### Testimony for US EPA Carbon Pollution Standard Public Hearings, May 24, 2012 by Richard F. Kenned y. PhD , C IA Senior Economic Analys t 1972

-2003 6009 Rive r Dr. , Lorton , V A 22079 tel: 703-339-7530 email: rke nned y

_ 98 @ yahoo.co m M y name i s Richard Kennedy. I am a chemical engineer who switched to economics , got a PhD , s pent 3 1 years as a C IA E uropean analy st , and was awarded the Age nc y'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 oi l price hike ($3 /bbl to $12/bbl) and wrote a paper in 1992 on how the EU makes env ironmental policy. That paper Jed me to read "The Economics of Global Warming " (1992 ) by W i lliam C line , a respected economi st. He approached the s ubject like a good C IA analyst, gathering as much information as po ss ible. Hi s conclusion was that the case for C02 -induced global warming was not abso lutel y proven , but it was very strong, and the likely consequences were severe--and the rati o na l re s ponse in that s ituation is to begin action to mitigate the consequences. (Note: In 2011 C lin e published "'Carbon Abatement Costs and Climate Change Finance" and I bet it' s just as good.) That was 20 ye ars ago. T he data since then s trongly confirm those conclusions. I did a c hart s howing polar sea ice coverage and northern lat itudes temperature for 1880-201 1. lt s hows the temperature rising and the ice shrinking si nce about 1 970. 

### (jirsL chart) I also looked at the plant "hardiness zo nes" from the Department of Agriculture , which show that almost half the country has s hifted to a warmer zone s ince 1990. 

### (second cha rt) There is much other ev id ence , including s hrinking glaciers world

- w id e and insects causing problems in region s that used to be too co ld for them. C02 a lso causes other problem s. I have heard a Smithsonian biologist s peak on how the world's co ral reefs are facing extinction because C02 is making the oceans more acidic. Given the problem , what is the economist sol ution ? First, ask why the free market is not wo rkin g here even though it works marvelou s ly in most situations. The answer i s that , in most transaction s , only the buyer and se ller are affected --and people usually are good at protec ting their own intere s ts. Some transactions , however, have what eco nomists call "externalities" , which simply means that other people are affected. In the case of fo ss il fuel s , the buyer pays all the costs of producing them but not the co st that the resulting C02 emiss ions impose on society. So the basic answer, to any economist. i s a carbon tax--impo sed gradually over man y years, according to a pre-announced sc he dule , so that busine sses and consumers have time to adju st; 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 propo s ing i s what economists wou ld call a " seco nd-best" so luti on but seco nd-be st i s 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 large s t 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 th e US to play a leading role in addressing the problem. I should also mention that former CIA Director Jim Woolsey i s a strong advocate of action to address g lobal warming , particularly the development of biofuels and plug-in hybrid cars . Also , CIA serves the rest ofthe government, and has analysts working on environmental issues , so p er haps EPA could reque s t an assessment--not of US policy , which woull(&t' permitted--but of whether a global problem exists and what other nation s are doing about it. One other observation: I am struck by the overwhelming consensus among sc ienti sts on global warming--not only th e climate scientists the m se lve s but also those in other discipline s, s uch as the biologist E. 0

. Wilson , or the phys ici st , Stephen Hawking

. Finally. let me add that , in 31 years as a CIA analyst , I se ldom encountered an iss ue as clear-cut as c limate change

. I hope yo u can beg in the process of a ddre ss ing it bef o r e it is too late--and time may be s hort , because of negative feedback effects that could increase emissions of methane--an even worse greenhouse gas. This could cause warming to spiral out ofcontro l, with possibl y catastrophic consequences--the "worst-case sce nario" that CIA analyses typically include .

### 15 

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