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CLIMATE CHANGE: STATE

AND LOCAL PERSPECTIVES

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 15, 2007

Serial No. 110–20

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

(II)

(III)

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

RICK BOUCHER, Virginia, Chairman

G.K. BUTTERFIELD, North Carolina,

Vice Chairman

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

ALBERT R. WYNN, Maryland

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

JOHN D. DINGELL, Michigan (ex offico)

J. DENNIS HASTERT, Illinois

Ranking Member

RALPH M. HALL, Texas

FRED UPTON, Michigan

ED WHITFIELD, Kentucky

JOHN SHIMKUS, Illinois

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

STEVE BUYER, Indiana

MARY BONO, California

GREG WALDEN, Oregon

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

MICHAEL C. BURGESS, Texas

JOE BARTON, Texas (ex officio)

PROFESSIONAL STAFF

SUE D. SHERIDAN, Chief Counsel

LORIE J. SCHMIDT, Counsel

DAVID J. MCCARTHY, Minority Counsel

CHRIS A. TREANOR, Legislative Clerk

(V)

C O N T E N T S

Page

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

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

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

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

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 4

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

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

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

Carolina, opening statement ............................................................................... 6

Hon. J. Dennis Hastert, a Representative in Congress from the State of

Illinois, opening statement .................................................................................. 7

Hon. Sue Wilkins Myrick, a Representative in Congress from the State of

North Carolina, opening statement .................................................................... 8

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 9

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

opening statement ................................................................................................ 10

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

Texas, prepared statement .................................................................................. 11

WITNESSES

Patrick McCrory, mayor, city of Charlotte, NC ..................................................... 12

Prepared statement .......................................................................................... 51

Linda Adams, secretary, California Environmental Protection Agency, Sacramento, CA .......................................................................................................... 13

Prepared statement .......................................................................................... 30

Lisa P. Jackson, commissioner, New Jersey Department of Environmental

Protection, Trenton, NJ ....................................................................................... 15

Prepared statement .......................................................................................... 45

Ron Curry, cabinet secretary, State of New Mexico Environment Department,

Santa Fe, NM ....................................................................................................... 17

Prepared statement .......................................................................................... 38

Julie Caruthers Parsley, commissioner, Public Utility Commission of Texas,

Austin, TX ............................................................................................................. 18

Prepared statement .......................................................................................... 61

Answers to submitted questions ...................................................................... 71

SUBMITTED MATERIAL

Shirley Franklin, mayor, city of Atlanta, GA, letter of March 15, 2007 to

Messrs. Boucher and Hastert, submitted by Mr. Barrow ................................. 76

Greg Nickels, mayor, city of Seattle, WA, letter of December 6, 2006, submitted by Mr. Inslee .................................................................................................. 78

Tom Cochran, executive director, the United States Conference of Mayors,

letter of March 14, 2007 to the subcommittee, submitted by Mr. Boucher ..... 79

‘‘Our Changing Climate. Assessing the Risks to California’’ ............................... 83

California Climate Action Team Report to Governor Schwarzenegger and

the California Legislature, submitted by Linda Adams ................................... 99

(1)

CLIMATE CHANGE: STATE AND LOCAL

PERSPECTIVES

THURSDAY, MARCH 15, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY

AND AIR QUALITY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The subcommittee met, pursuant to call, at 11:15 a.m., in room

2322 of the Rayburn House Office Building, Hon. Rick Boucher,

chairman, presiding.

Members present: Representatives Butterfield, Barrow, Inslee,

Baldwin, Ross, Dingell, Hastert, Shimkus, Shadegg, Myrick, and

Barton.

Also present: Representative Wilson.

Staff present: Sue Sheridan, Bruce Harris, Lorie Schmidt, Chris

Treanor, David McCarthy, Thomas Hassenboehler, Kurt Bilas, and

Peter Kielty.

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

OF VIRGINIA

Mr. BOUCHER. The subcommittee will come to order. This morning our climate change hearing focuses on the activities of State

and local governments that have been active in addressing greenhouse gas emissions.

California has enacted legislation setting mandatory greenhouse

gas reduction requirements targeting the achievement of 1990

emission levels by the year 2020. California has also undertaken

other steps including a low carbon fuel standard, a greenhouse gas

registry and a motor vehicle standard.

Five western States have recently formed the Western Climate

Action Initiative through which they have committed to set a joint

greenhouse gas emissions reduction goal that would be achieved

through implementation of a market-based program. Ten northeastern States have joined or expressed their intention to join the

Regional Greenhouse Gas Initiative, which will limit carbon dioxide

emissions from electricity-generating facilities through implementation of a cap-and-trade program.

Local governments are also taking actions with regard to the

goal of reducing emissions. These activities include improving government vehicle efficiency through the use of hybrids, switching to

light-emitting diodes for traffic signals, changing local building

codes, developing alternative fuel infrastructures and capping

2

methane gas from landfills. More than 415 mayors in communities

representing more than 60 million Americans in all 50 States have

signed the United States Mayors Climate Protection Agreement

under which they agree to reduce community-wide greenhouse gas

emissions by the year 2012 to at least 7 percent below 1990 levels.

Today’s witnesses will describe these various greenhouse gas reduction strategies and the policy considerations that led to their

adoption. The information to be presented this morning will enable

this committee to learn from the experience of State and local governments and we will very much welcome the suggestions from our

witnesses today about appropriate directions for United States policy on the critical subject of climate change.

Pursuant to the rules of the committee, members may now make

opening statements, and any member who elects to waive his or

her opening statement will have the time allotted for that opening

statement assigned to that period during which that member may

propound questions to our witnesses today.

We also welcome to our subcommittee today Mrs. Wilson from

New Mexico who, while not a member of the subcommittee, is a

member of the full committee and we are very glad to have her

participation in our subcommittee meeting.

At this time I am pleased to call on the ranking Republican

member of the Energy and Commerce Committee, the gentleman

from Texas, Mr. Barton, for a 5-minute statement. Mr. Barton.

OPENING STATEMENT OF HON. JOE BARTON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BARTON. Thank you, Mr. Chairman. As you know, we have

a subcommittee hearing on spyware that is in progress so I am

going to have to give an opening statement upstairs and hopefully

maybe come back to this. So I am not being impolite if I have to

run off.

I am not at all convinced that we have to rush to legislative action on this issue, as you well know, but I am very supportive of

you and Chairman Dingell building a fact-based record on the issue

and very supportive of the cooperative effort in which you are holding these hearings in terms of arranging for witnesses. So we are

supportive of the process. I am still skeptical there needs to be a

legislative solution.

It is important that we hear the input from our State and local

witnesses on the impact of some actions that we might consider

taking in Washington with respect to climate change. This is an

important issue and our State and local governments are going to

be where the rubber really meets the road.

Some of the States and regions have decided to move toward

some sort of a carbon cap-and-trade scheme. I think that is ill-advised at this point in time and would oppose such a mandatory regulatory scheme if it were to be enacted or attempted to be enacted

here in Washington. I am glad to see this week Speaker Pelosi has

indicated that any bill on climate change considered this year

doesn’t necessary have to include a mandatory cap-and-trade

scheme. I think that is a move in the right direction in terms of

actually getting a legislative solution.

3

There are many other ideas on how we can lessen carbon intensity, and if we can do it in a cost-effective and a timely fashion,

myself and I am sure many other members of the minority are

open to some of those ideas. Hopefully our panelists today will have

some ideas in that regard.

This hearing has several important issues that it is going to

raise. First and foremost is the cost of these programs, whatever

they are, in terms of implementation at the State and local level.

Also, what is the cost going to be in jobs? What is going to be the

cost in economic growth? I am told that a representative from the

California legislature said last fall at a conference that California’s

recent global warming bill, A.B. 32, only had two legislative requirements: No. 1, that it cause pain, and No. 2, that it change behavior. We have a representative from California here today and

we will be able to ask that witness if that is a true statement. I

am curious to find out, if it is a true statement, exactly how much

pain the California legislature feels it has to inflict on their constituents in the name of global warming. I would like to know what

life-altering changes their constituents are expected to make so

that we can be politically correct on global warming.

The second issue that I want to get some input on today is, what

are the actual environmental benefits, not perceived but actual,

when you keep in mind that H20 water vapor is 95 percent of all

greenhouse gases, that CO2, carbon dioxide, is 4 percent of greenhouse gases, and that the man-made portion of CO2 is 0.001 percent, one-thousandth of 1 percent of the atmosphere, you begin to

question exactly how much benefit there is going to be if we have

some sort of a mandatory CO2 sequestration program. If you are

only managing one-thousandth of 1 percent of anything, it is hard

to affect the 99.99 percent of the rest of the item that you are trying to manage.

The third issue is cost-effectiveness: what is the long-term prospect of some of these mandatory programs? If we only have State

and regional programs and you have got a worldwide problem, exactly how effective are they going to be? China is adding one 500-

megawatt coal-fired power plant every week. Every week. China

will soon surpass the United States as the single largest emitter

of man-made greenhouse gases. It really doesn’t make much difference what we do in the United States if China is going to continue to add these coal-fired power plants every week on an ad infinitum basis into the future.

When we look at what Europe has done to try to implement the

Kyoto Protocol, we found out that they have had some success in

raising electricity prices. In Germany alone, the wholesale price of

electricity has gone up 40 percent because of what they have had

to do to implement Kyoto. Forty percent. In our hearing last week

about the new technologies for carbon sequestration, the minimum

cost increase was 25 percent, and one of the witnesses said there

would be 100 percent cost increase if we implemented CO2-friendly

coal-fired technology immediately. Now, to be fair, Mr. Boucher

pointed out that as we come up the learning curve, the cost of some

of those technologies will go down.

But my main point is, if we do things in the United States that

cost us jobs and the only effect is to send those jobs to China or

4

India, we are really not doing our constituents much of a favor.

Our most abundant and lowest energy cost source right now for

electricity generation is coal. It is the cheapest by an order of magnitude of about 80 percent. We simply must find a way to use our

coal resources that are environmentally friendly and also cost-effective.

With that, Mr. Chairman, I want to yield back the balance of my

time but I do look forward to this hearing. I hope I can come back

after going upstairs.

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

The gentleman from Michigan, Mr. Dingell, the chairman of the

full committee, is recognized for 5 minutes.

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

Mr. DINGELL. Mr. Chairman, I thank you for recognizing me and

I thank you and commend you for calling this hearing on State and

local perspectives on climate change.

I want to begin by thanking all of our witnesses for making the

trip to Washington to testify today.

To Mr. Curry, I would observe it is our hope that you will give

our best regards to Governor Richardson, who is not only a good

friend of mine but also who served with extraordinary distinction

on this committee and has always made us proud that he is one

of our graduates.

Now, over the past few years, many State and local governments

have spent considerable time and effort in looking at the issue of

climate change and developing programs to reduce greenhouse gas

emissions. The pace of their activity is increasing. Today we will

hear from leaders in this area.

This hearing is important for two reasons. First, our system of

governance. The State and local governments serve as laboratories

for developing and testing novel approaches to emerging problems.

This hearing gives us an opportunity to benefit from the work done

and the lessons learned by State and local governments. For example, the State of California has taken a new approach to reducing

carbon emissions from fuel from motor vehicles. Rather than adopting a biofuel mandate, California has announced a new low carbon

fuel standard designed to reduce the fuel’s life cycle carbon emissions. I think it would be useful to understand both the benefits

and the drawbacks of this program.

Second, when the States act independently of the Federal Government, these actions can create a regulatory patchwork that unnecessarily creates inefficiencies and hinders economic growth.

Other Federal environmental statutes have been driven at least in

good part by concerns raised by multiple State regulations all addressing the same problem, and I would note that one of the reasons for the Constitution was the multiplication of State regulations and impairments to commerce amongst the States in those

early days.

In these cases, we look to action to address the problem nationally as a way of leveling the playing field across the country and

reducing inefficiencies and burdens on interstate commerce. For exVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
5

ample, California, New Jersey and New Mexico are all part of regional greenhouse gas initiatives that are intended to cap emissions in participating States. I am interested in hearing whether

there are concerns that such regional approaches can put their

businesses at a competitive disadvantage compared to businesses

in other States or concerns that multiple State programs will make

life unnecessarily complicated for companies that operate in multiple States.

I am pleased that Mayor McCrory is here today. The involvement

of our mayors on climate change is quite interesting, given the

global rather than local nature of the problem. More than 400 mayors representing over 60 million citizens across the country have

signed a pledge to reduce greenhouse gas emissions, demonstrating

widespread concern amongst our citizens regarding climate change.

I look forward to hearing what local governments are doing to address this problem.

As we have heard over the course of climate change hearings,

there is no single silver bullet that will do the job. There is no easy

way out of the problems we confront. It is clear that climate change

must be addressed through a broad array of actions at all levels of

government. I look forward to hearing more about the actions of

State and local governments, what they are doing and are contemplating undertaking.

I would also like to close with a word directed to my colleagues.

I know some of my colleagues here wish we were not addressing

climate change and I know others are moving more slowly. There

are a number of reasons why we need to address climate change

at the Federal level. Today’s hearing focuses on just one of those

reasons. States are making it quite clear they will act to address

climate change, and therefore the Federal Government must act in

appropriate ways.

Mr. Chairman, I again commend you. I thank you for your recognition and I commend our panel for being present with us today.

Thank you.

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

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

minutes.

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

Mr. SHIMKUS. Thank you, Mr. Chairman.

I want to welcome the panelists. It is going to be an interesting

discussion and debate I think because of the cap-and-trade positions of some of the States. The ranking member’s position is pretty

compelling because I think you will probably call upon us to do

something nationally, and our position is, at least some of us who

are somewhat skeptical but open because of our chairman is that

if you call for us to do something nationally and we can’t get anything internationally done, it is really the same debate. If we don’t

have States moving in the same direction you are moving, then you

are disenfranchised. If we can’t get the world to move in our direction, then we are going to be disadvantaged and I just want to

throw that out as part of the reason why some of us are concerned.

6

Our first hearing told us that a cap-and-trade system in Germany raised wholesale electric prices 40 percent, so again, that is

the bottom line what we are talking about, jobs and the economy.

China is building, as the ranking member said, equivalent of a 500-

megawatt coal-fired power plant each week, and if we don’t have

an ability to affect that, what are we killing ourselves for.

Also, the addressing of individual State’s problems of site transmission lines. If we want to move to renewable clean power, States

have to help us site transmission lines and there is going to be

huge problems in the New England area if they don’t move and address this. Now, we helped in the energy bill with the transmission

legislation which I think has empowered Texas and some of the

wind power issues that they are going to be discussing but this is

a more comprehensive debate and that is why I appreciate Chairman Boucher because he does understand the comprehensive nature of this debate.

Finally, there will be things I pick on California for but I do want

to talk about something positive. I am from Illinois, but believe it

or not, I have been working with the Port of Long Beach and in

the Port of Los Angeles and they want to expand their ability to

do the job that they do so well by moving to 5,300 LNG trucks,

5,300 clean diesel trucks, primarily run on biodiesel—there is the

Illinois connection—and they are doing this to be able to expand

their capacity without having a cap-and-trade system. So they have

got to meet the stringent requirements of California, especially in

that area, and they are going to do it through fuels, through innovation without any additional regulations. That is where a lot of us

are coming from on our side to make sure that we don’t lose our

ability to be competitive in this world and many of us fear that if

we aren’t careful, there is going to be great price increases and job

loses.

With that, Mr. Chairman, I yield back.

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

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

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

CAROLINA

Mr. BUTTERFIELD. Mr. Chairman, I too want to thank you for

convening this hearing today. You promised us several weeks ago

when we began this Congress that you would bring forward the

brightest and best witnesses that we could possibly get and I thank

them for coming forward today to participate in this very important

hearing.

I particularly want to welcome the mayor of the largest city in

my State, Mayor McCrory. Thank you so very much for coming.

This is an important issue. I think we can all agree on that. We

certainly have a substantial disagreement about how we are going

to deal with climate change but it is absolutely an important issue

and we need to develop our policies not within the Beltway only

but we need to get input from our State and local governments.

I look forward to your testimony today. What you have to say to

us is very, very important. Thank you for coming.

7

I yield back.

Mr. BOUCHER. Thank you very much.

At this time I am pleased to recognize the ranking Republican

member of our Energy and Air Quality Subcommittee, the gentleman from Illinois, Mr. Hastert, for a 5-minute statement.

OPENING STATEMENT OF HON. J. DENNIS HASTERT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. HASTERT. Thank you, Mr. Chairman, and Mr. Chairman,

thank you for holding this hearing today on State and local perspectives of climate change.

States are laboratories for democracy. It will be interesting to

learn what State and local jurisdictions are doing with regard to

the climate change issue. The number of hearings that we are holding attest to the fact that the subject of climate change is very complex and important. The different paths followed by State and local

jurisdictions can help us understand which policies may work best

or not at all. Some of the States here today are moving towards a

cap-and-trade program for CO2. While it appears that we were precipitously moving in that direction as well, many of the witnesses

we have heard from earlier hearings extolled the virtues of a capand-trade program. Speaker Pelosi has taken that option off the

schedule for now. I agree that we should not be doing a bill to create a CO2 cap-and-trade system in only a few months. Such significant changes in policy should be carefully considered by this committee even before being attempted.

As we learned a few weeks ago, compliance costs associated with

the Kyoto cap-and-trade scheme drove up wholesale electricity

prices in Germany about 40 percent. I am concerned that a capand-trade scheme will make electricity in the United States similarly more expensive. I am worried that the locals proposing or considering a cap-and-trade system are just those areas with already

high electricity prices and severe reliability concerns.

California has some of the highest electricity prices in the country and well-known market reliability problems. It is consistently

on the Federal Energy Regulatory Commission’s watch list for summer power problems yet it has the strictest global warming law of

any State in the Nation. Similarly, New England has high electric

prices and chronic reliability problems and yet it is contemplating

a cap-and-trade system. In both these areas, it is notoriously difficult to site new generation and transmission. Localized efforts to

cap carbon do not even make it any easier or more economic to

solve these critical problems. As a matter of fact, in New England,

the effort to put in the wind energy, which is a very green energy,

was stopped by many of the people who didn’t want it in the Cape

Cod area, in fact, just the opposite.

Abundant and affordable power supply is the key to our economic

growth. I want to hear from some of our witnesses today how they

can solve their electricity pricing and reliability problems and encourage robust economic growth. I am concerned that some of these

State and local plans while well intentioned may lead to unintended consequences. Increased energy efficiency, the use of more

renewable energy including more ethanol and taking advantage of

technological advantages that allow us to better utilize our abunVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
8

dant supply of coal are all things that I can and do support. We

need to be careful, however, when we consider any energy policy

that we do not stifle economic growth. The Energy Policy Act of

2005 took the balanced approach that I just have described. I believe we should build on the recent progress that we have made

and look for additional ways to accelerate our progress down the

road to energy security.

I look forward to the testimony today. I hope to learn from the

States and local experience, and I thank you, Mr. Chairman. I yield

back.

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

Mr. Barrow from Georgia is recognized for 3 minutes.

Mr. BARROW. Thank you, Mr. Chairman. In lieu of an opening

statement, I ask unanimous consent to submit for the record the

statement of my good friend, the mayor of Atlanta, the Honorable

Shirley Franklin.

Mr. BOUCHER. Without objection, that will be received for the

record.

Mr. BARROW. Ms. Franklin endorsed the mayors’ agreement almost two years ago. On a truly personal note, I am pleased to report that my even better friend, the Honorable Otis Johnson, the

mayor of my hometown, Savannah, Georgia, informs us that the

city of Savannah, their council will be endorsing the agreement in

the next month or so.

With that, I yield back. Thank you.

Mr. BOUCHER. Thank you, Mr. Barrow. We will interpret that as

a waiver of your opening statement and add additional minutes to

your time for questioning.

The gentlelady from Charlotte, Mrs. Myrick, is recognized for 3

minutes.

OPENING STATEMENT OF HON. SUE WILKINS MYRICK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH

CAROLINA

Mrs. MYRICK. Thank you, Mr. Chairman, for holding the hearing

and I want to welcome our mayor from Charlotte as my colleague

has done and thank him for being here.

This is a real challenging issue that all of us face and something

that we are going to have to do together. No one entity can do it

by themselves, and our concern, very frankly, is that we do have

cooperation in finding out what the real story is and how we move

forward and not move forward so fast from the standpoint that we

make mistakes. Up here in Washington we tend to do that periodically and that can be very detrimental to our States and local governments and we have seen that in the past. As a former mayor—

I am Pat’s predecessor—we have been dealing with these issues for

a long, long time so I am very interested in hearing all of our panel’s comments and concerns and anything you can share with us

that helps to make our job a little easier, and I thank all of you

for being here.

I yield back.

Mr. BOUCHER. Thank you very much, Mrs. Myrick. The

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

9

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

Ms. BALDWIN. Thank you, Mr. Chairman. I am pleased that we

are recognizing States and localities for actions they have taken to

address climate change. Many of the communities represented here

today have enacted policies or programs that will reduce their overall greenhouse gas emissions while also benefiting their local economies and residents. Their actions demonstrate that it is possible for

us to create meaningful, coordinated and economy-wide climate

change policies at the national level that will help us reverse global

climate change trends and also lead us in the right direction toward reducing our dependence on foreign oil.

I have in the past proudly mentioned my home State of Wisconsin because of its long leadership in environmental stewardship.

Our former Senator and Governor, Gaylord Nelson, envisioned a

world where our pristine oceans and lakes are protected, where our

air is clean to breathe and our planet preserved for future generations to enjoy. His efforts in organizing a nationwide grassroots

demonstration on behalf of the environment led to the creation of

Earth Day and triggered congressional action on some of our most

treasured environmental laws: the Clean Air and Water Acts and

the Safe Drinking Water Act.

With his vision in mind, last year Wisconsin passed a renewable

portfolio standard that establishes renewable energy and energy efficiency standards. As a result of this action, by 2015 Wisconsin

will avoid 5.5 million tons of greenhouse gas pollution. Our State

has also adopted a climate change action plan which serves as a

guide for how we plan to reduce our greenhouse gas emissions over

the coming years. Among our targets is to increase production of

cleaner fuels such as ethanol and biofuels. Wisconsin will soon be

producing almost 400 million gallons of ethanol annually and we

are on the right course to become one of the first States with cellulosic ethanol production from wood pulp.

Mr. Chairman, in Wisconsin it is clear that Gaylord Nelson’s legacy continues on. We are committed to protecting and respecting

our environment and natural resources but the actions like those

of the communities represented by our witnesses here today cannot

be the only steps taken to address global climate change. Rather,

they must serve as models for national action because now is the

time for Federal leadership in this arena.

I look forward to hearing from our witnesses today about how we

can learn from initiatives in your communities and States to create

the sound policy that will address the challenges of climate change

at the national level.

Thank you, Mr. Chairman. I yield back my remaining 14 seconds.

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

The gentleman from Arizona, Mr. Shadegg, is recognized for 3

minutes.

Mr. SHADEGG. I thank the gentleman for holding this hearing. I

am anxious to get to the witnesses’ testimony and therefore I will

waive.

Mr. BOUCHER. Thank you, Mr. Shadegg.

10

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

for 5 minutes.

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

Mr. INSLEE. Thank you.

I want to show my appreciation for the local leadership that has

been moving across this country to deal with climate change. It is

very inspiring and we hope to emulate some of your work.

I want to put in the record a letter from Mayor Greg Nickels,

who has been instrumental in helping mayors across the country

move forward on climate change. I appreciate his work.

I want to take issue, because I feel compelled to, on a couple of

statistics that my friend, Joe Barton from Texas, spread out about

global warming. Of course, they are accurate because Mr. Barton

is almost always accurate on statistical information but they are

largely irrelevant, and one of the statistics that we have heard him

talk a lot about is that carbon dioxide, anthropomorphic carbon dioxide, is a fairly small percentage of the total atmosphere and it

is also certainly well less than half of the global warming gases,

and that is an interesting but irrelevant statistic for this reason.

Actually there are two reasons. One, we have had for eons global

warming gases that have swathed our planet and kept it habitable,

and that is water vapor, a certain amount of carbon dioxide, megatons of gases which are not caused by humans, but those have always been in balance. They go into the atmosphere and they come

out of the atmosphere. CO2 has gone into the atmosphere and then

come out. It has been in balance. Water vapor has gone into the

atmosphere through evaporation; it has come out through rain and

snow and sleet. It has been in balance. These things have been in

balance for eons. What is now not in balance is carbon dioxide and

methane that we are adding to the atmosphere, and that is 100

percent of the gases that are out of balance are caused by you and

I, the anthropomorphic gases.

So when you hear my friend Joe Barton talk about it being 1 percent or some infinitesimal amount of gases, it may be a small percent of the total gases but it is 100 percent of the gases that are

now killing the planet Earth and that is why is sort of like a donut.

Your diet may be in balance with what you eat for years but when

you start eating extra donuts, the 100 pounds you may gain is

what is killing you, and that is what is happening to the planet

Earth right now.

Second, he points out accurately that man-made CO2 is a very

small percentage of the total gases in the atmosphere but when you

take some arsenic, it is a very small percentage of your total volume of your body mass but if that is what kills you, you should be

concerned about it. So I want people not to be misled about small

statistics, these are small numbers, except for the number that almost 100 percent of the gases that are out of balance right now are

caused by human activity and that is why we are here today.

So I just want to express thanks to cities and States moving forward and look forward to hearing from you. Thank you.

Mr. BOUCHER. Thank you, Mr. Inslee.

11

The gentlewoman from New Mexico, Mrs. Wilson, is recognized

for 3 minutes.

Mrs. WILSON. Thank you, Mr. Chairman.

I just wanted to welcome Ron Curry here to the committee and

look forward to his testimony, and I will waive an opening statement in lieu of questions.

Mr. BOUCHER. Thank you very much, Ms. Wilson. Any other

statments for the record will be accepted at this time.

[The prepared statement of Mr. Burgess follows:]

PREPARED STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS

Thank you, Mr. Chairman for holding this hearing.

And I’d like to thank the panel for taking time out of their extremely busy schedules to appear before us today.

Some States and regions are moving towards a cap-and-trade scheme for greenhouse gases. Some, like Texas, are not. California is working on a system now after

its law was passed last year.

Yet, Texas has surpassed California as the U.S. leader in renewable energy. In

2005, the State Legislature increased the State Renewable Portfolio Standard from

2,880 MW to 5,880 MW of installed renewable generation by 2015, with an even

more aggressive target of 10,000 MW by 2025.

I applaud the Texas State legislature for establishing these ambitious goals, as

well as the Public Utility Commission of Texas, represented here today by Commissioner Julie Caruthers Parsley, for setting policies that encourage the use of renewable energy.

Whether it be global warming, peak oil, high prices, or instability in the Middle

East, signs point to a day when we need to have energy sources that are not hydrocarbon-based. And some signs may suggest sooner rather than later.

As technology continues to improve, I anticipate that renewable sources will take

on an even greater importance in reducing our dependence on foreign energy and

reducing emissions of all kinds. I am heartened by reports of new solar panels, for

example, that operate in low-light conditions.

I strongly support the use of renewable energy and believe that where it can be

installed, it should be. I am, however, concerned about adopting a Federal mandatory Renewable Electricity Standard requirement when individual States, such as

Texas and others represented here today, have already made significant improvement in this area on their own.

I look forward to hearing from Commissioner Parsley about how Texas has been

able to achieve such success, so we might have the benefit of Texas’ expertise in

this matter.

I also look forward to hearing from our witnesses about State and local initiatives,

including zoning and planning, that encourage efficiency and conservation.

Mr. BOUCHER. At this time we welcome our panel of witnesses,

and I am pleased to briefly introduce each of them.

The Honorable Patrick McCrory is the mayor of the city of Charlotte, NC, a city that I would note that I visit frequently, if only

at the airport. I will be there later today, as a matter of fact, and

I always enjoy it. The Honorable Linda Adams is secretary of the

California Environmental Protection Agency. The Honorable Lisa

Jackson is the commissioner of the New Jersey Department of Environmental Protection. The Honorable Run Curry is the secretary

of the New Mexico Environmental Department. The Honorable

Julie Caruthers Parsley is a commissioner of the Public Utility

Commission for the State of Texas, and we want to say welcome

to each of our witnesses.

Without objection, your prepared written statement will be made

a part of our record. I am also going to ask unanimous consent to

insert in the record a letter addressed to the subcommittee from

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the U.S. Conference of Mayors, and without objection, that will be

admitted into the record.

We would welcome the oral statements of our witnesses and ask

that you limit your statements to approximately 5 minutes.

Mr. McCrory, we will be happy to begin with you.

STATEMENT OF PATRICK MCCRORY, MAYOR, CHARLOTTE, NC

Mr. MCCRORY. Thank you, Mr. Chairman. I encourage you to get

off the plane and get out of the airport the next time you come

through Charlotte, and spend some money too.

Sue, it is great working with you. I was a young 32-year-old city

council member when Sue was the mayor 18 years ago of Charlotte, North Carolina. I hate to rub that in, Sue, but it has been

a long time.

I want to give you a brief perspective of what it is like to be a

mayor and dealing with the balance that you were just talking

about on all sides of the aisle. In fact, I told you a story in my testimony about having the difficult task with my brothers and sisters

of cleaning out a drawer in my parents’ house. I have lost both my

parents this past decade and my mom just this past year. And in

cleaning out the drawer, I found a 1962 political brochure that my

dad used in a city council race in Worthington, Ohio, and in the

brochure it said the following: ‘‘We must walk the fine line between

the growth and the preservation of values which brought many of

us here. In this way we can be certain that new families and desirable industry will continue to be attracted to Worthington.’’ Well,

40-some years later you can replace Worthington with Charlotte or

Columbus or any city represented in this dais because we are trying to walk that fine line between protecting our values and our

environment along with continuing the economic vitality where we

can put food on the plates of the families in each of our cities, and

that is the fine line that mayors are working on across the Nation.

I must say as mayor of the city of Charlotte for the past 12 years,

walking that fine line doesn’t mean you step on toes. I have

stepped on toes on people on both the right and the left of the political spectrum. On the right, right now I have people wholly against

my mass transit plan for the next 30 or 40 years who believe that

we should only build roads and that will solve our transportation

and environmental problems. I am a firm believer that we have a

mass transit and a land use plan for the next 25 to 35 years to prepare for growth in the future. I also implemented tree ordinances,

the most aggressive tree ordinances in the Nation, for both residential and commercial properties and we are looking at other properties of industrial zoning. We are also looking at sidewalk ordinances. I passed my first year as mayor one of the most aggressive

sidewalk ordinances where you have to have pedestrian-friendly access and connectivity. I had to implement several vetoes to get this

implemented in the city.

However, also on the left I have stepped on some toes. I have

people on the left who want to implement mass transit everywhere,

even where it doesn’t work, out of fairness and I fight those efforts

also. I want to make sure our money is spent in the right place and

at the right time. I also have had people on the left who fight liability efforts to decrease the liability of people investing in

13

Brownfields and I also have people on the left, despite the issue of

global warming and climate change, never even mention the word

nuclear power or clean coal. It is nowhere in their vocabulary and

it is not a part of their discussion, and we have got to move people

to the center to find this balance between energy needs, job needs

with environmental needs and that is what I am intending to do

as mayor of Charlotte, North Carolina.

Why cities are so important? For example, our growth is increasing by 49 percent during this next 15 years. It is increasing by 80

percent automobiles during that same period of time. I have to look

at what our air quality will be for the next generation, especially

during hot summer days in July and August in Charlotte, North

Carolina.

Now, what are we doing? We are implementing the tree ordinances, we are implementing buffer requirements, we are implementing bike lanes, pedestrian-friendly access. We have got the

business community involved in Clean Air Works, a voluntary program where the business community not just in Charlotte but the

entire region which crosses city boundaries, State boundaries, community boundaries to get them involved, especially during highozone days. We are also implementing things with regional governments to make sure we have consistent land use policies so we

don’t have developers leapfrog regulations which encourage sprawl.

That has a major impact on the environmental policies that we are

implementing in cities. By the way, we are also implementing nuclear power in our region, which is very positive on our area. I have

two nuclear power plants within 20 miles of Charlotte, million-dollar lots right next door. I wish I would have invested in them 20

years ago and I did not. But we are very, very proud of our clean

energy and nuclear power.

The U.S. Conference of Mayors is also working on this, and I

work with my fellow mayors like Shirley Franklin and the mayor

of Seattle in 10 points in which we are looking at block grants,

which can encourage cities to implement good environmental policies and energy policies as opposed to just having a stick approach

in that effort.

I look forward to discussing more of these efforts in detail. My

dad was right: We all must balance our efforts between a viable

economy and also a clean environment. Thank you very much.

[The prepared statement of Mr. McCrory appears at the conclusion of the hearing.]

Mr. BUTTERFIELD [presiding]. Thank you, Mr. Mayor, for your

testimony.

At this time the Chair recognizes Secretary Adams, for 5 minutes.

STATEMENT OF LINDA ADAMS, SECRETARY, CALIFORNIA

ENVIRONMENTAL PROTECTION AGENCY, SACRAMENTO, CA

Ms. ADAMS. Good morning, Mr. Chairman, and members of the

committee.

I am Linda Adams, California’s secretary for Environmental Protection. On behalf of Governor Schwarzenegger, thank you for inviting me to testify today. Today I will describe California’s process

for developing our climate initiatives and explain the various proVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
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grams we have in place or are developing to meet our climate

goals.

First I want to commend the committee for this series of hearings on climate change. Climate change is one of the most pressing

environmental and economic issues of our time. If unaddressed, the

consequences are frightening. Addressing climate change is no

small task but the first step is political leadership. That is why I

am thankful that this committee and Congress as a whole is addressing this issue in a very serious manner.

California’s climate initiatives began with a similar act of political leadership. In June 2005, Governor Schwarzenegger announced

he signed an executive order laying out his goals for addressing climate change. He committed California to reduce its greenhouse gas

emissions to 1990 levels by the year 2020. He also established a

Climate Action Team, which I chair, consisting of cabinet-level decision makers from the various State agencies that have authority

to reduce greenhouse gas emissions from their respective jurisdictions. Last March the Climate Action Team released a blueprint report for how California could reach the 2020 goal. I would like to

submit a copy of the executive summary of this report into the report, and it has been delivered to the committee. The report made

a series of high-level recommendations including, one, to develop a

multi-sector market-based system to reduce greenhouse gas emissions in a cost-effective manner that both protect economic growth

and encourages innovation; two, mandate emissions reporting from

the largest sectors; three, conduct an economic analysis to inform

policymakers on the most cost-effective measures to reduce greenhouse gas emissions; four, accelerate regulatory measures such as

the renewable energy portfolio and energy efficiency standards; and

last, educate the public to ensure that all citizens understand the

significance of climate change and steps they can step to mitigate

it. The report also laid out over 40 specific strategies that could be

employed to reach our goal.

The purpose of this exercise was not to commit California to each

strategy but to demonstrate that a combination of strategies could

be implemented to achieve these goals. The report included a series

of scenario analyses of the potential impacts of climate change on

California. These research documents were collected from some of

California’s most renowned climate scientists. In July 2006, these

analyses were summarized in another important document, which

I would also like to submit to the record and that report has also

been delivered.

Mr. BUTTERFIELD. Without objection, it will be received.

Ms. ADAMS. Thank you.

That document called ‘‘Our Changing Climate’’ highlights the

various effects of climate change on California including a potential

loss of 70 to 90 percent of the Sierra Nevada snow pack, which

serves as our largest free water storage reservoir. Sea level rise affecting the livability and economy of coastal areas; saltwater intrusion into the California Bay-Delta, which supplies drinking water

to 23 million Californians; heat waves that worsen air pollution

and jeopardize public health; and significant damage to California’s

valuable agriculture industry. This report demonstrates that there

15

is a heavy toll to pay economically, environmentally and socially if

we do not address climate change.

The California legislature responded to the Governor’s goals by

passing A.B. 32, the Global Warming Solution Act. That bill gave

my California Air Resources Board broad authority to reduce

greenhouse gas emissions from significant sources. The bill allows

a market-based approach and calls for enforceable caps to be in

place by 2020. The Governor signed the bill in September 2006 and

we immediately began implementation. In October the Governor

issued an executive order calling on the Air Resources Board to develop a multi-sector market-based compliance system that could

permit trading between the European Union and the Northeast Regional Greenhouse Gas Initiative and others. It also called on me

to create a market advisory committee of national and international experts to advise on the design of a market system. I announced that membership in December and they have met twice already.

Mr. Chairman, I am worried that I am running out of time.

Mr. BUTTERFIELD. Yes, your time has expired. We have a copy

of your written testimony, I believe. Yes. Would you like to make

a final statement?

Ms. ADAMS. Yes. The final statement is that as Congress considers legislation to address global warming, I would recommend that

you consider several key principles. One, to set an overall cap on

emissions; two, to design a system that allows all sectors of the

economy to participate; three, allow for market mechanisms that

encourage new technology; four, invest in scientific research; five,

promote public education; and six, remain open to new ideas.

[The prepared statement of Ms. Adams appears at the conclusion

of the hearing.]

Mr. BUTTERFIELD. Thank you. Thank you very much.

Commissioner Jackson, you are recognized for 5 minutes.

STATEMENT OF LISA P. JACKSON, COMMISSIONER, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION,

TRENTON, NJ

Ms. JACKSON. Thank you. Good morning, Mr. Chairman, and

members of the committee. My name is Lisa Jackson. I run the

New Jersey Department of Environmental Protection. On behalf of

Governor Jon S. Corzine, I would like to thank this committee for

taking the steps necessary to begin tackling this issue of climate

change. Governor Corzine has said often that it is not only an economic issue, it is one that is absolutely imperative to the preservation of our planet for our children and grandchildren.

The economic impacts of global warming, I know we will talk

about the economic impacts of some of the fixes but the economic

impacts of global warming for our State, like many of my colleagues here, could be quite dramatic. We are talking about impacts to the environment, the economy and public safety. New Jersey has 127 miles of coastline. It has a vibrant and active port and

a vibrant and active agricultural sector in addition to the tourism

that comes with our wonderful coastline.

In response to the challenges of global warming, just a few weeks

ago Governor Corzine recently issued an executive order that set

16

statewide targets for stabilizing New Jersey’s greenhouse gas emissions at 1990 levels by 2020. Further, his order looks long term by

setting a standard of reduction of 80 percent from current levels by

the year 2050.

I think it is important to recognize, as many of you have, that

New Jersey is not the only State that is moving forward with global warming targets and challenges and solutions. In fact, many

States have already moved in that direction.

I am here to speak a bit about the Regional Greenhouse Gas Initiative that nine and soon 10 States in the Northeast have embraced to deal with greenhouse gas emissions from the electricity

generation sector in our State. I note that a number of the RGGI

States are represented on your subcommittee and we certainly

want to thank each and every one of them from New Jersey for the

hard work that they have put in to make the Regional Greenhouse

Gas Initiative as successful as it is doing so far as we move toward

implementation. Additional States, clearly California, Arizona, New

Mexico, Washington and Illinois, have also all set aggressive greenhouse gas targets. RGGI is the first ever cap-and-trade program

addressing CO2 in the United States. The proposed program will

require electric power generators in participating States to reduce

carbon dioxide emissions. Reductions targeted are to stay at approximately current levels through 2014 and then to reduce emissions 10 percent below current levels by 2018. That is actually a

16 percent reduction from business as usual projections. We also

intend to auction up to 100 percent of New Jersey’s allowances

under RGGI to support consumer benefits. Revenue from the auction of these allowances will be used to support energy efficiency

and clean energy technology across sectors and help to reduce the

impact to electricity ratepayers.

While I am here today to talk to you and answer any questions

that the subcommittee may have about RGGI and I am happy to

do that, I would be remiss if I did not take the opportunity to reiterate Governor Corzine’s strong call for Federal action to set minimum requirements on the issue of climate change and greenhouse

gases. As a former CEO, Governor Corzine is certainly not interested in pursuing a path that would lead our State or our people

to a place where we are not economically competitive. On the contrary, he believes very firmly and strongly that stepping up to address climate change now is an economic opportunity, that technological advances in the past in our country have lead to great economic innovations and economic success, and he believes that by

moving forward quickly now, New Jersey will be poised to address

what will be one of the greatest technological challenges of our era.

For that reason, I would ask today that this Congress redouble

efforts to come up with strong national laws that regulate greenhouse gas emissions, and attached to my testimony that has already been submitted are principles that we, the RGGI States,

have talked about and discussed as necessary for that kind of regulation including the fact that it be based on strong science-based

reductions on the order of 80 percent is what our scientists say we

need in order to address this issue, that it be portfolio-based, that

it include energy efficiency and CAFE standards, and that it acknowledge the fact that State action is fundamental to moving forVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
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ward and that those actions in the States not be preempted by

weak Federal regulations.

In closing, I would like to say that New Jersey, like many other

States and jurisdictions here, is a great example of innovation and

I look forward to answering any questions you may have.

[The prepared statement of Ms. Jackson appears at the conclusion of the hearing.]

Mr. BUTTERFIELD. Thank you.

Secretary Curry, you are recognized for 5 minutes.

STATEMENT OF RON CURRY, CABINET SECRETARY, STATE OF

NEW MEXICO ENVIRONMENT DEPARTMENT, SANTA FE, NM

Mr. CURRY. Thank you, Mr. Chairman, and thank you for inviting us from New Mexico to be here today.

I am Ron Curry. I am cabinet secretary for the State of New

Mexico Environment Department and I bring you best wishes from

Governor Richardson, who is a happy graduate from this committee.

The Governor has exerted strong leadership in this area since he

came into office in 2003. New Mexico is a State that is a lot about

water. We are concerned about our snow pack and our water supply in New Mexico because we are in the desert Southwest. We believe that Governor Richardson has given strong leadership in protecting our water supplies through the efforts that we are making

through climate change initiatives within New Mexico.

We also believe, and the Governor has made it very clear, that

we don’t want to do anything that harms our economy in New Mexico. Quite the contrary, we believe that good climate change measures will improve the economy in New Mexico and the United

States.

Governor Richardson has focused on four specific points as we

have gone through the climate change initiatives. One, in the summer of 2005, Governor Richardson issued an executive order setting

tough greenhouse gas emission reduction targets in New Mexico,

and this was done as a result of the Climate Change Advisory

Group, which was a diverse group of 40 people in New Mexico that

was made up of business folks, made up of people from government, made up of environmental advocates and it was a completely

diverse group including oil and gas and dairies and out of that

came recommendations for climate change action in New Mexico.

There were 69 recommendations. Sixty-seven of those recommendations out of this 40-member diverse group were unanimous, and I

think that is a tribute to the Governor’s leadership and making

people understand how important climate change initiatives are to

helping New Mexico not only environmentally but with the economy.

In New Mexico, the No. 1 source of greenhouse gas emissions is

power production while the No. 2 source is production and processing in the oil and gas sector. Those two industries account nearly

two-third of the greenhouse gas emissions produced in the State.

The Governor has led on this issue as well. Last week, Governor

Richardson signed legislation increasing the State’s renewable portfolio standard for the 10 percent renewable energy required in 2011

to 15 percent by 2015 and 20 percent in 2020. The Governor also

18

signed a bill creating the Renewable Energy Transmission Authority, a quasi-governmental agency that will facilitate the transmission of renewable energy within the State and to the markets

outside of New Mexico.

New Mexico was the first State under the leadership of Governor

Richardson to join the Chicago Climate Exchange. Chicago Climate

Exchange is a market-based voluntary cap-and-trade market and

New Mexico joined the ranks of duPont and Ford and other private

sector companies that have joined the Chicago Climate Exchange.

We are a proud member, we are the first State, and we are participating to make sure that in New Mexico the Government itself,

which is the participating member, reduces our greenhouse gas

emissions. As a member of CCX, New Mexico is committed to reduce greenhouse gas emissions associated with State operations by

6 percent by 2010.

Also as been mentioned, we are a member of the Western Regional Climate Action Initiative, and in the action of strong national climate program, New Mexico is also pushing for marketbased solutions at the regional level. On February 26, 2007, Governor Richardson signed a memorandum of understanding with the

Governors of California, Arizona, Washington and Oregon creating

the Western Regional Climate Active Initiative. This is a major collaborative effort by the western States.

We encourage Congress to learn from States like New Mexico

when implementing programs to reduce greenhouse gas emissions.

Over the last 30 years of the Clean Air Act, the States have proven

themselves as the laboratory for innovation in air pollution control.

We ask most importantly that Congress enact a program with

mandatory market-based greenhouse gas emission limits that slow,

stop and reverse the growth of these emissions. These emission

caps and such a program should result in reductions equal to the

targets set by Governor Richardson.

We look forward to answering any questions you have and we

look forward to continuing to work at the State level and at the regional level to solve this very serious problem.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Curry appears at the conclusion

of the hearing.]

Mr. BUTTERFIELD. Thank you, Mr. Mayor.

Commissioner Parsley, 5 minutes.

STATEMENT OF JULIE CARUTHERS PARSLEY, COMMISSIONER,

PUBLIC UTILITY COMMISSION OF TEXAS, AUSTIN, TX

Ms. PARSLEY. Thank you, Mr. Chairman and members. Thank

you for having us here today, and I have a slightly different perspective than the other witnesses today. The issue of climate

change and what Texas will do about it is a legislative issue that

they are struggling with even as we speak, just as you are, so that

is something they are dealing with in Austin right now. But what

I am here to tell you about is what we have done with renewable

energy in Texas and I have some recommendations for how it could

actually be implemented in other areas.

[Slide shown.]

19

Just to begin, this next slide is just to show you real quickly, because I will be talking about ERCOT and then out of ERCOT

areas. I know you know this already but just as a reminder, there

are three interconnections in the United States. Texas is the only

State in all three interconnections. El Paso is in the western interconnect, the panhandle and northeast Texas are in the eastern

interconnect and we have 85 percent of the load in Texas in

ERCOT, which is a wholly intrastate interconnection. Next slide.

[Slide shown.]

The Texas Legislature passed a Renewable Portfolio Standard for

Texas. It started out in 1999 at 2,880 megawatts by 2009 and we

had surpassed that by 2005. So in 2005 they increased that goal

to 5,880 in 2015. Last year we surpassed California as the U.S.

leader for renewable energy and actually Texas has the world’s

largest wind farm that just opened up outside of Sweetwater at 735

megawatts. Next slide.

[Slide shown.]

What has made this a successful program are really three major

factors. The first is robust markets for renewable energy, the second is a very significant transmission investment, and three, positive economic incentives for the generators of that energy. Next

slide.

[Slide shown.]

Robust markets for renewable energy—when you have a willing

buyer and a willing seller, you don’t really cap your growth. You

can sell as much as somebody is willing to buy and you can buy

as much as somebody is willing to sell. And having actual competitive markets in Texas has facilitated this. If you otherwise have a

renewable portfolio standard where you just require integrated

utilities to buy a certain percentage of their capacity from renewable sources, then that tends to act more as a cap. So that is one

of the reasons we have been able to exceed our standards, I believe,

is because we do have willing buyers and willing sellers. In fact,

earlier this week a coalition of environmental and renewable power

generator sent Chairman Kelliher at the FERC a letter arguing

that robust wholesale markets were necessary to really promote renewable energy, and I found that very interesting as well. Next

slide.

[Slide shown.]

We always hear in Texas about the high retail electricity prices

on the retail side and this chart is really just to show you how our

electricity prices track the natural gas prices. Seventy-three percent of our generation in ERCOT is natural gas generated, and you

can see the big spike in 2005. That was during the hurricanes.

Prices have come back down and mitigated somewhat but our

prices are quite more expensive than the other areas because we

do not have the kind of coal-burning facilities other States do. Even

in Texas, the out of ERCOT areas where there is 70 percent coal

in those areas, the prices are much lower. Next slide.

[Slide shown.]

The second element, and this is a very important element, is that

we have had a very significant transmission investment in ERCOT.

We have a socialized rate for transmission costs. If we build the

transmission, the costs are all uplifted and spread to all the rateVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
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payers. In this way it has avoided people complaining about crosssubsidization for one program over another and has just allowed us

to build what we need to build. In fact, in the next few years we

will have $5.3 billion worth of transmission investment in the

rolled-in rate and that equates to 7,500 new miles of transmission.

So that has been a very important thing. If you can’t move the renewable energy from the generation source to the load, there is not

much sense in having renewable energy.

One thing that we have also done is, we have a proceeding to

designate corridors in Texas and that is something that—next

slide.

[Slide shown.]

I would like to suggest as a recommendation. I am beginning to

run out of time, so I would like to just say positive economic incentives that have really led to this as well are our Renewable Portfolio Standards but the Federal production tax credit, we have been

told by the renewable generators, is actually even more important

than that. That is something they count on and something that has

really incented that activity. Next slide.

[Slide shown.]

The recommendations that I would make that we have seen that

worked in Texas, and can work elsewhere, are significant transmission investment which I think might be able to be done under

the transmission corridor power that was given to the Department

of Energy, also renewable transmission corridors and possibly socializing those costs, though allowing for regional flexibility. For instance, New Mexico has a renewable program that works very well

for them. We have a program that works very well for us. There

may be other regions that have the same.

So with that, I will close and answer any questions.

[The prepared statement of Ms. Parsley appears at the conclusion of the hearing.]

Mr. BUTTERFIELD. Thank you for your testimony.

I want to thank all of you. Most all of you stayed right on target

with your time and I thank you so very much.

It is now time for questions from the members of the committee.

The Chair will yield to himself 5 minutes for the purpose of asking

questions.

Mr. Mayor, thank you again for coming. Thank you for your leadership in Charlotte. Your reputation precedes you, and I thank you

very much. But Mr. Mayor, given the global nature of climate

change, it is not United States climate change, it is global climate

change, could you explain to us why you and the other mayors

across the country are taking local actions to address this important issue?

Mr. MCCRORY. Well, I think local action, grassroots action can

maybe have as much impact on the total environment as any Federal action because at the local level we are making the major land

use decisions that determine where growth goes regarding sprawl,

regarding where industry is placed and how much we are reliant

on the automobile. Many of these things are actually outside the

jurisdiction of the Federal Government so we feel very strongly

that what we do in our airports, what we do in our Government

buildings, what we do in our land development can have a major

21

impact on not just the national environment but the global environment, and I hope that spreads not just to cities like Charlotte or

Seattle or Chicago but also spreads to Singapore and cities in Asia

and Europe and across the world.

Mr. BUTTERFIELD. When the mayors take their official action and

take their positions on this issue and other issues, what forum do

you use to do that? Is it a poll? Is it a convention? What is the

methodology?

Mr. MCCRORY. We actually go through two separate committees,

and one thing I am recognizing which maybe was a mistake, I used

to be chairman of both the energy and environment committee and

I think to help spread out the chairmanships and things and get

more mayors involved, we separated the energy and environment

committee so we have lengthy discussions on both the energy and

environment committee and that is where we get the details on

what types of resolutions we would like to pass. We share ideas

and I might add, we steal each other’s ideas also.

Mr. BUTTERFIELD. Let me address this question to the distinguished secretary from New Mexico, Mr. Curry. Mr. Curry, you testified that your Governor has entered into an agreement with four

other western Governors to establish a cap-and-trade program for

greenhouse gases. Could you provide us with more information on

that such as what sectors within your economy might be covered

and what cap levels and timing may be under consideration?

Mr. CURRY. Mr. Chairman, yes, we will be glad to supply you

with all of that. I think one of the most important parts of that collaboration is the fact that we have many things in common and we

are going to set our guidelines and our mandates based on those

commonalities. Obviously in New Mexico we don’t have an ocean

like California does yet and we on the other hand, because of the

working relationship that Governor Richardson has with Governor

Schwarzenegger and the other Governors, we are going to be working trying to recognize the differences between the States and setting the timelines accordingly, and I think what we are going to

see out of that is those five States being the leaders in the country

because of that type of cooperation.

Mr. BUTTERFIELD. Secretary Adams, let me again thank you for

coming and ask you, if the Federal Government were to adopt a

cap-and-trade program for greenhouse gas emissions, how would

that affect the regional program that New Jersey is involved in? Do

you believe that the regional programs would survive?

Ms. ADAMS. Thank you, Mr. Chairman. We will be working with

not only the western States but the RGGI States on designing a

trading program. California’s program is required to take effect

January 1, 2012. I have a market advisory committee made up of

experts from around the world who really envision an international

market. I do have members from the RGGI States on that committee. We are a little bit at risk being potentially ahead of the Federal Government but we hope that we would be a leader in helping

to design a market and——

Mr. BUTTERFIELD. Your original program would continue? You

wouldn’t abandon your original program?

Ms. ADAMS. Absolutely we would not abandon. We hope that we

could—we are actually working with 30 other States on a multiVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
22

State registry so we are hoping that we could actually help Congress and the Federal Government design a market.

Mr. BUTTERFIELD. Commissioner Jackson, let me ask you to take

a stab at that if would in the last 15 seconds.

Ms. JACKSON. I would have to agree with Secretary Adams. We

are moving forward with rules that will be out this year and I

think we hope that the Federal Government will come in behind

us with rules that reflect the laboratory and experimentation that

we are doing in the States.

Mr. BUTTERFIELD. Thank you. The Chair’s time has expired.

Thank you. Thank you very much.

At this time the Chair recognizes the gentleman from Illinois,

Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman. Before I start my time,

I want to also recognize two alumni we have got hiding behind Ms.

Jackson, Rick Kessler, who was formerly of the committee, and we

have Dan Scopek, who used to be on Doug Ose’s staff in California.

So I think it is always good staff that helps good elected and appointed officials and we appreciate you all coming back.

Mr. BUTTERFIELD. Mr. Shimkus, I cannot help but to observe

that we have a good, diverse panel today as compared to the panel

yesterday when we had five men, all representing the automobile

industry. All right. You have 5 minutes.

Mr. SHIMKUS. Thank you, Mr. Chairman. I have got a lot of

things I want to talk about so I will try to go brief, and if you can

keep your answers simple at first, and you may not know the answer, but mayor, is your State a net importer or exporter of power?

Do you know? You have two nuclear plants so it is probably safe

to say in your area you are a net exporter.

Mr. MCCRORY. I would assume exporter. I don’t have those statistics with me but yes, and we work in both the Carolinas too, two

different utilities.

Mr. SHIMKUS. Thank you.

Ms. Adams, California?

Ms. ADAMS. Net importer.

Mr. SHIMKUS. I knew that answer.

Ms. Jackson?

Ms. JACKSON. Net importer, about 25 percent.

Mr. SHIMKUS. I knew that answer.

Mr. Curry—oh, before you start, God put a rainbow in the sky

to say there wouldn’t be another flood that destroyed the whole

world so I think you are safe from seeing any beachfront property

any time soon.

Mr. CURRY. Well, we have lots of sand. We are ready to go.

Net exporter.

Mr. SHIMKUS. Thank you.

Ms. PARSLEY. In ERCOT we are self-sufficient. We do have some

DC ties that we do move power through, but all the power in

ERCOT is used in ERCOT. The out of ERCOT areas, I believe that

they are net importers but——

Mr. SHIMKUS. And Texas is a little different because of ERCOT,

the way that was set up.

How many of you think there is a benefit to lower energy prices?

23

Mr. MCCRORY. One emphasis with energy prices which we always talk about residential energy prices but what is most important to us in the Southeast is energy prices for industry and manufacturing that is deserting our area, so that is very, very important

for any kind of development.

Mr. SHIMKUS. Ms. Adams?

Ms. ADAMS. Yes, sir, although California does have some of the

highest rates, people pay bills and for the most part Californians

pay lower bills because we are highly energy-efficient. Our electricity——

Mr. SHIMKUS. So the question, do you support low price energy

prices or high energy prices?

Ms. ADAMS. I support low but——

Mr. SHIMKUS. OK. Thank you.

Ms. Jackson?

Ms. JACKSON. Governor Corzine has made it clear that lowering

energy prices is important for our economic——

Mr. SHIMKUS. Because you are one of the highest energy cost

States in the Nation.

Ms. JACKSON. We do have high energy prices.

Mr. SHIMKUS. Thank you.

Mr. Curry?

Mr. CURRY. We believe in low energy prices, and the fact that we

have low energy prices in New Mexico has helped create 80,000

jobs in——

Mr. SHIMKUS. And you are a net exporter.

Mr. CURRY. That is right.

Mr. SHIMKUS. And that is an important point.

Ms. Parsley?

Ms. PARSLEY. Yes, we do believe in low energy prices.

Mr. SHIMKUS. How many jobs in your States are based upon energy exploration or recovery? And again, the mayor, you may not

know.

Ms. Adams?

Ms. ADAMS. I don’t have that.

Mr. SHIMKUS. You don’t have the information?

Ms. Jackson?

Ms. JACKSON. I think it would be minimal.

Mr. SHIMKUS. I would say limited for both of you but you might

want to clarify that for the record in the future.

Mr. Curry, probably quite a few?

Mr. CURRY. Yes.

Ms. ADAMS. And obviously Texas quite a few.

Mr. SHIMKUS. When we address this greenhouse gas debate, I

think it is safe to assume that natural gas could be a big advantage

in trying to reduce the amount and keep electricity prices low. This

was a map that I used before we eventually opened up some of the

eastern Gulf Coast exploration but it is always significant that the

west coast and the east coast, big red, off limits for natural gas exploration. Do you all know that?

Mr. Mayor, off your coast, do you know we can’t explore for natural gas?

Mr. MCCRORY. Yes.

Mr. SHIMKUS. Secretary Adams?

24

Ms. ADAMS. Correct.

Mr. SHIMKUS. Ms. Jackson?

Ms. JACKSON. Yes, we oppose that.

Mr. SHIMKUS. And of course, you are not on the coast yet there,

Mr. Curry, so——

Ms. PARSLEY. Obviously we support it and we are a net exporter

of natural gas in Texas.

Mr. SHIMKUS. And of course, you do have exploration off the

coast of Texas.

If we want low cost, we have got to have supply too. If we want

to have lower greenhouse gas emissions, we ought to move to some

supply that would incentivize low-cost energy by using less emissions. But that is why a lot of us have problems with this debate

from our friends on the other side of the aisle because they don’t

want to explore, they don’t want to go after more natural gas, and

natural gas is a major product and commodity for industry, for

manufacturing, for agriculture and the like.

I want to end up with my last question to the mayor. Where is

the high-level nuclear waste stored in those two nuclear power

plants that are in your community?

Mr. MCCRORY. I don’t have the statistics but much of it is currently temporarily stored on the location.

Mr. SHIMKUS. Whose responsibility is it to receive that high-level

nuclear waste?

Mr. MCCRORY. The utilities work through the Federal Government and work through the nuclear agencies of the Federal Government but that is——

Mr. SHIMKUS. Do you think it would be safer to store that highlevel nuclear waste under a mountain in the desert or next to your

community?

Mr. MCCRORY. I personally think that we need to have a Federal

policy of having one location, and I am an advocate of that. I think

you are addressing the program which you addressed with natural

gas and everything else. Even as mayors, as Sue knows, we have

NIMBY issues where we are all rather hypocritical.

Mr. SHIMKUS. If we are going to increase in a cap-and-trade program down to 80 percent that some people want, we are going to

have at a minimum 40 percent increase in cost and the NIMBY

issue better stop because you are using our resources, our coal, our

natural gas and you are not footing your part of the bill, and I

would take that back to your State.

I yield back.

Mr. BUTTERFIELD. Thank you. Thank you very much.

At this time the Chair recognizes the distinguished gentleman

from the State of Washington, Mr. Inslee, for 5 minutes.

Mr. INSLEE. Thank you. I would like to ask unanimous consent

to put in the record a letter from Mayor Greg Nicholas concerning——

Mr. BUTTERFIELD. Without objection, the letter will be received

into the record.

Mr. INSLEE. I want to elaborate on my thanking you for the local

leadership States and cities have shown on this from an economic

development perspective. A lot of people think of this as an environmental issue. I tend to think of it as an economic opportunity

25

for the United States, and I just want to thank you for the successes that you are creating by creating economic opportunity. The

fact that the local Governors and mayors are moving on this issue

has created an investment opportunity for companies that are now

developing technologies that are going to sell their products to

China one of these days, and right now the RamGen Corporation,

for instance, in Tacoma, Washington, has a compression technology

that might reduce the cost of compressing CO2 so we can make

clean coal actually a market-based possibility in this country, and

because of what you are doing, it is creating an investment climate

so that they can move forward to develop clean coal technology that

one of these days we are going to sell to China, because we need

to sell our technology to China to create jobs here and to restrain

their unrestrained CO2 emissions in China.

We have tremendous investment in the Nano Solar Corporation

in Palo Alto, California, that has developed a thin-celled solar cell,

a phototaic cell, using the sigs system rather than a silicone-based

system, but they have an investment climate that now allows that

because you have moved forward to create this economic opportunity and one of these days we are going to sell that material, we

are going to be the providers to China and India of solar. We have

solar thermal. We just had a company bought from Austria now

called Auster, it used to be called the Solar Power and Heating

Company, we are going to sell that technology around the world.

We have the A–123 Battery Company that is now in an investment

climate where they can grow because of your local leadership and

they have developed a lithium ion battery that is going to power

the next generation of plug-in cars. It is going to get 150 miles a

gallon and go 40 miles on zero carbon emissions. It can decrease

CO2 30 to 40 percent even using today’s grid.

The point I want to make is, what you all are doing locally are

growing the Nation’s economy by allowing us to fulfill our destiny

that I believe is America’s destiny to sell clean energy technology

to the world, and I believe that is a leadership destiny for this

country that we ought to seize, and the effort that you are doing

right now is helping us, so I just want to thank you for that. A lot

of people think of you from the green perspective. I am thinking

of the other kind of green here, and there is some other kind of

green that we got to think about when we develop our global

warming policy.

So with that, a question to Ms. Parsley. You talked about—and

I am not sure I understood. You said an RPS could be a cap if it

was not treated correctly, and I am not sure I follow what you said.

You said we had to do something on RPS so that it didn’t end up

being a cap, it would actually be a floor.

Ms. PARSLEY. Right. Well, what I meant was, if you have a market with the buyers and sellers, you can buy as much as sold and

you will produce, which is the law of supply of demand. With an

integrated utility, you tend to have to say you would either buy 10

percent of whatever your output is and if the utility is doing that,

then that tends to be a cap, in other words. It could be 10 percent

of what they can actually purchase and what they can actually use

because there are some system reliability limitations on wind because it is intermittent and some other issues surrounding it. So

26

that is all I meant. I didn’t mean that an RPS integrated utility

was a bad thing at all. I just meant that if you have a market

where you actually have people who can buy and sell it, it tends

to act—it tends to increase.

Mr. INSLEE. I will give you another company, by the way. You

mentioned intermittent nature of wind. There is a company called

General Compression that has had a very significant round of financing and they have a system of compressing air, putting it in

the ground, treating it as a battery that can run a turbine and it

can potentially double revenues from wind turbines by making it

a stable source of energy rather than intermittent, and it is that

type of investment that your actions are driving and I think that

is a technology some day that we want to sell to China as well.

Could I ask about the California experience? You may have

talked about this. As I understand it, California has had essentially

a stable electrical usage because of their efficiency work that they

have done whereas the average American has gone on 50 percent

in the last 15 or 20 years. I believe that is the statistic.

Ms. ADAMS. Yes, sir, I believe it is.

Mr. INSLEE. Could you talk about what you think is the most effective ways to accomplish that what I consider incredible achievement? You are still enjoying hot tubs out there. Your economy is

doing pretty well but you have stabilized electrical use but everybody else’s is going up by a factor of 50 percent.

Ms. ADAMS. Yes, that is true. Our electrical use per capita has

remained nearly flat while the rest of the Nation’s use has increased by 50 percent, and we do—we are very energy-efficient in

California and we have through the rates paid for our rebate programs and other energy-efficiency programs such as installing

dual-pane windows, installing solar, so we have a very active rebate program. My local utility, which is one of the most green in

the State, provides free shade trees. We have some hot weather in

Sacramento in the summer so——

Mr. BUTTERFIELD. The gentleman’s time has expired.

Mr. INSLEE. Thank you.

Ms. ADAMS. You are welcome.

Mr. BUTTERFIELD. At this time the Chair recognizes the distinguished gentlelady from North Carolina, Mrs. Myrick.

Mrs. MYRICK. Thank you, Mr. Chairman, and thanks to all of you

again for your testimony and your suggestions and things you are

doing.

I wanted to ask my mayor a question and just let you elaborate.

I know community-wise, we have got a lot going on with green

building initiatives and the same with what you are doing in government. Could you just give us a little bit of a synopsis on how

that is all working together and the difference it makes?

Mr. MCCRORY. Absolutely. I think this green building initiative,

which I really commend Mayor Daley in Chicago for being one of

the major leaders in this effort, is taking cities by storm and now

we are working with the private sector, the architects, the designers of buildings. We have designed a museum and a theater recently as a green building in downtown Charlotte and now we are

looking at putting those types of requirements in other buildings.

Of course, you have to balance the costs and there are different levVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
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els of the green ratings but we think it has tremendous potential,

especially with the impact of the heat index in major metropolitan

areas.

Mrs. MYRICK. And of course, because we have low energy rates

in the Southeast, I think a 40 percent increase would probably be

very damaging to what happens with our economy in business and

industry.

Mr. MCCRORY. Well, Sue, in your district, as you know, especially in the Gaston County area, we are trying to hang onto industry at this point in time, and as we try to compete with the Central

America right across the border and even China, one of the major

questions we get when we recruit industry or try to retain them

is the energy prices. No doubt about it.

Mrs. MYRICK. One of the things that I think frustrates us a little

bit in North Carolina relative to our energy situation is the fact

that hydro is great and wind is great but we don’t have the advantage of being able to use a lot of that, and so we have had to rely

on other technologies and I wanted to ask Ms. Parsley, relative to

Texas, I know you don’t do coal but do you have any plans or how

do you look at or have you considered clean coal technology in

Texas? Is that an option for you?

Ms. PARSLEY. We have had two announced IGCC plants. They

are test facilities. Texas has two of the four remaining sites for

FutureGen and we really hope that FutureGen will site in Texas

very much. But, yes, we are very supportive of that. It is still a

burgeoning technology. It is very, very promising but it is still not

quite available for commercial use. So that is something we are

looking at very—we are very interested in that, yes.

Mrs. MYRICK. Mr. Curry, forgive my ignorance on this. Do you

have any nuclear in New Mexico?

Mr. CURRY. Mr. Chairman, we do not have any nuclear in New

Mexico but we do use Palo Verde nuclear plant, which is in Arizona, southern Arizona, and New Mexico is also in the process of

permitting and has already been permitted by the NRC a uranium

enrichment plant, which is in New Mexico, which will be used to

supply fuel for nuclear facilities.

Mrs. MYRICK. Thank you. I will yield back my time.

Mr. BUTTERFIELD. Thank you. I believe that completes the first

round of questioning. Would you like to go a second round?

Mr. SHIMKUS. Mr. Chairman, I had a question from the ranking

member that——

Mr. BUTTERFIELD. The gentleman is recognized.

Mr. SHIMKUS. It is also one that I would want to ask also for

public disclosure. I am glad Sue talked about coal. The basic question is, do you support the development of clean coal power plants

in your State or adjacent States? And then I will just follow up

with a little response.

Mayor? And I am talking about integrated, combined gas cycle

which is the current technology.

Mr. MCCRORY. Yes, I do.

Mr. SHIMKUS. Ms. Adams?

Ms. ADAMS. I am not familiar with the technology on so-called

clean coal but I know that sequestration is a big part of the soluVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
28

tion and that is something that California is willing to invest in

and look at.

Mr. SHIMKUS. And we had a big hearing on that a couple hearings ago, so Ms. Jackson?

Ms. JACKSON. Governor Corzine has made it clear that he thinks

we must invest in coal technologies, not only IGCC but other sequestration technologies and we believe it is part of the mix.

Mr. SHIMKUS. Tell him thank you for me.

Mr. Curry?

Mr. CURRY. Yes, we do, and we are exploring the various types

of credits that are available to companies that would be willing to

do that exactly that in New Mexico.

Mr. SHIMKUS. And Ms. Parsley?

Ms. PARSLEY. Yes, we are.

Mr. SHIMKUS. And I hope that Texas is not successful. The two

other FutureGen sites are in southern Illinois, which is where I am

at. The States ought to be following this because it is near-zeroemission with carbon sequestration if you have the geological formations.

I do appreciate you coming, and with that, Mr. Chairman, I will

yield back my time. Thank you.

Mr. BUTTERFIELD. The gentleman from Washington, Mr. Inslee.

Mr. INSLEE. Thank you, Mr. Curry, for writing a book about the

economic opportunities associated with clean energy, and I have

been really impressed with what has gone on in New Mexico because it has been historically a fossil fuel-producing State and it

has been a major part of its economy but I have seen very significant changes under Governor Richardson’s leadership and I just

wanted to give you a chance to crow for a minute or two and tell

us what you think has been most successful in those efforts. The

question I guess I would ask you is, here we have a State that has

been dependent on fossil fuels and has been an integral part of its

economy and yet it is making this transition. How do you pull that

off?

Mr. CURRY. Well, I will crow for the Governor, Mr. Chairman

and Members. New Mexico gets most of its revenue stream from

the oil and gas industry, a third of it and sometimes more than

that, depending on the year, and that revenue stream helps to support our schools in New Mexico. The oil and gas industry is unique

in New Mexico. When we have done our inventories on emissions

that are greenhouse gases, the oil and gas industry is number two

in New Mexico for those emissions. So it is the good and the bad,

if you will, and what we have done is include them in the process

and they understand how important it is to work on this problem

and work on it with the State. In addition to that, we have brought

industries in like Advent Solar that are going to bring a lot of jobs

to New Mexico that are clean energy obviously. Tesla Electric Car

Motor Company have just announced they are going to New Mexico. The Governor is determined and putting into green building,

clean energy buildings that have low emissions within New Mexico.

And so we recognize the importance of fossil fuels in our State

and they will be there for a long time but we are also determined

to develop a strong renewable portfolio and these companies are

helping us to do that, and it is a—without sounding too much like

29

I am promoting the guy that I work for, it really is due to his leadership in these areas because he is familiar with the way business

works in New Mexico and how important these are to our sound

economy but he has been able to bring in to the State the types

of businesses that people see are profitable and sustainable as far

as energy goes, and we are going to continue to do that. We have

done that with tax credits and we have done that with tax cuts,

and just like we were mentioning on the IGCC, we have got a proposal in front of our legislature right now to offer credits for coal

companies that are willing to invest in the best available technology that is out there, and it is that sort of innovative thinking

that is making that transition easy.

Mr. INSLEE. Sort of a working presumption I have is that we in

Congress have been slow to this because we haven’t recognized the

public’s recognition that they recognize this as an economic opportunity for us, and as far as I can tell, no politician in America has

ever been beat arguing that Americans are smart enough to grow

new technology, and my perception is, people understand that and

that is why New Mexico has been successful at leadership. California, you have had good success and in New Jersey and other

States. In New Mexico, has there been any sort of pushback from

any quarter of the economy to try to grow these new companies in

New Mexico?

Mr. CURRY. Mr. Chairman, Members, there have been certainly

areas where people have resisted change, but when you get down

and you sit down and have a conversation with them, just like this

policy advisory committee that the Governor set up that included

oil and gas industry, it included areas like the dairy industry,

which is a producer of methane in our State, and New Mexico is

one the largest dairy-producing States in the Nation, when you sit

down and explain to folks if they can reduce waste in their business, whether it is greenhouse gases or other types of waste, as you

reduce waste in business, your bottom line is going to improve over

time. It will just simply do that by reducing waste and that is what

the Governor has been able to do and that is what we continue to

do.

Mr. INSLEE. Thank you.

And as I leave, I want to congratulate Texas for their movement

with TXU coal sequestration technology. We hope that reaches fruition. Good luck. Thank you.

Mr. BUTTERFIELD. Thank you, Mr. Inslee.

The gentlelady from North Carolina? She has no questions.

Thank you.

Well, I believe that completes the questions. Any other questions

from any other Member?

Again, we want to thank all of you for coming. This has been

most informative. This committee is in recess. Thank you.

[Whereupon, at 12:44 p.m., the subcommittee was adjourned.]

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ANSWERS TO SUBMITTED QUESTIONS OF HON. MICHAEL C. BURGESS FROM JULIE

CARUTHERS PARSLEY

1. Transmission siting and investment have been a problem in the United

States. How has Texas been so successful in siting and building new transmission? What are Competitive Renewable Energy Zones and how will they

work?

I believe that the major factors that have impeded the construction of new transmission facilities in the United States have been:

1. Lack of regulatory certainty, particularly uncertainty about the recovery of investment in new transmission facilities;

2. Market structures and rules that resulted in impediments to developing new

transmission facilities; and

3. Environmental and land-use concerns.

In Texas, we have adopted measures to address the first two issues. With respect

to environmental and land-use concerns, these issues arise in Texas in connection

with transmission proposed for urban and suburban areas and environmentally sensitive areas. Much of Texas, particularly in areas in which renewable resources

occur, is sparsely populated, and these issues have not been as prominent as in

other areas of the United States.

Uncertainty about regulatory decisions, particularly regarding cost recovery, has

been an issue in many areas of the United States for several reasons. In areas

where Regional Transmission Organizations were being formed, there was a period

in which the rules for the recovery of transmission investment were changing. While

the new rules were being debated by interested persons and being reviewed by regulatory bodies, there was uncertainty about cost recovery. In addition, in many areas

of the United States, transmission projects might affect several states, and there

could be different perspectives among affected regulatory bodies about the need for

additional transmission facilities and the recovery of their costs.

In the Electric Reliability Council of Texas (ERCOT), the Texas Public Utility

Commission (PUC) is the sole regulatory body that has responsibility for licensing

and cost recovery for transmission expansion. Transmission facilities in ERCOT do

not affect other states, and ERCOT is subject to regulation by the Texas PUC both

for retail and wholesale issues. Thus, the prospect for conflicts among regulatory

bodies is virtually eliminated. In addition, the PUC has adopted rules that remove

much of the uncertainty about cost recovery for transmission. Texas has adopted a

regional transmission rate that allocates transmission costs to all load-serving utilities in the region on the basis of peak demand, which is called a ′′postage-stamp′′ transmission rate, along with a mechanism that allows for annual adjustments of

transmission charges to reflect new investment in transmission. The postage-stamp

rate was adopted in ERCOT in 1996. Accordingly, there was not a long period in

which there was uncertainty about how investment in transmission would be recovered. The rules for recovering the costs of transmission are clear, simple, and stable.

One of the reasons that the Texas PUC adopted a postage-stamp rate for transmission in which the costs are charged to load-serving utilities was its view that

many of the transmission facilities in the region served multiple purposes and customers. Rather than trying to determine, on a line-by-line basis, which class of customers or generators would primarily benefit from the project, we adopted the philosophy that all transmission projects benefit the integrated electric grid, so all

users should pay the costs. This approach has eliminated much of the contention

over building transmission, and has both streamlined the process and greatly reduced the uncertainty surrounding projects.

In ERCOT, we not only use a transmission rate in which all load-serving utilities

bear a share of the cost of transmission, but all wholesale customers have the same

right to transmission service, and we have assigned to the ERCOT Independent System Operator the responsibility for planning the ERCOT bulk-transmission system.

Therefore, the planning responsibility is not in the hands of a company that has an

interest in whether transmission is built, but in a neutral planning organization

whose mandate is to enhance reliability and facilitate a competitive wholesale market.

The statute and rules related to Competitive Renewable Energy Zones (CREZs)

were developed to address issues specific to renewable energy. CREZs are areas

throughout Texas, to be designated by the PUC, in which renewable energy resources and suitable land areas are sufficient to develop generation capacity from

renewable energy technologies. The PUC is required to develop a transmission plan

for delivering that renewable energy to areas where it can be consumed. The CREZ

framework was developed, in part, to address timing challenges since traditional

processes require significant generator commitments before the transmission upVerDate 11-SEP-98 13:04 Oct 20, 2008 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 Q:\DOCS\110-20 SCOM1 PsN: SCOM1
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grades are considered and renewable generation can be operational within 18

months, while transmission lines often require up to 5 years for construction. In addition, because the lines needed for renewable generation are typically not needed

for reliability, there is difficulty getting approval through standard processes. The

purpose of the CREZ proceedings is to assess interest in renewable generation in

specific areas and then develop a plan to construct transmission in a manner that

is most beneficial and cost-effective to customers. The PUC initiated the first CREZ

proceeding in January 2007, and it expects to enter an order in this proceeding in

July.

2. Please describe the concept of renewable transmission corridors and

how they would work.

The concept of national interest electric transmission corridors was one of the provisions in the Energy Policy Act of 2005 to supplement state transmission siting efforts for the development of stronger energy infrastructure. As you know, the Department of Energy (DOE) is considering national corridors based on several factors,

including the economic vitality and growth of the corridor or end markets served

by the corridor, as well as issues such as energy independence, reliance on national

energy policy, and enhancement of national defense and homeland security. If national leadership seeks to promote renewable resources, renewable potential could

also be reviewed within a framework similar to that of the DOE. These corridors

could be critical to the success of a national renewable mandate, because renewable

generation is often located far from load centers, and this generation cannot be used

by consumers unless transmission exists to move the energy to load centers.

The transmission facilities that are being developed in Texas as a part of the

CREZ proceeding, as discussed above, are in effect, renewable transmission corridors. The critical elements of the CREZ proceeding are designating areas that are

suitable for renewable energy development, identifying related transmission facilities, and relying on financial commitments of developers of renewable projects to

make these decisions.

3. Please describe how a vibrant, competitive market was developed in

Texas that encourages the development of more renewable energy.

As I mentioned in my earlier testimony, I believe a commitment by Texas leadership to renewable energy, facilitated by the following three essential factors, has encouraged the development of renewable energy in Texas: robust markets for renewable energy; significant transmission investment; and positive economic incentives.

First, a commitment in competitive wholesale and retail markets has facilitated

willing buyers and sellers to expand the growth of renewable resources. Second, utilities have made significant commitments to improve the transmission infrastructure

in ERCOT, including over $2.2 billion from 1999 to 2005 with an additional $3.1

billion expected from 2006 to 2012. This level of transmission investment is due, in

large part, to the mandate from the State Legislature that wholesale transmission

services are priced based on the postage-stamp method and costs are socialized

across ERCOT. In addition, the Texas Legislature directed the PUC to designate

competitive renewable energy zones and develop a plan to construct transmission

capacity necessary to deliver renewable energy to consumers. Finally, the Federal

Production Tax Credit and Texas Renewable Energy Credits trading program offer

positive economic incentives to help make the costs of wind energy competitive, especially during times of high natural gas prices.

4. We learned at an earlier hearing that instituting a cap-and-trade

scheme in Germany raised electricity prices 30 percent to 40 percent. What

would happen to the Texas economy if electric rates went up 40 percent

after instituting a cap-and-trade system?

It is unclear how a cap-and-trade program would affect electric rates in Texas for

two reasons. First, we have a competitive wholesale market and some costs may be

absorbed by the generators. Second, approximately 72 percent of electric generation

in ERCOT is fueled by natural gas, and it is unclear how natural gas generation

would be affected by a cap-and-trade program.

That said, the Texas economy relies heavily on manufacturing, refining, oil and

gas production, and agriculture, industries which use a great deal of electricity. If

prices were to rise an additional 40 percent, it would obviously be extremely detrimental to both residential and business customers, and to economic development

in Texas.

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