. Of course. 

Mr. ROGERS. Because I think it will add to the conversation. 

First, in North Carolina we just got approval for us to invest to 

put solar on the rooftop, so when we look out, we see the rooftop 

of our customers as future plant sites. And so, we’re going to be installing, operating, and dispatching, and learning to operate our 

grid reliably with solar on the rooftop. It’s one of the first programs 

approved in the United States. 

The CHAIRMAN. That’s great. 

Mr. ROGERS. The second thing that I would say, with transmission—and that’s why I believe, at the end of the day, solar 

wins, versus wind—is because the only way you get transmission 

built in this country, to be—use a technical term, as a former lawVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6602 H:\DOCS\GREEN.TXT BETTY
36 

yer—you have to eminent domain, because—and, quite frankly, 

most people that want transmission built—I mean, want renewables, don’t want eminent domain, because of the local pushback. 

So, I think we need to have a honest conversation about eminent 

domain, but also to look at what the ultimate cost is of moving 

power across the country. 

And my last point—and I think this is one of the reasons that 

I’m here today, and it’s in my testimony, but I want to underscore 

it, because I think this should be the clarion call to Congress, to 

the American people, to the future of our economy, and there’s 

recent research that’s done by Lazare, that says, of the world’s top 

10 solar, top 10 wind, and top 10 advanced battery manufacturing 

companies, only 5 of the 30 are American companies. We’re losing 

out on an opportunity. And I think good, sound policy, that I know 

you all are working toward, is going to give us a running shot, because it isn’t a question of leading, it’s a question of catching up 

so that we can lead someday. 

The CHAIRMAN. Boy, do I agree with that, and I quote, often, in 

some speeches lately, that, having founded the solar cell, as I mentioned earlier, of the top 10 solar companies in the world, we don’t 

have one of them. And out of the top 30 alternative renewable, I 

think we only have 6. We only have 6 out of the 30. I mean, this 

is our economic future. 

And I couldn’t agree with you more, I testified, a year ago—I 

have legislation on the question of how you’re going to put some 

of these pipes in, and so forth, for sequestration. It works, as you 

know, pretty well if you’re in North Dakota or South Dakota or 

somewhere and you’re near a particular plant. They’re doing some 

enhanced oil recovery with natural carbon dioxide now. And you 

can do it. But, the fact is, boy, did I learn, in that hearing, as you 

listened to the various Senators and the questions that were asked, 

the morass of liability issues and of passage, rights-of-way, and 

easements and the—just the cost of the infrastructure—I have 

grown very, very skeptical and leery of joining in this grand chorus 

about geologic sequestration in far-off places. I think you can find 

some plants and put them right beside a place, and you may get 

some of it, but that is not going to be the silver bullet to this issue, 

because the cost of those pipelines and of those pipes and of that 

maintenance, as you just said, compared to that football field, it 

just—it’s not going to take you where you need to go. 

So, these are good things to be putting out on the table now, and 

I thank you for helping to do that today. We all need to do it. But, 

I hope—some of Senator Lugar’s questions, I hope, have been 

answered, and we look forward to continuing this dialogue in a 

very constructive way over the course of the next months. 

Thank you very much for being here. 

Senator Lugar, do you have any more questions or any comments? 

Senator LUGAR. I just would add to your compliment of our witness, Jim Rogers. He is uniquely in a position of being executive 

of a large power company and providing services to five States, as 

you pointed out, but, likewise, experienced enough with legislators 

here in Washington, as well as the rest of the other interest 

groups, to pragmatically try to weave together some source of forVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6602 H:\DOCS\GREEN.TXT BETTY
37 

1 Arctic Climate Impact Assessment, ‘‘Impacts of a Warming Arctic,’’ 10, 12 (2004), available 

at http://amap.no/acia/. 2 J. Schwartz, Testimony to the House Committee on Oversight and Government Reform Committee, U.S. House of Representatives, The Honorable Henry A. Waxman, Chair, October 18, 

2007. 3 Elisabeth Rosenthal, ‘‘Third-World Stove Soot is Target in Climate Fight,’’ N.Y. Times, April 

15, 2009, available at http://www.nytimes.com/2009/04/16/science/earth/16degrees.html?scp=l& 

sq=Ramanthan%20black%20carbon&st=cse. 4The current estimate for black carbon forcing at the ‘‘top of the atmosphere’’ is as much as 

60% of the current radiative forcing due to carbon dioxide’s greenhouse gas effect. V. Ramanathan, ‘‘Role of Black Carbon on Global and Regional Climate Change,’’ Testimony to the House 

Committee on Oversight and Government Reform Committee, U.S. House of Representatives, 

The Honorable Henry A. Waxman, Chair, October 18, 2007. 5 C. Zender, ‘‘Arctic Climate Effects of Black Carbon,’’ Testimony to the House Committee on 

Oversight and Government Reform Committee, U.S. House of Representatives, The Honorable 

Henry A. Waxman, Chair, October 18, 2007. 

mula. So, by the time these formulas are woven together, the 

purists, idealists, whatever, find all of this to be one compromise 

that is just simply unconscionable after another. But, it’s this kind 

of individual that conceivably can bring together a piece of work 

that, in our democracy, with all the complexities, and 50 States, 

and so forth, might happen. 

So, I appreciate your enormous patience, as well as the intellectual grasp you have of all this; likewise, your understanding of 

working politicians who are dealing with constituents, as you are. 

Yours is customers, ours is voters, and so forth. 

But, thanks so much for coming. 

Mr. ROGERS. Thank you. 

The CHAIRMAN. Sometimes they’re the same. [Laughter] 

Thanks so much. Appreciate it. 

We stand adjourned. 

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

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT SUBMITTED BY THE STAFF OF FRIENDS OF THE EARTH, 

WASHINGTON, DC 

INTRODUCTION

Chairman Kerry, Ranking Member Lugar, we ask that this written testimony be 

submitted into the record for the above-referenced hearing. Our comments concern 

reducing black carbon emissions from ships transiting Arctic waters. 

BLACK CARBON EMISSIONS ARE EXACERBATING ARCTIC WARMING

Climate, change impacts are apparent in many areas around the globe but nowhere more so than in the Arctic, ground zero for warming, where winter temperatures have climbed 3–4 degrees Celsius over the past 50 years, and may rise 

another 4–7 degrees Celsius over the next century.1 In addition to having welldocumented public health effects 2 and accelerating the melting of Himalayan glaciers to the detriment of billions in South Asia,3 black carbon, the light-absorbing 

carbonaceous element of soot, can have profound effects on Arctic warming, and, in 

turn, global ramifications. Suspended black carbon particles not only heat the 

atmosphere by absorbing direct and reflected sunlight,4 but they also reduce the 

reflectivity of ice and snow, thereby increasing melting rates.5 As lighter colored 

snow and ice recede and are replaced by darker, more light-absorbing matter such 

as water and land, warming is accelerated in a dangerous feedback mechanism. 

Recent studies find that black carbon is responsible for almost half of Arctic warmVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
38 

6D. Shindell & G. Faluvegi, ‘‘Climate Response to Regional Radiative Forcing During the 

Twentieth Century,’’ 2 Nature Geoscience 294, 2009. 7D. Koch et al., ‘‘Global Impacts of Aerosols from Particular Source Regions and Sectors,’’ 112 

Journal of Geophysical Research D02205, 2007; see M. Flanner et al., ‘‘Present-Day Climate 

Forcing and Response from Black Carbon in Snow,’’ 112 Journal of Geophysical Research 

D11202, 2007 (finding that over 80 percent of the forcing caused by black carbon on snow comes 

from black carbon from fossil fuels). 8 E.g., Ramanathan, supra note 4. 

9M.C. Serreze et al., ‘‘Perspectives on the Arctic’s Shrinking Sea-ice Cover,’’ 315 Science 1533, 

1536 (2007). 10 Arctic Climate Impact Assessment, ‘‘Arctic Climate Impact Assessment,’’ 840 (2005). 11 Rosenthal, supra note 3. 12Secretary of State Hilary Clinton, Remarks at The Joint Session of the Antarctic Treaty 

Consultative Meeting and the Arctic Council, 50th Anniversary of the Antarctic Treaty, Washington D.C., April 6, 2009, available at http://www.state.gov/secretary/rm/2009a/04/121314. 

htm. 13 Arctic Council Conference on Melting Ice, Co-Chair’s Summary—‘‘Melting Ice: Regional 

Dramas, Global Wake-Up Call,’’ Tromso, Norway, April 28, 2009, available at http://arctic-council.org/filearchive/summary.pdf. 14Tromso Declaration, 6th Ministerial Meeting of the Arctic Council, April 29, 2009, Tromso, 

Norway, at http://arcticcouncil.org/filearchive/FINAL%20DRAFT%20DECLARATION%2028%20 

APR%2009%20A4.pdf. 15Generally black carbon aerosols stay aloft for less than one week. Reddy, M.S. and O. Boucher, ‘‘Climate Impact of Black Carbon Emitted from Energy Consumption in the World’s 

Regions,’’ 34 Geophysical Research Letters L11802, 2007. 16Zender, supra note 5, at 6 (emphasis added). 17W. Battye et al., ‘‘Methods for Improving Global Inventories of Black Carbon and Organic 

Carbon Particulates,’’ Report No. 68-D-98-046, Prepared for U.S. EPA by EC/R Inc., 2002, available at http://www.epa.gov/ttn/chief/conference/ei11/ghg/battye.pdf. 18D. Lack et al., ‘‘Light Absorbing Carbon Emissions from Commercial Shipping,’’ 35 Geophysical Research Letters L13815, 2008. 19 Arctic Council, ‘‘Arctic Marine Shipping Assessment 2009 Report,’’ 141 (2009), available at 

http://arcticportal.org/en/pame/amsa-2009report [hereinafter AMSA]. 20Dr. Lawson Brigham presentation at 8th Conference of Arctic Parliamentarians, Fairbanks, 

Alaska, August 12, 2008, cited by Treadwell M. & Wiepking T., ‘‘Why the Arctic Matters . . . 

America’s Responsibilities as an Arctic Nation,’’ Commonwealth North Study Report, at 22, 

April 2009, available at http://www.commonwealthnorth.org/index.cfm?fa=documentslover 

view&doctype=54. 21 IPCC 2007, Observations: Surface and Atmospheric Climate Change, In: ‘‘Climate Change 

2007: The Physical Science Basis, Contribution of Working Group I to the Fourth Assessment 

Report,’’ [Trenberth, K. et al, (eds.)], 237, available at: http://www.ipcc.ch/pdf/assessment-report/ 

ar4/wg1/ar4-wgl-chapter3.pdf. 

ing,6 and that incomplete fossil fuel combustion, such as from marine vessel engines, constitutes a significant source of black carbon in this region.7

Many scientific experts assert that near-term black carbon mitigation efforts can 

limit warming and forestall cataclysmic ‘‘tipping point’’ events, such as permafrost 

melt and loss of the Greenland ice sheet and associated sea level rises.8 Additional 

derivative problems from Arctic-related warming that can be forestalled include prolonged droughts, altered weather patterns in the northern hemisphere,9 desertification, increased boreal wildfires,10 coastal erosion, and reduced glacial-fed freshwater resources in other parts of the world.11 These issues threaten the environmental, economic, and national security interests of the United States and the international community. Secretary of State Clinton,12 Nobel Prize Laureate Al Gore,13

and the Arctic Council 14 have all recently noted how addressing short-lived 15 climate forcers such as black carbon can slow Arctic warming. More specifically, one 

scientific expert even remarked during a 2007 congressional hearing that 

‘‘[r]educing intra-Arctic [black carbon] emissions from generators and marine vessels 

will become increasingly important as industry and transport seek new opportunities in the thawing Arctic.’’ 16

BLACK CARBON EMISSIONS FROM SHIPS: A GROWING PROBLEM

Ships accounted for 3.6 percent of black carbon emissions in the United States 17

in 2002 and 1.7 percent of black carbon emissions in the world in 2000,18 and in 

2004 released 1,180 tons of black carbon in or near the Arctic.19 Moreover, since 

2004, shipping and attendant black carbon emissions have increased substantially.20

With the Arctic continuing to warm at twice the rate of the rest of the world,21 and 

39 

22 R.W. Lindsay & J. Zhang, ‘‘The Thinning of Arctic Sea Ice, 1988-2003: Have We Passed a 

Tipping Point?’’ 18 Journal of Climate 4879 (2005); J. Stroeve et al., ‘‘Arctic Sea Ice Extent 

Plummets in 2007,’’ 89 Eos Trans. Amer. Geophys. Union 13 (2008), available at http:// 

www.agu.org/pubs/crossref/2008/2008EO020001.shtml; J. Richter-Menge et al., ‘‘Sea Ice Cover,’’ 

in Arctic Report Card 2008, available at http://www.arctic.noaa.gov/reportcard/seaice.html (in 

2007, sea ice extent was thirty-nine percent lower than the long-term average from 1979 to 

2000). 23 ‘‘Arctic is Seeing Thinner Sea Ice, Experts Warn,’’ Associated Press, April 6, 2009, available 

at http://www.msnbc.msn.com/id/30074699/. 24 Andrew Revkin, ‘‘Arctic Ice Hints at Warming, Specialists Say,’’ N.Y. Times, September 6, 

2008, available at http://www.nytimes.com/2008/09/07/science/earth/07arctic.html?lr=4&scp= 

2&sq=northwest%20passage&st=cse&oref=slogin. 25 USGS Newsroom, ‘‘90 Billion Barrels of Oil and 1,670 Trillion Cubic Feet of Natural Gas 

Assessed in the Arctic,’’ USGS, July 23, 2008, available at http://www.usgs.gov/newsroom/article.asp?ID=1980. 26 AMSA, supra note 19, at 76-77. 27Scott Borgerson, ‘‘Sea Change: The Transformation of the Arctic,’’ The Atlantic, 88-89, November 2008 (indicating that a voyage between Yokohama, Japan, and Rotterdam, Netherlands, 

over the North Pole, rather than through the Panama Canal, would reduce trip length by over 

12,000 kilometers). 28K. Wilson et al., ‘‘Shipping in the Canadian Arctic: Other Possible Climate Change Scenarios,’’ Geoscience and Remote Sensing Symposium, IGARSS ’04 Proceedings, September 2004, 

available at http://www.arctic.noaa.gov/detect/KWlIGARSSO4lNWP.pdf. 29 Approximately 250 passenger ships operated in the Arctic in 2004. AMSA, supra note 19, 

at 71; see also M. Treadwell & T. Wiepking, supra note 20, at 22 (noting that, in 2008, 45 cruise 

ships, carrying 55,000 passengers, visited Greenland, up from 30 ships in 2007; and three different cruise ships voyaged through the Northwest Passage in the summer of 2007, while seven 

cruise ships with over 3,000 passengers visited the northern Bering Sea and Arctic Alaska 

waters in 2008). 30 AMSA, supra note 19, at 72. 31See U.S. EPA Web site, at http://www.epa.gov/otaq/oceanvessels.htm. 

the region’s sea ice extent 22 and thickness 23 decreasing dramatically, the fabled 

Northwest Passage and Northern Sea Route opened to traffic in the summer of 

2008.24 In the near term, shipping involving oil and gas in the Arctic, where nearly 

one quarter of the world’s untapped hydrocarbon resources reside,25 as well as shipping of minerals and timber, is likely to increase.26 In the not-so-distant future, as 

sea ice melting accelerates, trans-Arctic shipping along the above-mentioned passages—as well as over the North Pole 27—will present attractive options for shippers 

as it could save many thousands of kilometers, and substantial fuel costs, on voyages between Asia and Europe.28 In addition, destinational cruise ship travel to the 

Arctic is exploding, and pushing further north.29 In sum, approximately 3,000 

marine vessels operated in the Arctic in 2004 alone,30 and that number has likely 

increased in the following five years time as summer sea ice has continued to wane 

and the Northwest Passage and Northern Sea Route have opened up. These vessels 

present a significant, continuing, and growing black carbon threat to an already 

warming Arctic. 

HOW THE UNITED STATES SHOULD PROCEED ON THIS ISSUE

Presently there are no national or International Maritime Organization (IMO) 

measures regulating black carbon emissions from ships in the Arctic. For instance, 

while the United States and Canada’s recently submitted Emission Control Area 

(ECA) application to the IMO is a necessary and laudable action directed at lessening the public health and environmental impacts from ships in both countries, the 

ECA does not extend into the U.S. or Canadian Arctic, nor do its proposed measures 

target black carbon emissions.31

The IMO has the ability to create stringent particulate matter standards that 

decrease black carbon emissions as well as adopt ECAs which focus on black carbon 

particle reductions, similar to what has been done with respect to sulfur in Baltic 

and North Sea SECAs. Further, there are available ways to reduce black carbon 

emissions immediately that are cost-effective and practicable, through in-engine 

modifications (e.g., slide valves) and operations (e.g., reduced speeds). Moreover, the 

use of distillate fuel in ship engines, rather than heavy fuel oil, would facilitate the 

use of engine exhaust technologies such as particulate filters that decrease black 

carbon emissions. 

We request that this Committee urge the U.S. IMO delegation, and in particular 

the U.S. EPA, to collaborate with IMO member nations, especially countries with 

territory in the Arctic, to (1) develop particulate matter/black carbon-specific ECA 

emission standards and adopt a black carbon (and also nitrogen oxide) Arctic ECA 

in the near term; (2) institute interim voluntary black carbon measures for ships 

operating in the Arctic immediately; and (3) support the development and enhanceVerDate Nov 24 2008 15:48 Nov 05, 2009 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 H:\DOCS\GREEN.TXT BETTY
40 

ment of technical and operational measures to control and reduce black carbon 

emissions from ships. 

It is imperative that strong and effective measures to reduce black carbon be initiated now as shipping emissions are currently contributing to melting Arctic sea ice 

and snow, Arctic shipping is growing considerably, and adequate mitigation measures may take several years to implement. Neglecting the issue of black carbon 

emissions from Arctic shipping at this stage would risk exacerbating the speed and 

degree of climate change. We believe that the U.S. delegation should take a leading 

role at the IMO to immediately address Arctic black carbon emissions from ships. 

We further request the Committee urge the U.S. IMO delegation to provide technical expertise and guidance in helping to strengthen and harmonize any black carbon-related efforts at the IMO with pending federal legislation (e.g., H.R. 1760) 

addressing black carbon emissions. 

Thank you for the opportunity to provide these comments. 

Sincerely, 

JOHN KALTENSTEIN, 

Clean Vessels Program Manager, 

Friends of the Earth. 

Æ