Testimony for US EPA Carbon Pollution Standard Public Hearings, May 24, 2012 

by Richard F. Kennedy. PhD, CIA Senior Economic Analyst 1972-2003 

6009 River Dr., Lorton, VA 22079 tel: 703-339-7530 email: rkennedy _98@yahoo.com 

My name is Richard Kennedy. I am a chemical engineer who switched to economics, got 

a PhD, spent 3 1 years as a CIA European analyst, and was awarded the Agency's Career 

Intelligence Medal (offer photo as proof). My work sometimes involved energy or 

envirorunental issues: I had a smaJl role in CIA's analysis of the 1973 OPEC oil price 

hike ($3/bbl to $12/bbl) and wrote a paper in 1992 on how the EU makes environmental 

policy. 

That paper Jed me to read "The Economics of Global Warming" (1992) by William Cline, 

a respected economist. He approached the subject like a good CIA analyst, gathering as 

much information as possible. His conclusion was that the case for C02-induced global 

warming was not absolutely proven, but it was very strong, and the likely consequences 

were severe--and the rational response in that situation is to begin action to mitigate the 

consequences. (Note: In 2011 Cline published "'Carbon Abatement Costs and Climate 

Change Finance" and I bet it's just as good.) 

That was 20 years ago. The data since then strongly confirm those conclusions. I did a 

chart showing polar sea ice coverage and northern latitudes temperature for 1880-201 1. lt 

shows the temperature rising and the ice shrinking since about 1970. (jirsL chart) I also 

looked at the plant "hardiness zones" from the Department of Agriculture, which show 

that almost half the country has shifted to a warmer zone since 1990. (second chart) 

There is much other evidence, including shrinking glaciers world-wide and insects 

causing problems in regions that used to be too cold for them. 

C02 also causes other problems. I have heard a Smithsonian biologist speak on how the 

world's coral reefs are facing extinction because C02 is making the oceans more acidic. 

Given the problem, what is the economist solution? First, ask why the free market is not 

working here even though it works marvelously in most situations. The answer is that, in 

most transactions, only the buyer and seller are affected--and people usually are good at 

protecting their own interests. Some transactions, however, have what economists call 

"externalities", which simply means that other people are affected. In the case of fossil 

fuels, the buyer pays all the costs of producing them but not the cost that the resulting 

C02 emissions impose on society. 

So the basic answer, to any economist. is a carbon tax--imposed gradually over many 

years, according to a pre-announced schedule, so that businesses and consumers have 

time to adjust; other taxes can be lowered so there is no net tax increase. 

EPA, of course, can't impose a tax so the regulation you are proposing is what economists 

would call a "second-best" solution but second-best is far better than nothing. 
The US, of course, can't get too far out of step with our trading partners because it would 

hurt our competitiveness. But the US was the largest contributor to the increase in 

atmospheric C02--29 percent of the increase is the figure 1 recaJI vs. 24 percent for 

Western Europe--so it is common sense for the US to play a leading role in addressing 

the problem. 

I should also mention that former CIA Director Jim Woolsey is a strong advocate of 

action to address global warming, particularly the development of biofuels and plug-in 

hybrid cars. Also, CIA serves the rest of the government, and has analysts working on 

environmental issues, so perhaps EPA could request an assessment--not of US policy, 

which woull(&t' permitted--but of whether a global problem exists and what other nations 

are doing about it. 

One other observation: I am struck by the overwhelming consensus among scientists on 

global warming--not only the climate scientists themselves but also those in other 

disciplines, such as the biologist E. 0 . Wilson, or the physicist, Stephen Hawking. 

Finally. let me add that, in 31 years as a CIA analyst, I seldom encountered an issue as 

clear-cut as climate change. I hope you can begin the process of addressing it before it is 

too late--and time may be short, because of negative feedback effects that could increase 

emissions of methane--an even worse greenhouse gas. This could cause warming to spiral 

out of control, with possibly catastrophic consequences--the "worst-case scenario" that 

CIA analyses typically include. 
15 Polar Sea Ice Extent and Northern Latitudes Temoerature. 1880-2011 

Data are annual averages and 1 0-year moving averages 

Temperature data from NASA, sea ice data from NOAA 

14 + -----------------.Sea lee -Exteot,.mmion square kllometer_s-(Jeft.axis)------- __ -- ____ . ___ - __ 

13 ~-------- -----

12 ~ ------- -- --------------------------------------------------------------------~-

11 

0.8 

0.6 

0.4 

0.2 

0 

10 ----- ---- ---. -- --- ----·------ -- ------ -...... -0.2 

Temperature, deviation from 1951-1980 average, in egrees lsius (right axis) 

, - - - - - - - - -- - - - - - - - - - ·r -0.4 ----------------------- -1S81-James 1992-"Economics 

Hansen of NASA of Global Warming" 

warns of global published 

warming 

8 -0.6 

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 
Dif£ rene . b tw n 1990 SDA hardin 

zone and 2006 arborday.org hardiness 

zone refle t ~varmcr climate 

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• 

1990 Map 

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2006 Map 

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