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Calendar No. 120
105th Congress Report
1st Session 105-54
CONDITIONS REGARDING U.N. FRAMEWORK CONVENTION ON CLIMATE CHANGE
July 21, 1997.--Ordered to be printed
Mr. Helms, from the Committee on Foreign Relations, submitted the
R E P O R T
[To accompany S. Res. 98]
The Committee on Foreign Relations having had under
consideration a resolution expressing the sense of the Senate
regarding the conditions for the United States becoming a
signatory to any international agreement on greenhouse gas
emissions under the United Nations Framework Convention on
Climate Change, reports favorably thereon, and recommends that
the resolution do pass.
I. Background and Purpose
In May 1992, the United States Senate gave its advise and
consent to the ratification of the United Nations Framework
Convention on Climate Change. The treaty, which was intended to
address the global emission of greenhouse gases, was signed by
President Bush at the Rio Earth Summit. Under that treaty the
United States, like other developed countries, committed to a
non-binding target of containing emission levels at 1990 rates
by the year 2000. The treaty entered into force in March, 1994
and is not fully implemented.
Soon after entry into force Parties began preparing for the
First Conference of the Parties (COP-1) in Berlin, Germany, and
began drafting of a new legal instrument to address emissions
reductions beyond the year 2000. At COP-1 in March 1995, the
``Berlin Mandate'' was adopted by the Parties. That document
set the broad framework for negotiations to follow, including a
decision that no commitments would be included in a new
agreement for countries with developing economies, as defined
in the Framework Convention. Countries that would not incur new
commitments include China, Brazil, Mexico, and India. The COP-1
also established the Ad Hoc Group on the Berlin Mandate (AGBM),
which was tasked with developing the text of a new agreement.
The Second Conference of the Parties (COP-2) in Geneva,
Switzerland, in July 1996, took an additional step in
negotiations, calling for ``legally binding'' commitments that
could have significant impact on many world economies.
Specifically, Parties agreed to work toward establishing
emissions reduction commitments requiring specific, legally
binding emissions limits and policies for the period beyond
2000. The ``Ministerial Declaration'' issued at COP-2 called
for accelerated negotiations on the elements of a new legal
instrument that would limit emissions of greenhouse gases. That
legal instrument continues to be under negotiation on a
timetable to be opened for signature at the Third Conference of
Parties in Kyoto, Japan, in December 1997.
The next round of negotiations is scheduled for July 1997
in Bonn, Germany. At this round of negotiations members will
have for the first time a full negotiating text with
submissions from all parties. The Clinton administration
submissions include the following key elements: 1) the target
for reduction of greenhouse gas emission levels should be
binding; 2) the target should focus on the years 2010 to 2020;
and 3) countries should have flexibility nationally in
implementation of the new commitments.
Other U.S. proposals include: 1) the creation of an
``emissions budget'' which would allow nations to ``trade''
emissions in order to meet targets, and ``bank'' emissions for
future years, and ``borrow'' from future years (with a
penalty); 2) establishment of procedures to ensure reporting,
measurement, review and compliance of emissions standards; 3)
involvement of developing countries (without requiring binding
emission reductions), including graduation requirements for
developing countries; and 4) provision for ``joint
implementation,'' which would permit parties to assume
reductions through activities in other countries.
Resolution 98 was introduced by Senators Byrd and Hagel and
has more than 50 cosponsors. Supporters believe that the
resolution sends a clear and unambiguous signal as to the basic
conditions that must be met if the United States is to accept
legally binding commitments to reduce greenhouse gas emissions.
In addition, the resolution recommends that a bipartisan group
of Senators be appointed by the Majority and Minority Leaders
of the Senate to monitor the status of negotiations on climate
change and report periodically to the Senate. This degree of
oversight is unusual and serves to emphasize the high level of
member interest in ensuring that the United States ratify a
treaty only if U.S. interests are adequately protected.
The attached appendix is an expansive compilation of the
testimony of Senators, administration officials, economists,
scientists, and U.S. industry and labor. A thorough reading of
the testimony indicates that the issues are complex, both in
terms of the scientific data that exists on global warming and
the potential impact on the U.S. economy if certain proposals
are implemented in the United States.
II. Committee Action
The Subcommittee on International Economic Policy, Export
and Trade Promotion held two public hearings on June 19 and
June 26, 1997. The hearings were chaired by Senator Chuck
Hagel. The Committee on Foreign Relations considered Senate
Resolution 98 on July 17, 1997, and ordered the resolution
favorably reported by a voice vote.
III. Section By Section Analysis
Section One of Senate Resolution 98 has two parts. The
first paragraph specifies two key conditions that the Senate
expects to see included in any international agreement that the
United States signs related to reducing greenhouse gas
emissions. This section states that it is the sense of the
Senate that any agreement that the United States signs that
would impose additional legal commitments on the United States
related to the United Nations Framework Convention on Climate
Change should include commitments for countries with developing
economies (termed non-Annex I countries under the existing U.N.
Framework Convention), and should not result in serious harm to
the economy of the United States. The section makes clear that
these requirements apply to any agreement reached during
scheduled negotiations in Kyoto Japan in December 1997 or any
agreement reached thereafter.
The second paragraph states the sense of the Senate
regarding the materials that must be included in the
transmittal documents that would accompany any agreement that
is submitted to the Senate for its advice and consent to
ratification. Such transmittal documents should include: 1) a
detailed explanation of legislation or regulations that would
be required to implement the agreement; 2) a detailed analysis
of the financial and economic costs to the United States
incurred by implementing the agreement submitted to the Senate.
Section Two of the Resolution requires the Secretary of the
Senate to transmit a copy of the Resolution to the President.
A P P E N D I X
STATUS AND IMPLICATIONS OF UNITED NATIONS
CLIMATE CHANGE NEGOTIATIONS
C O N T E N T S
Hearing of June 19, 1997
Byrd, Hon. Robert C., U.S. Senator from West Virginia............ 12
S. Res. 98................................................... 21
Dingell, Hon. John D., U.S. Representative from Michigan......... 26
Prepared Statement........................................... 30
Fay, Kevin J., Executive Director, International Climate Change
Partnership, Arlington, Virginia............................... 76
Prepared Statement........................................... 78
Gilchrist, Hon. Wayne T., U.S. Representative from Maryland,
Prepared Statement............................................. 33
Neidig, Bryce, President, Nebraska Farm Bureau Federation,
Lincoln, Nebraska.............................................. 70
Prepared Statement........................................... 73
Trumka, Richard L., Secretary-Treasurer, American Federation of
Labor and Congress of Industrial Organizations, Washington, DC. 68
Wirth, Hon. Timothy E., Under Secretary for Global Affairs,
Department of State............................................ 34
Hearing of June 26, 1997
Cunningham, William J. Jr., Legislative Representative, AFL-CIO,
Washington, DC................................................. 102
Jasinowski, Hon. Jerry J., President, National Association of
Manufacturers, Washington, DC.................................. 115
Prepared Statement........................................... 119
Michaels, Dr. Patrick, Professor of Environmental Sciences,
University of Virginia, Charlottesville, Virginia.............. 140
Prepared Statement........................................... 145
Montgomery, Dr. W. David, Vice President, Charles River
Associates, Washington, DC..................................... 105
Prepared Statement........................................... 108
Repetto, Dr. Robert, Vice President and Senior Economist, World
Resources Institute, Washington, DC............................ 122
Prepared Statement........................................... 125
Robock, Dr. Alan, Maryland State Climatologist, Department of
Meteorology, University of Maryland, College Park, Maryland.... 151
Prepared Statement........................................... 154
June 19, 1997 Hearing
Letter to the The President opposing the climate change
agreement, signed by 18 organizations.......................... 169
``Climate Change Speech,'' by John Browne, Group Chief Executive,
British Petroleum (BP America)................................. 170
``Greenpeace Dumps Coal and Oil Barrels on Capital Steps to
Protest `Byrd-Brained' Attempt to De-Rail Climate Treaty.''.... 176
``Authors of Economists' Statement on Climate Change Urge Action
at the Summit of the Eight in Colorado.''...................... 177
Statement of the American Farm Bureau Federation, Supplemental
``Global Warming: Our Nation's Capitol at Risk,'' by Dr. Janine
Bloomfield and Sherry Showell, Environmental Defense Fund...... 271
June 26, 1997 Hearing
``I. Decisions Adopted by the Conference of the Parties.''....... 279
``Review of the Implementation of the Convention and of Decisions
of the First Session of the Conference of the Parties.''....... 280
Letter from Robert N. Burt, Chairman and CEO, FMC Corporation to
Chairman Hagel................................................. 282
Letter from M.B. Oglesby, Jr., Association of American Railroads
to Chairman Hagel.............................................. 284
Prepared Statement of Richard K. Davidson........................ 286
``Global Warming and Avoiding Dangerous Human Interference with
the Climate''................................................ 287
``Global Warming and the Carbon Budget''....................... 288
``Global Warming and the Greenpeace Solution''................. 288
``Greenpeace Demands''......................................... 289
Prepared Statement of the Global Climate Commission.............. 290
GLOBAL CLIMATE CHANGE NEGOTIATIONS: THE ROAD TO KYOTO
THURSDAY, JUNE 19, 1997
Subcommittee on International Economic
Policy, Export and Trade Promotion,
of the Committee on Foreign Relations,
The subcommittee met, pursuant to notice, at 9:33 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel
(chairman of the subcommittee) presiding.
Present: Senators Hagel, Thomas, Sarbanes, and Kerry.
Senator Hagel. The committee will come to order.
Today the subcommittee meets to receive testimony regarding
the status of U.N. Global Climate Change Negotiations. We have
before us this morning a group of very distinguished witnesses
representing a variety of views from Congress, the
administration, and the private sector. We look forward to
We are dealing with an issue that has potentially drastic
consequences for American foreign, domestic, and economic
policy. The course of action we take on this issue will affect
for future generations our economy, environment, future energy
use, energy costs, economic growth, trade, jobs, global
competitiveness, national defense and, perhaps most important,
our national sovereignty.
We all agree on the need for a clean environment. We all
want to leave our children a better, cleaner, more prosperous
world. I have yet to meet one American or one Member of
Congress who wants dirty air, dirty water, a dirty environment
or declining standards of living for their children and
This debate will not be about who is for or against a clean
environment. It never has been. Nor will the debate be about
motives, personalities, or politics. This debate is about
finding the truth, the facts. It will be about asking the
necessary questions and expecting straight-forward answers.
What is the issue? What are the problems? What are the
solutions? What are the costs? And what are the consequences?
The debate we are about to enter will be conducted in both
Houses of Congress, in numerous committees of jurisdiction, and
with the full participation of the administration and the
private sector. This initial hearing will focus on educating
and informing the public, the media, and the Members of
We need to insure that any agreement negotiated and signed
by the administration will be fair to America, the world, and
that it will not adversely affect America's global
competitiveness, our economy, and will not challenge our
We are all interested in understanding where we are on this
issue and how we got here. I have heard reports and read papers
in the newspapers of how the American position changed from
advocating a position of supporting voluntary emissions
reductions to one of calling for legally binding reductions for
ourselves and only commitments for others. We look forward to
hearing why we changed in mid-stream this course of action, if
we did, how that decision was reached, and to what extent the
Congress was consulted.
We are also interested in why the administration is
advocating legally binding emissions reductions for the United
States and not for nearly 130 other countries, like China,
Mexico, South Korea, Singapore, Indonesia and other countries.
We look forward to hearing from Under Secretary Wirth on
this issue and the apparent inequalities inherent in any such
Related to this, we are also interested in how the
administration intends to curb the future growth of greenhouse
gas emissions in countries like China, who would not be subject
to the same legally binding emissions, but whose emissions will
soon eclipse our own.
We are concerned about the primacy of American sovereignty
in any new emissions reduction scheme and look forward to
hearing testimony on how the U.S. economy and fuel consumption
and use might be monitored by any new international body. How
is that going to work? Should it work?
I look forward especially to seeing how exactly any new
U.N. treaty dictating our domestic energy use will affect the
U.S. economy, not just in terms of lost GDP or lost jobs, lost
opportunities and global competitiveness, but, more
specifically, how it will affect the standard of living of
everyday Americans and future generations of Americans.
We must also take a long, hard look at how our future
competitiveness will be affected if American businesses are
forced to be subjected to new international regulations while
their global competitors are not.
Each of the witnesses before us today will offer a unique
and important perspective on the current negotiations as we
begin this debate. I thank them in advance for their time,
their courtesy, and their testimony.
As this debate moves forward, the U.S. Senate will offer
its own unique and important perspective. It is our
constitutional responsibility to do so.
We should be very clear to the administration, the American
public, and governments around the world that the U.S. Senate
intends to be very involved and will have a serious, informed,
and strong voice in helping shape the American position on this
With that, my distinguished colleague from Maryland and
ranking Democrat on this subcommittee, Paul Sarbanes, is not
yet with us. I would welcome now my colleague from Wyoming,
Senator Craig Thomas.
Senator Thomas. Thank you, Mr. Chairman. I have a statement
I would like to have included. I want to thank you for having
this hearing and to welcome our friends, Senator Byrd and
Congressman John Dingell.
At the outset, I want to express my concern and opposition
regarding the unilateral efforts to push for legally binding
targets and timetables on developed countries to reduce
greenhouse emissions, while at the same time exempting
developing countries from identical requirements.
We have talked about this before with Under Secretary
I want to hear from the administration on how they believe
putting American industries in a strait-jacket will ensure that
it does anything less than worsen the problem they claim to
want to fix.
Mr. Chairman, I firmly believe the goals of economic growth
and environmental protection do not have to be mutually
exclusive. We can do both. We need sound, peer-reviewed science
and a cost benefit ratio process.
We can do it. But we cannot achieve our goals by making
agreements unilaterally that put a handicap on us and leave the
rest of the world producing much of the problem untouched.
I am pleased to be a part of the resolution that Senator
Byrd and Senator Hagel have introduced. Sixty-one Members of
the Senate have joined in that effort.
There will be a great deal of work taking place between now
and December, and I strongly urge the administration to work
with the Congress in a bipartisan way so that we can express
these concerns and come up with real solutions.
[The prepared statement of Senator Thomas follows:]
Prepared Statement of Senator Craig Thomas
Thank you, Mr. Chairman, for taking the time to schedule this
important hearing to discuss the Clinton Administration's policy on
global climate change. Given the significant timing of this issue, and
the effects it will have on our nation's economy, I look forward to the
information that will be shared and the testimony that will be
At the outset, I want to let my concerns and opposition be known
regarding the Clinton Administration's effort to push for legally-
binding targets and timetables on developed countries to reduce
greenhouse gas emissions, while at the same time exempting developing
countries from those identical requirements. I realize that the United
States is responsible for significant quantities of carbon dioxide
emissions in the atmosphere. On the other side of this equation,
however, ``developing'' countries such as China, Mexico, South Korea,
Brazil and India emit over half of all greenhouse gases. For example,
in China -- a country with 1.2 billion people -- almost 80 percent of
the energy for home cooking and heating comes from high sulfur coal. In
India, the second most populous country in the world, the airport in
the capital of New Delhi is regularly closed -- for lengthy periods of
time -- because the smog is so bad airplanes cannot land because of
poor visibility. Our diplomats in New Delhi receive hazard pay because
of the air quality and many actually carry oxygen tanks with them. I
would like to hear from the Administration on how they believe placing
America's industries in a straight jacket will ensure nothing less than
the worsening of the problem they claim to want to fix?
This concept is frustrating to me because it is our businesses and
industries that are aware of the problems and are attempting to reduce
harmful air pollutants. The U.S. and other Annex I countries are the
ones with the knowledge and technology necessary to produce a safer
environment. No one can argue that our industries are cleaner than in
Nevertheless, if the Administration, led by Undersecretary of State
for Global Affairs Tim Wirth, succumbs to binding agreements for
industrialized countries in Kyoto, Japan, this December, we will let
underdeveloped countries off the hook. They will not have to meet the
uncompromising regulations that will be placed on our industries, which
will do nothing but jeopardize the United States' sovereignty. Simply
put, imposing legally binding sanctions on the U.S. and other developed
countries just doesn't make sense.
Mr. Chairman, I firmly believe the goals of economic growth and
environmental protection do not have to be mutually exclusive. We can
do both. But it will take a willingness from all countries to evaluate
how they will administer new programs in order to obtain better
results. The basis for this balance must come from several areas:
sound, peer-reviewed science and a cost-benefit approach. Using good
science, rather than emotional rhetoric, ensures we're spending our
limited resources on actual problems. Cost-benefit goes beyond whether
we ought to be doing something, but rather lets us decide how best to
spend our money. Once we decide to address a problem, we need to take
initiatives that give us the best results for the smallest cost.
However, rushing into agreements that will hurt America's economic
competitiveness for questionable benefits will only make solutions less
effective and worsen the environment as developing countries increase
their production levels. Furthermore, if an international treaty is put
in place that legally binds Annex I countries to specific targets and
timetables, I am concerned the U.S. will also see a shift of jobs from
our soil to overseas.
I will do everything I can to stop the Administration from
committing the United States to any binding international agreement
regarding global climate change that imposes one set of obligations on
us and other developed countries, but excludes those standards on
developing countries. Recently, I became an original cosponsor of
Senate Resolution 98, sponsored by Senators Byrd of West Virginia and
Hagel of Nebraska, Chairman of this subcommittee, calling on the
Clinton Administration not to adhere to any protocol or agreement which
would do just that. Although we should constantly work to reduce air
pollution around the world, this must be done in a manner that does not
threaten jobs or our international competitiveness and sovereignty. I
thank them for their work and was pleased that so many of my colleagues
cosponsored the initiative.
I commend the Chairman for holding this hearing today. Global
climate change is a critical measure to our industries and the nation
as a whole. A great deal of work and negotiating will take place
between now and December and I strongly encourage the Administration to
listen to the bipartisan concerns being expressed by the Congress.
Additionally, the administration needs to be frank with the American
people and explain the economic and social impacts of any proposed
changes. Folks need to be aware if a reduction in the Gross Domestic
Product will occur, or if gas taxes will increase as a result of their
actions. Thank you, and I look forward to hearing from our guests.
Senator Hagel. Senator, thank you. The first panel this
morning will consist of the distinguished senior Senator from
West Virginia, Senator Robert Byrd, and our distinguished
colleague from the House, Representative John Dingell. Each of
you has a long history and tradition of service to this
Congress and to our Nation. Each has contributed mightily in
many areas. Each of you has particular perspectives and bring
great leadership to this issue.
So on behalf of our committee, I welcome you both. We are
most, most pleased that you are here and look forward to your
thoughts on this very important issue. Senator Byrd, I would
ask you to begin. Thank you.
STATEMENT OF HON. ROBERT C. BYRD, U.S. SENATOR FROM WEST
Senator Byrd. Thank you, Mr. Chairman, members of the
committee. Let me say at the beginning that I listened
carefully to your statement and that of Mr. Thomas. I think you
quite correctly, carefully, methodically, and meticulously set
out the problem and where we need to go.
Let me also say at the beginning that I am very privileged
to share this opportunity as a witness with my friend John
Dingell. I served in the House of Representatives with
Congressman Dingell's father. I have watched Congressman
Dingell over the years and I think on most issues, with the
exception possibly of the Byrd Rule, we are much in agreement.
Mr. Dingell. And you beat me fair and square on that one.
Senator Byrd. So, I am just very proud to have this
opportunity to work with and to share this time with John
Dingell. He is a very articulate, very capable, very highly
respected Member of the House and that respect also exists in
Mr. Chairman, before I read my prepared statement, let me
begin like this. I will soon be 80 years old. I do not need any
scientific analysis to tell me that something is wrong out
there, that something is happening. I have seen it in my own
lifetime. The winters are different. The summers are different
from what they were when I was a boy. Something is at work out
there. I can't explain it, but I think we must understand that
there is something going on that is causing the storms, the
floods, causing the elements to be so unpredictable. It seems
to me that we are all in this boat together, the developed
world and the developing world.
So I begin with that premise, that there is something going
on that is very serious. It is already having an impact upon my
life, your life, and the lives of all Americans and peoples
around the world.
I also begin with the premise that if we recognize that
fact and agree that there is something going on, we need to
work together in dealing with this problem. It won't get better
of itself. We need to work together or else my children, my
grandchildren, and their grandchildren will have an intensified
problem and one which will be even more costly in its
resolution, and more painful.
So with that beginning, I thank you for the opportunity to
appear before the subcommittee to discuss the critically
important issue of the negotiations aimed at signing a protocol
during the Third Session of the Conference of the Parties to
the United Nations Framework Convention on Climate Change,
which is scheduled to be held in December in Kyoto, Japan. I am
concerned that the protocol that results from these
negotiations could have a serious impact on American industry
and on the American economy while, at the same time, failing to
address a looming threat to the global environment.
And so, on June 12, I introduced, together with the
chairman of the subcommittee, a Sense of the Senate Resolution.
We were joined by a bipartisan group of our colleagues which
now numbers 61 in toto. It addresses the conditions for U.S.
agreement to revisions to the United Nations Framework
Convention on Climate Change. The resolution has been co-
sponsored, as I say, by 61 Senators, including ourselves, from
both sides of the aisle. This resolution states the Sense of
the Senate that the developing world must fully participate in
the treaty negotiations and commitments and play a meaningful
role in effectively addressing the problem of global climate
In essence, the resolution accepts the thesis, which is
still the subject of some dispute, that the increasing release
of carbon dioxide and its accumulation in our atmosphere are
causing a very gradual heating of the globe which has many
adverse consequences for us all. I believe the administration
should be commended for its efforts on this issue and I commend
this subcommittee for its attention to the matter. If
substantial steps are going to be taken to influence carbon
dioxide and other greenhouse gas emissions, we need to
accelerate new technologies, anticipate new developments, and
encourage public/private sector participation.
President Bush signed the United Nations Framework
Convention on Climate Change, the so-called Rio Pact, in 1992,
which was subsequently approved by the Senate and calls on the
industrialized nations to aim to reduce their greenhouse gas
emissions to their 1990 levels by the year 2000, a goal which
will not be achieved by the U.S. nor by the vast majority of
the industrialized nations.
The parties to the Framework Convention met in Berlin in
1995 to discuss the future direction of the treaty in light of
this projected failure to meet the voluntary objectives,
agreeing that any new commitments would be binding upon the
signatories. Specifically excluded--and this was a mistake--
specifically excluded from any new commitments, however, would
be the countries that comprise the developing world. The
rationale for the so-called Berlin Mandate was that it is the
industrialized OECD nations that have been the major emitters
of greenhouse gases in the past and will continue to be for the
There are two intrinsic problems with the Berlin Mandate.
First, while the industrialized world is the primary
contributor to the current problem, that will not be the case
in just a few years.
Senator Byrd. As this chart demonstrates, the emissions of
the developing world are rapidly increasing on a sharp upward
slope. These emissions will actually surpass those of the
industrialized OECD nations by the year 2015. In short, the
developing world is rapidly becoming a clone of the OECD
Now let us assume that the current negotiations for a new
protocol, which are to be concluded in Kyoto this December,
result in a binding commitment that the OECD nations must
reduce their emissions to 1990 levels by 2010.
Senator Byrd. This chart demonstrates that under such a
scenario, the OECD nations will sharply reduce our emissions of
greenhouse gases. The price we will pay in order to achieve
these reductions is open to debate as estimates differ.
Nonetheless, the key point is that this responsibility will not
be shared because of the Berlin Mandate, for the chart clearly
shows that the emissions of the developing world continue on
their inexorable upward track, even as we, in the OECD group,
make the painful and costly adjustments necessary to force down
our own emissions.
This demonstrates the second problem with the Berlin
Mandate, which is that we gave away the store and we received
nothing in return. Many of the biggest emitters of greenhouse
gases in the developing world have refused to even discuss, let
alone seriously consider, taking any emissions limitations
commitments upon themselves. In what can only be viewed as an
act of environmental irresponsibility, the developing nations
have adamantly refused to recognize that they will, over the
next 2 decades, become the primary cause of the problem in
terms of annual emissions.
The refusal of the developing world to discuss any future
emissions limitations commitments has become a central issue,
for any attempt to bring them into the process is labeled by
some as a treaty killer. I have a different perspective. I am
not interested in killing the treaty. My resolution and yours,
Mr. Chairman, is not a treaty killer. It is, in fact, a treaty
enhancer. It calls upon the administration not to agree to a
protocol unless it includes new commitments to limit or reduce
greenhouse gas emissions for developing countries parties
within the same compliance period. Our resolution improves the
treaty, for any treaty that does not include emissions
limitations provisions for the developing world is inherently
unsound and ineffectual on its face. Environmentally we are all
in the same global boat.
So I ask the rhetorical question: What good does it do for
the United States and other developed nations to work
feverishly to plug the holes that we have drilled in the bottom
of the boat over the past decades while at the same time the
developing nations will be drilling holes, larger holes, at the
other end just as fast as we plug them on our end? Be assured
that the global boat will sink just as rapidly and we are all
going to be in for a long, long swim.
Bringing the developing world in under the climate change
tent as part of any future treaty will not only increase the
prospect of Senate ratification--of Senate approval, I should
say; the Senate does not ratify treaties, it approves the
ratification of treaties--will not only improve the prospects
of Senate approval, it will also be enormously beneficial for
the international environment.
Let me further clarify that point.
Senator Byrd. The chart before you shows the world of 1995
in terms of world carbon emissions in millions of metric tons
of carbon. The United States and OECD nations, shown in red,
are responsible for a little over half of that total.
Senator Byrd. The next chart projects the world as it might
be after the currently proposed treaty is adopted with only the
developed world taking action to reduce greenhouse gas
emissions. The difference is startling. The difference, again,
is startling. The developing world, shown in purple, has
assumed the U.S. and OECD nations' place as the biggest global
polluters. The problem remains the same. Only the names have
changed. And, again, because of the flawed Berlin Mandate, all
of these emissions from the developing world will be completely
uncontrolled and free to increase even further. From this
perspective, it is the Berlin Mandate and the fact that it lets
the developing world off the hook Scot-free that will seriously
harm the global environment in future years.
Finally, let us examine the role of China. Despite
possessing a strong and growing economic and industrial base,
despite possessing a nuclear capability, despite possessing the
ability to launch satellites into orbit, China is still counted
among the family of developing nations. But its industrial
growth is matched by its growing contribution to global
Senator Byrd. This chart compares China's contribution to
global carbon emissions with the contribution made by the
United States. On the left, we can see that, based upon current
trends, China will surpass the United States in carbon
emissions by the year 2015. On the right, we can see that if
current proposals are adopted, under which we would reduce our
carbon emissions to 1990 levels while imposing no requirements
upon the developing world and China, China, all by itself, will
greatly exceed the United States in metric tons of carbon
Now if that isn't enough to make environmentalists' hair
curl, I don't know what will.
I find it disturbing that, despite its future role as the
world's leading contributor to the problem of carbon emissions,
China has indicated steadfast refusal to apply any type of
binding obligations upon its own economy and its own industry.
I believe that if the treaty we are negotiating today does not
equally commit developing nations, like China, to binding
commitments, there will be no incentive for China and the other
nations of the developing world to make responsible and
environmentally sound choices as they develop. There will be no
incentive for the Senate to approve such a treaty. I can
guarantee you that there will be a mountain in the way which a
mustard seed of faith will not, in itself, remove.
You can be sure that after China assumes its role as a
leading carbon emitter, she will not be very eager to make the
tough and costly corrections to retrofit her industries to
reduce emissions of greenhouse gases. Indeed, she may expect to
benefit from a treaty in which she escapes binding commitments
because it may allow her to import industries from OECD nations
that would choose to relocate there rather than change their
ways and clean up their acts at home.
Now I am not here to bash China. But I am here to say that
we, in the developed world, have to look out after our future
as well, our industry, our jobs, the health of our people. We
are all in the same boat together. It goes round. What they
breathe, we will breathe. There is no way to avoid it.
My message to U.S. negotiators is that all nations, but
particularly those that are making and will make a significant
contribution to greenhouse gases emissions, need to, (1) make
commitments at Kyoto that unequivocally demonstrate an action
program to tackle this problem; and (2) start with aggressive
efforts to act on those commitments immediately and not settle
for vague promises to return to a future negotiation to get
serious. In other words, there is no point in our agreeing to
meet at some future time at which time we will agree. We must
Finally, while countries have different levels of
development, each must make unique and binding contributions of
a pace and kind consistent with their industrialization. It is
important. Let's read that again. While countries have
different levels of development, each must make unique and
binding contributions of a pace and kind consistent with their
industrialization. The developing world must agree in Kyoto--if
not in December, why not in January? If not in January, why not
in February? The developing world must agree in Kyoto to some
manner of binding targets and commitments that would begin at
the same time as the developed world in as aggressive and
effective a schedule as possible given the gravity of the
problem and the need for a fair sharing of the burden.
I note that our resolution states that any treaty presented
to the Senate be accompanied by a detailed explanation of any
legislation or regulatory actions that may be required to
implement the protocol or other agreement and should also be
accompanied by an analysis of the detailed financial costs and
other impacts on the economy of the United States which would
be incurred by the implementation of the agreement. We need to
know that when this protocol comes before the Senate. We need
to know that. There surely will be costs. Nobody is getting off
scot-free. There surely will be costs if the United States is
to make the changes to our existing industrial base and to our
existing lifestyle necessary to meet the goals of this treaty.
Our smokestacks must be cleaner and our automobiles more
efficient. There are many ways to achieve these goals. But we
must be able to tell the American people what will be required
to meet any proposed commitment.
Politically, I believe there needs to be a strong consensus
between the President and Congress about any plan of action.
The administration's policy of follow-on multilateral
negotiations to deepen the impact of the Rio Pact requires very
substantial consensus building with the Congress. This is one
of the reasons why, Mr. Chairman, we felt we ought to start now
and let the administration know we are going to be looking over
their shoulder and that we want to participate. That is why we
have the ``whereas'' clause, which indicates that the Senate
expects to have independent observers appointed not by the
administration but by the Majority and Minority Leaders of the
Senate, who will monitor the developments and who will report
back to the Senate on those developments.
This is the way to build a consensus. The administration
cannot go down the road happily on its own, looking back over
its shoulder. We have to be in this boat together, and there
must be broad educational activities to bring the American
This is why we want this debate to start now, not in
November, not next January. To impose effective, legally
binding measures on the United States economy will mean having
the strong support of the Senate and the House. We all
represent the same people.
We Senators need to be deeply concerned over the alarm that
has been expressed to us by a very broad range of American
industry and labor over the impacts on our economy of a treaty
which commits the United States to deep emission reductions and
which does not spread the burden of responsibility equitably
across the globe. It has to do that.
These assessments by bedrock American industry must be
taken seriously. They will be taken seriously. I hope that this
hearing will result in new Senate attention to the progress of
these negotiations and that this committee will serve to
interact regularly with the State Department and administration
policymakers as our negotiating strategy is developed and
The resolution that Senator Hagel and I introduced and
which has won the support of a majority of 60 Senators, no, 61,
is aimed at that negotiation and beyond. Since carbon and other
greenhouse gases can accumulate in the atmosphere and persist
for long periods, we will not, as a community of nations, get a
handle on these threats to our global climate unless everyone
participates and does its share to solve the problem. We all
share our Earth in common. We breathe the same air. We are
exposed to the same global climate system. We must all accept
our share of the responsibility for the global climate. We must
keep this fragile boat afloat together, and the sooner we have
commitments from all of its passengers to work together in that
effort, the better.
Mr. Chairman, I ask unanimous consent that the resolution
which we have joined in sponsoring and co-sponsoring appear at
this point in the record.
Senator Hagel. Without objection.
[The information referred to follows:]
Senator Byrd. That completes my prepared statement.
Senator Hagel. Senator Byrd, thank you.
We would now like to hear from your distinguished
colleague, Congressman Dingell.
Congressman, thank you for coming over this morning and
giving us your thoughts. I have been joined, as you note, here
at the desk by my distinguished colleague, Senator Sarbanes,
from Maryland, who has asked to make some comments after
Congressman Dingell's remarks.
Senator Sarbanes. Mr. Chairman, I will defer my comments
because I know our colleagues have other business to attend to.
I would be happy to hear from Congressman Dingell, Ranking
Member Dingell--I'm sorry, John.
STATEMENT OF HON. JOHN D. DINGELL, U.S. REPRESENTATIVE FROM
Mr. Dingell. Thank you, Mr. Chairman and thank you members
of the committee.
I want to thank you for holding this hearing and commend
you for it. There are a lot of questions that need to be
answered and I was much comforted by your opening statements,
Mr. Chairman, and I am delighted that you are doing this
because there are a lot of questions that need answering.
I want to say hello to my good friends, Mr. Thomas and Mr.
Sarbanes, who are old and dear friends of mine. They served in
the House with me. I am delighted to see them.
I am particularly pleased also to be here with my old
friend and colleague from better days, when he served in the
House, Senator Byrd, for whom I have enormous affection and
respect. As he mentioned, the only significant difference that
I can think of that we have between us is the Byrd Amendment,
on which he has taught me a lot of valuable lessons.
Mr. Chairman, I do not appear before the committee as a
critic of the idea that this country should engage in global
climate change negotiations nor do I criticize the idea that we
should go forward. In fact, I believe that there is good reason
to think that it is time for the world to address the fact that
we may be changing the climate and that there is need to
address that. But, as Senator Byrd has so wisely pointed out, I
think that it is necessary that, if we are going to do it, we
insist that all participate fairly, the United States not bear
unfair burdens, and that the rules of the game be both founded
on good knowledge, good science, careful analytical work, a
sound and careful appraisal of our national interests and our
policy goals and the well being of our people, as well as the
needs of the situation.
With respect to the global climate change negotiations, I
have some questions on which I have yet to receive satisfactory
One, have we overreached the science?
The State Department has concluded that the current science
proves that global warming is ``dangerous'' and requires
immediate emissions reductions. The official U.N. scientific
body has gone only so far as to identify a link between human
activity and global warming. But their own document on science
states, and I quote: ``Our ability to quantify the human
influence on global climate is currently limited.'' In other
words, we do not know with any degree of precision how big the
problem is, we don't know how fast it is moving or how it can,
or should, be mitigated.
My friend and colleague, Secretary Wirth, who will testify
later this morning, agrees on this point. At a public forum
this February, he said there is, and I quote, ``No doubt about
the theory'' of climate change. I think that it should be
quoted again. ``We don't know where, how much or how fast.''
Second, is what we are seeing a classic example of mission
It is a very interesting thing. We have observed as this
negotiation has gone forward in some curious, imperceptible,
and inexplicable fashion that United States policy has changed.
Initially, the administration's policy was based on voluntary
agreements with industry and reliance on ``joint
implementation'' of mutually beneficial partnerships between
U.S. industry and developing countries. Strangely, that
approach has changed and has vanished. In regard to that, U.S.
companies would get credit for helping developing countries to
build clean power plants. But sometime early in 1996, the
change became evident and the tone was different. Mandatory
emissions reduction became the goal.
Three, who is representing America's interests? The
question I think underneath that is the one that you expressed,
Mr. Chairman, and that my good friend Senator Byrd expressed.
Are we setting the United States up for an economic fiasco? Are
we going to assume burdens that no one else in the world is
In a letter to me in 1995, President Clinton promised not
to agree to anything that would adversely affect U.S.
competitiveness. That is a good policy. I think it should
probably be communicated to the State Department.
The State Department has signed on to agreements that are
procedurally and substantively disadvantageous to the United
States. The outcome may be an agreement late in 1997 in Kyoto
imposing mandatory emissions reductions on the developed
countries and at best only voluntary steps for the developing
nations. I would note that if you look at how this is going to
go, the U.S. and the OECD countries will appear to be absorbing
heavy burdens. If you look, you are going to find that the OECD
countries are very liable not to be assuming heavy burdens and,
in fact, to have wonderful escape clauses which they can flee
through while the United States remains trapped. I think that
is a question into which this committee should inquire most
We have already committed ourselves to steps to control
emissions and potentially to harm the competitiveness of the
United States. Those agreements or at least those
pronouncements and those positions have been put on the table
The developing countries are scot-free. We do not have a
single binding commitment from them. I would note also that
Eastern Europe and the Soviets are indicating small desire to
be helpful in anything which would be an even sharing of the
responsibilities that this global warming treaty, agreement, or
whatever it might happen to be, is going to impose on the world
and upon the United States.
My friends in the administration argue that they are being
hard-nosed because they have rejected the more extreme
proposals advanced by such powerful groups as the Association
of Small Island States, or the AOSIS. That I am sure took an
enormous level of effort by the administration. However, I find
scant reason to congratulate our negotiators for refusing the
chance to submit our unconditional surrender to so small an
Fourth, even if you agree that global climate change is a
problem, is the administration really doing anything to protect
The theory of global warming holds that greenhouse gases
have an effect no matter where in the world they are emitted.
This is not like the debate over acid rain or ozone, where
emissions from one part of the country are thought to cause
problems in another identifiable region.
As Senator Byrd has told the committee, China will surpass
the United States in terms of emissions early in the next
century. If you accept the theory of global warming, those
emissions will cause as much harm to the climate as emissions
from the developed countries today. Of course, that will be
true because there are going to be substantial increases from
almost everyone in the world, except the United States, if we
bind ourselves to the curiously uncompetitive position of the
United States being bound and nobody else being bound.
Fifth, how is this whole matter going to work?
I have yet to see the proposed negotiating text that
includes specific dates and numbers. These are important
matters, but there are some other important and fundamental
issues at hand. Who will have to do what? Who will enforce the
agreement? And how timely would enforcement be? If we establish
a trading system, how will it be enforced? Can we be assured
that that trading system is going to be one which will work
fairly and which will work for the United States in fair
fashion and also in fair fashion as regard to any other
The question I think we need to ask is this: Is China or
any other developing country going to be allowed to keep the
credits for themselves as a country or will there be a trading
around the world for these credits? Or will companies be
allowed to use them to offset operations elsewhere in the
world? Or, for example, would China keep them home?
Does anyone seriously believe that China or any other
country, for that matter, will act on altruistic motives and
make the credits, if such there will be, available to other
countries for economic development? I seriously doubt that.
This leads me to my sixth and final question. Why are we
doing all of this before we have the most basic information
about how climate change policies will affect our economy? In
short, has the administration bothered to do its homework?
I would observe that the administration has been before our
committee on at least several occasions. I can think of two,
and there may perhaps be three or more. In each instance, the
questions that I have raised were raised and the answers were
promised. But no answers have been forthcoming.
So I am particularly pleased, Mr. Chairman, that you and
this committee are doing this because it is perhaps possible
that through your powers and the exercise of your wisdom, we
will get the answers that we, in fact, need.
We were supposed to have the analysis and assessment of the
impact of climate change policies on the U.S. economy by the
end of last year. It is now something over a year since this
was promised and it is something over a year since it was
supposed to be done.
The assessment and the analysis have not been made
available to the Congress. It is quite certain that they are
not yet completed and, despite the fact that the administration
has made repeated promises to the Congress and to industry that
it would be available before important policy decisions are
made, we are rushing head-long toward Kyoto. We have moved
forward toward agreement in all fashions in ways which we
cannot gauge against any measurable set of standards, any
analysis of the U.S. interests, or any assessment of the impact
on climate changes.
It is very clear that the State Department has either been
rushing forward without information, has been suppressing the
information, has not been making it available to the Congress,
or has not been cooperating with us in providing the
information we need to evaluate what it is they are doing, how
they are doing, and how it is going to impact the country.
We also do not have the vaguest idea of what their
assessment is about, what the real need is, or what it is we
have to do to come forward with an intelligent agreement that
is going to serve the best interests of the United States.
The State Department formally proposed a ``cap and trade''
negotiating position in January. Again, no analysis or
assessment was available to them or to us at that time.
In short, the analysis is self-evidently too late to inform
the process. It may perhaps be arriving here before the
Congress just in time to justify what the administration has
already decided on doing or what the administration has already
agreed to do.
So perhaps you in the Senate will find yourselves presented
with this wonderful assessment after they have completed the
negotiation and which was not available either to them or to us
as the negotiation went on.
It appears that the intelligent participation of the United
States in these negotiations cannot be going forward under
those circumstances and, just as clearly, public participation
and comment on the analysis and assessment, indeed upon the
whole process, appears to be irrelevant in view of the fact
that they have not done the work that an intelligent negotiator
would do and should do as they go forward into something that
is going to affect the entire future of the United States.
It is interesting to note that the Department of Commerce
official in charge of the analysis and assessment has moved on
to pursue other career opportunities. It may be as you go
forward in these matters, Mr. Chairman, that you might want to
have the Department of Commerce come up here to assist you
because of their responsibilities over climate.
I have asked the administration whether when they go to
Kyoto next December they will refuse to sign any agreement that
binds the United States to new emissions obligations unless it
holds our economic competitors in the developing world to
equivalent obligations. I have not received a reassuring answer
to this matter.
My concerns here I think parallel those of yourself and the
members of the committee. They also parallel those of American
labor. I am delighted that you will be hearing from my good
friend and Senator Byrd's good friend, Secretary-Treasurer
Trumka of the AFL-CIO. I commend to you the resolution on
climate change adopted by the AFL-CIO Executive Council as well
as the Senate Resolution offered by my good friend, Senator
Byrd, which has, I think, touched the basic good judgment of
the Senate and prompted an enormous outpouring of support
I am hopeful that this resolution will have a favorable and
beneficial effect upon the administration and will perhaps
induce them to recognize that they may just have a treaty
agreement that they are working on that is not going to get
approved because of the slovenly work which they have done to
bring themselves to an ultimate agreement toward which they are
rushing madly, again without either scientific support for what
it is they are doing or without a real appreciation of the
economic consequences of that.
I want to close, Mr. Chairman, by thanking you very much
for the privilege of being here and for the fact that you are
inquiring into this. I would urge you and the committee to
proceed most diligently and vigorously to get the answers that
we in the House have not been able to get. I suspect you can do
rather better than we have done.
I also want to tell you again that I am not opposed to
international negotiations on climate change. I would, however,
approach these negotiations the way I would approach a high
stakes poker game--with an open mind but not with a blank
check. As Senator Thomas might tell you, there is an old
Western story about a fellow who was seen walking along early
Sunday morning. Somebody said to him where are you going. He
said I'm going to one-eyed Minnie's. He said I'm going to play
poker. They said why are you going to play poker at one-eyed
Minnie's? Everybody knows it's a crooked game. He said I know,
but it's the only game in town.
Mr. Dingell. Well, this is not the only game in town and I
urge us to be more careful.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Dingell follows:]
Prepared Statement of Representative John D. Dingell
Mr. Chairman, I appreciate your holding this hearing. I consider it
a great honor to testify beside my good friend and highly respected
colleague from West Virginia, Senator Byrd.
I do not appear before this Subcommittee as a critic of the idea
that we are engaged in climate change negotiations and that we are
moving forward. I'm critical of the idea that we are negotiating
without the full and proper information that we need.
With respect to the climate change negotiations, I have several
questions to which I have yet to receive satisfactory answers.
One: Have we overreached on the science?
The State Department has concluded that current science proves that
global warming is ``dangerous'' and requires immediate emissions
reductions. But the official U.N. scientific body has gone only so far
as to identify a link between human activity and warming, but their own
document on the science states, and I quote, ``our ability to quantify
the human influence on global climate is currently limited.'' In other
words, we don't know with any degree of precision how big the problem
is, we don't know how fast it's moving, or how it can be mitigated.
My friend and former colleague Tim Wirth, who will testify later
this morning, agrees on this point. At a public forum this February he
said there is ``no doubt about the theory'' of climate change and that
``we don't know where, how much or how fast.''
Two: Is what we're seeing here a classic example of mission creep?
We've seen a shift from voluntary to mandatory policies. Initially,
the Administration's policy was based on voluntary agreements with
industry and reliance on ``joint implementation'' of mutually
beneficial partnerships between U.S. industry and developing countries.
For instance, U.S. companies would get credit for helping developing
countries build clean power plants. But sometime early in 1996, the
tone changed. Mandatory emissions reduction became the goal.
Three: Who is representing America's interests? Are we setting
ourselves up for an economic fiasco?
In a letter to me in 1995, President Clinton promised not to agree
to anything which would adversely affect U.S. competitiveness. But the
State Department has signed onto agreements that are procedurally and
substantively disadvantageous. The outcome may be an agreement late in
1997 in Kyoto imposing mandatory emissions reductions on developed
countries, and at best only voluntary steps for developing nations.
We've already committed ourselves to steps to control emissions and
potentially harm our competitiveness. The developing countries are
scot-free. We've gotten not a single, solid, binding commitment from
My friends in the Administration argue that they are being hard-
nosed because they have rejected the more extreme proposals advanced by
groups such as the Association of Small Island States, or AOSIS. But I
find scant reason to congratulate our negotiators for refusing the
chance to submit our unconditional surrender.
Four: Even if you agree that climate change is a problem, is the
Administration really doing anything to protect the environment?
The theory of global warming holds that greenhouse gases have an
effect no matter where in the world they are emitted. This is not like
the debate over acid rain or ozone, where emissions from one part of
the country were thought to cause problems in another, identifiable
region. China will surpass us in terms of emissions early in the next
century. If you accept the theory of global warming, those emissions
will cause as much harm to the climate as emissions from the developed
Five: How is all this going to work?
I've yet to see a proposed negotiating text that includes specific
dates and numbers. Those are important matters, but there are some
other fundamental issues at hand: Who will have to do what? Who will
enforce the agreement, and how timely would enforcement be? If we
establish a trading system, is China or any other developing country
going to be allowed to keep credits for themselves as a country? Or
will companies be allowed to use them to offset operations elsewhere in
the world? Does anyone seriously believe China, or any other country
for that matter, will act on altruistic motives?
This leads me to my sixth and final question. Why are we doing this
before we have the most basic information about how climate change
policies will affect our economy? In short, has the Administration
bothered to do its homework?
We were supposed to have the vaunted analysis and assessment of the
impact of climate change policies on the U.S. economy by the end of
last year. It has not been completed yet, despite repeated promises to
Congress and industry that it would be available before important
policy decisions are made. But the State Department formally proposed a
cap-and-trade negotiating position in January. In short, the analysis
is self-evidently too late to inform the process, and likely will be
used to justify what the Administration has already decided to do. Just
as clearly, public participation and comment on the analysis and
assessment is irrelevant. And the Department of Commerce official in
charge of the analysis and assessment has moved on to pursue other
I have asked the Administration whether, when they go to Kyoto next
December, they will refuse to sign any agreement that binds the U.S. to
new emissions obligations unless it holds our economic competitors in
the developing world to equivalent obligations. I cannot in all truth
say that I have received a reassuring answer.
My concerns very closely parallel those of American labor, and I am
delighted that you will be hearing from Secretary-Treasurer Trumka of
the AFL-CIO. I commend to you the resolution on climate change adopted
by the AFL-CIO Executive Council, as well as the Senate resolution
offered by Senator Byrd.
Let me close by noting again that I am not opposed to our being
part of international negotiations on climate change. But I would
approach those negotiations the way I would approach a high-stakes
poker game: with an open mind, but not with a blank check.
Senator Hagel. Congressman Dingell, thank you for those
wise departing colloquialisms. I will pass those on to Senator
Thomas. He will be very proud that you quoted him.
Senator Hagel. Congressman, thank you.
Senator Sarbanes. I have no questions. Thank you.
Senator Hagel. In the interest of time, gentlemen, your
time, you have other areas and obligations to address here this
morning. On behalf of the Foreign Relations Committee, I add
again my thanks for your wise counsel, your experience, and
your leadership. You have both brought forward what I think is
the essence of the issue here and both in your own ways have
contributed mightily to this debate.
I am grateful, and on behalf of all of us. Thank you.
Senator Byrd. Mr. Chairman, my earlier request that a copy
of the resolution appear in the record of the hearings goes to
the Star print that was just made overnight because it includes
all of the then-60 signatories plus the additional ``whereas''
clause dealing with the monitoring group that would be
appointed by the two leaders in the Senate, whereas the
original resolution does not have those.
Senator Hagel. The record will reflect that as well,
Senator. Thank you.
Senator Byrd. I thank all Senators and I thank my friend,
John Dingell, for being allied with us in this effort.
Senator Hagel. Thank you, gentlemen.
The next panel will be Secretary Wirth, Under Secretary of
State for Global Affairs. Tim Wirth is before us.
Tim, thank you for coming this morning. We had an
opportunity to visit a little bit a couple of days ago, to get
acquainted, which I thought was valuable. You obviously are no
stranger to this body and to this process. So we again thank
you for your time, because much of what has been said so far
and will continue to be said today obviously cuts in your
direction. We are looking for some answers to these questions
and I know you will help get us there. But first, Senator
Senator Sarbanes. Mr. Chairman, I'm sorry I was not able to
be here right at the outset of the hearing, but I did hear most
of the testimony from our Congressional colleagues.
The issues surrounding global climate change and proposals
for addressing it are extremely complex. I think it is an
understatement to say they are often contentious.
I take it this is the first in a series of hearings, and I
think it is important to have such a series. I think it is
important to make sure that we are exposed to the great
diversity of views which exist on this issue.
The Congress obviously needs to examine this question in a
rational and constructive manner and I hope that will be the
outcome of these deliberations. So I look forward, I assume, to
further hearings. I think there is one scheduled already for
next week, or there are tentative plans to have one next week.
These will provide an opportunity for those responsible people
who wish to be heard on this issue to present their views to
In this regard, my Maryland colleague, Congressman
Gilchrist, I understand had hoped or wanted to be here this
morning. But in any event, he has written testimony which he
has asked me to submit for the record and I certainly do that
at this point. This is from Congressman Wayne Gilchrist, who
represents the First Congressional District in my State. I ask
consent that that be included in the record.
Senator Hagel. The record will reflect that.
Senator Sarbanes. Thank you.
[The prepared statement of Representative Gilchrist
Prepared Statement of Representative Wayne T. Gilchrest
Mr. Chairman and members of the committee, thank you for the
opportunity to submit testimony today on the important subject of
global climate change. This is a complex problem and the Congress
should be fully engaged in understanding the facts and fiction
surrounding it. I would like to touch on three subjects this morning:
the science, the economics, and finally, the negotiations and the role
of developing nations.
I know that the science of climate change is complex. It involves
interpretation of data from a wide range of sources, over long time
scales. But this is also an area where we have more scientific
consensus than virtually any other environmental issue. Do not be
mistaken, this is not an issue where there is an even split in the
scientific community. 2,400 IPCC scientists concur that the planet is
warming, that human contributions of greenhouse gases are disrupting
global climate, and that the impacts of a destabilized climate system
are occurring and will continue to escalate if we do nothing. Another
2,400 scientists yesterday signed a statement endorsing the IPCC
report, and observing that ``the further accumulation of greenhouse
gases commits the earth irreversibly to further global climatic change
and consequent ecological, economic and social disruption.'' Skepticism
is an inherent part of the scientific process, but it should not be
used as an excuse to do nothing.
To the people of my district, the cost of doing nothing is too much
to bear. The primary industry in my district is agriculture, followed
closely by tourism to places like Ocean City. These are two industries
that will be severely impacted by the effects of a sea level rise, more
frequent and severe weather events, such as hurricanes and droughts.
We do need to look at the economic implications of any policy that
we take. But we must not fall victim to alarmist gloom and doom
scenarios. The US marketplace has demonstrated time and again that we
can utilize flexible, innovative, market-based solutions to
environmental problems. I am heartened by the numerous studies that
have come out showing that significant emissions reductions can be made
with little or no disruption to the economy.
It is significant to consider the fact that in a global context,
the US uses energy far less efficiently than our economic competitors
and trading partners. On a per capita basis, the US uses twice as much
energy to produce a unit of GDP than do Germany or Japan. These
inefficiencies are more than an environmental waste--they represent
lost economic opportunity, as well as increased oil imports and
decreased energy security. As a result, numerous studies have found
that there is tremendous room for energy efficiency and productivity
gains in the US economy through cost-effective investments in energy
efficiency and advanced energy technology. A 1991 study by the National
Academy of Sciences concluded that ``the United States could reduce or
offset its greenhouse gas emissions by between 10 and 40 percent of
1990 levels at low cost, or at some net savings . . . the efficiency of
practically every end use of energy can be improved relatively
The IPCC 1995 Second Assessment report further confirms that
significant energy efficiency gains can be made at no cost or even at a
savings to the economy by improving conservation measures and utilizing
existing technologies. The report states that ``numerous studies have
indicated that 10-30% energy efficiency gains above present levels are
feasible at negative to zero cost in each of the sectors in many parts
of the world through technical conservation measures and improved
management practices .... Using technologies that presently yield the
highest output of energy services for a given input of energy,
efficiency gains of 50-60% would be technically feasible in many
countries over the same period.''
I would also like to note that recently a statement was signed by
2,300 economists--including eight Nobel laureates and many other
distinguished economic thinkers--who recognize that ``significant
environmental, economic, social and geopolitical risks'' are posed by
climate change, that ``preventive steps are justified,'' and that
``economic studies have found that there are many potential policies to
reduce greenhouse gas emissions for which total benefits outweigh the
total costs. For the U.S. in particular. sound economic analysis shows
that there are policy options that would slow climate change without
harming American living standards, and these measures may in fact
improve U.S. productivity in the long run.''
Clearly, mitigating climate change is a global problem, requiring
full participation of both developed and developing nations. There is
no question that we need commitments and timelines for full
participation by developing nations. But in order to address this
problem we have to act now, and the US needs to maintain its leadership
The US has been the world's leading emitter of greenhouse gases for
decades, and with only 5% of the world's population we account for 20%
of global emissions. In addition, we have failed to meet our 1992
convention agreement to hold emissions at 1990 levels through the year
2000. Instead, it is projected that we will exceed 1990 levels by 13%.
Voluntary programs and targets are a good idea, but they have not been
sufficient. Binding targets and emissions trading options are one
possible solution. I believe the US should work toward a protocol that
provides flexibility and incentives for reducing emissions using
market-oriented approaches and that sets a clear time line for bringing
developing countries on board. A good climate treaty will need to
provide a mechanism whereby all parties are brought into the solution
Recently several leaders from the business community have made
strong statements regarding the necessity and importance of addressing
the climate change problem. As John Browne, Group Chief Executive with
British Petroleum, said in a speech at Stanford University in May of
this year, ``There's a lot of noise in the data. It is hard to isolate
cause and effect. But there is now an effective consensus among the
world's leading scientists and serious and well informed people outside
the scientific community that there is a discernible human influence on
the climate, and a link between the concentration of carbon dioxide and
the increase in temperature. The time to consider the policy dimensions
of climate change is not when the link between greenhouse gases and
climate change is conclusively proven--but when the possibility cannot
be discounted and is taken seriously by the society of which we are
Some members have called for continued debate of the issue and an
open discussion of the policy options that can be used to address it. I
agree, but I most strongly urge my colleagues not to give up now and
walk away from the negotiations. We have the potential to lead with
fair, flexible. sensible strategies that can stabilize climate without
disrupting the economy. Climate change is one of the most compelling
issues of our time and the moment for action is upon us.
Senator Hagel. Thank you. Secretary Wirth, welcome.
STATEMENT OF HON. TIMOTHY E. WIRTH, UNDER SECRETARY FOR GLOBAL
AFFAIRS, DEPARTMENT OF STATE
Mr. Wirth. Thank you very much, Mr. Chairman. I am pleased
to join you this morning to discuss the importance of climate
change and to outline the United States negotiating position as
we move toward the Third Conference of the Parties to be held
in Kyoto in December.
I am especially pleased to follow this morning two
gentlemen I consider important mentors to me. John Dingell was
my first tutor legislatively. I was the ranking Democrat on the
first Energy Committee on the old Commerce Committee in the
mid-1970's. Robert C. Byrd taught me about the importance of
institutions and how they demand our continuing, patient
attention as we work to continue the success of our democratic
institutions. Thank you, Senator Byrd.
Climate change is probably--excuse me, Mr. Chairman. I am
in the throes of a heavy flu. Climate change is probably the
most important environmental challenge facing the world. The
ecological, human, economic, and political consequences are of
enormous importance for the mid-term and for the long-term, and
each of us needs to understand them. We look forward to active
and frequent consultations with this committee and with other
Members of the Congress as we seek to reach an agreement and as
we set up the needed long-term process. The ``serious,
informed, and strong voice'' which you noted in your opening
remarks, Mr. Chairman, will be most welcome, and we look
forward to working closely with you.
I would like to begin this morning with the science,
because scientists were the ones who drew our attention to
climate change in the first place and because we continue to
base our policies on the best evidence and the most rigorous
scientific analysis available.
Let me highlight some of the key scientific issues on which
there is a global consensus.
Human activities have significantly increased the
atmospheric concentration of greenhouse gases over the last
century. Global average temperatures have already increased
about \1/2\ to 1 degree Fahrenheit. The balance of evidence
suggests a discernible human influence on global climate.
Projections of the future change based on complex climate
models and on our best understanding of the physics of the
climate system suggest an increase of another 2 to 6.5 degrees
Fahrenheit by 2100, an average greater than any seen in the
last 10,000 years.
Sea levels are projected to rise an additional 1.5 feet by
2100 from expansion of the oceans due to global warming and
from a melting of glaciers and ice sheets. Climate change is
likely to have wide-ranging and mostly adverse effects on human
health with direct and adverse effects leading to increased
Coastal populations and infrastructure are vulnerable. A 20
inch rise in sea levels would put about 100 million people at
risk each year from storm surges with significant costs.
Natural and managed ecosystems are at risk as ideal ranges
shift with the climate. The location of forest and agricultural
zones will change significantly.
Future unexpected changes in the climate are not included
in the models. These surprises may have impacts of global
magnitude, such as fundamental changes in global ocean
circulation or ecosystem behavior.
These are the conclusions of the Intergovernmental Panel on
Climate Change, an international body of more than 2,500
scientists, expert in all aspects of climate change, including
the physical sciences, the social sciences, and the economics.
U.S. Government experts have endorsed their work as have the
academic communities in the United States and around the world.
An excellent summary of the science and the impacts that
could occur as a result of global climate disruption was
presented yesterday on behalf of nearly 2,500 leading American
scientists, and I would like to include their statement for the
[The information referred to follows:]
GLOBAL CLIMATIC DISRUPTION
June 18, 1997
We are scientists who are familiar with the causes and effects of
climatic change as summarized recently by the Intergovernmental Panel
on Climate Change (IPCC). We endorse those reports and observe that the
further accumulation of greenhouse gases commits the earth irreversibly
to further global climatic change and consequent ecological, economic
and social disruption. The risks associated with such changes justify
preventive action through reductions in emissions of greenhouse gases.
In ratifying the Framework Convention on Climate Change, the United
States agreed in principle to reduce its emissions. It is time for the
United States, as the largest emitter of greenhouse gases, to fulfill
this commitment and demonstrate leadership in a global effort.
Human-induced global climatic change is under way. The IPCC
concluded that global mean surface air temperature has increased by
between about 0.5 and 1.1 degrees Fahrenheit in the last 100 years and
anticipates a further continuing rise of 1.8 to 6.3 degrees Fahrenheit
during the next century. Sea-level has risen on average 4-10 inches
during the past 100 years and is expected to rise another 6 inches to 3
feet by 2,100. Global warming from the increase in heat-trapping gases
in the atmosphere causes an amplified hydrological cycle resulting in
increased precipitation and flooding in some regions and more severe
aridity in other areas. The IPCC concluded that ``The balance of
evidence suggests a discernible human influence on global climate.''
The warming is expected to expand the geographical ranges of malaria
and dengue fever and to open large new areas to other human diseases
and plant and animal pests. Effects of the disruption of climate are
sufficiently complicated that it is appropiate to assume there will be
effects not now anticipated.
Our familiarity with the scale, severity, and costs to human
welfare of the disruptions that the climatic changes threaten leads us
to introduce this note of urgency and to call for early domestic action
to reduce U.S. emissions via the most cost-effective means. We
encourage other nations to join in similar actions with the purpose of
producing a substantial and progressive global reduction in greenhouse
gas emissions beginning immediately. We call attention to the fact that
there are financial as well as environmental advantages to reducing
emissions. More than 2000 economists recently observed that there are
many potential policies to reduce greenhouse-gas emissions for which
total benefits outweigh the total costs.
The Framework Convention on Climate Change, ratified by the United
States and more than 165 other nations, calls for stabilization of
greenhouse gas concentrations in the atmosphere at levels that will
protect human interests and nature. The Parties to the Convention will
meet in December, 1997, in Kyoto, Japan to prepare a protocol
implementing the convention. We urge that the United States enter that
meeting with a clear national plan to limit emissions, and a
recommendation as to how the U.S. will assist other nations in
significant steps toward achieving the joint purpose of stabilization.
Dr. John P. Holdren Dr. Peter H. Raven
Dr. Jane Lubchenco Dr. F. Sherwood Rowland
Dr. Harold A. Mooney Dr. George M. Woodwell
Signed by 2409 scientists as of 6:19 PM on June 17, 1997
Ozone Action 1636 Connecticut Avenue, NW Washington, DC 20009 Voice:
(202) 265-6738 FAX: (202) 986-6041
Mr. Wirth. We do not yet have all the answers with respect
to the science. We cannot yet say with certainty what the local
effects of climate change will be, but with better scientific
data the picture is becoming clearer.
For instance, in the United States, 20 inches of sea level
rise would inundate 9,000 square miles of U.S. coastal land,
with great loss of property and infrastructure. Rising
temperatures could double the number of heat related deaths. We
now know that the 10 warmest years since records began all
occurred since 1980. Some of the most recent data shows that
four of the five hottest years have occurred since 1990. With
CO2 concentrations doubled in the atmosphere, heat
waves like the one that killed 500 people in Chicago 2 summers
ago would be 4 to 6 times as likely to occur.
While we acknowledge uncertainties about where, how fast,
and when climate change will occur and, while we continue to
press for research that will help us to answer these important
questions, the basic fact remains that we are having a
discernible impact on our climate.
Our policy is based on the current scientific consensus and
the need to achieve the most cost effective emissions
reductions possible. Our policy has three simple and straight-
forward objectives, which are outlined in detail in the
framework proposal which we submitted to the climate convention
in January, which we discussed with the Congress and submitted
to you at the same time. The proposal was shared with this
committee, as I noted, and was distributed widely with the
public. The three objectives are as follows.
First, we are seeking to establish a legally binding
emissions target for developed countries which is verifiable,
credible, and realistic.
Second, we are seeking an agreement in Kyoto that maximizes
the flexibility for each country to meet this legally binding
target, including the use of market mechanisms.
Third, we recognize the importance of involving all
countries in the agreement. To this end, we have incorporated
extensive language into our proposal that calls for developing
countries to act.
Let me go through each of these three elements in greater
detail if I might, Mr. Chairman. First is the target.
It is clear that the Framework Convention on Climate Change
has not proven adequate to the task of reducing global
emissions. We anticipate that only two countries will meet the
convention's nonbinding aim of lowering emissions to 1990
levels by the year 2000. We ourselves will miss the aim by
about 10 percent.
We believe a binding legal obligation to act will result in
the passage of domestic laws in all countries that compel
action. In order to build in some flexibility, our proposal
calls for the targets to be multi-year in nature. Without this
sort of legal obligation, countries will continue to pay only
lip service to their efforts to solve this problem. The past
shows that this is not enough.
Second is flexibility. Solving the problem of climate
change is a long-term proposition that will require enormous
effort over a sustained period. It is, therefore, vital that we
achieve emissions reductions as cost effectively as possible.
Our approach to climate change seeks to do this. We have
recommended that each country be given the maximum flexibility
to meet its legal obligation and we have rejected common,
harmonized policies and measures recommended by some countries.
We have also learned from the successes of the past and are,
wherever possible, focusing our efforts on the use of market
mechanisms to reduce costs.
One of the most innovative of these is the introduction of
emissions trading into the lexicon of international agreements.
This concept has been successfully used to reduce costs as much
as tenfold in meeting the standard set for power plant
emissions of sulfur dioxide. A similar program has also been
successfully implemented in the Montreal Protocol on substances
that deplete the ozone layer.
In the climate context, we envision that parties would be
allowed to trade their emissions, seeking to reduce them where
it is most cost effective to do so. While we are still engaged
in working through some of the details of how to implement this
proposal, it is clear that such a program could significantly
reduce the costs, some studies suggest, by up to 50 percent.
Another piece of our strategy on flexibility is joint
implementation. Through joint implementation, countries are
allowed to undertake emissions reductions projects in
developing countries and count these reductions against their
own emissions. We believe that joint implementation holds
enormous potential to reduce global greenhouse gas emissions,
again in a cost effective manner. Joint implementation would
also produce other benefits, such as encouraging technological
innovation, promoting the use of cost cutting U.S. energy
technologies and protecting forests and other critical habitat
around the world.
The U.S. has extensive experience with successful joint
implementation projects. Recently, our approach on joint
implementation received a major boost when President Clinton
received the endorsements of the Dominican Republic and the
seven Central American nations to endorse our concept of joint
implementation for credit. This is a good example of our
commitment to pushing through flexible mechanisms to implement
new commitments under the climate change protocol.
Third concerns developing countries. We recognize the
importance of including developing countries in this agreement.
Their participation is critical to achieving any kind of
lasting success in combating the threat of climate change. For
this reason, Mr. Chairman, the participation of developing
countries has been a central piece of our negotiating strategy.
We must seek a level playing field in which all countries that
contribute to the problem contribute to its solution.
Developed countries, including the former Soviet Union and
the countries of Eastern Europe, contribute about 60 percent of
global emissions today, as Senator Byrd pointed out earlier,
and developing countries account for about 40 percent. What do
these numbers tell us?
They tell us, first, that the developed countries have
historically contributed the greatest amount to the current
heightened concentrations. We have fouled the nest. But the
developing countries are rapidly growing, as are their
emissions. The United States, with 5 percent of the world's
population, is the largest greenhouse gas emitter, with more
than 20 percent of the world's emissions. But China is not far
behind and is expected to pass us sometime in the first quarter
of the 21st Century, although on a per capita basis, its
emissions are projected to be less than one-fifth of our own
There is a clear concern about the potential impacts on our
international competitiveness. Let me assure you that
developing countries are part of our negotiating strategy and
they must join us in order to insure that no country suffers
significant competitive disadvantage.
We are all in this together with different histories but
with the same future.
To add to Senator Byrd's appropriate metaphor of the boat,
let me add that we pull a heavier oar at the beginning; over
time, we must all pull together.
Our policy has to be calibrated to reflect this reality. We
cannot expect to solve the global problem unless all countries,
developed and developing, participate in the solution. To this
end, we have proposed three separate elements for developing
countries in our proposal for Kyoto.
First, we call on developing countries to continue to
elaborate on their commitments in the convention, including by
providing information on emissions on an annual basis, the same
as for developed countries and by taking no regrets measures,
actions which may be valuable in their own right and which may
also mitigate climate change. We also call for a regular review
of the actions developing countries are taking, again using a
review process similar to that established to assess our own
Second, we call on the newly developed countries, such as
Mexico and South Korea, to take on binding legal obligations to
reduce emissions, recognizing that, while the targets they
adopt may not be the same as our own, such commitments will
codify their new status and differentiate them from the lesser
developed countries. We are now working with potential members
of this group to seek their agreement on such a step. While by
no means an easy task, we believe that in Kyoto we can find
some language to insure that countries in this category that
are graduating to OECD status, for example, will take on
commitments that correspond to their more developed status.
Third, we call for the negotiation of a new legal
instrument which will include legally binding obligations for
all countries, including all developing countries, as a next
step in the past for the ultimate stabilization of greenhouse
gas concentrations in the atmosphere at a level that is not
dangerous. This step, too, faces significant difficulty in the
negotiations leading toward Kyoto.
Finally, I want to take this opportunity to note that one
of the most important, potential incentives with regard to
additional developing country participation in the Global
Environmental Facility would be seriously undermined if
Congress does not fully fund the U.S. contribution to this
program. I hope that you and the committee, Mr. Chairman, will
support our request of $100 million for the GEF for this year.
Let me close this morning by briefly reviewing for you the
negotiating process between now and December 1, when we meet in
Kyoto. We have two more 1-week officials-level negotiating
sessions, the first one in late July in Bonn and the second one
in late October, also in Germany. During these 2 weeks, we will
be examining and negotiating the extensive text which is a
compilation of all the materials submitted by all the
countries. This is an extremely divergent and broad document,
reflecting many interests around the world, and it must be
moved toward some consensus.
At one end of the spectrum, reflecting their strong
commitment to making an aggressive statement, the European
Union has proposed that developed countries reduce emissions by
15 percent below 1990 levels by the year 2010. The Organization
of Small Island States has proposed a 20 percent reduction by
the year 2005.
At the other end, reflecting their concerns with the
potential impact of various emissions reduction proposals,
particularly on reductions on the consumption of fossil fuels,
OPEC countries have introduced a proposal that they be
compensated for any economic cost they might incur as a result
of treaty requirements.
Other countries have introduced recommendations that they
be allocated an individualized, different target. This
commitment to so-called differentiation is not yet defined but
is used by many countries as a first step toward finding their
own way of joining the negotiating process.
As we examine these proposals and develop our own
negotiating strategy, we will continue to be guided by our own
principles of feasibility and economic opportunity. We are, as
you know, doing extensive economic modeling and, while some
drafts have been leaked, we have not yet completed the process.
We expect the modeling will soon be completed and available to
all interested parties.
I am aware of stories that interpret some of the model's
early findings. Some report that impacts on specific industries
and sectors may be negative, while others suggest that the
development of new technology will offset the cost. Others
still point to the economically beneficial effects of joint
implementation and emissions trading, two of our cornerstone
approaches to meeting the climate challenge.
I think it is useful, as we think about the economic
impacts of reducing greenhouse gas emissions, that we remember
over 2,300 economists, including 8 Nobel laureates, have
endorsed a statement which in part states, ``As economists, we
believe that global climate change carries with it significant
environmental, economic, social and geopolitical risks and that
preventive steps are justified. For the United States in
particular, sound economic analysis shows that there are policy
options that would slow climate change without harming American
living standards, and these measures may, in fact, improve U.S.
productivity in the long run.''
We agree with the statement of these ecologists and I would
ask that their statement be included in the record.
[The information referred to follows:]
Mr. Wirth. Finally, I should note that we understand that
Kyoto is but one more step in the long road toward stabilizing
the atmospheric concentrations of carbon and other greenhouse
forcing gases. The long-term goal, Mr. Chairman, is
stabilization of concentrations of greenhouse gases in the
atmosphere at an acceptable level.
Let me state that again, Mr. Chairman, because this is the
fundamental issue that has to be understood by all students of
this issue. The long-term goal is stabilization of
concentrations of greenhouse gases in the atmosphere. This is a
task that must begin now but which will require a sustained
effort over many decades to come.
Kyoto is a first step, but a very important one. The
message that we send by what we do is enormously important. We
believe that we can succeed by developing new technologies and,
thus, improving the way we fuel our economy, transport
ourselves and process materials; using flexible economic
instruments and market mechanisms, such as emissions trading
and joint implementation; bringing in developing countries as
full partners as the thrust of your resolution, Mr. Chairman;
fulfilling the obligation of our leadership role.
Through this process we can continue to promote economic
development and improve the standard of living for the American
people while we protect the environment.
It is important in Kyoto that we set up a system that will
work, one that will allow us to reduce our emissions at the
lowest possible cost, so that we can achieve the maximum
protection of the environment. It is also important that we
send a clear signal to governments and industries so that they
can make significant investments in the new technologies that
will be required if we are to achieve our ultimate goal.
Although those of us in the developed world must take the lead,
everyone must participate in moving toward the solution.
Let me briefly comment, if I might, also, Mr. Chairman, on
the Byrd Resolution or the Byrd-Hagel Resolution which has been
discussed this morning.
We agree with the analysis found in Senator Byrd's
resolution and we agree with the thrust of the resolution's
approach toward the developing world. What has to be worked out
are the points of definition of what those commitments ought to
What steps do we have to take to show that we are meeting
our leadership responsibilities, as defined in the climate
treaty. At what level of development do the emerging countries
kick in? Is it when they achieve OECD status? Is it when they
achieve some level of per capita development? These are
important and critical questions which we must come to
understand and work with them on. When should such a trigger
Let me say that I believe that the resolution introduced by
you and 59 of your colleagues can be very helpful to us. There
is one small part of it, as we have discussed, that causes us
to want to have some further discussions with you. But, as a
general proposition, we think it is very helpful and a very
good sign, Senator, of joining in a very thorough and complete
discussion with all of you.
Finally, we should, I believe, join in the spirit, as well,
of Senator Byrd's statement. It is the obligation of leaders to
recognize dangers to the populace. One of the primary
requisites of leadership is to anticipate, rather than just
respond, to the problem after it occurs. That is what this
issue is all about, Mr. Chairman.
It is about understanding this issue, coming to grips with
the fundamental science, and then beginning to move and
exercising our leadership in the United States.
We look forward to working closely with you and your
colleagues on this most challenging and complex of
Thank you very much. I will be happy to answer any
questions which you may have.
Senator Hagel. Secretary Wirth, thank you very much.
We have another panel behind Secretary Wirth. In the
interest of everyone's time, since there are just two of us
here, Senator, I propose we do a 7 minute question period and
Mr. Secretary, let me begin my questions with a couple of
As we thread our way along this morning, I want to get to
some of the points that Congressman Dingell and Senator Byrd
pointed out in their testimony on some of the specifics. We
will get to those. But I want to say this to you at the outset
so that you can frame this in your own mind, as you heard both
Congressman Dingell's and Senator Byrd's testimony.
Mr. Wirth. I did, Mr. Chairman.
Senator Hagel. First, can you assure this committee that
whatever action is taken by this administration regarding
global climate change will come in the form of a treaty?
Mr. Wirth. Well, it will either be a protocol to a treaty
or an amendment to a treaty. But it will have to come back up
in front of the U.S. Senate, both for agreement and we will
have an implementing stage as well. Whatever we do is going to
require, as well, implementing legislation.
So there would be, I anticipate, two areas, one, approval
of our actions, and second, the implementing legislation that
will be necessary to carry it out.
Senator Hagel. You mentioned a number of times in your
testimony economic decisions and economic well-being. The term
``economy'' or ``economics'' was brought out a few times in
Based on the last 4 years of analysis, one of Congressman
Dingell's points was that we have still not seen the
administration's economic model, even though, as Congressman
Dingell pointed out, it has been promised for more than a year.
I would be interested to know what the problem is.
Second, perhaps more importantly, Mr. Secretary, how can
you make any decisions on the economics and consequences of
these actions without any road map, without any analysis,
without any assessment, without any model?
You can dive into that, Mr. Secretary, wherever you wish.
Mr. Wirth. Let me be very careful in what I say because I
personally share many of your own frustrations in not having
the models out. I think many of us have been very frustrated by
the great difficulty that has been reflected in attempting to
take the three different fundamental models that are used and
merge them into one.
That process has been going on since our announcements in
Geneva in 1996. We had hoped, Mr. Chairman, to have those out
early in the year. The task proved significantly more
complicated than we thought it was going to be.
For example, there were three different models. None of
them was really sensitive to including the very important joint
implementation and emissions trading operations, which changes
the whole nature of this. That had to be Federal in nature and
worked. That also proved to be very difficult.
Second, we have discussed publicly in as many ways as we
can the general approach that we are taking to this. I don't
think it is any mystery what are the general parameters of what
we are discussing. Most people know what they are. In fact, as
I noted in my testimony, the first analysis out for peer review
on May 15 has been broadly discussed in public. It was in
``Inside EPA.'' One of your future panelists used it as the
basis of a broad discussion with dozens of highly respected
individuals in Baltimore 10 days ago or 2 weeks ago. So, in
fact, that first draft for peer review has been out very
We are now accepting all of the comments. We are in the
process of taking all of the comments. We have been asked if we
would peer review it. We said yes, we would. It went out for
peer review. It got leaked. That information is out. We have
that back and we hope to have that in very soon.
Third, as a non-economic modeler, Mr. Chairman, although I
have listened to all of these people to the point of almost
becoming thoroughly anesthetized by them, I do believe that one
can put a certain amount of faith in these models and they only
go so far.
These models are not going to determine a whole lot of
things. These are the same models that were very wrong about
what happened with the energy bump-up in pricing after the Arab
oil boycott of 1972. They were models that, for the most part,
were very wrong about the costs of the Clean Air Act. They were
models that do not reflect a lot of other aspects, what happens
with certain investments that we make in alternative energy
programs, for example. There are other groups out.
As a final comment, for example, the Union of Concerned
Scientists and NRDC have estimated that we could achieve a 10
percent reduction by the year 2010 with investments that pay
back to us, focused predominantly on conservation activities.
Recently, the National Energy Laboratories Group came out
saying that we could stabilize by the year 2010 at the
equivalent cost of $20 a ton, which would be about $10 billion
a year in overall cost to the U.S. economy, which would then be
Federal back into the economy. Many think that would be a wash
and may be even beneficial.
So there are all kinds of different ways of looking at
We will have it out as soon as possible. Everybody will
look at the models. But the models are one high priest of
economic activity. Ultimately, we are all going to have to make
judgments about what we do economically and environmentally and
what makes the most sense.
Senator Hagel. I understand that. But you reference cost
savings, for example, and you reference the economics of some
of the actions and the consequences of those actions.
So I am still confused as to how you get there if you
partially dismissed economic models. If you have dismissed
economic models, why is it important for us to have an economic
Somehow along the way, Mr. Secretary, we have to, in some
way, base our actions and understand the consequences as best
we can, as you suggest. But we should have some assumptions. As
you know so well, we put budgets together in the Senate based
on assumptions. If you believe what Senator Byrd's charts
indicated this morning and other references to those numbers
today, it seems to me that the economics of this are probably
at the first grade level.
I don't know what the problem is within the administration,
but you should have those numbers, Mr. Secretary, because that
is going to be a problem.
Mr. Wirth. Mr. Chairman, if I might just very briefly, I am
not dismissing economic models. I am just saying that economic
models are a helpful tool, like other things, to the ultimate
judgment that has to be made by the Congress and the
administration in broad discussion.
Now they are not going to tell you exactly what to do. But
they are helpful indicators which provide us with information
and further grist for the discussions that are going to have to
When I mentioned cost savings and economic efficiency,
those references, Mr. Chairman, were to joint implementation
and to emissions trading. It is very clear and I don't think
anybody disagrees with the fact that joint implementation and
emissions trading will make the process and the cost of
reducing greenhouse gases significantly lower.
I think there is broad consensus on that. There is a great
deal of economic data available.
Senator Hagel. Well, I don't think there is broad consensus
on that, Mr. Secretary, not at all.
Senator Sarbanes. Does the Secretary want to respond to
Mr. Wirth. Oh, I will be happy, Mr. Chairman, to do so. If
you have questions about where the consensus may or may not be
on emissions trading or joint implementation, I really would be
delighted to respond.
Senator Hagel. I do have a lot of questions on that. But it
is Senator Sarbanes time to ask questions. I will defer to him
and then I will have my round when we can come back to that.
Senator Sarbanes. I would like to try to trace through how
we are where we are now.
The Framework Convention that was adopted in October 1992
was where the parties committed to voluntarily bring down the
greenhouse gas emissions. Is that correct?
Mr. Wirth. Yes, Senator Sarbanes. The term of art is a
Senator Sarbanes. How many countries were there? I saw that
153 countries, I think, signed that. How many ratified it in
Mr. Wirth. 161 countries have now ratified.
Senator Sarbanes. Was each of the countries that ratified
committed to the nonbinding objectives?
Mr. Wirth. No. There was differentiation between countries,
Senator Sarbanes, in what are called Annex I countries and non-
Annex I countries.
Senator Sarbanes. What was that differentiation?
Mr. Wirth. The Annex I countries were developed countries,
largely the OECD countries, and Russia and the states of the
former Soviet Union.
Senator Sarbanes. What commitment did they undertake?
Mr. Wirth. They undertook the agreement to attempt to reach
emissions reductions at the 1990 level by the year 2000; to try
to stabilize their emissions at 1990 levels by the year 2000.
Senator Sarbanes. What commitment did the other countries
Mr. Wirth. The other countries had commitments of reporting
and commitments of--let me just ask my staff very specifically
what specific items were in there. [Pause]
Mr. Wirth. They had to inventory gases and to take policies
and measures that would move them toward greater efficiency.
But they did not have the specifics of the nonbinding aim that
the developed countries had.
Senator Sarbanes. But were they committed to trying to
reduce their emissions?
Mr. Wirth. There was no specific commitment that they had.
They understood that this was the direction in which we'd go,
but there was written into the treaty no specific that they had
Senator Sarbanes. Now the commitments on the part of the
Annex I countries were voluntary, is that correct?
Mr. Wirth. They were nonbinding aims, essentially.
``Voluntary'' means something different because the action plan
that we together was fundamentally voluntary.
Senator Sarbanes. Let me write that phrase down and then I
will make sure that I use it. Nonbinding aims, OK.
Now did the Berlin Mandate put you in the framework of
requiring shifting from nonbinding aims to mandatory? What do
you call them now? You don't call them nonbinding.
Mr. Wirth. We believe and we stated in Geneva--Berlin was
in 1995, Geneva in 1996--we stated in Geneva that we thought
that the nonbinding aims written into the original treaty were
not adequate, that countries were stating what they were going
to do but were, in fact, not doing so, and that the gap between
rhetoric and reality was growing broader and broader.
Consequently, we said that we believed that the way in
which we were going to achieve some real results in the area of
climate change was to make these aims required, to make them
compulsory, and that countries would, therefore, not only
adhere to that but would follow and draft their own domestic
programs to adhere to what they said they were going to do.
Senator Sarbanes. What was the rationale when you shifted
from nonbinding aims to compulsory aims of maintaining the
differentiation between Annex I countries and all other
I can understand the differentiation and the burden on the
Annex I countries is a nonbinding aim, because then they can,
in effect, act with an evaluation of what's happening
everywhere. But when you then move to compulsory aims, what is
the rationale for sustaining the differentiation between the
two groups and leaving the--well, are the non-Annex I countries
simply called ``non-Annex I'' countries or is there another
name for them?
Mr. Wirth. They are not called anything. They are known to
be non-Annex I countries.
Senator Sarbanes. They are not. All right.
What is the rationale for that?
Mr. Wirth. Well, there were two rationales to that, Senator
Sarbanes. The first was the obligation, under the climate
treaty, as originally agreed to in Rio in June 1992 and then
approved by countries around the world, that the developed
countries had an obligation to move first. That was in the
So we continued that obligation under the treaty.
Second, it is very clear that most of the greenhouse
forcing gases in the atmosphere today were put there by the
developed countries. We have an obligation to move first.
Senator Sarbanes. Let me interrupt you right at that point.
Do you agree with the factual assertions that have been
made that by the year 2015, I think it's 2015, that China will
be putting more emissions into the atmosphere than the United
Mr. Wirth. Yes. We think that is approximately right and I
stated that in my testimony. Yes.
But the question is we have to demonstrate that we are
willing, as the people who, as I stated in my testimony, fouled
the nest to begin with, that we are prepared to do something
about cleaning that up and prepared to take steps in the
Senator Sarbanes. How will you insure that the countries
that are not under compulsory aims will be included within it?
Mr. Wirth. That is the whole trick to the crossing of the
lines that were in Senator Byrd's charts. That is precisely the
issue. At what point is there a trigger where the developing
countries graduate to status of obligations and what should
those obligations be?
Senator Sarbanes. Well, I keep reading these articles that
say that the only commitment that will be made is to
participate in negotiations to seek to determine that. Is that
Mr. Wirth. In my testimony, Senator Sarbanes, we point out
three elements that are essential to our approach to the
developing world. First is that they have to elaborate, in
other words, draw out in much greater detail what they are
going to do with special reference to the no regrets policies
that they can be taking. A good example of that is pricing of
energy. You don't know how to conserve energy unless you can
put a price on energy. There are some very fundamental areas of
economics in energy where that is a very, very important step
A second element that we point out is that there are
countries which are now graduating to OECD status--Mexico and
South Korea--we believe. We have stated that and that is part
of our negotiation, that they should have further obligations
than the other non-Annex I countries.
Third is we think that the evolution of all of this we
ought to move into a point with a further negotiation where the
developing world will then, in that further negotiation, assume
over a period of time obligations so that we are all in this
together, say by 2030 or something like that.
Senator Sarbanes. Mr. Chairman, may I just pursue that one
Senator Hagel. Sure.
Senator Sarbanes. How can you assure yourself that the
further negotiations will result in an undertaking of
compulsory aims on the countries that were not committed to
that? How can you guard against a situation in which one group
of countries is bound by compulsory aims, by international
treaties that have been approved, and another group of
countries, their undertaking is that they will negotiate at
some point coming under compulsory aims?
Mr. Wirth. A number of things are happening around the
world, Senator, related to this.
First, increasingly countries are coming to understand that
their undertaking of actions related to climate change will not
only be beneficial to them, such as the pricing issue I
referred to earlier, but also enormously beneficial to them in
terms of health of their populace and the livability of their
This is found, in particular, as you talk to provincial
Governors throughout China, where they understand that there
are very significant problems that they have. They are moving
slowly, but surely, in beginning to undertake obligations.
A second thing that happens is that, if we are successful
with joint implementation and in including that, that becomes a
very real incentive for the sharing of technology which, as
countries are building, for example, great hundreds of very
large power plants, they would like to have that sharing
technology with us. In the most efficient kinds of power
plants, joint implementation is a real tool to getting there.
Third, many developing countries with excellent science--
here I will cite again the Chinese--are coming to understand
that the impacts of climate change are going to be extremely
deleterious to them, probably moreso than to us. What happens
on sea levels and their ability to adapt to sea level rise?
What is happening to them in terms of agriculture and the
drawing out of hinterlands and agricultural areas which we can
probably adapt to in a better way? There is the use of water
and our much greater efficiencies--not as much as they ought to
be, but our much greater efficiencies. We are seeing all kinds
of indications like this that countries are coming to
understand the importance of their taking on these obligations.
Senator Sarbanes. Well, now, I am not on any of these
resolutions. As I indicated at the outset, I think this is a
very complex subject and I think it has to be very carefully
I find that answer very soft for the following reason. All
of those arguments would apply to the effort to achieve
nonbinding aims which you have said the Annex I countries have
fallen short on.
Every one of the three arguments you have just listed,
which, according to you, would lead these countries that are
not committed to some binding aims but in effect would cause
them to do so, apply now to the Annex I countries.
Apparently it didn't work there. So now you want to do
compulsory aims. But I don't understand why if you are going to
move to compulsory aims it would not be all encompassing.
I cannot carry through on it by being given arguments as to
why countries not under the compulsory aim regime would take
these measures on the basis of arguments which exist now and
have not led the Annex I countries to take these measures.
Mr. Wirth. Well, first, we believe, as I pointed out, that
compulsory aims are critical in order to provide exactly the
sort of incentives that we need in terms of signals in the
economy, in terms of moving toward the kinds of stabilization
that we eventually have to go toward. The compulsory nature of
this is imperative.
Senator Sarbanes. But you are placing a certain group of
countries in that regime and leaving another group of countries
outside that regime.
Mr. Wirth. Yes.
Senator Sarbanes. Then when I ask you why would the second
group of countries in effect undertake these aims, you give me
as the answer a series of arguments in terms of a perception of
their self interest and so forth and so on that have not worked
for the Annex I countries and are now leading you to seek to
put the Annex I countries under a compulsory regime.
If that is the case, why shouldn't that analysis lead you
to seek to put all countries under a compulsory regime?
Mr. Wirth. We eventually would like to see all countries
under a compulsory regime. We have stated that. That is
something that we think is an appropriate thing to do down the
But right now, one, we have to demonstrate that we, who
were there first fouling the nest, most significantly the
people who put most of the carbon up into the atmosphere, are
going to be seriously demonstrating that we are willing to take
on the problem. Second, as we do so, it is clear, the history
of all of this is that what we do is followed very, very
closely by other countries. The developing world looks very
closely at what we do.
Third, if the developed world together is putting on this
kind of pressure, if we can reach this kind of step in the
right direction, we think that the developing world would,
therefore, be able to come into line a lot more likely than
they are now.
If we don't have this kind of evolutionary process, we are
not going to get anywhere. That is also the blunt reality of
this. We can say we are going to take all of our cards and go
home tomorrow if you don't have exactly the same obligations
that we do.
Senator Sarbanes. They may not be exactly the same. But as
I understand the differentiation you have made, it's between
obligation and no obligation, not between--I have overrun my
time, Mr. Chairman. I apologize.
Senator Hagel. No, please, go ahead and finish.
Senator Sarbanes. It's not between the extent of the
obligation. I mean, I'm concerned about a situation in which
you have Annex I countries who have committed to a mandatory
regime and you have other countries that are not committed to
any sort of mandatory regime. You then say well, these other
countries will, in effect, come aboard because they will
perceive it to be in their interest to come aboard, and the
very arguments that were used with respect to Annex I countries
that have not proven out will now lead you to seek a mandatory
I can pursue this in the next round. Thank you, Mr.
Senator Hagel. In fact, I would like to follow on--I know
you are pleased about this, Secretary Wirth--I would like to
follow on what Senator Sarbanes is getting at. It seems to me
Senator Sarbanes has been pursuing the core of this issue.
I am, like Senator Sarbanes, somewhat confused. If these
amendments are in the enlightened self interest of all these
countries, why do we need binding regulations or legally
mandated commitments in the first place? If this is such a good
thing for everybody, then why don't we go back to 5 years ago,
when we talked about voluntary obligations?
Mr. Wirth. Bluntly, Mr. Chairman, because we have not done
what we said we were going to do.
Senator Hagel. Who is ``we?''
Mr. Wirth. The United States of America and every other
developed, every other Annex I country except for Germany and
Senator Hagel. What did we say we would do?
Mr. Wirth. We said we would--it was a nonbinding aim--but
we said we would reduce our emissions to 1990 levels by the
year 2000. We have missed that, as I pointed out in my
testimony, by about 10 percent for a number of reasons. It was
not for any malevolence, by any means. There was a good plan to
do it. But our economy grew much faster in the 1990's that we
Economic models, by the way, suggested that it was going
Second, the price of oil, the price of energy, remained
significantly lower than we thought it was going to and than
the economic model suggested.
Third, we did not have the support in the Congress for the
implementation of a lot of the action plan that was necessary,
for example, in areas of conservation, building standards, and
so on, that were necessary to achieve that plan.
The same is true for reasons of their own of the Canadians,
the Japanese, the Australians, and all of the other Annex I
countries, again, with the exception of Great Britain, which
changed from a coal to a natural gas economy and, therefore,
reduced their emissions of carbon very significantly, and of
Germany, which inherited the very dirty and inefficient
economies of East Germany and shut them down. So they got
credit for all of that shutdown in terms of the overall
Senator Hagel. So one of the alternatives would be slow
down our economic growth? Is that one of the problems that we
Mr. Wirth. No, I'm not saying that that is the alternative.
I am saying that one of the reasons that we did not achieve
our goal is that our economy grew much more robustly during the
1990's than it had been anticipated as all the economic
modelers were looking at where we were going to be over the
decade of the 1990's.
Senator Hagel. So you think that is good enough reason to
shift, as we have, from voluntary to legally binding mandates?
Mr. Wirth. Well, I don't know what the alternative is, Mr.
Chairman. We had nonbinding aims to achieve this and if, in
fact, we are able to set a standard which establishes what the
aim is going to be, everybody agrees that's what's going to
happen, and it's done over a long enough period of time with
the kind of flexible economic instruments, then we will see our
industries, as happened in 1973, after the Arab Oil Boycott,
the anticipated rise in the price of energy caused very, very
significant changes in the way in which we viewed energy, the
way in which we treated energy, the way in which we priced
energy, and the efficiency with which we used energy.
That same sort of thing, that same sort of framework, that
same sort of certainty is necessary for us.
We are not going to get out of this without a very
significant long-term technological commitment to change if, in
fact, we believe that we ought to limit the concentrations of
carbon in the atmosphere.
Now I think that there is probably almost no scientist who
would agree that if we went long-term, say a quadrupling the
concentrations of carbon in the atmosphere, that that would be
a good thing. I don't think that anybody would say that this is
where we want to be.
Do we want to go to tripling? Well, there may be a few who
would say maybe we could go to tripling. Most are saying that
when we get around to doubling, it is time for us to stabilize
the overall concentrations.
Well, how are we going to get from here to there? That is
the conundrum in which we find ourselves. That is what this
instrument is designed to do.
For our commitments, for the flexible economics, and to
begin to engage the developing world as well--those are the
three corners of this negotiation.
Senator Hagel. Have we not, in fact, done better than what
you had stated in Berlin, when I believe you had said something
to the effect that we probably would miss by 30 percent?
Mr. Wirth. It depends on what the percentage is--a
percentage against what? What are you talking about?
Senator Hagel. Well, what were you referring to?
Mr. Wirth. In Berlin, we were emitting about 14,000 million
tons--in 1990 levels, about 13,000 million tons of carbon. We
are going to be at over 14,000 million tons of carbon. So we
are going to miss by an overall percentage of close to 10
percent, of the overall goal. We are going to miss it and it
will probably be at 1,370 or something like that. So we will
miss the gap by about 50 percent. We will miss the overall, an
overall percentage of our reduction by about 10 percent.
If you look at the base being, say, 1,300, we are going to
get at the end of this decade to more than 1,400.
Senator Hagel. How did you come up with those numbers?
Mr. Wirth. I think those are very--the scientific community
measured the amounts of carbon in the atmosphere and what we
are emitting based upon what our economy does, the amount of
gasoline that is used, the kind of fuel that is used in our
utilities. I don't think there is any disagreement over those
base numbers, Mr. Chairman.
Senator Hagel. Let's go back to what you said in Berlin and
what you are now saying. I believe you told me in my office on
Tuesday that the ultimate goal was a 70 percent reduction in
emissions. Do you recall that?
Mr. Wirth. Let me go back. We are talking about two
different kinds of reductions, Mr. Chairman.
The first kind of reduction, the first step that we have to
take is to stabilize our own emissions at some level at some
date. The original aim was to stabilize our emissions at 1990
levels by the year 2000. That was our first aim for our own
That is a first step toward the much bigger and much more
difficult job of stabilizing the concentrations of carbon in
the atmosphere. That is the overall loading of carbon in the
We have to reduce now in order for everybody in the world,
for all of us, to end up with concentrations in the atmosphere
that may be double the historic standard. Again, if you think
about this as a swimming pool, we are piping water into that
swimming pool. We are piping carbon into the atmosphere.
The pipe that is pouring water into the swimming pool is
getting bigger, and bigger, and bigger. Our economy is growing,
the European economy is growing, the developing world is
growing. The pipe pouring carbon into the atmosphere, pouring
water into the swimming pool is getting bigger, and bigger, and
Now if we continue in this way, the swimming pool is going
to overflow very rapidly. If we even stabilize the size of that
pipe, our own emissions, you are still pouring a lot of carbon
into the pool, a lot of water into the swimming pool. We have
to reduce that trickle of water in order to get to the point
where the swimming pool does not overflow.
Now that metaphor where, it is overflowing, we will
generally assume that overflowing is at about double the
concentrations of carbon in the atmosphere. Others would say
that maybe it is somewhere between two and three times. It
certainly is not four times.
But we have to get to a stabilization of the levels of
carbon in the atmosphere. As I said to you in your office, this
is the single, most important concept in studying and thinking
about climate change one has to understand, concentrations of
carbon in the atmosphere.
Senator Hagel. But are you still saying, as you told me a
couple of days ago, and as you said in your testimony, that the
ultimate goal, is well beyond Kyoto: a 70 percent reduction in
Mr. Wirth. Well, if we set the concentrations, Mr.
Chairman, to be double the historic standard, which would be
about 520 parts per million of carbon, if that is the ultimate
standard, the ultimate concentration that we believe we can
tolerate, if you choose that number--there is no number that
has been chosen, but for the purposes of illustration let's say
if we choose that number, and if we decide that we want to try
to get to that number sometime toward the middle of the 21st
century, that will require, ultimately, a 70 percent reduction
in the amount of carbon that we are pumping into the
atmosphere, to get from here to there.
Senator Hagel. One last point and I will yield. We have
been joined by our distinguished colleague from Massachusetts,
I can tell you as a member of the Senate Foreign Relations
Committee, Mr. Secretary--and you may want to check the State
Department on this, your reference in responding to Senator
Sarbanes' questions about developing countries, their self
interest and why would they participate--unless China has
changed policy as of this morning, it has continuously and
resolutely said that it will not be bound by any mandatory
Mr. Wirth. I am very aware of that. I have dealt with and
negotiated with them all along for a long time.
Senator Hagel. But that is not the way you answered the
Mr. Wirth. Excuse me?
Senator Hagel. That is not the way you answered the
Mr. Wirth. Mr. Chairman, there are all kinds of negotiating
statements that are made and I know what people say in
negotiations when they are saying things publicly, and I know
what goes on and what people say when they are talking to you
about OK, where do we go from here. You have had that
experience, I know, in a very distinguished political career
and a very distinguished economic career. There are certain
things that you say for consumption here and then you sit down
and try to figure out how you get from here to there. That is
what a negotiation is about, to try to figure out how do we get
from here to there.
Now if you sat in on an economic negotiation in your
business or a political negotiation and said this is where I
want to get to, that's all I'm going to do, people will assume
that whatever is that bottom line is the beginning of your
Senator Hagel. Well, if that is your interpretation of
where the Chinese are, we may want to get back to the
Ambassador on this and determine their position.
But it is now Senator Sarbanes' turn.
Senator Sarbanes. Thank you, Mr. Chairman.
I just have a few points I want to make. First of all, in
defense of the Organization of Small Island States, since
Congressman Dingell dismissed them sort of out of hand in his
testimony, I ought to observe that, while they may not be
powerful, they obviously have an intense interest in this
issue. This is because if this issue is not properly resolved,
they may cease to exist. So I think you can understand why they
would be quite exercised about it. I just want to make that
I accept the science. I think the science here is pretty
overwhelming. In any event, if one has questions about the
science, what is wrong with taking steps to address the problem
if those steps can be done rationally? In other words, the
National Academy of Sciences, apparently in a 1991 study, said
about the U.S., at least, that we could reduce or offset our
greenhouse gas emissions by between 10 and 40 percent of 1990
levels at low cost or at some net savings. The efficiency of
practically every end use of energy can be improved relatively
Of course, they cited the fact that we use about twice as
much energy on a per capita basis to produce a unit of GDP than
does Germany or Japan. So it seems to me that if you have, as I
think we do, pretty strong scientific evidence that there is a
problem, even if one wanted to question that, then you would
say well, there are things that can be done to address this
problem that do not require a tremendous dislocation and that
those things need to be looked at just to be prudent, careful,
The thing that is difficult here, though, is this
differentiation, it seems to me.
Let me ask you this question. Did the Berlin and Geneva
decisions now put you within a framework of negotiating that
the differentiation between the Annex I countries and the other
countries is an accepted proposition? I'm trying to search
here. In other words, I mean when you go to negotiators, you go
to Kyoto. Has that been established as a sort of negotiating
principle or framework within which you have to operate? Or is
that open so that a decision could be reached that would
encompass all countries within a mandatory regime?
Mr. Wirth. In the climate treaty agreed in 1992 and then
reaffirmed in the Berlin Mandate, there is a distinction
between Annex I and non-Annex I countries. That becomes a
Senator Sarbanes. But the regimes were nonbinding.
Mr. Wirth. Yes. That has become the basis upon which most
negotiations go on.
We in the United States are attempting to push this
negotiation--and I will tell you at this point without much
support from our colleagues in the developed world--for the
developing world to assume much greater obligations.
We have been very clear over and over again, and I outlined
the three parts of our proposal related to the developing
world, to try to move them more rapidly toward the assumption
of broader obligations.
Senator Sarbanes. But are you operating under
understandings reached that the non-Annex countries will remain
outside of a compulsory regime, or is there inclusion within a
compulsory regime open to negotiation?
Mr. Wirth. We would like to bring them into a compulsory
regime. Our proposal says those three things. One, we would
like to elaborate in greater detail those items which they can
do now. Second, we want to bring countries like Korea and
Mexico, which have graduated to a higher status, into much more
specific obligations. Third, we want the developing world to
recognize that eventually they have to get into this, they have
to evolve into this, and that we should have a next negotiation
related directly to their becoming involved in it.
Senator Sarbanes. Well now, is that the limit to which you
can go in the negotiation?
Mr. Wirth. We think that is as far as--we are going to have
a great deal of difficulty, Mr. Chairman, in getting the other
two elements that we want. We want emissions trading and joint
implementation. We don't have a lot of support for that.
We want the developing world to have greater obligations.
We don't have a lot of support for that. One of the fundamental
reasons that we don't have a lot of support for that is the
world looks to us, with 5 percent of the world's population and
20 percent of the world's emissions, missing our target very
significantly and not appearing to be very serious about it.
So we are attempting, from a negotiating point of view, to
strengthen the position that we're taking in terms of what we
do so that that helps us to get the economic instruments that
we want and that, in turn, will help to bring in the developing
Senator Sarbanes. Yes. But you leave us, then, exposed to a
regime in which we are under a mandatory framework and a number
of significant countries are not when both the environmental
trend lines and the economic trend lines raise serious
questions. So we could be down the road somewhere and still
find ourselves within the mandatory regime.
You would then say that these countries ought to be in the
mandatory regime now, by any standard. But they are not. They
refuse to be.
At this point, we--and when I say we I mean the Annex I
countries--are in the mandatory regime and the other countries
Mr. Wirth. And that is where we are today. We are trying to
set up a process to bring the developing world into the
Senator Sarbanes. Well, no. Your process does not assure
that. Your process, as I perceive it--I'm trying to find this
out here--your process assures that the Annex I countries will
be within the mandatory regime.
Mr. Wirth. Which is where we are today.
Senator Sarbanes. Well, no, we're not.
Mr. Wirth. That's where we are today.
Senator Sarbanes. No, we are not there today.
Mr. Wirth. It is with the assurance that the Annex I
countries have requirements. You know, the nonbinding aims were
Senator Sarbanes. We're not in a mandatory regime now.
Mr. Wirth. But we're listed as having requirements today.
Senator Sarbanes. I understand that. But they are
Now you are going to make them binding.
Mr. Wirth. Uh-huh.
Senator Sarbanes. But there is no assurance that these
objectives will become binding on the non-Annex I countries----
Mr. Wirth. That is true.
Senator Sarbanes [continuing]. In the regime you are going
to put us into. This is how I understand it.
Mr. Wirth. That is right. We are going to set up a series
of ways in which they elaborate their responsibilities and will
be required to do so, and other OECD countries, like Mexico and
South Korea, that graduate to status, have newer obligations,
and that we undertake a further negotiation to bring in the
Now there is no guarantee, that is true.
Senator Sarbanes. Yes. But that negotiation may not lead to
Mr. Wirth. That's true.
Senator Sarbanes [continuing]. And they may stay out.
Mr. Wirth. That's right--at which point, then, I think the
whole treaty falls apart.
Senator Sarbanes. Well, no. By that time you have a treaty.
Mr. Wirth. What was that?
Senator Sarbanes. By that time you have a treaty.
Mr. Wirth. But you don't have a treaty that really makes
sense to anybody at that point.
Senator Sarbanes. Then what are you going to do, denounce
Mr. Wirth. Well, I think you'd get to a point where you'd
have to look very carefully at where we are under the
obligations of the treaty.
Senator Sarbanes. Well, why don't we negotiate a treaty
that does not contain in it the prospect of denouncing it?
Mr. Wirth. Well, if you could figure out, Senator Sarbanes,
if you could figure out how to bring the developing countries
into this process, how with 151 people who are negotiating on
this, in which there are all of these major parties, how we do
that immediately--we are setting up a process that we think is
the best that we can do in terms of bringing the developing
countries into their set of responsibilities over a period of
Senator Sarbanes. I understand the difficulty. But the
problem is you then end up putting us into a mandatory regime
without the assurance that the others will be in a mandatory
regime. That, it seems to me, is a difficult problem. In fact,
people that are supporting your efforts to negotiate have
pinpointed that particular aspect of it as raising very
Mr. Wirth. Well, as I said to Senator Byrd yesterday, the
single most difficult area in all of these negotiations beyond
our own domestic political will to make the changes that are
necessary is this issue of bringing the developing countries
in. That is something that is going to take continuing work, a
lot of work over a long period of time.
Senator Sarbanes. Thank you, Mr. Chairman.
Senator Hagel. Senator Kerry.
Senator Kerry. Thank you very much.
Welcome, Mr. Secretary.
Mr. Wirth. Thank you.
Senator Kerry. I apologize in that I have been in a markup
in the Commerce Committee.
Let me try to get at not only what Senator Sarbanes was
getting at but sort of the broad confrontation that we face
You, in your testimony, which I was just looking through,
lay out some of the sort of science findings with respect to
where we are heading--the warmth, the increase, the potential
increase in the next days of the temperature.
What would you say to Americans is the most compelling set
of scientific facts that mandate action? I mean, if you want to
really grab people's attention and say listen, this is why we
have to incur cost and why there is sacrifice demanded, what
are those most compelling scientific rationales?
Mr. Wirth. Well, 2 years ago, in a heat wave in Chicago,
500 people died. The likelihood of that kind of heat wave
occurring again is 4 to 6 times greater. Temperatures in the
upper latitudes are going to increase more than they will at
the equator. It is much more likely we are going to get those
kind of hot and intense heat events. Four of the five hottest
years have occurred since 1990.
Senator Kerry. The implications of that are, obviously,
significant crop dislocation, significant agricultural costs,
Mr. Wirth. I was thinking specifically of the health
impacts on people living in big cities.
Second is the point that you make, a very good one, related
to the drying out of agricultural areas and the changing of our
capacity to grow crops. Probably we, in the United States,
would adapt pretty well to that with all of the bioengineering
that we currently have and our ability to rotate and change
crops in agriculture. The impact that that would have on the
developing world would be much more serious. This would be at a
time when there are already more than a billion out of 5.7
billion people in the world who are living below any kind of
level of nutrition.
That is an open invitation to enormous political
instability in some very fragile areas of the world, long-term
not in our interest.
Third, I would speak to the question of sea level rise. If
we continue in the direction in which we are going, all the
models suggest that sea level is going to rise somewhere
between a foot and 30 inches. The implications of that in the
Senator Kerry. The minimum it would raise is a foot?
Mr. Wirth [continuing]. A foot.
Senator Kerry. And the minimal rise that we know will
happen means what over what period of time?
Mr. Wirth. That means that by the middle of the next
century, we are going to see some very significant dislocations
in the Mississippi River Delta, South Florida, the Cape, the
areas of the San Francisco Bay, estuaries in San Francisco Bay,
and the impacts, in turn, on wetlands, which are remarkable, as
you well know, a remarkable source of life all around the
world. They will be flooded with sea water, wetlands that are
very, very fragile and are the source of life of practically
everything. A very large percentage of living things will be
Senator Kerry. I recently asked for a briefing from our
scientists on this and learned something new which I was not
aware of. It is that the half life of these gases is such that,
even if we were to stop today, what is currently in the
atmosphere will result in some 75 years of sort of status quo.
Is that accurate?
Mr. Wirth. That is at a minimum, 75 years. The carbon
dioxide, when it goes up there, stays there for somewhere
between 100 and 150 years. So the average of what is up there
would be about 75.
Senator Kerry. I understand also that the oceans are
critical in the consumption of the carbon dioxide, that a very
significant amount of that carbon dioxide in warming is
diminished by virtue of ocean consumption. But no one
scientifically can tell us at what point you might have sort of
a nuclear reaction within the oceans where the capacity to
consume the CO2 is saturated. So, you'll have an
exponential increase. Is that accurate?
Mr. Wirth. This is one of the single most important
research issues. We have come to understand a lot in El Nino
about ocean currents, ocean temperatures, and the impact that
that has. That has been a major breakthrough in the last 5
We hope that continuing research on this effort will give
us a much clearer understanding about concentrations of carbon
in the oceans, about the conveyor belt, about the cold water
that comes from the Arctic and flows underneath the Atlantic
and comes back up again as the Gulf Stream. It moves around and
that is what allows Europe to exist. The Gulf Stream keeps
If that conveyor belt, for reasons of climate change, for
reasons of melting of the ice caps, if that conveyor belt
stops, and circulations in the Atlantic stop, Europe is in
very, very significant difficulty, as are we.
Senator Kerry. Now historically, the 8,000 or so years that
human kind has existed, as we know ourselves to have existed,
those 8,000 years measured against what we are learning from
the ice core analyses we are making are, in fact, the most
tepid period of human existence, as we measure it historically.
Isn't that accurate?
Mr. Wirth. That's true. We have had, for the most part,
very favorable weather.
Senator Kerry. And when you measure it against the ice age
periods and the great climate swings that we have had, I would
assume that a conservative minded, respectful human being would
measure those 8,000 years against those other periods and come
to a conclusion, as most scientists have, that we are really
playing with some very dangerous possibilities here.
Mr. Wirth. There is a broad school of analysts, Senator
Kerry, who look at this from the perspective of a clear
national security problem; that the threats to us from this are
so significant that we ought to view it in that way and view
the kinds of changes that we invest in as, in fact, a kind of
Senator Kerry. Now I gather yesterday or the day before you
cited these 2,500 scientists who came together. I know there is
some argument about exactly what kind of local impact might
occur and the models are not capable of telling you exactly
what the cloud cover may or may not do, et cetera. But I also
take it there is no argument among these scientists about a
sort of de minimis level of this negative impact which, in and
of itself, is--what--catastrophic, or serious? How do you
Mr. Wirth. I think there are two answers. I think there are
remaining a handful of scientists who would doubt the science
or are critical of the IPCC. The overwhelming 2,500 scientists
around the globe, the best of the world's climate scientists
from all over the world, participated in the IPCC and came out
with the results that I summarized in my testimony. I think the
overwhelming evidence is there. We believe that prudent
individuals should look at that. That is what the scientific
community overwhelming is saying to us. We ought to act and
respond to that particular data.
Senator Hagel. Senator Kerry, I'm sorry to interrupt but we
have another panel behind Secretary Wirth. I know he is not
going to be disappointed to escape. But I think in the interest
of our other panelists, we need to move on. Obviously we will
keep the record open.
Senator Kerry. Mr. Chairman, can I just get a couple of
things on the record because I think this is very important?
Senator Hagel. Well, one question, if you would, Senator.
It is not fair to the other panelists. I'm sorry you were late.
But ask a question and then we can, if it is appropriate, add
the rest for the record. These gentlemen have other
Senator Sarbanes. Why don't you give him a couple of
Senator Hagel. Oh, I will. I am going to give him a couple
Senator Kerry. Thank you, Mr. Chairman.
Let me sort of jump ahead because I was trying to come
through a logical process. We are 10 percent behind or worse of
where we promised we were going to be and we are the world's
largest greenhouse gas emitter.
Mr. Wirth. That's true.
Senator Kerry. So when you look at--there are two questions
here that are part of the same question, I guess. When you look
at the Byrd Resolution and you just read it as a citizen, you
say to yourself well, we are spending money, we are asking our
citizens to shell out in order to reduce. Now admittedly, we
are not reducing at the rate we committed to, which is sort of
question No. 1. What are we going to have to do to live up to
our part of the bargain?
But question No. 2 is linked to that. Why is it
inappropriate, if we are going to put ourselves under that kind
of mandate and we are going to ante up to try to do it, to
require that, as China comes on line, as Southeast Asia comes
on line, as all of these countries do so--I mean, the President
has said repeatedly we cannot afford to have them make our
mistakes. Absent some sort of required regime, it is hard for
common sense to share a notion of how we get from here to there
in a shared sacrificial way.
So how would you address Senator Byrd and the country in
saying that it is inappropriate for us to try to come to some
kind of requirement that they also are going to develop in a
way that won't repeat those mistakes and will, in fact, join us
on a proportional level or on some level in those reductions?
Mr. Wirth. Well, at the end of my statement, Senator Kerry,
and this was not in the written statement which I delivered
this morning, we said that we agree with the analysis in
Senator Byrd's resolution. The question is a definition of what
the commitments ought to be. What do we do first? That has to
be part of this. At what level of development do emerging
countries kick in? Do they do that on a per capita basis? Do
they do it on an overall basis? Do they do it on a percentage
of carbon going into the atmosphere basis? Do we pick 20
countries and say we are the biggest emitters, let's us 20 get
together? That has been proposed by some.
It is a matter of definition as to when this trigger kicks
in. As Senator Sarbanes has been pursuing, at what point is it
binding when it does kick in? That is the single most difficult
part of this negotiation, as Senator Byrd and I have discussed
and as we have discussed at length this morning. That is the
whole thrust of the Byrd Resolution.
Senator Kerry. I wanted to have some time to explore that,
obviously. But I think we can do so at other times.
I certainly appreciate your efforts on this. I think you
have been doing an outstanding job in giving meaning to this
new portfolio and I want to thank you for wrestling with this
on our behalf. I think you are one of the great voices on it.
Mr. Wirth. Thank you very much, Senator Kerry.
Senator Hagel, thank you very much for having us this
morning. We would, of course, be delighted to answer any
questions which you might have that might be useful.
If I might suggest, maybe on some of these issues if there
are sharpened questions or on the thrust of what Senator
Sarbanes was asking, we might look at a progression of
questions and get together to see if we can make sure we all
understand each other, the answers, and what we know and what
we don't know.
This issue, as I have stated, Senator Hagel, is the most
difficult and long-term probably the most important, next to
our own obligations, and I think this hearing has been
extraordinarily useful in helping us to publicly air the issue.
Now let's take it the next step and see what we can do in terms
of making sure we understand a lot better the specifics.
We would look forward to doing that then. At your request
we would be happy to do so.
Senator Hagel. We will have ample opportunity, Mr.
Secretary, to talk about this. I am very appreciative of your
time. You have put a lot of effort in this and answered our
One other thing. I think we should leave with this thought.
Senator Kerry, I don't know if you had an opportunity to
listen to Senator Byrd this morning or Congressman Dingell and
others who have been exchanging ideas and views with Secretary
Wirth, but we are all in agreement that, first, this is a tough
issue. Second, we are in agreement that we must address it.
Obviously, that is why we are holding this series of hearings;
to find the best way to do that.
Mr. Secretary, thank you.
Mr. Wirth. Thank you very much, Mr. Chairman, Senator
Sarbanes, Senator Kerry. Thank you.
Senator Hagel. If the next panel would come forward, we
will get started.
Gentlemen, welcome. Let me appropriately introduce you and
then we will get started.
First is Mr. Richard L. Trumka, Secretary-Treasurer of the
AFL-CIO. Mr. Trumka, welcome. It is a pleasure to have you with
us. We appreciate it very much.
Also we have Mr. Bryce Neidig, President of the Nebraska
Farm Bureau Federation from a state I have heard a couple of
things about, Nebraska.
It is nice to see you, Mr. Neidig.
Also we have Mr. Kevin Fay, Executive Director of the
International Climate Change Partnership, Arlington, Virginia.
Mr. Fay, I appreciate very much you taking your time today
to come and exchange views with us on this subject.
Again, on behalf of the committee, welcome. Mr. Trumka,
would you like to begin.
STATEMENT OF RICHARD L. TRUMKA, SECRETARY-TREASURER, AMERICAN
FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS,
Mr. Trumka. Thank you, Mr. Chairman, and thank you for the
opportunity to testify on the ongoing multilateral negotiations
regarding global climate change. This issue is of great
importance to the AFL-CIO because the course of these
negotiations can have profound effects on the job security and
incomes of American workers and the welfare and lifestyle of
AFL-CIO members and their families are concerned about the
environment. We share with all Americans a deep desire to leave
our children and grandchildren a safe and secure environment,
and we are ready to work with you and the administration to
insure that these negotiations succeed in meeting these goals.
The administration is now engaged in an effort to negotiate
a treaty to mitigate the effects of carbon dioxide emissions on
the Earth's climate. At the February 1997 Executive Council
meeting of the AFL-CIO, we issued a statement which points out
that a treaty will not be effective if it excludes China,
India, Mexico, and other developing nations.
Our statement says specifically that the exclusion of new
commitments by developing nations under the Berlin Mandate will
create a powerful incentive for trans-national corporations to
export jobs, capital, and pollution and will do little or
nothing to stabilize atmospheric concentrations of carbon. Such
an uneven playing field will cause the loss of high paying U.S.
jobs in the mining, manufacturing, transport and other sectors.
Although much remains to be decided before December, Mr.
Chairman, we are concerned that the United States has already
agreed to a very dangerous principle that now governs the rest
of the negotiations. At U.N. talks in Berlin in 1995, the U.S.
agreed to what has become known as the Berlin Mandate, which
says that only Annex I countries would have to meet legally
binding targets for their greenhouse gas emissions. Other
countries, from impoverished developing nations like those in
much of Africa, to the fast growing economies of Southeast
Asia, to China and Mexico would have no binding limits on their
With rapid industrialization, the countries with no
requirements will soon be responsible for well over half the
planet's greenhouse gas emissions, and with no emissions
reductions to meet, these countries will attract foreign
businesses like a magnet.
While no firm decisions have been made regarding domestic
reduction policies, all of the mechanisms under discussion
would have the same impact, that is, a sharp rise in energy
prices resulting in significant economic dislocation. For
example, a carbon tax or carbon permit price of $100 per ton of
carbon is equivalent to a price increase of 26 cents per gallon
of gasoline, $1.50 per thousand cubic feet of natural gas, a
$52 per ton increase in coal, and 2 cents per kilowatt hour of
electricity. These are the minimum levels of energy increases,
price increases, for a policy to stabilize U.S. carbon
emissions at 1990 levels.
Several studies have been done to estimate the impact of a
treaty on the economy. A range of estimates exists, but even
the most conservative estimate shows a large job loss as a
result of policies to reduce emissions.
According to a 1992 study by the U.S. Department of
Commerce, a carbon tax to help the U.S. achieve emission
reductions of a scale now being discussed in the U.N. would
cost some 1.7 million U.S. industrial jobs.
More recently, the administration has conducted two studies
estimating the economic impact of meeting emission reduction
targets. The first was released in June 1996 and the second is
currently in draft form, dated June 1997.
The 1997 study makes new assumptions which reduce the
estimated loss of production or GDP and implicit job losses by
roughly one-half the expected GDP reductions estimated in the
analysis a year before. The new assumptions also accelerate the
economy's bounce-back by several years. In general, under the
1997 study, estimated GDP losses are assumed to be one-half of
what they assumed in 1996 and the bounce-back occurs in half
Nevertheless, even with those new assumptions, the
administration draft study shows that 900,000 jobs could be
lost as a result of climate change policies. Jobs will be lost
in nearly every region of the country and across a broad range
of sectors. The job loss estimate should be regarded as very
conservative, Mr. Chairman. A much more realistic estimate of
the impacts of stabilization at 1990 levels would be in the
order of 1.25 to 1.5 million jobs, with even larger job losses
to achieve a reduction level below 1990 levels.
You will recall that the proposal right now from the
European Community is to reduce below 1990 levels an additional
15 percent by the year 2010.
The 1997 administration study does not attempt to measure
the impact of the job loss to our international competitors who
are not subject to emission limitations requirements. This is a
crucial matter for jobs and incomes which the administration
The administration and its consultants expect that natural
gas will displace coal in increasing quantities. The DRI model
used by the administration indicates that 57 percent of all
emission reductions by 2010 and in the stabilization case would
result from a reduced demand for coal. That would increase to
65 percent by 2020.
Energy intensive industries would be most hurt by rising
energy prices. Chemicals, refining, aluminum, paper, cement,
and steel are included in the list of industries that would
suffer the most serious job loss due to energy price increases.
The jobs in production would not disappear. They would simply
The rising energy crisis would place U.S. industry at a
competitive disadvantage. As energy prices rise to meet more
stringent targets, jobs will move to countries that are non-
Annex I countries that do not have to meet those targets.
Carbon dioxide emissions as well as jobs and incomes will move.
Ironically, in those industries where jobs move, emissions of
carbon dioxide as well as other air and water pollutants are
likely to rise since the industries in the U.S. must already
meet more stringent environmental standards than our
Both the target concentration level and the timetable for
meeting these levels are still to be negotiated. These are
crucial decisions and must be carefully considered. A rush to
judgment in Kyoto could result in long-term damage to our
economy yet produce little or no environmental benefit.
Two basic principles must guide our approach in these
negotiations. First, all countries of the world must be
included in emission limitations. Emissions in China alone are
growing rapidly enough to increase carbon dioxide
concentrations in the atmosphere. Even if all other countries
were to reduce their emissions, emissions of China and India
will ultimately dwarf the emissions of the U.S. as
industrialization proceeds because of their much larger
Second, emission reductions must not proceed in a manner or
a timetable that causes severe damage to the U.S. economy. Jobs
and incomes must be protected and adverse effects on our
international competitiveness must be avoided.
The current approach in the U.N. negotiations is fatally
flawed, Mr. Chairman. It does not meet the requirements of
equity or environmental effectiveness. It requires a very large
de facto energy tax, the transfer of a large chunk of our
industrial base overseas, and at the end of the day does little
or nothing to improve the prospects for a better climatic
Mr. Chairman, the AFL-CIO is ready to work with you and
your colleagues to develop tools to address climate change in
ways that are equitable and genuinely deal with the problems.
Global warming is a global problem and our response must
involve the entire international community.
Thank you, Mr. Chairman.
Senator Hagel. Mr. Trumka, thank you very much.
We will listen to the remainder of the panel and then come
back with a round of questions. Thank you. Mr. Neidig.
STATEMENT OF BRYCE NEIDIG, PRESIDENT, NEBRASKA FARM BUREAU
FEDERATION, LINCOLN, NEBRASKA
Mr. Neidig. Thank you, Mr. Chairman. My name is Bryce
Neidig. I am a farmer and President of the Nebraska Farm Bureau
Federation and a member of the board of directors of the
American Farm Bureau Federation, which I represent today.
My family owns and I operate, with my son, a 650 acre corn,
soybean, and alfalfa farm in northeastern Nebraska, near the
town of Madison. To give some credibility about my being a
farmer, I live in the house I was born in, the same house my
father was born in. My grand kids think I came with the place
but I didn't. It has been in the family 105 years.
I am very concerned that the International Agreement on
Climate Change will hurt my farm operation and others like it
across the Nation.
I appreciate this opportunity to discuss a subject that
practically every farmer is an expert on--the weather. Experts
or not, they complain about it. It rains too much or to little.
It's too cold or too hot, and frost threatens the harvest. We
are interested in the weather because our livelihood depends on
Farmers who are aware of the climate change treaty are also
concerned about controls which may be imposed on the farm to
reduce greenhouse gas emissions. They are concerned about
higher costs for fuel, energy, vehicles, and equipment. They
are concerned about new, burdensome regulations. They are
concerned about threats to their competitiveness in world
markets where they now must export about one-third of the crops
Farmers are aware that in the last decade or so there has
been considerable discussion by some scientists that greenhouse
gases, carbon dioxide, methane, and nitrous oxide, are
contributing to increases in average global temperatures that
could cause adverse changes in the world's climate. We know
that there is some data to show that there are increases in
greenhouse gases, but believe there is still a legitimate
debate about the magnitude of those changes, their
significance, and the relative contribution of natural versus
human causes, including agricultural production.
Many farmers who have followed this important issue believe
that the administration is acting hastily and prematurely in
leading international efforts for immediate, legally binding
and enforceable caps on greenhouse gas emissions. We don't know
enough about the problem or even if we have a problem. We don't
know about agriculture's contribution to the problem or the
solution. We don't know what practices or programs farmers are
likely to encounter as a result of an international agreement.
To put it simply, most farmers familiar with the climate treaty
are less concerned with the illness than they are with the cure
that is being prescribed for them.
The administration's proposal will restrict farming
practices. Farmers like to think of themselves as good guys.
But we are being portrayed as villains when it comes to
greenhouse gases. Our own Environmental Protection Agency
blames agriculture for about 33 percent of total methane
emissions and up to 46 percent of the nitrous oxide generated
from human activity in the United States. Led by our own
administration, international negotiators are pressing for
strict, binding limits on these emissions.
If such limits are adopted, the U.S. would be forced to
consider drastic policies to meet those legally enforceable
reductions. New taxes on fuel and fertilizer, forced mileage
requirements for light trucks and other motor vehicles,
controls on planting, cultivation, and harvesting practices,
and limits on the number of livestock per acre have all been
proposed and may become regulatory policy here in the U.S.
Farms like mine would not only be severely disrupted but
could be put out of business.
Restrictions on planting, cultivation and harvesting would
interfere with my farm management plans which are designed to
reduce my production costs, maximize yields and conserve my
farmland. For example, prescriptive crop practices to reduce
greenhouse gas emissions may not be compatible with my current
personal crop rotation practices. My current production
management programs, which reduce pesticide use through
intelligence rotation, could also be jeopardized.
Fuel and energy cost increases resulting from the treaty
could deal farmers an especially heavy blow. The American
Petroleum Institute estimates that the climate agreement
proposal could increase prices for gasoline, diesel fuel and
electricity by 50 percent or more, depending on the emission
targets which are prescribed.
Personally, in the last roughly 5 years in my farm
operation, we have reduced the use of our fuel consumption by
about two-thirds. We have gone to almost completely no-till. I
cannot do that anymore. There is no further way that I can go
unless I can find some other way to pull a corn planter through
the field. So we have already done that, basically, in
Cost estimates by the administration have been lower, but
the U.S. Department of Commerce has recently agreed that
capping carbon dioxide emissions at 1990 levels requires the
equivalent of a 25 cent per gallon gas tax. Fuel cost
increases, even at those levels, would be a big hardship on
U.S. farmers. That is why the Farm Bureau fought hard several
years ago for defeat of the BTU tax. We are concerned that the
Climate Change Treaty may provide an opportunity to resurrect
the BTU tax under a different name but with the same results.
Fuel and energy are major production costs on my farm. We
use 2,600 gallons of gasoline yearly--and these are approximate
figures--as well as 3,800 gallons of diesel fuel, and if you
have a printed copy of my statement, there was an error in the
zero. We use approximately 17,000 gallons of propane in an
average year. That covers irrigation, engines, and drying, crop
drying. Depending on weather conditions, we will also use up to
$4,000 in electricity for crop drying in the fall.
Ours is a medium sized family farm, typical of farms in
Nebraska and the Midwest. A 50 percent or even 25 cent per
gallon increase in my fuel costs would be a very significant
cost of production, which could not be passed on in the
commodities I produce.
Critics ignore farmers' positive role in reducing
greenhouse gas emissions. I have already mentioned my own case
about going no-till and drastically reducing the amount of
fossil fuel used. According to some scientists, agricultural
cropland here in the U.S. may be a net ``sink'' for carbon
dioxide because of the carbon sequestered by plants through
photosynthesis. Little recognition is given to advances in
agricultural practices, conservation and energy efficiency by
farmers, particularly here in the U.S.
U.S. farmers have significantly improved their efficiency
and reduced their use of fuel and fertilizer. They have
dramatically increased their use of conservation practices.
Last year, 61 percent of U.S. croplands utilized
conservation tillage or reduced management practices which
incorporate plant residue and carbon in the soil, reduce trips
over the land, and conserve fuel.
Most importantly, agriculture's critics in the climate
change debate have focused on agriculture's contribution to
greenhouse gases and overlooked agriculture's most important
role--feeding and clothing a growing, hungry world. Little, if
any, consideration has been given to the climate agreement's
impact on our ability to meet future world demand for food and
The administration's proposal commits the U.S. and other
developed countries to specific, legally binding, enforceable
emissions reductions forcing higher production costs on U.S.
farmers. It sets no binding requirements for developing
countries, some of which are our strongest competitors for
world markets of agricultural commodities. Some of these
developing countries already have lower labor and production
costs and would be given a new, major competitive advantage.
The proposal makes no sense from an environmental or an
economic standpoint. By the administration's own projections,
carbon dioxide emission increases from developing countries
will far outpace those of the United States or other developed
By forcing compliance of developed countries only, we fail
to invest our efforts where they will achieve the greatest
emissions reductions. In the process, we place U.S. farmers at
a competitive disadvantage and make them easy prey in the new
world of free trade and market oriented farm programs.
Mr. Chairman, we especially appreciate the leadership
provided by Senator Byrd and yourself in introducing last week
Senate Resolution 98, which now has more than, as you said this
morning, 60 co-sponsors. This resolution will go a long way in
helping to assure that agriculture and other economic interests
are considered in full.
We hope that it is not overlooked as the administration
proceeds with the agreement.
The administration should fully explore methods to reduce
greenhouse gas emissions with the least possible disruption to
U.S. agriculture. If controls on agriculture are justified,
they should be accomplished voluntarily.
Until Farm Bureau and other agricultural groups formally
expressed our concerns to the administration, there was no
effort to seek our involvement and input before international
negotiations. If agriculture is a major contributor to
greenhouse gas emissions, as the administration claims, then it
is appropriate that the administration seek a full and open
debate with agricultural producers, leaders, and organizations.
These efforts must include agricultural policymakers within the
House and Senate Committees on Agriculture, the Congress, and
The administration must not accept the final agreement
without a full and open public debate which includes
agriculture and minimizes the negative impact on agricultural
We thank you for this opportunity to present our concerns.
Thank you, Senator Hagel.
[The prepared statement of Mr. Neidig follows:]
Prepared Statement of Bryce Neidig
Thank you. Mr. Chairman, my name is Bruce Neidig. I am a farmer and
President of the Nebraska Farm Bureau Federation and a member of the
board of directors of the American Farm Bureau Federation which I
My family owns and I operate, with my son, a 600-acre corn, soybean
and alfalfa farm in northeastern Nebraska near the town of Madison. I
am very concerned that the international agreement on climate change
will hurt my farm operation and others like it across the nation.
Climate change policy is controversial--drastic action proposed by the
administration is not justified
I appreciate this opportunity to discuss a subject that practically
every farmer is an expert on the weather. Those farmers that aren't
experts complain about it. It rains too much or too little, it's too
cold or too hot or frost threatens the harvest. We're interested in the
weather because our livelihood depends on it.
Farmers are interested in climate change for the same reason. We
are willing to consider scientific evidence that human activities,
including our own, may lead to increased concentrations of greenhouse
gases, higher global temperatures and extreme weather events.
Farmers who are aware of the climate change treaty are also
concerned about controls which may be imposed on the farm to reduce
greenhouse gas emissions. They're concerned about higher costs for
fuel, energy, vehicles and equipment. They're concerned about new,
burdensome regulations. They're concerned about threats to their
competitiveness in world markets to where they now must export about
one third of the crops they grow.
Some farmers are aware that in the last decade or so, there has
been considerable discussion by some scientists that greenhouse gases
(carbon dioxide, methane and nitrous oxide) are contributing to
increases in average global temperatures that could cause adverse
changes in the world's climate. We know there is some data to show
increases in greenhouse gases but believe there is still a legitimate
debate about the magnitude of those changes, their significance and the
relative contribution of natural versus human causes, including
Many farmers who have followed this important issue believe that
the Administration is acting, hastily and prematurely in leading
international efforts for immediate legally binding and enforceable
caps on greenhouse gas emissions. We don't know enough about the
problem or if we have a problem. We don't know about agriculture's
contribution to the problem or even to the solution. We don't know what
practices or programs farmers are likely to encounter as a result of an
international agreement. To put it simply, most farmers familiar with
the climate treaty are less concerned with the illness than they are
with the cure that's being prescribed for them.
The administration's proposal will restrict farming practices, disrupt
livestock and crop production and increase farm energy costs
Farmers like to think of themselves as good guys, but we're being
portrayed as villains when it comes to greenhouse gases. International
and U.S. regulators tell us we are contributors to human-caused
greenhouse gas emissions. Cattle and sheep produce methane. Crop
tillage produces both methane and carbon dioxide. Nitrous oxide comes
from fertilizer and the burning of crop residue.
The regulators tell us that we're more than contributors, we're
major contributors. According to the United Nations Intergovernmental
Panel on Climate Change, one-fourth of the world's greenhouse gases
come from agricultural activity. Our own Environmental Protection
Agency blames agriculture for more than 40 percent of total methane
emissions and 90 percent of the nitrous oxide generated from human
activity in the U.S.
Lead by our own Administration, international negotiators are
pressing for strict, binding limits on these emissions. If such limits
are adopted, the U.S. will be forced to consider drastic policies to
meet those legally enforceable reductions. New taxes on fuel and
fertilizer, forced mileage requirements for light trucks and other
motor vehicles, controls on planting, cultivation and harvesting
practices and limits on the number of livestock per acre have all been
proposed and may become regulatory policy here in the U.S.
Farms like mine could be severely disrupted. Restrictions on
planting, cultivation and harvesting would interfere with my farm
management plans which are designed to reduce my production costs,
maximize yields and conserve my farmland. For example, prescriptive
crop practices to reduce greenhouse gas emissions may not be compatible
with my current crop rotation practices. My integrated pest management
programs, which reduce pesticide use through the tillage and crop
rotation, could also be jeopardized.
Fuel and energy and cost increases resulting from the treaty could
deal farmers an especially heavy blow. The American Petroleum Institute
estimates that the climate agreement could increase prices for
gasoline, diesel fuel and electricity by 50 per cent or more, depending
on the emission targets which are prescribed. Cost estimates by the
Administration have been lower, but the U.S. Commerce Department
recently agreed that capping carbon dioxide emissions at 1990 levels
requires the equivalent of a 25 cent gas tax. Fuel cost increases, even
at these levels, would be a big hardship to U.S. farmers. That's why
Farm Bureau fought hard several years ago for defeat of the B.T.U. tax.
We're concerned that the Climate Change Treaty may provide an
opportunity to resurrect the B.T.U. tax under a different name, but
with the same results. You might say that its a back-door B.T.U. tax.
Fuel and energy are major production costs on my farm. We use 2,600
gallons of gasoline, 3,800 gallons of diesel and 1,700 gallons of
propane in an average year. Depending on weather conditions, we also
will use up to $4,000 in electricity for crop drying in the fall. Ours
is a medium-sized, family farm typical of farms in Nebraska and the
Midwest. A 50 percent or even 25 cents per gallon increase in my fuel
cost would be a very significant new cost of production which could not
be passed on in the commodities I produce.
Agriculture's positive contribution in controlling emissions is not
Our critics ignore farmers' positive role in reducing greenhouse
gas emissions. According to some scientists, agricultural cropland here
in the U.S. may be a net ``sink'' for carbon dioxide because of the
carbon sequestered by plants through photosynthesis. Little recognition
is given to advances in agricultural practices, conservation and energy
efficiency by farmers, particularly here in the U.S.
U.S. farmers have significantly improved their efficiency and
reduced their use of fuel and fertilizer. They have dramatically
increased their use of conservation practices. Last year 61 percent of
U.S. croplands utilized conservation tillage or residue management
practices which incorporate plant residue and carbon in the soil,
reduce trips over the land and conserve fuel.
Most important, agriculture's critics in the climate change debate
have focused on agriculture's contribution to greenhouse gases and
overlooked agriculture's most important role--feeding, and clothing a
growing, hungry world. Little, if any consideration has been given to
the climate agreement's impact on our ability to meet future world
demand for food and fiber.
The administration's proposal would disadvantage U.S. agricultural
producers in world trade.
The Administration proposal commits the U.S. and other developed
countries to specific, legally binding, and enforceable emission
reductions, forcing higher production costs on U.S. farmers. It sets no
binding requirements for developing countries, some of which are our
strongest competitors for world markets of agricultural commodities.
Countries exempt from controls include China, South Korea, Chile and
Argentina. Some of these developing countries already have lower labor
and production costs and would be given a new, major competitive
The proposal makes no sense from an environmental or an economic
standpoint. By the Administration's own projections, carbon dioxide
emission increases from developing, countries will far out pace those
of the United States or other developed nations. By forcing compliance
of developed countries only, we fail to invest our efforts where they
will achieve the greatest emissions reductions. In the process, we
place U.S. farmers at a competitive disadvantage and make them easy
prey in the new world of free trade and market-oriented farm programs.
Agricultural's concerns have been strongly expressed to the
administration, with negligible results
Last November Farm Bureau and 17 other national farm organizations
expressed strong concerns to President Clinton relating to the climate
change agreement and its impact on agriculture. Although we have
received assurances from the Administration that the agreement will
provide maximum flexibility and opportunity for U.S. farmers, the
Administration's response does not reduce our concern.
We are greatly appreciative of the efforts of the Senate
Agriculture and Natural Resources Committee in reinforcing our
concerns. This March, Chairman Lugar and a bipartisan group of 13
members of his committee requested an analysis by the Administration of
the following: the potential effect of climate change on agriculture;
estimated emissions and sequestration of greenhouse gasses by U.S.
agriculture; actions or controls likely to be implemented; and the
resulting economic impact on U.S. farmers and ranchers.
Although the Administration has not yet provided this information
to us, it is essential that it become available soon, in advance of
August treaty negotiations in Bonn and the final agreement scheduled
this December for Kyoto.
Mr. Chairman, we especially appreciate the leadership provided by
Senator Byrd and yourself in introducing last week Senate Resolution
98, which now has more than 50 co-sponsors. This resolution will go a
long way in helping to assure that agriculture and other economic
interests are considered in full. We hope that it is not overlooked as
the Administration proceeds with the agreement.
In addition to information and analysis requested by the Senate
Agriculture Committee and S.R. 98, Farm Bureau supports the following
administrative or legislative action relating to the climate agreement.
Also supporting these actions are 17 other farm organizations which
cosigned this request to President Clinton and the Administration.
The administration should withdraw support for legally binding and
enforceable caps on greenhouse gases
The Administration should fully explore methods to reduce
greenhouse gas emissions with the least possible disruption to U.S.
agriculture. If controls on agriculture are justified, they should be
There must be a full and informed public debate which involves
agriculture and agricultural policy makers
Until Farm Bureau and other agricultural groups formally expressed
our concerns to the administration, there was no effort to seek our
involvement and input before international negotiations. If agriculture
is a major contributor to greenhouse gas emissions, as the
Administration claims, then it is appropriate that the Administration
seek a full and open debate with agricultural producers, leaders and
organizations. These efforts must include agricultural policy makers
within House and Senate committees on agriculture, the Congress and
The final climate change agreement scheduled for completion this
December in Kyoto, Japan should be delayed
The Administration must not accept a final agreement without a full
and open public debate which includes agriculture and minimizes the
negative impact on agricultural producers.
Thank you for this opportunity to present agriculture's concerns
with the climate chance agreement.
[See appendix for additional material submitted by Mr.
Senator Hagel. Mr. Neidig, thank you very much. Mr. Fay.
STATEMENT OF KEVIN J. FAY, EXECUTIVE DIRECTOR, INTERNATIONAL
CLIMATE CHANGE PARTNERSHIP, ARLINGTON, VIRGINIA
Mr. Fay. Thank you, Mr. Chairman.
My name is Kevin Fay. I serve as the Executive Director of
the International Climate Change Partnership. We are a
coalition of U.S. industry representatives and associations as
well as international associations interested in the policy
development process with respect to global climate change. We
appreciate the opportunity to be here this morning.
ICCP continues to recognize the climate change issue as an
important matter with which government should be concerned.
However, it is a very long-term issue and extraordinarily
complex, both in its underlying science and its entanglement
with the very foundations of the global economic structure.
We have just recently communicated our views on the issues
in the Kyoto negotiations to the administration. I am attaching
this correspondence to my testimony and ask that it be included
in the record.
We have also communicated to the President on the issue of
the administration's as yet unreleased economic analysis,
expressing our frustration at their lack of communication on
the matters of greatest concern to the private sector, namely,
the potential economic impacts of a climate change agreement
and the current thinking of future implementation scenarios.
This letter is also attached and we ask that it be included for
Our views have been based on the premise that the only
agreement that is acceptable is one that is comprehensive and
can work with flexibility, maintain national sovereignty,
ensure participation by all countries, maintain a competitive,
level playing field, and is guided by effective science and
includes a long-term objective that will guide future policy-
makers as well as future negotiators.
This agreement must continue to balance our need for
economic growth and to attain the desired environmental
You will note that in both letters, we urge the President
and the State Department to use the opportunities of the
upcoming G-8 meeting and the United Nations General Assembly
Special Session on the Environment to reiterate to our
negotiating partners that the U.S. policy framework enunciated
last July is the only framework that can provide a climate
change agreement that is both environmentally beneficial and
Since prior to the first meeting of the parties in Berlin,
we have consistently argued that the time is not yet right for
a climate change agreement. Unfortunately, the parties
established an artificial deadline under the Berlin Mandate to
reach an agreement at COP-3, now scheduled to be held in
December of this year at Kyoto.
In our view, the administration did make progress in its
own deliberations and offered a thoughtful policy framework at
COP-2, which we have heard about here today. This policy
outline includes a comprehensive approach, identification of a
long-term objective, identification of the developing country
role under the treaty, implementation flexibility through
emissions trading, banking, and joint implementation; and
avoidance of a laundry list of so-called ``policies and
The U.S. framework also included a call for a binding
commitment which the administration has subsequently defined as
an emissions budget period of undetermined length to achieve
reductions of an undetermined size. While most of the attention
has been focused on this part of the discussions, we continue
to believe that it is not the only key to a successful treaty
agreement in Kyoto or after Kyoto.
We should point out at this time, however, that we have
been provided with no analysis to justify any particular target
or timetable that might be advocated.
Our primary concern has been that the result of the
negotiations would focus on only one or two of these key
issues, some of which we have outlined in our letter, and that
the rest would be left until later. This would be unacceptable
to us. The worst result would be for the administration to
agree to some target and not achieve the entire policy
framework it has advocated.
We have heard testimony today on the Byrd-Hagel Resolution,
and we commend the Senators, including you, Mr. Chairman, for
raising the important issue of requiring an agreement that
includes developing country commitments. We believe very
strongly in this principle. We have concerns, however, that
just as some have focused only on identifying a target or
timetable as an acceptable Kyoto outcome, others may focus on
only one or another of the remainder of these key issues we
An agreement on a target and timetable in Kyoto and nothing
else would be unacceptable to the ICCP. An agreement in Kyoto
on a target and timetable, including a developing country
schedule but with none of the flexibility or other provisions
as articulated last year by the administration, would be just
To date, we have been disappointed in the progress on most
of these fronts. We are pessimistic on the ability to
successfully resolve them between now and Kyoto absent strong
signals by the White House to reinvigorate the climate change
ICCP is not and never has been interested in an agreement
at the Kyoto meeting just for the sake of reaching an
agreement. This view will not change.
With respect to the economic issues and the impacts of a
climate change agreement on the U.S. economy, jobs, and the
environment, we remain very concerned. It is difficult to
address this issue in any effective way given the lack of
dialog on these topics and the lack of information being
provided by the administration.
We do know that the economic analysis that has been
performed not only by the administration but by several others,
tells us several important things--that there are costs
involved in reducing greenhouse gas emissions; that the costs
are likely to be reduced if the flexibility provisions that
have been proposed are incorporated; that you cannot achieve
any reasonable goals, either environmentally or economically,
without developing country participation; and, last, that the
costs are less if you avoid premature capital retirement or
turnover and provide industry the opportunity to manage our way
into the technological innovation that will be necessary to
accomplish whatever long-term goals established by the parties
to the convention.
It is difficult to know how the costs compare to the
benefits because we also have yet to see any analysis that
includes the benefits of mitigating climate change or
facilitating adaptation strategies.
In order for there to be an effective treaty, we believe
that the parties must first get the treaty structure correct.
We have a long way to go before that will happen.
Our companies have determined that the current state of
scientific understanding requires a prudent, long-term approach
to address this issue. This view is equally applicable to the
We cannot support a treaty at any cost, nor can we support
a treaty that is incomplete. In your monitoring of the progress
of the negotiations and your consideration of its outcome, we
urge you to use our list of key issues as a checklist of the
administration's effort in this regard.
We appreciate the opportunity to appear before you today
and look forward to answering your questions.
[The prepared statement and attachments of Mr. Fay follow:]
Prepared Statement of Kevin J. Fay
Good Morning, Mr. Chairman and members of the Committee. My name is
Kevin Fay; and I serve as the Executive Director of the International
Climate Change Partnership (ICCP), a coalition of U.S. industry
representatives and associations, as well as international
associations, interested in the policy development process with respect
to global climate change. We appreciate the opportunity to appear
before the Subcommittee today on the subject of a global climate change
ICCP was organized in 1991 to provide a forum to address the issue
of global climate change and to be a constructive participant in the
policy debate. Six months before the Third Conference of Parties
meeting in Kyoto, the issue has certainly raised the interest of many
of us in the private sector and the Congress.
ICCP continues to recognize the climate change issue as an
important matter with which governments should be concerned. However,
it is a very long-term issue and extraordinarily complex in both its
underlying science and its entanglement with the very foundations of
the global economic structure.
We have just recently communicated our views on the key issues in
the Kyoto negotiations to the Administration. I am attaching this
correspondence to my testimony and ask that it be included in the
record. We have also communicated to the President on the issue of the
Administration's as yet unreleased economic analysis, expressing our
frustration at their lack of communication on the matters of greatest
concern to the private sector--namely the potential economic impacts of
a climate change agreement and the current thinking of future
implementation scenarios. This letter is also attached.
Our views have been based on the premise that the only agreement
that is acceptable is one that is comprehensive and can work with
flexibility, maintain national sovereignty, ensure participation by all
countries, maintain a competitive level playing field, and is guided by
effective science and includes a long-term objective that will guide
future policymakers and future negotiators.
You will note that in both letters, we urge the President and the
State Department to use the opportunities of the upcoming G-8 meeting
and the United Nations General Assembly special session on the
environment to reiterate to our negotiating partners that the U.S.
policy framework enunciated last July is the only framework that can
provide a climate change agreement that is both environmentally
beneficial and economically feasible.
Since prior to the first meeting of the parties in Berlin, we have
consistently argued that the time is not yet right for a climate change
agreement. Unfortunately, the parties established an artificial
deadline under the Berlin mandate to reach an agreement at COP-3, now
scheduled to be held in December of this year.
In our view the Administration made progress in its own
deliberations and offered a thoughtful policy framework at COP-2 which
we have heard about here today. This policy outline includes a
comprehensive approach; identification of a long-term objective;
identification of a developing country role under the treaty;
implementation flexibility through emissions trading, banking, and
joint implementation; and avoidance of a laundry list of so-called
``policies & measures.''
The U.S. framework also included a call for a binding continent,
which the Administration has subsequently defined as an emissions
budget period of undetermined length to achieve reductions of an
undetermined size. While most of the attention has been focused on this
part of the discussions, we continue to believe that it is not the only
key to a successful treaty agreement in Kyoto or beyond Kyoto.I11We
should point out at this time, however, that we have been provided with
no analysis to justify any particular target or timetable that might be
Our primary concern has been that the result of the negotiations
would focus on only one or two of the key issues, some of which we have
outlined in our letter, and that the rest would be left until later.
This would be unacceptable to us. This worst result would be for the
Administration to agree to some target and not achieve the entire
policy framework it has advocated.
We have heard testimony today on the Byrd-Hagel Resolution, and we
commend the Senators for raising the important issue of requiring an
agreement that includes developing country commitments. We believe very
strongly in this principle. We have concerns, however, that just as
some have focused only on identifying a target or timetable as an
acceptable Kyoto outcome, others may focus on only one or another of
the remainder of these key issues we have identified.
An agreement on a target and timetable in Kyoto, and nothing else,
would be unacceptable to the ICCP. An agreement in Kyoto on a target
and timetable, including a developing country schedule, but with none
of the flexibility or other provisions as articulated last year by the
Administration, would be just as unacceptable.
To date, we have been disappointed in the progress on most of these
fronts and we are pessimistic on the ability to achieve them between
now and Kyoto absent strong signals by the White House to reinvigorate
the negotiations. ICCP is not and never has been interested in an
agreement at the Kyoto meeting just for the sake of reaching an
agreement. This view will not change.
With respect to the economic issues and the impacts of a climate
change agreement on the U.S. economy, jobs, and the environment we
remain very concerned. It is difficult to address this issue in any
effective way given the lack of dialogue on these topics and the lack
of information being provided by the Administration. We know that the
economic analysis that has been performed tells us several important
that there are costs involved in reducing greenhouse gas
the costs are likely to be reduced if flexibility provisions
that you cannot achieve any reasonable goals either
environmentally or economically without developing country
the costs are less if you avoid premature capital retirement
or turnover, and provide industry the opportunity to manage
their way into the technological innovation that will be
necessary to accomplish whatever long-term goal is established
by the parties to the convention.
It is difficult to know how the costs compare to the benefits
because we have yet to see any analysis that includes the benefits of
mitigating climate change or facilitating adaptation strategies.
In order for there to be an effective treaty, we believe that the
parties must first get the treaty structure correct. We have a long way
to go before that will happen.
Our companies have determined that the current state of scientific
understanding requires a prudent long-term approach to address this
issue. This view is equally applicable to the negotiations themselves.
We appreciate the opportunity to appear before you today, and we
look forward to answering your questions.
International Climate Change Partnership,
June 6, 1997.
President William Clinton
The White House,
Washington, D.C. 20500
Dear Mr. President: On behalf of the International Climate Change
Partnership, I am writing to express our concern for the status of the
economic analysis for purposes of the international negotiations on
climate change and the apparent lack of progress in making the economic
issues an integral part of these negotiations. The ICCP is a coalition
of companies and industries around the world committed to responsible
participation in the climate change policy process.
ICCP continues to recognize the climate change issue as an
important issue with which governments should be concerned. However, it
is a very long-term issue and extraordinarily complex in both its
underlying science and in its entanglement with the very foundations of
the global economic structure. ICCP commended the U.S. position
enunciated in its statement in July of last year as a reasonable
framework, and was particularly supportive of its efforts to give the
negotiations greater focus on the long-term character of the issue and
its economic implications.
It is disturbing to us that, for nearly one year, there has been
little public discussion of the economic impacts of the range of
proposed climate change mitigation strategies by any of the parties,
including the United States.
The Administration had promised the results of its economic
analysis to the Congress, its negotiating partners, the private sector
and the nongovernmental organizations. While we applaud the recognition
of the need to peer review this work, the slow pace at which this
activity is occurring raises concerns that it is either not being
seriously pursued, or that the results are not being shared. Neither of
these reasons, if true, bodes well for constructive private sector
support of the Administration's efforts or for any result produced from
the Third Conference of Parties meeting to be held later this year in
This matter is further complicated by the recent resignation of
Under Secretary of Commerce Ehrlich, who was coordinating the
analytical effort. His departure suggests a possible further loss of
momentum on this important effort at a critical time.
Those who may be able to provide constructive input into the
analysis and assessment being pursued by the Administration wonder what
must be done to understand how specific industry sectors are being
examined and what steps are being contemplated in order to pursue your
climate protection goals. At a minimum, the Administration should be
able to immediately publish the policy assumptions being used for
In addition, aside from frequent references to implementation of
flexible, market-based approaches, there has been little discussion of
what may be suggested as implementation steps for a Kyoto agreement.
Failure to discuss some of these issues in advance will likely make it
difficult to build support for ratification of the international
agreement and for development of implementing legislation.
We respectfully urge you, the Administration, to provide an outline
of the economic information and policy considerations, as well as a
meaningful time frame for the release of this information. Finally, we
understand that you are preparing to attend the meetings of the G-7 and
the United Nations General Assembly Special Session on the Environment.
We urge you to reiterate the United States' support for these key
economic issues as critical elements of any future agreement on climate
change. It is only with these key policy provisions that we will have a
climate change agreement that is both environmentally beneficial and
Kevin J. Fay,
International Climate Change Partnership,
June 6, 1997.
The Honorable Timothy Wirth
Under Secretary of State for Global Affairs,
Department of State,
Washington, DC 20520.
Dear Mr. Wirth: You have requested our views on specific issues
under consideration as part of the negotiations on implementation of
the Berlin Mandate for a possible protocol or other legal instrument to
the Framework Convention on Climate Change. We are pleased to provide
these comments on specific issues of concern to the members of the
International Climate Change Partnership (ICCP) with respect to the
treaty negotiations. We are also writing, however, to express our
concern with the current lack of focus to the negotiations or linkage
of these issues with the important relationship between the
international treaty and domestic implementation schemes.
ICCP continues to recognize the climate change issue as an
important matter with which governments should be concerned. However,
it is a very long-term issue and extraordinarily complex in both its
underlying science and its inextricable entanglement with the very
foundations of the global economic structure. We are concerned that
this complexity is exposing an overly ambitious timeframe for current
negotiations and that the cohesive activity necessary to ensure a
viable foundation for future action under this important treaty simply
has not come to be. It is equally disturbing that there has been little
public discussion of the economic impacts of the range of climate
change mitigation by any of the parties, including the United States.
ICCP commended the U.S. position enunciated in its statement in
July of last year as a reasonable framework, and was particularly
supportive of its efforts to force into the negotiations greater focus
on the long-term character of the issue and its economic implications.
However, we have made clear that our support is for the entire
framework, and not for individual components. Some have misconstrued
this position as support for early targets and timetables. It would be
incorrect to read our position as such. While ICCP members have
recognized the possibility that negotiators would agree on a mid-term
emissions target, we could not specifically support such a target given
the current lack of understanding of the implications of such a target
or how it would be implemented.
In our view, the issue of a binding target is not the most critical
element of the negotiation. We view it more important to provide
definition to the treaty structure through a long-term objective and a
mechanism to ensure that all parties, developed and developing, have
clearly defined roles before we enter into a binding commitment period.
It is also important that the parties are able to achieve these goals
with flexibility through emissions trading, banking, and true joint
implementation. We appreciate that the U.S. has recognized this need
It is of great concern to us that little progress appears to have
been made on many of these issues concerning flexibility and the role
of developing countries. While the U.S. has elaborated its views on
these positions in subsequent statements and its protocol draft, we
have detected little movement by the other parties on these issues.
Since we are not privy to your bilateral discussions or the behind the
scenes meetings, it is difficult for us to determine the current status
of these topics.
It is not acceptable to us for the negotiations to conclude in
December with an agreement on a binding commitment towards a mid-term
target with all details on other key provisions to be negotiated later.
As you recall, we have consistently expressed our view that 1997 is
too soon for a credible technical assessment process which would
support an agreement by the parties on these issues. The apparent lack
of progress to date, the dearth of information available to us
regarding how these issues may be resolved, and the failure to
thoroughly discuss the economic implications for an agreement, have
only served to confirm this view.
We have pledged to work responsibly with the United States and
other parties on the development of an effective framework to address
the climate change issue consistent with the need for all nations to
sustain economic growth. We remain committed to this principle. It is
not clear, however, that these issues can be resolved satisfactorily by
the Kyoto meeting. ICCP will, of course, reserve any judgment on the
results of Kyoto for the implementation process.
We urge the United States to remain focused on and committed to
delivering concrete results on all the points outlined in the statement
delivered last July and elaborated on in its subsequent submittals.
Further, we believe that the U.S. should indicate its commitment to its
proposed climate change policy structure at the upcoming meetings of
the G-7 and the United Nations General Assembly Special Session on the
Concurrently, we believe the economic impacts of a possible
agreement should be communicated with industry and other policymakers
so we can have an effective dialogue. Failure to discuss some of these
issues in advance will make it extremely difficult to build support for
ratification and implementation of the international agreement.
We look forward to working with you and appreciate the opportunity
to discuss the specific views on the attached position paper in the
very near future.
Kevin J. Fay,
cc: The Honorable Madeleine Albright
Secretary, Department of State
The Honorable William Daley
Secretary, Department of Commerce
The Honorable Federico Pena,
Secretary, Department of Energy
Honorable Rodney Slater,
Secretary, Department of Transportation
The Honorable Carol Browner
Administrator, Environmental Protection Agency
The Honorable Frank Murkowski
The Honorable Dale Bumpers
The Honorable John Chafee
The Honorable Max Baucus
The Honorable Thomas Bliley
The Honorable John Dingell
The Honorable Dan Shaefer
The Honorable Ralph Hall
International Climate Change Partnership
Key Issues in the Climate Change Protocol Negotiations
(In Alphabetical Order)
Developing Country Role
The United States has outlined a specific proposal for dealing with
the developing country role as part of the Kyoto agreement, including
definition of obligations under Article 4.1 of the Framework
Convention, establishment of an Annex B of countries which would
voluntarily adopt emissions budgets, and a date certain by which all
parties would have emissions budgets.
As stated by Bert Bolin, Chairman of the Intergovernmental Panel on
Climate Change (IPCC) at the March 1997 meeting of the Subsidiary Body
on Science and Technological Advice (SBSTA) in Bonn, ``[I]t is obvious
from this graph that no reasonable future reductions by Annex I
countries would stabilize global emissions.'' Therefore, it is
imperative that developing countries be part of this agreement.
Furthermore, as stated in the Administration's recent economic work, a
significant percentage of infrastructure and industry investment by
developed countries is occurring in developing countries. Finally,
because of the strong linkages between population growth and greenhouse
gas emissions, it is important that we recognize that seven of the
current non-Annex I countries represent two-thirds of the world's
The Administration has been forthright in its insistence that the
developing country role be defined. ICCP recognizes the potential
limits of the current Berlin Mandate with respect to new commitments
for non-Annex I Parties. It is clear, however, that the Berlin Mandate
contemplates definition and elaboration of Article 4.1 commitments for
all Parties, including the developing countries.
Additionally, it is imperative that additional developing country
participation, including emission budgets, must be defined prior to the
start of the first binding budget period for the current Annex I
parties. It is only through such definition that governments and the
private sector can ensure that investment flows are not distorted.
Entry into Force
ICCP has noted that six countries, including India and China,
currently account for 55% of greenhouse gas emissions. In order for the
treaty to enter into force, it is imperative that a significant
percentage of greenhouse gas emissions be represented by ratifying
countries. In addition, a significant percentage of Annex I countries
and developing countries should ratify the treaty before it enters into
We also believe that it is inappropriate for a regional economic
organization to be allowed to represent both itself and the voting
rights of its individual members. The EU has argued that it should be
allowed to bubble its emissions and is proposing to allocate emissions
internally. It is unfair that the EU be granted this concession to
bubble its emissions when it declines to support similar flexibility
for other Parties. Therefore, the EU should have to decide to either
bubble and count as one vote, or to not bubble and to be counted
Greenhouse Gas Comprehensive Approach
The protocol negotiations should continue to focus on a
comprehensive approach at the international level. Recent proposals
from the European Union suggested a protocol on only three gases--
carbon dioxide, methane, and nitrous oxide--with the notation that
fluorocarbon compounds should be covered by policies and measures and
added to the basket in the year 2000. ICCP strongly opposes the EU
approach. The gases that can be measured should be covered
simultaneously in a comprehensive manner. The key to a comprehensive
approach is for Parties to focus on achieving the most efficient
emission reductions possible; and therefore, it is unproductive to
segregate gases from coverage until a later date or to treat gases
differently in an international agreement
ICCP has urged the negotiators to provide for a long-term focus or
objective. We believe such an objective provides clarity to
negotiators, as well as to those charged with implementation of
commitments. It is our understanding that the United States has
performed some analysis of this issue, and that such analysis could be
useful to the negotiators currently. Furthermore, we applaud the
article in the U.S. protocol proposals which contemplates a long-term
This objective will be an important guide to future decision
making, including private sector investment planning. We note that
several participants, including the EU, and certain environmental
organizations have suggested certain objectives characterized as
atmospheric concentrations of greenhouse gases, and that the IPCC
documents present their analysis according to atmospheric loading, of
greenhouse gases measured in parts per million (ppm) of CO2
ICCP has not advocated a greenhouse gas concentration as the
appropriate measure for the long term objective. A long-term objective
could be defined as a combination of adaptation, impacts, and
Recent analysis of the economics of climate change controls have
indicated that the long-term objective is not as relevant as the path
charted for the emission reduction. In our view, it is impossible to
develop a meaningful path without knowing the point of departure and
the intended goal.
We recognize that the current state of science does not provide a
precise ``correct'' answer. Science does provide a basis for making an
informed political judgment on the objective, and scientific assessment
through the IPCC and elsewhere is critical to future reassessment of
any potential long-term objective.
Policies and Measures
It is imperative that each nation maintains maximum national
flexibility with respect to implementation of its climate commitments.
It is neither appropriate nor productive for the negotiators to
determine the manner in which each country should achieve its
commitments. ICCP is opposed to any listing of specific annexes of
policies and measures in any manner, i.e., mandatory, regional
coordination, voluntary, or exemplary.
There have been several proposals for specific point targets and/or
budget periods as part of the protocol proposals that are currently
before the Parties. ICCP has not endorsed the notion of a binding
``target.'' We do, however, recognize that all of the government
proposals to be considered in Kyoto do contemplate such a step as a
The lesson from the non-binding commitment of the 1992 FCCC
agreement is that, despite the best of intentions, a specific point
target is very difficult to administer due to fluctuations in economic
conditions, weather conditions, etc. Therefore, we believe it is
imperative that the long-term objectives be utilized to examine a
reasonable path that minimizes short-term economic disruption and
stimulates the longer-term technological innovation necessary to
significantly reduce worldwide greenhouse gas emissions.
The U.S. has indicated a preference for an emissions budget period
and a binding commitment to achieve that budget. In our view, the
practical timetable for ratification and implementation of a Kyoto
climate agreement, including subsequent definition of a developing
country role, suggests that meaningful program implementation steps
could not be up and running with confidence any time soon after a Kyoto
agreement. There has been a great deal of focus on the beginning, of
such a so-called budget period.
In our view, the beginning of the budget period is not as important
as the end of the budget period, i.e., the point at which the principle
of ``binding commitment'' actually has the potential to impose penalty
or sanction. In light of the uncertainties stated above, ratification,
implementation, developing country role, and some level of experience
with the implementation process, we believe that it would be
inappropriate to end the first binding budget period before the year
2020. This time frame will allow industry to develop its programs, and
gain confidence in their performance.
ICCP also believes this time frame is consistent with its previous
position that policies at the outset of this effort must take into
account a reasonable period for capital stock turnover. This will
provide a period for industry to ``ramp up'' its climate change
If the budget period is to be adopted, we believe that it should be
long enough to encompass weather and economic cycles, but not so long
as to present an impossible horizon to provide both industry and
policymakers with some certainty. Therefore, it appears that a 10-year
budget period is better than a 3 or 5-year period.
Although not specifically included as part of the current protocol
proposals, ICCP continues to believe that the FCCC must be grounded in
sound scientific and technological assessment processes. This function,
as currently served primarily through the Intergovernmental Panel on
Climate Change (IPCC), is inadequate.
The IPCC is currently considering restructuring proposals including
the adoption of working group outlines that incorporate an effective
role for private sector expert participation. We encourage support for
Finally, it is also important that we de-politicize the IPCC
process to the maximum extent possible. Its credibility can be
sustained only if it is truly seen to be the work of scientific and
technical experts, and not subject to the whims of the diplomatic and
political process or other special interests.
Trading, Banking, and Joint Implementation (JI)
Most available economic analysis continues to indicate that
flexibility through emissions trading, banking of emission credits, and
joint implementation policies can help to maximize greenhouse gas
emission reductions most cost-effectively. ICCP is fully supportive of
such mechanisms as part of any agreement in Kyoto and beyond.
We believe it to be imperative that such principles be included in
the first agreement and not be left to some future negotiations. We
also believe it is important that these provisions not be relegated to
some pilot project with final decisions to be made at some future date.
Finally, it appears that flexibility is a positive inducement to
ensure maximum compliance. It also would allow us to avoid the use of
trade restrictions or trade sanctions as an enforcement mechanism in
ICCP Urges Administration To Insist on Full Climate Policy Framework
and Engage in Economic Dialogue
June 19, 1997, Arlington, Virginia.--The International Climate Change
Partnership (ICCP) today urged the Clinton Administration to toughen
its support for its climate policy framework and to release its long-
promised economic and policy analysis. In testimony before the Senate
Foreign Relations Subcommittee on International Economic Policy, Export
and Trade Promotion, ICCP Executive Director Kevin Fay requested the
that Senators urge the President to use the opportunities of the
upcoming G-8 meeting and the United Nations General Assembly special
session on the environment to reiterate support for the US climate
policy framework as ``the only framework that can provide a climate
change agreement that is both environmentally beneficial and
ICCP urged the Senators to consider a list of key issues in the
negotiation and the full outline of the Administration's proposals.
utilizing a comprehensive approach;
establishment of a long-term objective;
identification of a role for all parties, developed and
utilization of market-oriented measures such as emissions
trading, banking, borrowing and joint implementation;
maintaining national sovereignty and avoiding a laundry list
of so-called ``policies and measures'' such as taxes.
``Our primary concern has been that the result of the negotiations
would focus on only one or two of the key issues, such as a target,''
said Fay, ``and that the rest would be left until later. This would be
unacceptable to us. This worst result would be for the Administration
to agree to some target and not achieve the entire policy framework it
has advocated.'' He urged the Senators to use the list of key issues as
a checklist during consideration of any treaty agreement that may be
presented to the Senate for ratification.
Fay also expressed doubt about the ability to complete the climate
negotiations by the end of this year given the lack of progress to date
and the failure of the Clinton Administration to engage in the economic
and domestic implementation dialogue it has promised for more than a
year. ``ICCP is not and never has been interested in an agreement at
the Kyoto meeting just for the sake of reaching an agreement. This view
will not change.''
ICCP is a coalition of US businesses and industry associations, as
well as international associations, interested in the policy
development process with respect to global climate change.
Senator Hagel. Mr. Fay, thank you very much. Again, to all
three of our panelists, we are grateful for your time. You have
each focused on a particular area that is of immense concern
and I very much appreciate the courtesy that you have extended
to this committee by coming forward and talking a little bit
about this important issue.
Mr. Trumka, let me begin with you. I would like to focus a
little bit on some of your testimony.
I don't know if you were in the room this morning when
Senator Wirth talked a little bit, at my request, about a
conversation I had with him a couple of days ago regarding the
ultimate goal of this treaty: a 70 percent reduction in
greenhouse gases. That is rather significant.
Mr. Trumka. Very significant.
Senator Hagel. Would you give me some analysis of what that
would do to jobs?
Mr. Trumka. It would devastate jobs, particularly if the
timetable were crunched in, as they are currently proposing it.
Right now, to get to 1990 levels and stretching it out to
the year 2015 or 2020, you are looking at a job loss of a
million and a quarter to a million and a half.
If you magnify that to the level that you are talking about
and keep the timetable the same, you are going to magnify the
number of job losses. It would actually be devastating to
various sectors of the economy.
When you balance that against what it would do under the
current structure, it makes absolutely no sense because they
would shut a power plant down here and build a power plant in
Mexico. They would shut a factory or a steel mill down here and
build it somewhere else. We've lost the jobs. They've gained
the jobs and the environment gained nothing in the process.
Mr. Chairman, if you limit just stabilizing us, stabilizing
to the 1990 levels to the Annex I countries, here is all you
do. The CO2 emissions are scheduled to double, are
projected to double by the year 2066. If you put the burden on
us and no one else, you will simply move the timetable back to
2059. That is a 7 year difference in timing with job loss that
ends up in the millions.
Senator Hagel. I want to continue along this line. Your
testimony also included the comment that for every $100 in a
carbon tax or an equivalent trading program, we would be
talking about roughly a 26 cent per gallon increase in
Actually, I think those numbers, at least the numbers I
have seen, are even higher than that. So I think you take a
pretty conservative baseline, which is good.
First of all, tell me a little more about the impact, in
your analysis and the AFL-CIO's analysis, about that would have
on the economy. Second, do you believe your membership, the
people of this country, would be willing to do that? It all
connects back to something we talked very little about this
morning, though we tried to get there. It is something that Mr.
Fay talked about: the cost-benefit analysis.
When you have no numbers, even though Secretary Wirth
dismissed the models to some extent, I don't know how we get
anywhere without having some cost-benefit analysis, some ratio,
some rationale, to accomplish whatever it is we need to
Finally, as I said right at the beginning of the hearing
this morning, there are few people that I know in this body or
across this country that do not believe we have some problem
Mr. Trumka. That's correct.
Senator Hagel. We have to face this. What we are trying to
get at, once again, is the identification of the problem and
its magnitude. Once we identify that, with some basis of
knowledge and analysis, and cost-benefit analysis is pretty
important, we develop a common sense policy.
So with that, would you like to talk a little bit about
some of those issues, such as the gasoline tax and your
Mr. Trumka. Absolutely, Mr. Chairman.
First of all, it is hard for me, as a negotiator, having
negotiated literally hundreds of contracts, to comprehend how
you can go into a negotiation, make proposals that ultimately
are binding on you without knowing with some specificity, or at
least a fairly good understanding, what those proposals are
going to do. That is really what we have been told so far.
Every time we have asked for an analysis on what these
proposals will do in terms of impact on the economy, impact on
jobs, impact on energy price increases, impact on trade, we are
told that the models don't exist and we'll get to that.
I think that is an unhealthy way of negotiating any kind of
deal and I would not advocate it to any of our membership.
Our membership looks at those prices. Let's assume for just
1 second that they could pay the 26 cent increase for gas, or
they could take a one-third increase in the price of their
electricity. Are they willing to do that? I think it is highly
unlikely that they are. But the more realistic thing is what
does it do long-term to their jobs?
Those types of price increases can destroy industries. Take
their jobs away and, whether they were willing to pay them or
not, they won't be able to pay them.
There is simply no reason to rush to that right now until
we have done a very thorough analysis of the impact, and we can
negotiate with all of our partners for a fair, level playing
field so that we don't simply displace our jobs by having
higher energy prices, higher taxes than our competitors and
still have no gain to the environment.
I think my membership, the membership of the AFL-CIO, would
be angered, to say the least, at some of these price increases.
If you heat your home with gas, for instance, and the tax would
go up $1.50 per thousand, it is right now at $1.42 per
thousand, so you are looking at doubling the price of gas. That
is before you add the increase of what demand will do to a
If you look at the gasoline tax of 26 cents, the family
farmers over there cannot take a hit of that magnitude. They
simply cannot do it and still survive in today's economy.
I think our people really want a clean environment. They
want to leave a clean environment to their children. But they
also want to leave a healthy, vibrant economy, and these are
not mutually exclusive, Mr. Chairman. If we take our time and
do it right the first time, we can get both. That's what I
think my membership would demand and I think has a right to.
Senator Hagel. Thank you.
Senator Sarbanes. Thank you, Mr. Chairman.
The first question I want to put to each member of the
panel is do you think there is a serious problem that we have
to deal with with respect to global warming?
Mr. Neidig. Do I think there is a serious one? I think
there is a problem. Is it a serious problem? To be very candid
and frank, no. I don't think it is a serious problem.
The industry I represent does not think it is a serious
problem. I don't mean to be flip. I have not been around as
long as Senator Byrd has. But in my lifetime, in 1936, in the
State of Nebraska, Northeast Nebraska, we had 30 days when the
temperature never got below 100 degrees in the summer and 30
days in the winter when the temperature never got above zero.
We did not hear a word about global warming.
The last 4 years I could have used a little of it in the
spring when I planted my crop. I don't think there is a serious
problem. I don't think we have proven there is.
Senator Sarbanes. So you don't think we really need to do
Mr. Neidig. I don't think there is a rush to do that. I
think we need to be very aware. I think we need to be concerned
and certainly would be willing to work at these things. But
there is not a compelling reason to rush pell-mell to this at
Senator Sarbanes. That is a different question.
Mr. Neidig. Sorry?
Senator Sarbanes. That is a different point. I wasn't
exploring whether we should rush pell-mell. I never believe in
rushing pell-mell into anything because you can always make it
worse rather than better. The question is whether there is a
serious problem that we need to address and I take it your
position is no.
Mr. Neidig. That's right.
Senator Sarbanes. Mr. Fay?
Mr. Fay. I think our companies would agree with the
consensus of the Senators here that this is a serious problem.
It needs to be addressed, but it needs to be addressed over a
long timeframe and not with some emergency short-term action.
Senator Sarbanes. But we need to try to come to grips with
Mr. Fay. Yes.
Senator Sarbanes. Mr. Trumka.
Mr. Trumka. Senator Sarbanes, we think that there is a
problem and if there is even doubt, the consequences could be
so dire that we think we ought to err on the side of caution
and assume that that type of problem does exist and attempt to
address it as best we can--in a fair, equitable, meaningful
Senator Sarbanes. Now I was listening to these various
figures that you were citing and I'm not quite sure where they
come from in terms of the number of jobs that would be lost and
the various policies that would be put in place.
I quoted earlier in the hearing a 1991 study by the
National Academy of Sciences which concluded with, and let me
just read what they said: ``The United States could reduce or
offset its greenhouse gas emissions by between 10 and 40
percent''--now that is a broad range, I admit. So let's just
take the lower figure, 10 percent--by between 10 percent ``of
1990 levels at low cost or at some net savings. The efficiency
of practically every end use of energy can be improved
Then, people cite the figure that on a per capita basis we
use twice as much energy to produce a unit of GDP than does
Germany or Japan.
I guess I am interested in to what extent either of you
agree with that statement or think that there is something in
it. This assertion is that we could, in fact, do a better job
without imposing some--and I have taken the low range. I have
taken the 10 percent figure because I want just to try to see
if we can be on the same path, if that's possible.
This assertion is that we, in fact, could do that without a
major--in fact, they say even at some net savings. They cite
other countries who seem to have been able to do that.
Do you take sharp difference with that?
Mr. Trumka. I think there are ways that we can save
CO2 gases, become more efficient, do conservation.
There are a number of ways in which we can do that.
I don't know that you can achieve the levels that they are
now talking about through that alone. Clearly, the proposals
that are being made by the administration do not envision that.
They envision, as Secretary Wirth told you today, affecting
through a process energy consumption--not energy conservation
but energy consumption. One of the things that they tossed
about is a $100 per ton tax on carbon. I gave you the figures.
If that proposal is adopted, we are going to have significant
and major job loss.
Now there are paths that we could work together on and
minimize the job loss and we would encourage that. We would
welcome that idea, to work together, to do that so that, one,
we do clean up the environment; two, we do not lose our
international competitiveness; and, three, we don't cause major
economic dislocation throughout the United States while our
competitors have none of that.
Senator Sarbanes. Mr. Fay?
Mr. Fay. Senator, I think that we have shown that we can do
some of these things. We are doing them now. We are doing them
voluntarily under some of the climate change action plans.
We have been through hours of briefings on the mind numbing
economic analysis. The fact is the analysis is out there and
yes, it does show there are costs. It does show there are
opportunities as well.
What no one seems to be able to get out on the table is
what is it that the administration is thinking of once we sign
on to this binding agreement. That is all we are asking: Tell
us what you are thinking of. Tell us what your assumptions are
about our industries in terms of efficiency improvements that
you think we are going to achieve in order to meet whatever
goal it is you want.
So the analysis has been done. They are doing the analysis,
Senator. They are not talking about it and they are not
releasing it. All we are saying is we want to have a dialog.
But yes, there are many things we can do to reduce
emissions. Whether we do them to 1990 levels by 2010 or some
other time is still open to debate.
Senator Sarbanes. Both of you have mentioned this
competitive factor. To what extent is your concern about where
the administration is going tied to the fact that they have
this differentiation between Annex I countries and other
countries so that some countries would, in effect, be under the
same mandatory regime we would be under but other countries
would be outside of that mandatory regime?
I don't think anyone has really thought that through in
terms of what the implications of that are, not only
environmentally, which is, of course, the whole purpose of this
effort, but also what the economic implications would be.
How much of your concern is geared to that aspect of this
Mr. Fay. Unfortunately, I think the 1992 treaty already
began to establish some level of differentiation between Annex
Senator Sarbanes. Yes, but that was done voluntarily. That
is a big difference.
Mr. Fay. I understand that.
Senator Sarbanes. Or to take that differentiation and
simply carry it over when you shift from voluntary to
mandatory, that's, well.
Mr. Fay. Absolutely.
We feel that the developing countries must be in this
treaty. How you get them in is not our area of expertise. But
they must be in.
Now are they allowed to grow first? It is not clear to me
from the chairman's and Mr. Byrd's resolution whether we are
requiring the exact schedule that Annex I countries would have.
But yes, they must be in. This is because most of the
infrastructure investment that is taking place in the world
today is taking place in developing countries. So we don't know
what their requirements are. We cannot make effective
So we have to know. What we insisted on in our position
paper to the administration is if not at Kyoto, you have to
have this resolved before any binding commitment period begins
for Annex I countries and you have to insure that, as part of
the entry into force requirements, that you have those
countries as parties to this agreement.
Senator Sarbanes. Within a mandatory regime of some sort.
Mr. Fay. Right.
Senator Sarbanes. Mr. Trumka?
Mr. Trumka. We would agree that we have a significant
concern about their lack of being included in the mandatory
regime, as he calls it, because it would create yet another
gigantic incentive to move jobs offshore to come up with
We also have two other major concerns. These are: Even if
both people, even if all of the countries are in in some forum,
whether it is a lower level, growing to a higher level, as
their economy grows, or whatever; the other concern is how we
internally will be required to achieve our reduction levels.
This is because if it is through a carbon tax, as we just
talked about, even if our competitors are going to have to do
something that is fair and equitable in the overall scheme of
things, we are still disadvantaged.
The other concern we have is the time period for
compliance. The more collapsed it is, the more harsh and
radical the solutions, the more harsh and radical the effect on
the American economy and the American working force.
Senator Sarbanes. Thank you.
Senator Hagel. Mr. Neidig, did you want to respond?
Mr. Neidig. Senator Sarbanes, you asked the question about
competitiveness and I mentioned that as far as agriculture as
well. If I can specify and single out a country, if you will,
Argentina would be the one. If we, the United States, and I as
a farmer, were faced with mandatory compliance with energy
requirements and other things to control greenhouse gas
emissions, Argentina has indicated they are not going to be
part of that. They have indicated they would not be. I have
been to Argentina twice. It has the most productive capability,
I think, of anywhere in the world and would be major
competition. Those who think that we can only have it in the
United States are wrong. That is a real competitor that
concerns agriculture and should concern agriculture.
Senator Hagel. Mr. Neidig, if I can stay with you for a
moment, I have the same general question that I asked Mr.
Trumka on gasoline tax concerning increasing energy costs, the
effects it would have on his membership, jobs, and the ripple
effect. I was talking with Senator Lugar this morning, who is a
very distinguished member of this panel and also, as you know,
chairman of the Agriculture Committee. He was telling me that
he had met recently with some individuals from the United
Nations and they were talking about projecting out population
numbers. They were projecting what it was going to take to feed
the world, with around 9 billion to 10 billion people in 50
years, and what pressure and burden that was going to put on
our food producers and our farmers.
Connecting that to what we have been talking about today is
a pretty significant challenge.
Would you develop a little bit for this panel, Mr. Neidig,
some of the thoughts that you have regarding the numbers that
have been thrown around here and what that would do to farm
production and the ability to feed the world?
Mr. Neidig. Well, as I indicated, it would not only be
drastic, it could be devastating. It would be devastating.
As I indicated in some of the figures I had here for my own
farm, my own operation, which is not large--it is average to
small--if you add that much cost that we are talking about,
whatever it be, 25 cents a gallon for gasoline, or a 50 percent
increase, or a 30 percent increase, whatever, it gets to the
point where it is absolutely uneconomical for me to continue
Now this is not necessarily dependent upon size of the
operation because you just magnify the problem with larger
operations under those kinds of situations. So we not only
would reduce our ability to make a living or to be profitable,
we would reduce our ability to feed the world, if you will,
because, as you know, American farmers serve and feed many more
people than just those in this country.
So we not only would become uncompetitive, we would go out
of business and thereby exacerbate the problem. It is hard to
describe, Senator, exactly the fear and the concern that I and
my people have if we face this kind of mandatory situation that
is not across the board.
Even if it were across the board, we are going to
significantly reduce our ability to produce food and fiber for
Senator Hagel. Thank you.
Mr. Fay, I would like to get to some of your testimony. I
have read your letters to the State Department and the White
House. I compliment you on each. They are well thought out. As
your testimony I think very poignantly brought out, what we are
striving for is some kind of policy that is economically sound,
allows economic growth, and continues a higher standard of
living for all of our people. This is an argument that gets
lost in this.
I hear some of my colleagues talk on one side, in the
morning, about how we have to give everybody equal opportunity
and standard of living. Then, in the afternoon, they suggest
cutting our economic growth back 1 or 2 percent to do this.
Well, you can't do that. Something has to give here.
I am interested in your presentation today and the letters
that you sent to the White House and State Department from the
standpoint of the common sense economic approach you have
First of all, explain why we have not seen any cost-benefit
analysis, economic modeling, or anything else to my knowledge
that would give us some sense of if we doing the right thing,
while tying where we want to go with this environmental policy
to sound economic policy.
Mr. Fay. Well, obviously, I cannot speak for the
administration on that point. I do know that it has been
promised for over a year.
There has been a lot of modeling going on, however, outside
of the government. Frankly, it is all pretty consistent and it
all points to the kind of conclusions that I outlined.
But what is missing is what are you thinking of in terms of
implementation, the types of things you just asked about in
terms of imposition of carbon taxes or various policies and
We are not interested in pursuing some laundry list of
command and control programs or taxes to implement this
initiative. We have heard a lot about a potential of some kind
of cap and trade and some kind of emissions trading program.
But we would like to know, if you are going to institute a
trading program, how are you going to allocate the rights to
that and what is the cap going to be.
I cannot respond to that. We all kind of know generally
where the economic information is sending us. But we are not
getting the kind of specifics, we are not getting the kind of
dialog we have been promised.
In 1993, the White House promised the ``White House
effect'' on the greenhouse effect. Well, lately we've felt a
little bit more like the ``whitewash of the impacts and a
blackout on information.''
We need to get that dialog done. If it is not going to get
done by Kyoto--and I fear that it is too late to have that
dialog--then no, there should not be an agreement because we
have a right to know.
Now they have ideas inside and they keep telling us that
our information is showing the kind of thing cited by the
National Academy of Sciences, as Senator Sarbanes referred to,
that it is modest, that there are things we can do. That is the
wonder of mind numbing macro economic analysis. But there are
certainly going to be some people who will suffer, such as Mr.
Trumka's members, such as the farm community, such as the
manufacturers that I represent. We want to have that debate. We
want to have that dialog. We want to have it before they agree
to the treaty and not after.
Senator Hagel. Are you familiar with a study that I
understand was done in November known as the Argonne National
Mr. Fay. I am familiar with it.
Senator Hagel. My understanding is that the name of the
study was ``The Impacts of Potential Climate Change,
Commitments on Energy Intensive Industries.''
Mr. Fay. Yes, sir.
Senator Hagel. My understanding is also that it was never
Do you know anything more about it?
Mr. Fay. Well, it was never officially released. I guess it
managed, like drafts of the current economic analysis managed,
to find its way out there. We have been told that well, it is a
qualitative study, not a quantitative study, and yes, it does
point out these objections.
We sponsored a conference last week where we asked them to
present somebody, to present their view and what was good or
bad about the study. The administration declined.
So again, I know the study is out there. It suggests very
draconian effects. It suggests that a carbon tax won't succeed
in achieving the policy objectives they are trying to achieve.
Then it is suggested by the administration that that is not
what the study was designed for. But if they are not going to
tell us what it was designed for or what they view it to do, we
cannot read their minds.
Senator Hagel. Mr. Fay, thank you.
Senator Sarbanes. I think that is a very good point. In
fact, I think your whole statement was very helpful in terms of
I take it your starting point is that we should be striving
to reach an agreement but we need to be very careful how we do
it and take into account these various concerns that you raise
Is that a fair statement of it?
Mr. Fay. Yes, sir.
Senator Sarbanes. I have to tell you that I'm not so sure
about something. It seems to me there is considerable room here
to advance with respect to controlling global warming without
getting yet into the situation of paying significant costs. Now
at some point you are going to get a tradeoff.
But if we are using double the energy that our competitors
are using, the price of gasoline in this country, compared with
other industrial countries, is far less. What is it that they
are able to do that enables them to absorb this cost and yet
remain competitive with us in the marketplace? It is an
interesting sort of question, it seems to me.
But there is a lot of conservation that has not yet been
done, it seems to me.
What do you understand the framework in which they are
going to Kyoto as being?
Mr. Fay. By ``framework,'' do you mean the entire policy
framework, the numbers?
Senator Sarbanes. First of all, do you understand that they
could meet in Kyoto and not reach an agreement? They could
continue the process of trying to develop an agreement.
Mr. Fay. That's correct. There is no requirement to reach
an agreement. They have set themselves a deadline of Kyoto.
We felt that the technical process to facilitate the
negotiations was not properly established and that the year
2000 may have been more appropriate. They set 1997 as their
Senator Sarbanes. Now do you understand them to be bound by
the notion that the non-Annex countries are not to be brought
under a mandatory regime? Is that, in effect, a defining
criterion of the bargaining process or is that open?
Mr. Fay. Well, the administration has proposed, actually
proposed, a developing country role and evolution for those
countries that some have said violates the premise of the
Berlin Mandate, that it brings in commitments that they are not
supposed to have.
The Berlin Mandate expires at the end of this year. So for
purposes of what they have outlined in these negotiations,
technically we have asked for ``what does no new commitments
mean for developing countries'' because, under Article 4.1 of
the treaty, it does require that they take policies and
measures to reduce emissions. We have said at a minimum you
have to define that now.
What does that mean? Nobody knows. Nobody knows what that
means. That's Number 1. Number 2, you have to set a schedule
for defining what their emissions budget will be before we ever
enter into a budget period of our own because we have to know
Now whether that's feasible, again, those are legal issues
and diplomatic issues that have not been discussed publicly in
Senator Sarbanes. How much interaction has the
International Climate Change Partnership had with the
administration on this, with respect to these negotiations?
Mr. Fay. We talk to them frequently. We talk to them as
often as we can about the policy issues that you see outlined
in our letter.
Senator Sarbanes. So you don't have a complaint about the
extent of consultation? Or do you?
Mr. Fay. Well, we have plenty of access and consultation.
But on some of the policy nuances and those issues, the
consultation is fine. On the details of what are we talking
about in terms of domestic implementation, or what are the
impacts, or what is it you think is going to happen to this
industry, this industry, or this industry, it is pretty
Senator Sarbanes. Now the Farm Bureau people, have they had
Mr. Neidig. Yes. But I could reiterate what Mr. Fay said:
Substantial consultation; details, not much.
Senator Sarbanes. Mr. Trumka?
Mr. Trumka. Significant consultation. Answers to specific
questions have been lacking. This goes over a period of
probably 3 or 4 years. My own personal experience goes back
When I was President of the United Mine Workers, we were
promised information on analysis over a 2 year period. We never
received it. When we talked about specifics, there are no
I think the danger of all of this is probably what was
perhaps a strategy, the strategy to adopt the treaty and worry
about how you comply with it later, and we are very, very
concerned with that type of strategy.
Mr. Fay. Senator, if I might add, the chairman raised a
question at the beginning of this about Mr. Wirth and his 70
percent reduction goal. That is one of the reasons we have
encouraged them to tell us where we are going. What is your
The original treaty has this vague language about
stabilizing at a level to prevent dangerous anthropogenic
modification of the climate. The science does not provide us
with a precise answer to that. But if it means that what they
are really thinking is 70 percent reductions, then we are
talking about a marathon, not a sprint. If they mean that but
are not telling us, then we are going to burn ourselves out in
the first mile.
So we have to know if they think they have enough
scientific data to tell us what we should be doing 20 years
from now. We think they have, then, enough information to tell
us where they think they want to be 100 years from now because
the technological innovation that is going to be required to
achieve whatever that is not out there today.
All we have said is just tell us where we are going.
Senator Sarbanes. Did you think that the goal that was set
in 1992 was a realistic one?
Mr. Fay. The 1990 levels by the year 2000?
Senator Sarbanes. Uh-huh.
Mr. Fay. I don't know that I have a basis for addressing
that. I think if that were the goal adopted in Kyoto, 1990
levels by 2010 or something like that, which often has been
mentioned, I think it is going to be very difficult. It will be
difficult both procedurally, just getting ratification and
implementation in this country. Whether we can achieve it or
how easy it is, I don't know. I don't think any of us knows.
Senator Sarbanes. That's why you want to see the specifics
of the game plan to do it, is that correct?
Mr. Fay. Right.
Now we do recognize, I should add, we do recognize,
Secretary Wirth did talk about the fact that it is a
negotiation. You don't expect a negotiator to give out a bottom
line during the negotiations.
I will say that I have been to the negotiations. We
participate as observers in the negotiating sessions. We are
carving out from the active negotiators the conservative
position, the United States is. We are the only country that is
talking about a developing country role. We are the only
country that is talking about flexibility through emissions
We are the only country that tabled a proposal to establish
a long-term objective, though some have now talked about long-
So the outline was a good start. But the progress or the
willingness of our negotiating partners, whether it is the
developing countries or the European Union, or Australia or
Japan, has been slow in coming.
Part of this is perhaps they have not listened to our
framework enough. Perhaps they are not sure we are serious
We think the United States has the strongest economy in the
world and should stand up and negotiate from a position of
strength and a right policy; but negotiate from a position of
strength and don't be afraid to walk away from a bad agreement.
Senator Sarbanes. Well, now, what is the European Union
position, as you perceive it?
Mr. Fay. They want a number. They want a number and they
have a laundry list of so-called policies and measures that
reads like a tired old list of regulatory programs that we
would just as soon not repeat, whether it is CAFE standards,
energy efficiency standards, chemical bans, carbon taxes. To
our credit, the U.S. is also one of the few governments that is
insisting now that that is unacceptable. But that is what the
European Union wants.
Senator Sarbanes. This is an interesting perspective which
probably has not been brought out this morning. That is, it is
your perception that, compared with other parties that are at
this negotiating table, there is more, I don't know whether the
word is ``rationality'' or ``prudence,'' perhaps, in the
American position that in a lot of the other significant
Mr. Fay. A year ago this time there was no discussion of
long-term objectives. There was very little support or no
discussion of developing country role. There was only
discussion of short-term, very short-term, targets and
The U.S. is the one who said they are all very impractical,
not doable. So, yes. I mean, the U.S. has done the most
scientific work on the issue and has done more economic
analysis, I think, than anyone else in the negotiations. But
that still does not mean you just agree to something, even if
it is a bad deal.
Senator Hagel. Mr. Trumka, did you have a comment?
Mr. Trumka. The proposal by the European Union, Senator, is
an additional 15 percent below 1990 levels by the year 2010.
You asked the question whether the framework was such that the
developing countries are now locked out of it.
Well, whether we think they are I think is probably less
important than what they think. They think that they are. They
think that they have done everything they have to, according to
the Berlin Mandate, and the Berlin Mandate sets the framework
for these negotiations. That is why it is so important for us
to change that notion.
This is because he is right. We are the only ones out there
Now the administration can talk very loudly about how they
want to include Third World countries. They are not going to
succeed in Kyoto in doing that. They are the only ones out
there saying that. If we agree to that type of treaty, I agree
with you, Mr. Chairman, that signing a treaty and then
renouncing it when it goes sour for us does not really increase
our level of esteem around the world.
This is a subject that has such wide ranging impacts both
on the environmental side and on the economic side and for the
development of this country that we need not set an artificial
deadline of Kyoto and say it must be done by then without any
clue of how we will achieve what we have agreed to.
That is a prescription for a disaster. We will then be
stampeded into bad decisions rather than some of the decisions
that Senator Sarbanes talked about, where we can really sit and
counsel together and really work toward a real lowering of
carbon dioxide gases in the atmosphere by everyone while we do
not pay all of the economic prices with jobs and the economy
here at home.
Senator Sarbanes. Thank you.
Senator Hagel. Gentlemen, thank you. You have offered great
insight into this issue. We will be talking with you again, I'm
We will keep the official record open till close of
business on Friday for our colleagues or others who want to
submit questions for the record.
Mr. Trumka. Thank you, Mr. Chairman.
Mr. Fay. Thank you.
Senator Hagel. We are adjourned.
[Whereupon, at 12:52 p.m., the subcommittee adjourned, to
reconvene at 9:32 a.m., June 26, 1997.]
ALL MEMBERS GLOBAL CLIMATE NEGOTIATIONS: ECONOMIC AND SCIENTIFIC
THURSDAY, JUNE 26, 1997
Subcommittee on International Economic
Policy, Export and Trade Promotion,
of the Committee on Foreign Relations,
The subcommittee met, pursuant to notice, at 9:32 a.m. in
Room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel
[chairman of the subcommittee], presiding.
Present: Senators Hagel, Thomas, and Sarbanes.
Also present: Senator Enzi.
Senator Hagel. The subcommittee will come to order. This
morning, the subcommittee meets to consider for the second time
the current international negotiations underway intended to
curb global greenhouse gas emissions. As world leaders began to
focus on this issue last week at the G-8 Summit and this week
at the United Nations, I want again to stress the importance of
our efforts in the U.S. Senate to be very actively involved in
As I mentioned last week, these hearings are not about
motives or blame, personalities, or politics. These hearings
are about finding the truth and the facts.
This hearing will focus on the economics and science that
form the basis of these negotiations and discussions. I look
forward to a fair and informative exchange on the merits of the
I want to thank our distinguished panelists for their time,
their testimony, and their courtesies. Welcome.
Before I ask each of you to respond, let me lay out some of
the facts of life that we are dealing with this morning. The
Senate just went into session at 9:30. We are dealing with the
Tax Reconciliation bill today. That means we will have a number
of votes this morning.
To the best of my knowledge, as of 9:30, what we will try
to do is get in at least a half hour of testimony. Then, when
the first vote is recorded, we will recess very briefly to
allow the other Members who are here and myself to vote. We
will then come back. That should take about 10 minutes. We will
pick up from there and finish that testimony. There will
probably be one more vote, for which we will do the same thing.
Then I think we will have some daylight for the rest of the
hearing. That will be the schedule as of now.
Sometimes, as you know, when you have a number of Members
present, we just hand off the gavel and let someone else
preside. But I don't want to do that because I would miss
someone's testimony. It is one of the prerogatives of the chair
to do it your way. It may be wrong, but it is your way.
So I will run the subcommittee hearing this morning in that
way. Before I ask for your testimony this morning, let me
introduce my friend and colleague from the State of Wyoming,
Senator Mike Enzi, who is not a member of this committee but is
very involved, engaged, and interested in this subject matter.
Senator Enzi, welcome.
Senator Enzi. Thank you, Mr. Chairman.
Senator Hagel. Do you have a statement? Would you like to
make any comments?
Senator Enzi. I would like to do so. I really do
appropriate your inviting me to be a part of this. This is a
very crucial issue to the United States and particularly to
Wyoming. Wyoming is the Nation's largest producer of coal. This
is a bipartisan issue, of course, because Wyoming and West
Virginia are large producers of coal. So I share Senator Byrd's
interest in the attempts to see that we do not incrementally
kill our Nation's energy producing capability.
I believe the theme of these hearings, which are going to
concentrate on economic and scientific considerations in the
global warming debate, go straight to the heart of the issue.
Even though there is a disturbing lack of scientific consensus
on this issue, the hype threatens to carry the day and stands
to have a devastating effect on our economy. Some of the
studies I have seen indicate it will be about $350 billion per
Many, when they hear these numbers, perceive them with
certain hysteria. They might say well, come on now, there's no
way the Government should risk that kind of economic carnage
unless the science is pretty persuasive. Well, I am still
waiting to see that persuasive science.
In fact, the newest sciences indicate exactly the opposite.
We can also look at past examples of what we have done to
ourselves. One of them is with our national forests. We had
environmental predictions that were backed on the body of
dubious science that showed that the spotted owl was headed for
certain extinction. They said the logging industry in the
Pacific Northwest had to be halted. We did do that. An entire
industry of workers was thrown out of work.
Our national forests were left unmanaged. They are a big
tinderbox. They are going up from lightning strikes. There is
no economic advantage out of the forests. At the same time,
this timid little owl is being found building nests in
While we do that, what we are doing is sending our economy
to other countries where we are devastating their forests. We
have sent them to the Siberian forests, where they are tearing
down 10 million acres of forest a year with no environmental
So in supposing to save the spotted owl, we have wiped out
the Siberian tiger--or we will. That is the kind of action that
we often take in the United States.
I have this rule of legislative action, which is that if it
is worth reacting to, it is worth over-reacting to. I see where
we do that time after time and send our economy to other
That is what the proposed treaties want to do now. They
want to send the economy to those areas of the world that are
underdeveloped without putting them under the same kind of
rules as the developed countries. We cannot take that kind of
economic hit. We just transfer dollars and jobs.
I am anxious to hear the testimony today to see if it
changes any of my views on the economy and the science. I
really do appropriate the opportunity to be a part of this
Thank you, Mr. Chairman.
[The prepared statement of Senator Enzi follows:]
Prepared Statement of Senator Mike Enzi
Thank you, Mr. Chairman. I am very grateful to have been invited to
participate in these hearings this morning. This is a very bipartisan
issue. Wyoming and West Virginia are the first and second largest coal
producing states in the nation. Consequently, I share Senator Byrd's
interest in the attempts to--as I see it--incrementally kill our
nation's energy producing and utilizing--industries.
I believe that the theme of these hearings, which concentrate on
the economic and scientific considerations of the global warming
debate, goes straight to the heart of this issue. Even though there is
a disturbing lack of scientific consensus on this issue, the hype
threatens to carry the day, and in so doing, stands to have a
devastating effect on our economy to the tune--some studies claim--of
350 billion dollars per year. Now, many citizens might hear those
numbers and perceive in them a certain hysteria.
They might say, ``well come on now, there is no way our government
would risk that kind of economic carnage unless the science was pretty
persuasive.'' To those people I would just say two words: National
Forests. I cannot think of a more illustrative example of dire
environmental predictions, backed by a body of dubious science, made
real in the most unexpected ways by the sheer demagogic momentum of
their proponents. In an effort to save the spotted owl from certain
extinction, they said, the logging industry in the Pacific Northwest
must be halted. And halted it was. An entire industry's worth of
Americans--over twenty thousand of them in five states--were thrown out
of work. Meanwhile, our national forests were left unmanaged and are
now overgrown fire bombs awaiting the lightening strike that will
detonate them, while the timid and ecologically fragile spotted owl,
never in imminent danger in the first place, is occasionally seen
building nests in bill board signs. And if that was not bad enough,
consider what is happening in Siberia. So productive was the carefully
managed forests of the Pacific Northwest, that for every one hundred
thousand acres of those forests taken out of production, one and a half
million acres of Siberian wilderness must be cut down to fill the gap.
And indeed, many of the surviving saw mills in those states are
importing Siberian timber just to keep their heads above water. In fact
the Russians are cutting down ten million acres per year of Siberian
Wilderness. Does anyone really think they observe the same stringent
environmental standards that we observed? In an effort to save the
spotted Owl, the government and the environmental activist community
have probably signed the death warrant for the Siberian Tiger. I relate
this sad tale only to illustrate that--no indeed--the power of sound
science is never a guaranteed trump to skillful spin and demagoguery. I
am very concerned that we will wind up exporting jobs, damaging our
economy and encouraging the environmental degradation of other nations
if we fail to demand that a high scientific standard rule this debate.
We have done it before. It looks like we are determined to do it again.
This is also an issue of common fairness. Some of the terms of the
International Treaty on Global Climate Change would hobble our economy
while allowing the economies of other nations to steam happily along
for years, barely burdened at all by their own, often lax,
environmental standards. How is that fair?
I am a big believer in the axiom that the worst thing in the world
for the environment is poverty. I think that a visit to any third world
country will confirm this. And it is precisely this conviction that
strikes so much fear into my heart whenever I hear someone predict that
unless we subject our economy to those of the developing world in this
misguided attempt to satisfy a scientific consensus that does not
exist, we will soon find ourselves face to face with an environmental
apocalypse. I do not believe it and until I see the scientific
community agree on a body of quality science, I will not. So I look
forward to your testimony gentlemen, and to asking you questions. My
comments notwithstanding, I assure you I am here to learn.
Thank you Mr. Chairman
Senator Hagel. Senator Enzi, thank you. We are grateful
that you are here and participating.
Let me now introduce our first panel of witnesses. We have
Mr. William J. Cunningham, Jr., Legislative Representative of
the AFL-CIO. Welcome, sir. Also we have Dr. W. David
Montgomery, Vice President, Charles River Associates. Dr.
Montgomery, welcome. We have Dr. Robert Repetto, Vice President
and Senior Economist, World Resources Institute.
We, again, are grateful that you would take the time to
come here this morning and share with us your views on this
Let me ask Mr. Cunningham to begin the testimony. Mr.
STATEMENT OF WILLIAM J. CUNNINGHAM, JR., LEGISLATIVE
REPRESENTATIVE, AFL-CIO, WASHINGTON, D.C.
Mr. Cunningham. Thank you, Mr. Chairman for this
opportunity to testify on behalf of the AFL-CIO on the
potential economic impact of a United Nations' global climate
The AFL-CIO has repeatedly stressed that environmental
protection and job creation can go hand in hand and we
recognize that sound environmental policy can create jobs as
well as improve the environment. The AFL-CIO supports the
administration in its efforts to enforce the Nation's
environmental laws and to insure adequate funding for research,
enforcement and cleanup as sound economic as well as good
We are, however, deeply concerned with the ongoing efforts
to negotiate a treaty to mitigate the effects of carbon dioxide
emissions on the Earth's climate. In particular, we are
concerned that the so-called Berlin Mandate requirements will
have an adverse impact on American economy but little or no
effect on the problem of greenhouse gas emissions. We are
further concerned that the permit trading of energy tax regimes
now under consideration by the administration will worsen the
At the February 1997 Executive Council meeting, the AFL-CIO
issued a statement elaborating on those concerns.
The Executive Council statement says: ``Carbon taxes or
equivalent carbon emission trading programs will raise
significantly electricity and other energy prices to consumers.
These taxes are highly regressive and will be most harmful to
citizens who live on fixed incomes or work at poverty level
``As corporations shut down domestic factories, mines, and
mills as a result of higher energy costs, they will have
additional incentives beyond the search for cheap labor and
anti-labor regulatory regimes to locate new capacity off-shore,
in countries with no carbon reduction commitments. Carbon
emissions, therefore, will be transferred to the developing
world along with the jobs, thus providing no real benefit to
As the administration considers its objectives for the
upcoming Kyoto negotiations, we urge that the Berlin decision
to confine mandatory emissions limitations to Annex I countries
Carbon dioxide emissions are growing three to four times
faster in the developing countries and these countries, with no
requirements, will soon be responsible for well over half the
planet's greenhouse gas emissions. Exclusion of developing
countries means that greenhouse gas emissions will continue to
grow at a rapid pace and the harm that increased concentrations
do will only be delayed rather than avoided. In fact, all else
being equal, stabilization of carbon dioxide at 1990 levels in
Annex I countries will delay the doubling of carbon dioxide in
the atmosphere by only 7 years.
Several studies have been done to estimate the impact of an
emission reduction regime on our economy. A range of estimates
exists, but even the most conservative estimate shows large job
According to the 1992 study by the U.S. Department of
Commerce, the carbon tax that would help the U.S. achieve
emission reductions of a scale now being discussed at the U.N.
would cost some 1.7 million U.S. industrial jobs.
The Urban Institute estimated that a carbon tax of $15 per
ton would reduce total nonagricultural employment by up to
410,000 jobs. Economists estimate that a carbon tax well over
$100 per ton would be needed to meet the requirements of the
CONSAD Research calculated that a total of 1.4 million
American jobs could be considered severely at risk under a
carbon tax of $24 a ton. Primary metals, oil and gas
production, electric and gas utilities, and railroads would
have the most jobs at risk. Again, this is a much smaller tax
than would be necessary to meet the requirements now being
considered by the United Nations.
CONSAD Research also showed substantial production cost
increases for energy intensive industries. For example, a
carbon tax of $100 per ton raises the cost of producing
aluminum by about 20 percent and the cost of cement by 41
Recently, the administration conducted two studies
estimating the economic impact of meeting emission reduction
targets. The first was released in June, 1996, and the second
is currently in draft form, dated June 1997.
The 1997 study makes new assumptions which reduce the
estimate of lost production and implicit job losses by roughly
one-half the GDP reductions estimated in the 1996 analysis. The
new assumptions also accelerate the economy's recovery by
several years. In general, estimated GDP losses are now smaller
and recovery occurs sooner. Nonetheless, the administration
draft study shows that 900,000 jobs could be lost as a result
of climate change policies. The job loss estimate should be
considered as very conservative. A more realistic estimate of
the impacts of stabilization at 1990 levels may be on the order
of 1.25 to 1.5 million jobs, but even larger job losses to
achieve a reduction below 1990 levels.
The 1997 administration study does not attempt to measure
the impact of the job loss to international competitors who are
not subject to emission limitation requirements. This is a
critical matter for jobs and incomes which the administration
The administration and its consultants expect that natural
gas will displace coal in increasing quantities. The DRI model
used by the administration indicates that 57 percent of all
emission reductions by 2010 in the stabilization case would
result from reduced demand for coal, increasing to 65 percent
A serious consequence of the loss in jobs in the coal
industry will be reduction of the fuel diversity in the U.S.
Less diversity in fuel use means the economy will be more
vulnerable to price and supply fluctuations of imported oil and
Both the target concentration level and the timetable for
the treaty are still to be negotiated. These are crucial
decisions that must be carefully considered because they will
have an impact on jobs and incomes. An examination of a range
of targets shows that there is time to put together a sound
treaty with carefully considered goals and timetables.
Negotiations should continue beyond the December Kyoto meeting
if that is necessary to arrive at an effective treaty with a
minimum of dislocation and cost to the economy.
A target of 550 parts per million is twice the
preindustrial level and is often cited by scientists as a
desirable goal. To stabilize concentration of carbon dioxide in
the atmosphere at 550 parts per million, total world emissions
of carbon could increase from current levels of some 6 billion
tons per year to a peak of 9 to 11 billion tons by the years
2033 to 2063. Major, near-term reductions of U.S. emissions
would not be required to meet such a target.
A target of 650 parts per million, which is well within the
range of concentration levels considered appropriate as a long-
term target, would allow global carbon emissions to grow to 11
to 13 billion tons by the years 2040 to 2075, reducing rapidly
These timetables are considerably longer than the short-
term carbon reduction proposals for industrial nations now
being debated before the United Nations. Obviously, setting
aggressive emission reduction goals for industrial nations
could prove to be premature and wasteful if other nations do
not make similar commitments.
In its discussion of reducing emissions, the administration
does not set a goal in terms of stabilizing carbon dioxide
concentrations at a given level. Signatories to the Rio Treaty
have not even begun to debate the appropriate target
concentration level. Yet such a goal is a key to a lasting
solution to the problem that we face and establishing such a
goal must logically precede a decision as to what kind of
emission requirements to place on any country.
If the administration is serious about stabilizing carbon
dioxide concentrations in the atmosphere, obligations must be
placed on all nations of the world to reduce or limit their
rates of growth of emissions. These reductions and limitations
should take into account the economic growth needs of
developing nations. Although this is a difficult task, it is
the only effective means of accomplishing climate change goals.
Senator Hagel. Mr. Cunningham, thank you.
We have been joined by my friend and colleague, the Ranking
Minority Member of the subcommittee, Senator Sarbanes from
Senator Sarbanes, would you like to make a statement?
Senator Sarbanes. No, I have no statement, Mr. Chairman. I
know that we have a vote problem on the floor and I think it is
important to try to get the testimony of these witnesses.
Senator Hagel. Thank you. Dr. Montgomery.
STATEMENT OF DR. W. DAVID MONTGOMERY, VICE PRESIDENT, CHARLES
RIVER ASSOCIATES, WASHINGTON, DC
Dr. Montgomery. Thank you, Mr. Chairman and Senator
Sarbanes. It is an honor to appear before you today and I
appreciate your invitation.
For the record, my name is David Montgomery. I am Vice
President of Charles River Associates and head of the CRA
I have a prepared statement which I have submitted for the
record and I will try to summarize and hit on the high points
of that to try to keep us moving along before the debate.
Just to mention a bit of background, the conclusions that I
will be presenting today come from work that we have been doing
at Charles River Associates for the past several years where we
have developed a set of integrated economic models that deal
both with international trade and with national economic
impacts of carbon limits. I will draw on the results of several
of our studies to try to cover the range of economic impacts
that I think are of interest to the committee.
I would also be happy to provide copies of our more
detailed studies dealing with these issues for the record. I
have some of those here with me.
As you are aware and as Mr. Cunningham mentioned, the
current negotiating process is working under a series of
guidelines or ground rules set by the Berlin Mandate, which
essentially say that the agreement to be brought to the meeting
in Kyoto in December should deal with near-term targets and
timetables for emission reductions that would only involve the
industrial countries and that would exempt the developing
countries from any additional commitments.
There have been a number of proposals along those lines.
The most ambitious was one from the Alliance of Small Island
States to have the industrial countries reduce their emissions
to 20 percent below 1990 levels by the year 2005 and then keep
them there from there on.
The European Union has made a somewhat more modest proposal
of a limit of 85 percent of 1990 levels in the year 2010. They
ask that a bubble be provided, essentially for the European
Community, that the European Community be allowed to work out
its own set of arrangements for meeting that goal while the
rest of the world, each country, was subject to a uniform
The United States position is not yet explicit, but one
possibility that seems potentially consistent with things the
administration has been working on would be to cap emissions
from industrial countries at 1990 levels from 2010 onwards.
That is probably the least binding of the targets that seem to
be underway in the negotiations.
I will actually concentrate on that one because that
proposal by itself would have serious economic consequences for
the United States and any of the others would have potentially
similar but larger consequences of the same kind.
So we can add to most of the things that I say, and if one
of the more severe proposals is adopted, it will be worse in
the same direction.
Any of these proposals would have serious consequences for
the U.S. economy as a whole. They would affect the trade
position of the United States and they would reduce the
international competitiveness of energy intensive industries.
I have not mentioned this much in my prepared statement
because I have taken it as a given, but let me mention that, of
course, their most severe impacts would be on the energy
producing industries themselves. That is something that we need
to keep in mind when thinking about all of these consequences.
The effects on U.S. international trade are due in large
part to the provision in the Berlin Mandate that developing
countries need not agree to any limits on their carbon
emissions. Just to cite some of the kinds of economic impacts
that are at issue, if any of these proposals is adopted in
Kyoto, they would lead to increases in energy prices and costs
for U.S. industry and households; they would lead to reductions
in U.S. GDP from levels it would otherwise reach; they would
increase the costs of U.S. industries relative to their
international competitors; they would cause losses in U.S.
exports and losses in output and jobs in specific energy
producing and energy intensive industries.
I thought what I would do in the remaining time that you
have allotted to me is just go through these kinds of impacts.
There are, basically, 10 points that I will try to hit and I
will try to hit each of them briefly. Then I will make myself
available for your questions.
The first point is that even the goal of holding emissions
at 1990 levels through 2010 will require a substantial
reduction of carbon dioxide emissions from levels they would
otherwise reach. The U.S. Energy Information Administration
forecasts that carbon dioxide emissions will be 20 to 25
percent above 1990 levels by the year 2010. That means it will
take a 25 percent reduction in emissions from what they would
otherwise reach in order to meet these targets.
This is going to require quite substantial policies. The
administration has indicated a preference for a cap in trade
system like that which was set up for sulfur emissions under
the Clean Air Act. Another alternative is a carbon tax. We can
discuss differences between them at some point. But they will
have similar implications for the cost of energy and the prices
that consumers and businesses face.
Our studies indicate that the price of an emission permit
that is sufficient to meet this cap of holding emissions to
1990 levels would have to reach $150 to $200 per ton of carbon
to introduce sufficient fuel switching and energy conservation
to reduce emissions by the 25 percent that is required. This is
equivalent to about a 50 cent per gallon tax on gasoline, fuel
oil, and other petroleum products using industry. It would be
an increase of 50 percent or more in the price of natural gas
and electricity to households and businesses. And--I am always
surprised when I do this calculation but I checked it again--it
would increase the price of coal by a factor of about 4 at the
The result of these higher costs of energy would first be a
loss of aggregate output in the economy. Since this topic may
come up later, like all other economic modelers, we assumed
that the revenues from taxes and permits are recycled in the
economy. It is not the collection of revenues that causes
damage to the economy. It is the change in patterns of energy
use and patterns of production and trade patterns that add up
to that loss in GDP.
We estimate that, again, for the limit of just holding
emissions at 1990 levels, the cost would be on the order of 1
percent of GDP in the year 2010, rising to about 3 percent in
later years. I think those are substantial and significant
Countries that do not adopt emission limits, the developing
countries that are left out of the process right now, would not
incur these costs. These disparities in energy costs will give
some developing countries a competitive advantage over the
I have given in my prepared testimony examples of some of
the countries that might gain such advantages. Jamaica, because
it is an oil importing country, will benefit from lower world
oil prices. It produces bauxite, which is a highly energy
intensive product which competes with the U.S. aluminum
India, another oil importing country, also has the
industrial infrastructure to take advantage of lower costs and
compete in a variety of manufactured products.
China, the world's most energy intensive economy, would
probably gain significantly in its export markets because it
would no longer face such a disadvantage in energy costs if the
industrial countries imposed these costs on their manufactured
goods and exports.
Industries that are most likely to be affected by carbon
limits are, first of all, the energy producing industries. The
kinds of reductions in coal production Mr. Cunningham was
talking about sound reasonable to me. They not only mean
cutting off growth in coal. They mean substantially lower
levels of output for the coal industry in 2010 and beyond than
it has today.
But there are other energy intensive industries that are
likely to be substantially affected. I have put in my prepared
testimony a chart which shows the cost increases that we would
expect for the top 25 non-energy industries, that is, 25 out of
about 100 industries the way we put them together, due to a
$100 a ton carbon tax. It shows, for example, that the aluminum
industry would face cost increases of about 12 percent.
Now we have looked at the implications of these kinds of
cost increases in a couple of our economic models. One is a
broad model that looks at patterns of international trade and
it suggests that, in general, for the non-ferrous metals
industry, we would expect to see losses in output--this is not
just exports, but losses in total output--of 2 percent to maybe
10 percent, depending on the region and the strength of the
emission limit that we are looking at, and corresponding
increases in output for the non-ferrous metals industries in
China, in India, and in the rest of the world.
So we definitely reach the conclusion that there will be
shifts in output and that carbon limits in the industrial
countries not applied to the developing countries will produce
a significant shift in the production of some energy intensive
goods away from countries like the United States and toward
developing countries that would not be subject to these
Now this shift of energy intensive industries to developing
countries not subject to emission limits also frustrates the
environmental objectives of the United Nations treaty because,
as those countries increase the output of their energy
intensive industries and increase their use of energy, they
will increase their carbon emissions. This is known as the
phenomenon of leakage.
Different studies with different models have seen leakage
anywhere from 10 percent to 70 percent of the emission
reductions that would be recurring in the industrial countries.
At the high end of the range, that says for every 3 tons of
emission reduction in the U.S., we would only reduce global
carbon emissions by 1 ton. That reduces immensely the cost
effectiveness of any policy. It increases in direct proportion
what it costs to meet any goal for protecting the global
climate, which, of course, depends on what every country's
emission reductions are.
Let me conclude by pointing out--and this, again, follows
on a point Mr. Cunningham made--that the economic costs to the
U.S. economy from these near-term emission limits are neither
necessary nor sufficient for achieving the goals that are
expressed in the Framework Convention on Climate Change.
Climate change depends on the concentrations of greenhouse
gases in the atmosphere. There are many different time paths
for emissions by which we could achieve any target for
concentrations of greenhouse gases. Choosing one of those time
paths which delays emission reductions until technologies can
be developed to make those emission reductions cheaper and to
allow normal turnover of the capital stock and avoid stranding
assets throughout the economy can reduce costs by about 30
Bringing the developing countries into the process so that
emission reductions occur where they are cheapest, like in
China, with its immensely inefficient coal fired power plants
they will be building over the next century, can reduce costs
We conclude that appropriate timing of emission reductions,
which really means delay of the emission reductions well beyond
any of the targets and timetables that are being looked at in
the Berlin process and including developing countries can
reduce the costs by 90 percent and leave us at the same point
or even better in terms of the objectives of the Framework
[The prepared statement of Dr. Montgomery follows:]
Prepared Statement of W. David Montgomery
Mr. Chairman and members of the Subcommittee, I am honored to
appear before you to discuss the potential economic impact of a United
Nations' global climate treaty. For the record, my name is David
Montgomery and I am Vice President of Charles River Associates (CRA)
and head of the CRA environment practice. I have been involved in the
analysis of economic impacts of climate policies since the late 1980s,
when as Assistant Director for Natural Resources and Commerce, I
directed the Congressional Budget Office study of carbon taxes. I was a
principal lead author of the Second Assessment Report of the
Intergovernmental Panel on Climate Change (IPCC), with responsibility
for sections on the economic impacts of limiting carbon emissions.
Under my direction, we have conducted a series of studies on economic
impacts of climate chance policies at CRA, with support from the
Electric Power Research Institute, the American Petroleum Institute,
the American Automobile Manufacturers Association, and other clients.
In particular, my colleagues and I have developed a set of
integrated economic models that deal with international trade and
national economic impacts of such limits. I will draw on the results
from several of our studies to cover the range of economic impacts that
I believe should be of interest to the subcommittee. We are continuing
to investigate these issues, and expect to be completing new estimates
of economic and trade impacts shortly. I would be happy to provide
copies of our more detailed studies dealing with these issues for the
As you are aware, international negotiations are now in progress
leading up to a meeting in Kyoto, Japan in December. These negotiations
are taking place under a set of ground rules known as the ``Berlin
Mandate,'' referring to the location of the First Conference of the
Parties to the Framework Convention on Climate Change (COP-1).
Negotiations under the Berlin Mandate are intended to produce a
``protocol, or other legally binding agreement'' incorporating
quantitative objectives for limiting and reducing Greenhouse gas
emissions, for the years 2005 to 2015, and excluding any additional
commitments on the part of developing countries.
A number of proposals for such emission limits have been
introduced. Three of the most important are from the Alliance of Small
Island States, the European Union, and the United States.
AOSIS: limit greenhouse gas emissions from industrial
countries to 80% of 1990 levels from 2005 onwards.
European Union: limit emissions from industrial countries to
85% of 1990 levels in 2010, with a ``bubble'' for the European
United States: support for ``hard targets in the medium
term,'' without committing to specific targets or timetables.
One possibility is capping emissions from industrial countries
at 100% of 1990 levels from 2010 onwards.
Any of these proposals, if adopted, would have serious consequences
for the United States economy as a whole, affect the trade position of
the United States, and reduce the international competitiveness of
energy-intensive industries. The consequences for U.S. international
trade are due in large part to the provision in the ``Berlin Mandate''
that developing countries need not agree to any limits on their carbon
The important economic impacts of proposals that could be adopted
in Kyoto include increases in energy prices and costs for U.S. industry
and households, reductions in GDP, increases in costs of U.S.
industries relative to their international competitors, losses in U.S.
exports, and losses in output and jobs in specific energy producing and
energy-intensive industries. I will use results from Charles River
Associates' study of a proposal to cap emissions at 1990 levels from
2010 onward to illustrate the potential impacts of an agreement in
Kyoto. Any of the other proposals would have similar, but larger,
The remainder of my testimony is organized to answer the following
How large a reduction in carbon dioxide emissions could be
How high will the required carbon tax or price of emission
How much will energy prices increase?
What losses in GDP are likely?
How great a disparity in energy costs between the United
States and its international competitors will be created?
How will the U.S. terms of trade with other countries be
How will U.S. exports be affected?
How will output of specific energy intensive industries be
How does increasing production of energy-intensive goods in
developing countries affect progress toward global climate
Holding emissions at 1990 levels from 2010 onwards will require
significant efforts, because in the absence of limits on emissions,
economic growth will cause rising demand for energy services. Even
assuming that there will be substantial future improvements in energy
efficiency, the U.S. Energy Information Administration projects that
carbon emissions are likely to grow to more than 20% above 1990 levels
by 2010. Thus it would be necessary to reduce emissions by 25% or more
below the levels they would otherwise reach to meet the 1990 target,
and further to comply with more ambitious proposals.
The Administration has indicated that its preferred method of
implementing an emission limit is through a ``cap and trade'' system,
similar to that pioneered in the sulfur emission trading program
created by the Clean Air Act Amendments. The price of a carbon emission
permit would be set in the emission trading market, and would equal the
marginal cost of reducing emissions to the required level. Taken from
another perspective, the price of an emission permit would equal the
carbon tax required to reduce emissions to the level of the cap. Our
studies estimate that the price of emission permits would have to reach
$150 - $200 per ton to induce sufficient fuel switching and energy
conservation to reduce emissions by 25% in 2010. This is the cost of
the most expensive measures required to meet the target - such as
building new natural gas combined cycle units to replace coal in
existing electric utility power plants, or increasing the cost of new
cars to achieve large increases in fuel economy.
This cost would be reflected in the market prices of different
forms of energy. A cost of $200 per ton of carbon is equivalent to
approximately a 50 cent per gallon tax on gasoline, fuel oil, and other
petroleum products used in industry, and an increase of 50% or more in
the price of natural gas and electricity to industry and households.
The result of these higher costs of energy would first be a loss in
aggregate output in the economy. It is important to emphasize that this
loss comes about not because of revenue that would be collected by the
Treasury. Like all other economic models, we assume the revenues from
taxes or permits are recycled in the economy. The economic cost of
emission limits comes from the costs that must be incurred to reduce
energy use and switch fuels in order to meet the limits. This is true
whether carbon taxes or tradable permits are used. We estimate that
holding carbon emissions to 1990 levels from 2010 onward would cause
GDP losses on the order of 1% of GDP in 2010, rising in later years as
greater efforts are necessary to hold to the cap with rising energy
Countries that do not adopt emission limits will not incur these
costs. Indeed, energy importing developing countries will benefit from
lower energy costs than they would face in the absence of emission
limits, because the drop in fossil fuel demand in industrial countries
will put downward pressure on the prices of oil and coal imported by
developing countries. These disparities in energy costs will give some
developing countries a competitive advantage over the United States.
The countries in the best position to exploit this benefit are the more
advanced developing countries like Korea, that import most of their oil
supplies - thus benefiting from lower world oil prices - and have the
industrial infrastructure in place to take advantage of their lower
costs and increase their share of world markets.
Differences in energy costs will affect the terms of trade between
the U.S. and regions of the world not included in the negotiations for
emission limits. Terms of trade measure the price received for exports
divided by the price paid for imports. When the terms of trade rise, it
means that export prices have risen relative to the cost of imports.
The result is that U.S. exports are less competitive on international
markets, and imports are more competitive in U.S. markets. We estimate
that limiting U.S. emissions to 1990 levels would cause the cost of
U.S. exports to rise, relative to the cost of imports, by about 1%.
Overall, U.S. exports are likely to fall, and exports from non-
participating countries are likely to rise as a result of the costs
imposed on the U.S. by carbon limits. Figure 1 displays our estimates
of changes in exports from the United States and selected developing
countries, due to adoption of carbon limits in the U.S. and other
Jamaica's exports are likely to increase because Jamaica imports
oil, whose cost will fall, and exports bauxite, a very energy intensive
material. Indonesia is in a position to use its domestic oil and gas
production to support increases in its exports of non-energy goods, and
China is a very energy-intensive economy whose products will become
more competitive when energy costs increase in the industrial
countries. India is an oil importing country with the industrial base
to take advantage of lower energy costs.
The industries whose competitiveness is most likely to be affected
by carbon limits are energy intensive industries. Figure 2 gives an
indication of which industries are most likely to be affected. It shows
the increase in cost likely to be caused by a $100 permit price or tax
on carbon. Both direct costs due to higher energy costs in the industry
itself, and indirect cost increases due to changes in the costs of
materials purchased by the industry, are included. The industries
particularly at risk include cement, pulp and paper, copper, iron and
steel, and aluminum.
How large a loss in output will be caused by such cost increases
depends on several factors: how sensitive demand for the products of
the industry is to their price, what kinds of substitutes are
available, and in particular whether competitors producing the same
goods in other countries are subject to the same emission limits.
Figure 3 contains results from our most comprehensive dynamic model
of international trade that incorporates 9 world regions, 6 non-energy
industries, and a detailed representation of energy production and use.
These results give an example of how emission limits applying to just
the industrial countries could affect output of the nonferrous metals
industries, which include several of the industries with the largest
likely cost increases in Figure 2. Output of these industries in the
United States and all other OECD countries would fall, while output in
developing countries such as China not subject to emission limits would
Employment in affected industries will be also be reduced by the
reduction in their output, compared to levels projected in the absence
of emission limits. Energy industries, of course, will shrink most,
with coal likely to suffer the largest losses.
In another recent study, we examined three energy-intensive
industries in more detail: aluminum, copper, and pulp and paper. In all
three cases we concluded that increased energy costs due to emission
limits could have significant effects on output of these industries in
the United States between 2010 and 2030, ranging from about 5% for the
copper industry to over a 50% loss in output for the aluminum industry.
We made these estimates by comparing the cost of expanding capacity in
countries not subject to emission limits to the costs of continuing
operations in the United States. We concluded that because of their
advantages in energy cost, many of the countries that are exempt from
carbon limits under current proposals could expand output and capacity
at a cost less than the cost of continued operations in the United
States, and at significantly less than the cost of adding new capacity
in the United States.
The shift of energy-intensive industries to developing countries
not subject to emission limits also frustrates the environmental
objectives of the United Nations treaty. Since the developing countries
will be producing more energy-intensive goods, and using more energy,
than they would in the absence of emission limits on the industrial
countries, carbon emissions from developing countries will rise. This
increase in emissions from exempt countries is known as ``carbon
leakage.'' In another recent study my colleagues estimate that carbon
leakage could be about 12% -- for every 8 tons of emissions reduced by
the United States, global emissions would fall by only 7 tons because
there would be I ton of increased emissions from developing countries.
Other studies have found even higher leakage, some implying that two-
thirds of the emission reductions from the industrial countries would
be offset by increases in the developing world. (see T. F. Rutherford
in An Economic Perspective on Climate Change Policies, American Council
for Capital Formation, 1995). The phenomenon of leakage follows solely
from the failure to include developing countries in the process of
limiting emissions, and significantly increases the cost of reaching
any goal for global emissions.
Finally, I would like to put these economic impacts in a broader
perspective. Near term limits on emissions from the industrial
countries are neither necessary nor sufficient to address global
climate change. These are the issues of ``where and when'' flexibility.
As the Framework Convention on Climate Change itself recognizes, it is
the concentration of greenhouse gases in the atmosphere that matters
for climate change. There are many different time profiles of emissions
that can produce the
same effect on ultimate concentrations of greenhouse gases (the
definitive study on this subject is by Wigley, Richels and Edmonds in
Nature, March 1996.) Delaying emission reductions to allow time to
develop new technologies that will provide substitutes for fossil fuels
at lower cost than any available today, and to deploy those
technologies as the capital stock turns over naturally, can reduce
economic impacts dramatically.
Costs can also be reduced by bringing developing countries into the
process. As Figure 4 illustrates, the developing countries will be
responsible for the vast majority of the world's carbon emissions over
the next century. Even eliminating carbon emissions from the industrial
countries would not be sufficient to keep carbon concentrations in the
atmosphere from rising. Moreover, countries like China could reduce
emissions from planned coal-fired power plants far more cheaply than
the United States can squeeze further improvements out of its already
Figure 5 illustrates the cost savings that are possible. These
results were developed as part of an IPCC exercise examining where and
when flexibility. The first bar represents the costs of meeting the
AOSIS targets as a reference. Each other bar shows global costs of
achieving the same total reduction in emissions that would be achieved
under AOSIS in the 2000-2050 time period. The second bar assumes that
the industrial countries are still solely responsible for emission
reductions, but are allowed to choose the timing of emission reduction
flexibly. The third bar assumes no flexibility in timing, but that the
burden of achieving the emission reductions required by AOSIS is spread
across all countries, including developing countries. The fourth bar
includes both flexible timing and inclusion of developing countries in
emission reduction. These results show that it is possible to reduce
costs by 90% by allowing time to develop lower cost technologies and to
bring developing countries fully into the process of reducing
emissions. All this is possible while achieving the same results for
protection of the global climate.
To recap my testimony, let me make a series of points.
The proposals now under consideration in negotiations on the
United Nations climate treaty could have significant economic
impacts on the United States.
They would increase energy costs in the United States
relative to competing countries that are not being asked to
make commitments to reduce carbon emissions.
These cost increases are likely to reduce U.S. exports and
confer trade advantages on industries in the same developing
Energy-producing and energy-intensive industries are likely
to suffer losses in output and employment if any of these
proposals are adopted.
Failure to include developing countries in any agreement to
limit emissions results in carbon leakage that significantly
increases the cost of achieving the goals of climate policy.
Substituting investment in science and technology for near
term emission limits, and including developing countries in
commitments to limit emissions, can reduce costs by as much as
90% while achieving the same or better effects on
concentrations of greenhouse gases in the atmosphere.
Senator Hagel. Dr. Montgomery, we thank you very much.
Senator, we have a vote right now. I think this will be a
good time to recess until we return.
The subcommittee will stand in recess and we will be coming
Senator Hagel. The subcommittee will come to order.
We have been joined by my colleague from Wyoming, Senator
Craig Thomas, who is a member of the full Foreign Relations
Committee as well as this subcommittee and who also serves as
chairman of the Asian Subcommittee. I would ask Senator Thomas
for any comments or remarks.
Senator Thomas. Thank you, Mr. Chairman. I have a couple
some remarks to make.
As I stated last week, I am opposed to any efforts that
would set legally binding targets and timetables on developed
countries to reduce greenhouse emissions, while at the same
time exempting developing countries. I do not believe this
process is based on good policy judgments, or sound science.
Restricting economic growth in this country while allowing
developing nations, such as China, Mexico, South Korea, Brazil,
and India the unlimited use of fossil fuels will insure nothing
less than worsening the problem we claim we want to fix.
I am pleased that 64 Members of the Senate have co-
sponsored the resolution introduced by Senators Byrd and Hagel,
which represents this same point of view.
Hopefully, we will get the attention of the administration
and they will refrain from signing any binding agreement for
industrialized countries in Kyoto this December. Rushing into
this agreement will, I believe, hurt America's economic
competitiveness for questionable benefits.
I am also concerned that the U.S. will see a shift of jobs
from our soil to overseas. We should constantly work to reduce
air pollution. But we should continue to do that around the
world, and everyone must participate.
However, this must be done in a manner that does not
threaten our jobs or international competitiveness.
I appreciate the efforts of the chairman and this
subcommittee to continue to work on this. I shall continue to
work on it as well. I hope we can slow the administration, stop
the administration, from committing to any binding agreements.
Mr. Chairman, I am pleased to be here and glad you are
having this hearing.
Senator Hagel. Senator Thomas, thank you.
Now I would like to introduce our fourth panelist, Jerry
Jasinowski, who is President of the National Association of
Jerry, we are pleased to have you. I understand you have a
date with Carol Browner at 11:30. We would be very pleased to
receive your remarks and then in whatever time you have
remaining, Senator Sarbanes and the rest of us might ask a
question or two.
Senator Sarbanes. Has Dr. Repetto given his testimony?
Senator Hagel. He will be next, after Mr. Jasinowski.
STATEMENT OF HON. JERRY J. JASINOWSKI, PRESIDENT, NATIONAL
ASSOCIATION OF MANUFACTURERS, WASHINGTON, D.C.
Mr. Jasinowski. Thank you very much, Mr. Chairman. I would
want to say good morning to Senator Thomas and Senator Sarbanes
and to thank the committee for its leadership on this very
I have a longer statement I would like submitted for the
record and would like to make several points briefly in summary
about the economic impact and why this is an unworkable treaty.
As you know, I am President of the National Association of
Manufacturers. We have 14,000 companies, 10,000 of which are
small, all across the country, covering all the industries that
would be impacted by this treaty and representing 18 million
As a result, we have a very big stake in this, Mr.
Chairman, and I would say that, first, we feel that the global
climate issue is a very important one and that we ought to
continue to make progress in understanding it and make progress
in even reducing emissions through means of greater energy
efficiency, exporting technology that reduce pollution abroad,
and studying this problem so that we understand the real
Manufacturers have been responsible for about two-thirds of
the investment in pollution control over the last 2 decades,
and we have a terrific record in the United States of having
made progress on air quality. We want to continue to do that.
Our record certainly is as good or better than that of the
Europeans, notwithstanding some of the comments in the press
recently by the Europeans.
Our problem with this proposal, Mr. Chairman, is that it
calls for a legally binding international agreement on only
industrialized countries, not the developing countries, which
will make it unworkable since we won't be able to reduce
emissions properly, and it also will put us at a considerable
trade and competitive disadvantage, which will cause the loss
of jobs in this country and severely damage several industries.
This, in turn, will affect workers and have an enormous effect
on the economy as a whole.
Let me say before I go into the details of the economic
impact that I would want to subscribe to pretty much everything
that David Montgomery said. As I carefully listened to what he
said, the range of economic estimates that he made for every
aspect of a proposal to cap the 1990 emissions by 2010 reflects
pretty much what we know from the studies that we have looked
at as well as a great deal of information from these real live
manufacturers who are out there analyzing and trying to
understand what this treaty means.
I think that the estimates are pretty much congruent with
Mr. Cunningham's proposals and analyses as well. But let me go
through and repeat these in terms of six major reasons why we
are opposed to a legally binding treaty--not opposed to moving
forward with dealing with this important global issue.
I might say before doing that that we support Senate
Resolution 98, which you have shown great leadership in
sponsoring as well.
Turning to the enormous negative impact associated with
this on the economy as a whole and repeating some of what David
Montgomery said, if you look at this overall, what you see from
DRI studies, his analyses, comments and analyses from Professor
Nordhaus, the Australian studies, basically you see a 1 to 2
percent reduction in GDP growth, which would give you roughly a
$100 billion plus increase in costs associated with moving or
capping the 1990 emissions.
It could be as high as $200 billion, but let's take the
most conservative estimates.
From this, you see from our members and the Argonne Lab
analyses that we are looking at a 5 to 10 percent increase in
the cost of most of the industries affected. Mr. Montgomery's
chart does an excellent job of telling you precisely what
industries these are. But we are talking about steel,
petroleum, paper, coal, chemicals, transportation, aluminum,
utilities, and all the related industries. So we are talking
about an extraordinary expanse of American industry that would
have a 5 to 10 percent increase in their costs.
Now, Mr. Chairman, as you know, in today's global economy
you cannot raise prices. The average price increase for
manufacturing over the last 5 years has been 1 to 2 percent. It
is impossible--it is impossible--to pass on a 10 percent
increase in this global economy. So what happens? The next
thing is that you lose out on your global competitiveness. You
are not able, of course, to export. Once that happens, you look
at it and say look, I cannot produce in the United States the
way I could before. Unfortunately, Mr. Chairman--this is not
suggested as any kind of threat; it is the reality--firms will
move abroad. This absurd design of the treaty that leaves out
developing countries means that we are going to move to
developing countries in order to produce cement, or chemicals,
or these other matters. This is going to mean an extraordinary
loss of jobs, which is a very large part of the reason that the
NAM and the AFL-CIO both oppose this binding, legal agreement
at this time.
So if you look at the macro effects, they are enormous in
terms of GNP, trade competitiveness, the cost of industries,
the specific industry affected, and in jobs.
As you go down that ladder, it also gets very damaging with
respect to consumers and workers.
Now the job estimates are hard to come by altogether. In my
own testimony, in the written part, I would like to correct a
statement at the beginning, where it says millions of jobs
lost. My estimate is that we are talking about something
between 1 million and several hundred thousand. Some suggest,
and I know the AFL-CIO think, that it could be even higher. I
don't know that it ever got into the millions.
What was the highest estimate that you had?
Mr. Cunningham. We estimated at 1.25 to 1.5 million. That
is based upon the administration's study for stabilization at
Mr. Jasinowski. I could go to 1.2 million. I just did not
want to suggest that it is millions and millions. We are
talking that it could be that, but we are talking,
conservatively, about something in the range of a million to
several hundred thousand associated with these GNP losses.
The numbers are hard to believe, as Mr. Montgomery said--a
50 percent increase in gasoline, a four-fold increase in coal,
fuel oil increases of 60 to 70 percent. These are at, again,
the minimum proposal that is being discussed in this treaty
So what you have here as a result of these extraordinary
economic impacts is this. I really should have mentioned
agriculture, where you see, and I am sure you are aware in your
own State, everything from fuel oil to fertilizer, to
pesticides, are going to increase in costs. Our ability to
compete in terms of the farm industry is going to be damaged.
As a result, what we see are small business, energy
intensive industry, manufacturing, utilities, agriculture,
labor unions, and I think increasingly mayors and Governors
saying why are we in a situation where we are pursuing an
extreme set of proposals in terms of its economic impact and at
the same time, to go to my next point, leaving out the
In my statement I say not only do you harm the United
States economically because what you do is put them at a trade
disadvantage and you shift production abroad, but what you have
because of leakage and what you have because you are leaving
out these developing countries is that you don't achieve your
I mean, it is a little bit absurd, when we are looking
forward over the next decade or so, where the developing
countries will contribute three-quarters of the greenhouse gas
emissions, and where China's emissions are going to double,
that we would, in fact, consider a proposal where we would
shoot ourselves in the foot economically, give a competitive
advantage to the developing countries that we are struggling to
compete with, and we support open trade, and we support fair
competition, and we fought along many of you for China MFN. Why
would we, in fact, give ourselves a competitive disadvantage
and then not achieve our environmental goal because of leakage
and the fact that these people do not have to comply with the
It is, I think, even for serious analysts, absurd to really
think that this kind of proposal makes sense for the American
If you go on and look at other aspects of the economic
impact, besides the ones that I mentioned, you begin to ask
yourself this question: If the economic impact is so large and
if by leaving out the developing countries the treaty becomes
so unworkable, what about the rest of the proposals with
respect to the treaty in terms of a mechanism that will achieve
There I think what is striking is the extent to which we do
not really know what the administration proposal is.
Now I know that there is some inconsistency in what I am
saying. On the one hand, I am outraged by what are, I think,
some extraordinarily ambitious environmental goals and their
negative impact. On the other hand, we don't know what the
administration is proposing.
I must say in my 15 years of public policy experience that
I have never seen a case where we had something this important.
Some people suggest that it has the largest potential economic
impact on the United States of anything--the tax bill, the
regulatory bill that we heard announced yesterday--and yet we
have very few facts from the administration as to what our
proposal is. We are supposed to go to Kyoto in 6 months and
decide this legally binding treaty.
We don't know what the economic impact is. We don't know
what the goals are. We don't know what mechanism it will be. Is
it a carbon tax? Is it a trading system? How do we do it? Then,
beyond that, what is the enforcement mechanism that would
People talk, and I certainly am sympathetic to trading
mechanisms because they use price signals. But can you imagine
a trading regime on a worldwide basis even being able to track
emissions well enough to know who can trade what? I think it is
very close to impossible.
So what you have, I think, is a lack of specifics as to
what we are asking the Senate and this committee to go forward
with. It seems to me this cries out for a much larger national
debate before we go forward with this treaty.
So in conclusion, Mr. Chairman, we think that we ought not
to go forward with the legally binding treaty at this time
because we don't have enough information on the science, which
I have not gone into but you have taken great testimony on it
and it is not convincing. The adverse economic impacts are
huge. We ought not to go forward as long as the developing
countries are not full participants.
Now I have debated the environmentalists on this issue many
times and all of them who are thoughtful analysts agree that
this will not work unless the developing countries are
Bill Nordhaus, who is a leading economist who supports
moving forward, says it won't work unless you've got the
So let's not kid ourselves. Let's take time to do the
analyses and have the national debate that this important issue
Thank you, Mr. Chairman.
[See appendix for longer statement submitted by Mr.
[The prepared statement of Mr. Jasinowski follows:]
Prepared Statement of Jerry Jasinowski
Senator Hagel, and others: Good morning. My name is Jerry
Jasinowski. I am President of the National Association of
Manufacturers, the nation's oldest and largest broad-based industrial
trade association. Its 14,000 member companies and subsidiaries,
including approximately 10,000 small manufacturers, are in every state
and produce about 85 percent of U.S. manufactured goods. The NAM's
member companies and affiliated associations represent every industrial
sector and employ more than 18 million people. The NAM's mission is to
enhance the competitiveness of manufacturers and improve living
standards for working Americans by shaping a legislative and regulatory
environment conducive to U.S. economic growth, and to increase
understanding among policymakers, the media and the general public
about the importance of manufacturing to America's economic strength.
The National Association of Manufacturers opposes a legally binding
international agreement on climate change that requires industrialized
nations to reduce level of greenhouse gas emissions, to the exclusion
of developing nations. Such an agreement would hurt America's
manufacturers, workers and families, with little or no environmental
benefit, since new restrictive energy policies in the U.S. simply would
force the flight of U.S. investment to developing countries. Millions
of Americans would lose their jobs, and American manufacturers could
take a severe hit in the world marketplace. With no consensus in the
scientific community to support the theory of enhanced global warming,
it makes no sense for the U.S. to participate in an international
political compromise that would employ drastic measures without
reaching its goal.
I commend the Chairman for his leadership in holding this hearing
today to help get more input on this important issue. We support Senate
Resolution 98, sponsored by 64 senators, which Senator Byrd and Hagel
introduced recently. We appreciate your leadership on this critical
issue that will affect all Americans.
On behalf of the NAM, let me suggest six areas that animate our
opposition to adoption of a binding treaty this year:
1. First, Adoption of Legally Binding Emission Reduction Commitments
Will Profoundly Impact the U.S. Economy.
If legally binding caps are placed on greenhouse gas emissions in
developed countries and not on developing countries as well, the United
States will experience a slowdown in economic growth, a reduction in
manufacturing productivity and competitiveness, a flight of domestic
industry to locate abroad, and a loss of jobs. These are indisputable
facts supported by a number of studies.
According to William Nordhaus of Yale University, ``the magnitude
of the global investments necessary to make a significant dent in the
problem (would be) probably hundreds of billions of dollars a year.''
A report prepared by DRI/McGraw Hill estimated a decline in the GDP
of 2-3 percent ($140-200 billion) if carbon emissions are stabilized at
1990 levels by the year 2010. A recent study by the Pacific Northwest
Laboratory found that stabilizing greenhouse gas emissions will result
in a 1-2% reduction in GDP.
We have learned from our members that some industries are at
particular risk: primary aluminum, primary ferrous metals, iron ore
mining, pulp and paper mills, chemical and fertilizer mineral mining,
industrial chemicals, and transportation industries. Production costs
could increase substantially; for example, 15% for blast furnaces and
steel mills, 9% for primary aluminum, chemical and fertilizer mineral
industries, and 6-8% for paper and pulp mills.
A draft report not yet published by the Department of Energy's
Argonne Lab evaluated the impacts of reducing greenhouse emissions to
1990 levels by the year 2010. One scenario estimates the price of
electricity would increase by 50 percent, the price of coal would more
than double, the price of natural gas and fuel oil would increase by
70-80 percent. As a result, the U.S. trade competitiveness in six
energy-intensive industries would significantly decline, and those
industries would relocate production capacity abroad to developing
countries with no emission caps. These industries include: iron and
steel, petroleum, paper and allied products, aluminum, chemical and
2. Proposed Commitments Would Also Result in Substantial Costs to
Americans, Including Higher Energy Costs and Job Loss.
A carbon tax set high enough to achieve the proposed reduction
goals would cause gasoline, fuel oil, and electricity, prices to rise
by 50 percent. A recent Data Research International study concluded
that to merely stabilize emission to 1990 levels by 2010 would require
a tax of as much as $200 per ton of carbon. That is the equivalent of
$23 tax per barrel of oil. The impact on a family is estimated as high
as $5,000 per year for a family of four.
Impacts would be severe on agriculture. Crop production products,
diesel fuel, feed and seed, electricity, and fuels, would affect food
pricing and availability.
The AFL-CIO's Executive Council adopted a resolution in February
1997 condemning the exclusion of developing countries from efforts to
negotiate legally binding carbon restrictions because it will ``create
a powerful incentive for transnational corporations to export jobs,
capital and pollution, and create an uneven playing field that will
cause the loss of high-paying U.S. jobs in the mining, manufacturing,
transport and other sectors.''
Job losses will result from economic slowdown and rising
unemployment. Estimates range from the DRI study's one million jobs
lost to Charles River Associates study showing at least 250,000
American jobs. DOE's Argonne lab estimated job losses of 23,000 for
aluminum smelters, the chemical industry could experience job losses by
as much as 75,000, in the cement industry by as many as 5,800.
3. By Exempting Developing Countries from the Treaty, the Proposed
Commitments Will Negatively Impact U.S. Trade Competitiveness Without
any Net Environmental Benefit.
Greenhouse gas emissions in developing countries are rapidly
increasing and are expected to surpass emissions of the United States
and other OECD countries as early as 2015. Developing nations are
expected to contribute 76 percent of total greenhouse gas emissions
within the next fifty years. Developing countries are expected to be
responsible for as much as 85 percent of the projected increase in
carbon dioxide emissions.
The majority of greenhouse gas emissions in the next century will
come from China, India, Brazil, Indonesia, Singapore and others as a
result of their projected population surges and economic growth. By
2015, developing countries' emissions will have increased by more than
141% over 1990 levels while the OECD countries' emissions will increase
A recently-released study from the Australian Bureau of Agriculture
and Resource Economics stated that by the early part of the 21st
century, China's emissions alone will be nearly double the amount
emitted by the U.S. and triple that of the European Union.
Developing countries will experience a surge in economic growth as
industry shifts their production capacity abroad to areas with no
greenhouse gas emission caps (and probably little to no environmental
pollution control requirements). Industries leading the exodus from the
U.S. are those that are most energy-intensive, as discussed earlier.
4. The U.S. Should Not Agree to New Commitments Without a Full Debate
of the Economic Realities and Public Debate on Whether the Costs to the
American Economy are Justified.
The Administration's proposal has been inadequately developed and
disclosed and this raises serious questions about its workability. The
Administration's analysis of economic impacts of global climate change
proposals has not been complete .
What are the goals? What measures will have to be taken to reach
those goals? How will it be enforced? These are all crucial questions
that need to be answered as part of the Treaty negotiations.
The Administration has given indications that it favors an
international permit trading scheme as the implementing mechanism to
meet a binding emissions target. EPA has been evaluating a wide number
of implementation options. While details are still lacking, the primary
focus has been on an emissions trading system or some form of carbon
A carbon dioxide trading program would be unworkable since it could
potentially involve millions of emitters with wide variations in
categories of sources. A carbon dioxide trading program would have to
be administered world-wide. The initial allocation of emission permits
would be extremely controversial and hard fought politically. Once
assigned, how would such a system be monitored and enforced? Who would
implement this program and how would it work?
A carbon tax would be a blind stab in the dark, set at a
politically acceptable (rather than scientifically defined) level with
only the vaguest idea of whether or not it would achieve a politically
determined level of emissions reductions.
5. Progress is Being Made to Reduce Carbon Dioxide Emissions.
Progress is being made toward the goal established in May 1992 to
limit greenhouse gas emissions to 1990 levels by the year 2000. Between
1950 and 1985, carbon dioxide emissions per unit of GDP fell 1.3
percent a year as a result of more energy-efficient technologies and
lifestyles in our country.
Refinements in manufacturing processes are reducing the units of
energy needed to produce a given product; the discovery of new, lighter
materials, insulating products, adhesives, and coatings is contributing
to the process.
America's manufacturers are improving energy efficiency, reducing
emissions, accelerating commercialization of new technologies, and
assisting governments and industries in less advanced countries.
Individual companies, such as British Petroleum, have begun to
develop their own carbon dioxide emission reduction plans. They include
developing a better understanding of how emissions of carbon dioxide
can be monitored and controlled.
Pollution prevention and reduction efforts have resulted in more
complete use of current inputs to the manufacturing process. The drive
for profits and greater productivity is inseparable from the trend
toward cleaner and more energy-efficient manufacturing techniques.
Many NAM members are helping develop and commercialize new
technologies to reduce greenhouse gas emissions. For example,
electrification of machines and processes that were once powered by
free-standing internal combustion engines; development of fuel cell
technologies and photovoltaic cells; and innovations in lightweight
materials. They are helping to transfer this promising new technology
to developing countries as well.
The Federal Government should expand its programs to promote the
export of energy-efficient technologies as well as environmental
pollution control and monitoring technologies.
6. Given the State of the Science, the U.S. Should Not Compromise its
Economy and American Jobs.
We don't have strong evidence on how much, how fast, or in which
direction global climate change is going. So how can we set mandates on
greenhouse gas reductions?
The science of predicting man's influence on global temperatures is
inexact. The argument for man-induced climate change rests on estimates
generated by mathematical, computer-driven simulations. These models
must be revised and updated based on new data.
The Intergovernmental Panel on Climate Change (IPCC), a joint
effort of the United Nations and the World Meteorological Organization,
bases its global climate change assumptions on a General Circulation
Model, which attempts to replicate complex climate processes. As a
result to changes in the model and its underlying assumptions, the IPCC
has revised its estimates of global temperature change downward by
about 30% in its Second Assessment published in 1995, as revised from
its original estimates presented in 1990.
However, global temperature changes have also been measured by
satellite, weather balloons, and land-based systems. Each method
predicts different forecasts for global climate, some even showing
There are other variables involved in creating global climate
conditions. A study was published last year by the Lawrence Livermore
Laboratory that showed global climate was affected by both warming from
greenhouse gases and cooling from sulfates. In 1995, the IPCC agreed
that increases in sulfate aerosols are partially counteracting warming
due to increases in greenhouse gases.
In conclusion, we urge the Senate not to ratify any treaty that
imposes limits or reductions in greenhouse gas emissions unless the
science supporting global climate change is more convincing, the
adverse economic impacts better understood, the developing countries
are full participants, and an enforcement regime is understood. In
short, there must be much more complete debate before the Senate is
asked to ratify a binding treaty.
Senator Hagel. Thank you very much, Mr. Jasinowski. Dr.
STATEMENT OF DR. ROBERT REPETTO, VICE PRESIDENT AND SENIOR
ECONOMIST, WORLD RESOURCES INSTITUTE, WASHINGTON, DC
Dr. Repetto. Thank you, sir.
My testimony today will address the two issues that we have
been discussing, that is, the economic impacts in the United
States of limiting CO2 emissions----
Senator Sarbanes. Dr. Repetto, if you would pull the
microphone closer to you, it would be helpful.
Dr. Repetto. Yes, sir. Thanks very much.
Senator Sarbanes. You really need to speak right into it in
order for it to work.
Dr. Repetto. Thank you, sir.
Second is the relationship between the U.S. and the
developing countries in limiting global emissions.
I am going to provide the highlights of two reports that
WRI, World Resources Institute, has just released, which I
would like to submit for the record, sir.
Senator Hagel. Yes.
[The material was received and has been retained in
Dr. Repetto. It undoubtedly, as my predecessors said, is
extremely important to analyze and understand the economic
impacts of limiting CO2 emissions. The
administration has analyzed the issue. They are apparently
about to release a report on it. There is a large number of
predictions and forecasts circulating outside Government. We
just heard some of them.
All of these forecasts and predictions are necessarily
based on macroeconomic models that simulate the economic
impacts of limiting fossil energy use.
Many of these models are highly complicated. They are hard
to understand. But, nonetheless, they are gross simplifications
of how the economy actually works.
They are essentially a set of assumptions, and the
predictions that come out of them are 100 percent determined by
the assumptions that are built into them.
What we have done to try to understand this issue is we
have collected essentially all of the credible economic models
that are available, that are being used, have been used to
analyze this issue--16 models. It includes the three that the
administration has used. It includes those developed by the
OECD, by some of the national laboratories, by academic
economists at Harvard, Stanford, and elsewhere, models
developed by consulting firms, like Charles River Associates,
We have built a data base of 162 different model
simulations of what would be the impact of enacting policies to
limit CO2 emissions. Those predictions are presented
graphically in Exhibit 1, in the back of my written testimony,
As you can see, being the work of economists, the
predictions are all over the map. But this is not simply noise.
What we have found is that 83 percent of the difference among
these predictions is attributable to six basic assumptions
built into the models.
So, in other words, if you understand these 6 basic
assumptions, you've got 83 percent of the difference among all
of these economic predictions of the impact of limiting
CO2 emissions, achieving any limitation targets.
This is pretty remarkable, in fact, because it implies that the
hundreds of other coefficients, parameters, and other
assumptions built into the models collectively result in the
remaining 17 percent of the differences.
Now what are these basic assumptions?
First, about the nature of economic behavior, will firms
and consumers in the long run respond efficiently to changes in
energy prices to take advantage of opportunities to limit cost
increases and so on? Models that assume that firms and
consumers reallocate their resources efficiently in the long
run predict much smaller impacts from limiting CO2
Second, will some backstop, nonfossil energy sources, such
as hydroelectricity, nuclear power, solar and wind energy be
available at stable prices as fossil fuel costs rise? If that
is true, it will limit the increase in energy prices. Models
that ignore the existence of nonfossil alternative energy
sources predict much higher cost of stabilizing CO2
emissions in the long run.
Third, will nations cooperate to take advantage of low cost
opportunities to reduce emissions by undertaking joint
implementation or by trading CO2 emissions permits
Models that assume that the United States must meet its
reduction target in isolation predict much higher costs because
there are potential gains from trade for taking advantage of
low cost emissions reductions opportunities elsewhere.
Fourth, will the policy instrument used to reduce
CO2 emissions generate revenues that will be used,
can be used, to cut other business taxes? For example, would
business income or payroll taxes be cut and the revenues be
made up by auctioning off carbon permits or through some tax or
fee mechanism? Models that ignore the possibility of reducing
other burdensome taxes through these revenues predict much more
adverse economic impacts.
Fifth, will reducing fossil fuel consumption avoid damages
from a change in climate? Most of the models used to analyze
this climate policy have no climate in them so that there are
no potential costs to the economy, no droughts, no floods from
Models that try to build in the costs of a change in
climate predict, on balance, a less unfavorable economic
Finally, will reducing fossil fuel and particularly coal
use reduce damages from conventional air pollution? Will the
switch to cleaner fuels reduce health damages, health
expenditures, and so on? Models that try to build in the
reduced damages from lower pollution, again on balance, predict
less unfavorable economic impacts.
Now what we have done is shown the result of moving from a
set of unfavorable assumptions on these six points to a more
optimistic set. Exhibit 2 indicates--and I want to emphasize
that these results are not based on our model or some ``green''
model; it is based on the models that are out there, other
people's models. It simply derives from them a consensus set of
predictions based on the underlying assumptions.
Under the worst case assumptions, achieving the target that
Mr. Montgomery spoke about, that is, stabilizing emissions at
1990 levels and holding them there, would result in a loss in
GDP of about 2.4 percent, compared to business as usual
projections by the year 2020.
This is not by any means an insubstantial loss. It implies
that by 2020, the economy would be approximately 70 percent
larger than today's rather than 74 percent larger than today's.
The remainder of that exhibit shows the effects of altering
those assumptions within these 16 models. Assuming that firms
and households react efficiently cuts the loss to about 1
percent of GDP. Assuming that joint implementation
opportunities would be available cuts it again to about 0.5
percent of GDP.
Assuming that there will be noncarbon alternative energy
sources available at competitive prices cuts the losses to a
very small figure.
Assuming that the policy instrument used will generate
revenues that are then used to cut burdensome business taxes
means that, in fact, the economy would be somewhat larger in
2020 than it would be today. Building in the reduced
environmental damages implies that the net economic benefits
would be larger still.
So these are the results of this body of analysis of 16
models, 162. It shows a range of going from worst case to best
case assumptions. Of course, one need not assume either the
worst case or the best set. One can form a judgment as to what
other realistic assumptions about how the economy will work,
what energy sources will be available, what policy approaches
are feasible and so on, and then derive a corresponding
judgment about what the economic impacts will be.
Of course, three of these key assumptions are policy
variables. One, will we be able to practice joint
implementations? Mr. Jasinowski says that to do that will take
an awful lot of institutional work to create a framework. But
all analyses show that the potential gains are very, very
For example, it could limit the increase, the necessary
increase, in the price of carbon fuels, reduce that increase by
more than 50 percent if we can do joint implementation.
Second, if revenues are raised out of this policy that are
then used to cut other burdensome taxes, say by auctioning off
rather than grandfathering or giving away carbon permits, that
would have substantial economic benefits.
Third, the Federal Government can, in cooperation with
industry, pursue research and development programs to make
nonfossil energy sources more widely available at lower prices.
These are policy measures that can be used to mitigate the cost
Now let me just turn briefly to the question of
It is absolutely true that, unless the developing countries
and the transitional countries participate, it is going to be
impossible to stabilize CO2 concentrations. This is
a global issue.
There are two underlying concerns. One, which has been
discussed extensively, is about the competitiveness if the U.S.
and other advanced countries go first.
I think this competitive issue is exaggerated. There is
scant empirical evidence that having low energy prices confers
an international trading advantage.
There are many countries in the world that have maintained
low energy prices, such as the former Soviet Union, Russia,
China, Mexico, Venezuela and others. These countries have not
been highly competitive in industry, industrial trade. As a
matter of fact, having low energy prices has contributed to
economic crises and collapse in many of those countries because
they have contributed to highly inefficient deficit running
enterprises and overall fiscal deficits.
Consequently, since 1990, what has been happening around
the world is that many of these countries unilaterally, for
their own self interest and economic motives, have been raising
In the former Soviet Union, in India, in China and in other
countries, between 1990 and 1995, fossil fuel subsidies have
been reduced by from 45 percent. Many of these countries have
already begun restructuring energy markets, privatizing energy
industries, inviting participation from private, independent
power producers, other private energy companies, with the
result that there has been increased investment in high
efficiency cogeneration facilities and combined cycle gas fired
power plants because they are more efficient and cheaper.
Countries have been doing that unilaterally throughout the
developing world for their own economic reasons. U.S. companies
have been participating in that business.
They have been promoting energy efficiency and renewable
energy. Mexico, for example, has developed energy efficiency
standards for appliances, buildings, electric motors and
industrial boilers. India provides depreciation, immediate
depreciation, write-off, and customs exemption for wind
turbines and so on.
There is no reason why these countries will not continue to
do that because it is in their own interest whether they accept
binding commitments to limit CO2 emissions or not.
I think that those past and continuing policy changes to
raise energy prices, to raise energy efficiency, and to reduce
CO2 emissions in our major and other large
developing, emerging market countries should not be overlooked
in this discussion.
Thank you very much, sir.
[The prepared statement of Dr. Repetto follows:]
Prepared Statement of Robert Repetto
This testimony addresses two issues: the impacts on the U.S.
economy of limiting carbon dioxide emissions, and the respective roles
of the U.S. and less developed countries in limiting global emissions.
What follows provides -- very briefly -- the findings of two new WRI
research reports, The Costs of Climate Protection: A Guide for the
Perplexed, by Duncan Austin and myself, and Developing Countries
Already Taking Action to Slow Climate Change?, by Walter Reid and Jose
Goldemberg. Copies of those reports have been made available to the
I. Macroeconomic Impacts of Limiting C02 Emissions
As the United States approaches the Kyoto negotiations in December
under the Framework Convention on Climate Change, the economic impacts
of limiting greenhouse gas emissions are coming under increasing
scrutiny. The Clinton Administration has analyzed this issue in an
InterAgency Taskforce report. Widely divergent predictions about the
costs of stabilizing or reducing greenhouse gas emissions are
circulating outside government.
All such predictions are based on macroeconomic models that
simulate the economic impacts of policies that raise energy costs.
These models are complicated and hard to understand, but nonetheless
are gross simplifications of the real world; what modellers leave out
influences their predictions as strongly as what they put in. The
predicted economic impact of policies adopted to reduce carbon dioxide
emissions depends totally on the assumptions built into the forecasting
Fortunately, one doesn't have to be an econometrician to understand
the key assumptions and how they affect the predicted costs. WRI
examined 162 different simulations using sixteen widely used economic
models, including all three that the InterAgency Taskforce used to
analyze its climate policy options. (Exhibit I) Though the predictions
varied substantially, we found that, across all sixteen models, only
six basic assumptions account for eighty percent of the differences in
the models' predictions. These six basic assumptions determine whether
the predicted economic impacts of controlling carbon emissions are
large or small, positive or negative. This is remarkable. It implies
that the hundreds of other assumptions on which the models are based
collectively account for only the remaining twenty percent of the
difference in their predictions.
Reasonable people can readily form their own judgments about these
key assumptions. The most important ones are these:
1. Will firms and consumers reallocate their expenditures
efficiently in the long-run as energy prices increase to take advantage
of cost-savings opportunities? Models that assume that firms and
consumers reallocate their resources efficiently in the long-run
predict much smaller economic impacts from limiting CO2
2. Will some ``backstop'' non-fossil energy source, such
hydroelectricity, nuclear power, solar and wind energy, be available at
a stable competitive price as fossil fuel costs rise? Models that
ignore the existence of non-fossil alternative energy sources predict
much higher costs of stabilizing carbon dioxide emissions.
3. Will nations cooperate to take advantage of low-cost
opportunities to reduce emissions by undertaking ``joint
implementation'' of abatement commitments or by ``trading''
CO2 emissions, permits internationally? Models that assume
that the United States must meet its reduction target in isolation
predict a much higher cost.
4. Will revenues from energy taxes or from auctioning off permits
to emit carbon dioxide be used to cut income, profits or payroll taxes?
Models that ignore the possibility of using energy tax revenues to cut
other burdensome taxes predict more adverse economic impacts.
5. Will reducing fossil fuel consumption avoid damages from a
changing climate? Models that incorporate the predicted impacts of a
changing climate on the economy tend to predict, on balance, a lower
net cost of controlling emissions.
6. Will reducing fossil fuel -- and especially coal -- consumption
affect damages from the conventional air pollutants? Models that ignore
health and environmental damages from rising fuel combustion predict
higher net costs from controlling them.
As Exhibit II indicates, people who assume that the unfavorable
assumptions on all these points are most realistic should expect --
based on simulations from all sixteen models -- that stabilizing carbon
dioxide emissions at 1990 levels by 2010 and holding them steady
thereafter would result in economic losses of about 2.4 percent in GDP
in the year 2020. That would be about one-year's growth in gross
domestic product. Were these impacts to occur, the economy in 2020
would be about 70 percent larger than today's, rather than 74 percent
larger under a ``business-as-usual'' scenario.
Exhibit II also shows the implications of changing those
unfavorable assumptions one-by-one. For example, people who think that
the firms and households will reallocate their expenditures efficiently
over the long-run to minimize the effects of higher energy prices
should expect much smaller impacts -- about 1 percent of GDP in 2020
rather than 2.4 percent. If, in addition, the availability of non-
carbon energy sources and the possibility that nations will agree on
joint implementation are accepted as reasonable long-run assumptions,
then people should expect that meeting this stabilization target would
have negligible impacts on the economy twenty-three years down the
road. Those who also accept the assumption that revenues from energy
taxes or similar policies will be recycled to the economy through other
tax cuts should expect a small positive impact on the economy. And,
finally, if they believe that,avoiding climate change and air pollution
will avert health and other economic damages, people should conclude
from these models that the overall economic impacts of stabilizing
carbon emissions will be even more favorable. The underlying
assumptions strongly affect the predicted impacts.
Of course, people need not accept all the best-case or all the
worst-case assumptions. The chart indicates the effect of each key
assumption singly on the predicted economic impacts of stabilizing
Three of these assumptions are policy decisions:
The United States can, and should, negotiate vigorously with
other nations to achieve international cooperation in
stabilizing carbon emissions through a system of joint
implementation. All nations can potentially gain.
The federal government can choose the policy instruments
with which to limit carbon dioxide emissions. It can, and
should, restructure the tax system to lower income, profits, or
payroll taxes, making up the revenues through energy taxes or
revenues from auctioning off carbon emissions permits.
The federal government, in cooperation with industry can,
and should, vigorously pursue research and development programs
to make renewable, non-fossil energy sources more widely
available at lower prices.
Through such measures the government can make sure that climate
protection will not adversely affect the economy.
II. International Competitiveness
The Framework Convention and the Berlin Mandate negotiated in 1995
agreed that developing and developed countries should have
differentiated responsibilities, in view of the preponderance of
developed country emissions and the lower incomes per capita emissions
of developing countries. Nonetheless, a resolution recently circulated
in the Senate states that the United States should not accept binding
commitments to reduce emissions unless developing countries do
There are two underlying concerns. First, that any reductions
achieved by the United States and other developed countries would be
soon swallowed up by increased emissions from large, rapidly developing
countries such as China. Second, that measures adopted only by the
United States and other developed countries would put industries in
these countries at a competitive disadvantage.
The second concern is exaggerated. There is scant evidence that
lower energy prices or weaker environmental standards give countries a
competitive advantage in trade or investment. Countries that have had
low energy prices -- including the FSU, Mexico, Venezuela, India, and
China -- have not been particularly competitive in energy-intensive
industrial sectors. Low energy prices lead mainly to energy
inefficiency; weak environmental standards result in high environmental
The first concern is more realistic. Annual emissions from
developing countries will exceed those of OECD countries by 2020, given
current trends. Stabilizing greenhouse gas concentrations requires
However, it's important to realize that without any international
commitments developing countries have already taken significant steps
to curtail carbon dioxide emissions, purely on ``no regrets'' economic
grounds. They have:
reduced energy subsidies: Between 1990 and 1995 fourteen
developing countries whose combined emissions match those of
the United States reduced fossil fuel subsidies by 45 percent.
China reduced coal subsidies from 37 to 29 percent and oil
subsidies from 55 to 2 percent. The World Bank estimates
substantial savings in CO2 emissions as a result.
restructured energy markets: Many developing countries have
privatized energy industries or invited participation from
private independent power producers and other private energy
companies. The result has been increased investment in high
efficiency cogeneration facilities and combined cycle gasfired
power plants, meeting energy needs with lower emissions.
promoted energy efficiency and renewable energy: Mexico, for
example, has developed energy efficiency standards for
appliances, buildings, electric motors and industrial boilers.
India provides immediate write-off and customs exemptions for
wind turbines. Brazil has a large-scale ethanol program for
Such programs as these have reduced developing countries emissions
substantially relative to their business-as-usual trend. The importance
of these ``no regrets'' policy changes should not be overlooked.
Senator Hagel. Dr. Repetto, thank you very much.
I think it is fair to say that we have had a fairly
significant range of ideas presented this morning. What I would
like to do, since I do not have the expertise of the four
panelists, is ask the panelists to respond to each other, at
least during my round of questioning.
I was particularly intrigued, Dr. Repetto, with your point
that you believe the competitiveness issue is exaggerated. I
would like to start there, as it really does cut to some of the
previous testimony. I would like to ask all three panelists to
respond to that, starting with you, Mr. Jasinowski.
Mr. Jasinowski. Thank you very much, Mr. Chairman.
First of all, I would congratulate Mr. Repetto on a fine
piece of work because it sets out a framework which allows
experts and nonexperts to debate this issue. I would want first
to emphasize the extent to which I agree with his framework and
agree with many of his conclusions, some of which show very,
very serious, adverse economic effects, and certainly which
make the point that you cannot do this without having the
developing countries involved. It would be impossible, in his
I was intrigued with the energy point and competitiveness.
I would not only disagree, I would say that his problem is that
he is looking at this through macroeconomic lenses and does not
really understand the way American competitiveness now works. I
think a lot of people don't.
As I said, manufacturers can only increase prices now about
1 percent. I talk to them every day. They think reducing costs
in every way is absolutely essential. Since they cannot raise
prices, they have to raise productivity in order to maintain
So the notion that this would not affect their
competitiveness from an American point of view is just not the
way any single businessman I know, would think of it. His
citation of Mexico and the Soviet Union as being examples of
energy competitiveness not making any difference is really
overlooking the extraordinary reasons why those countries are
not competitive that have nothing to do with energy pricing.
So there are countries in which I think his generality
would hold. But it does not hold for the American economy,
which has become competitive again. We are now back, able to
compete around the world. But we can only raise prices 1
percent, Mr. Chairman. Therefore, every single cost that you
can cut you must cut and every company I know, from the 14,000
companies, are trying to reduce energy costs. To have this kind
of energy cost increase piled on top is going to have all the
effects that Mr. Montgomery and I have suggested.
Senator Hagel. Dr. Montgomery.
Senator Sarbanes. Mr. Chairman, Mr. Jasinowski, I take it,
has an appointment at 11. Is that correct?
Senator Hagel. At 11:30.
Would you like to ask him a question before he leaves?
Senator Sarbanes. I wonder, since there is a vote on,
whether we could do that. Obviously, when we leave for the
vote, we will have to excuse him because we could not really
hold him. He would miss his other appointment.
Senator Hagel. Why don't you go ahead and ask a question.
Senator Sarbanes. I wonder if we could sort of inquire of
Senator Hagel. Absolutely.
Senator Sarbanes. I had just a couple of questions.
First of all, is it your view that there is an issue with
respect to global warming that needs to be dealt with? Or could
we simply say look, there is no problem, so let's just put this
thing off to one side and there is really nothing to deal with?
Or is there something to deal with?
Mr. Jasinowski. No, no. I think there is a problem and I
think most of my members do, too, Senator Sarbanes, in the
sense that we have increasing population, increasing emissions
occurring in the world, and there are reasonable speculations
that that can have significant environmental harm.
Therefore, for those reasons, we need to pursue it. Beyond
that, there is the question of energy efficiency which both
relates to and contributes to that and is important for
competitiveness reasons. We need to improve our energy
So we think there is a serious set of issues here. We want
to be a part of it. We just need to get the facts more clearly
in mind on everything from the science to the economic impacts.
Senator Sarbanes. OK. I think it is important. I think this
framework of analysis, as you pointed out, is very important. I
was struck that Mr. Montgomery said coal prices would go up 4
times where you said 2 times. So there is a wide kind of
Mr. Jasinowski. Yes, there is a wide variation.
Senator Sarbanes. The other question I wanted to put is
this. European countries have made the argument that the United
States uses 2 to 3 times as much energy per capita even than
they do. Many of them, of course, are the most highly
industrialized and modern economies in the world. In fact,
Chirac took the U.S. to task, I think, at the summit in Denver
on this very issue.
I am just curious. Why is this the case and what is our
response when they say we are highly competitive and we use a
half or a third per capita energy in terms of the emission
Mr. Jasinowski. I think you have asked the most important
question in a global political sense on this whole issue,
Senator Sarbanes. Let me just make the case on the other side
from the Europeans. They have obviously made the case for
I think you've got two or three things here that they don't
talk about that are really involved. In fact, the American
economy now has a competitive advantage in industry relative to
a number of Europeans. If we want to trade that away by raising
energy prices enormously in order to deal with these vague
scientific notions under global warming now, we can do that.
That is what they want, in fact.
They know we've got a competitive advantage and they are
not slow. This is a very good way for them to knock that out of
the box. That is point number one.
Second, if you look at France, they've got 50 percent of
their energy in nuclear. That is great for them. We don't and
you know the reasons why as well as I do.
So it is easy for the French to say hey, no problem for us.
The Europeans have a way of saying one thing and making it
fairly easy on themselves. This takes me to my third point.
This notion of a European bubble is a very fascinating
notion, so that they can kind of get by without more severe
country limitations. I think it is another reason why they are
Finally, and the most important reason is, as you know,
Isabel, my wife, is French. We spend a lot of time in France.
The French have a different way of implementing these things
than do the Americans. They will be all for it and they will
implement it in the French way, as do the Europeans.
In the United States, you are in court the next day with
somebody suing you because you did not do what the treaty or
the U.S. Senate told us to do. So if we implement a treaty in
this country, we implement it. They won't implement it the same
way in Europe.
Senator Sarbanes. Thank you.
Senator Hagel. We will leave in a minute or two and they
are holding the vote, so it is all right. Let me just stay with
you for a moment, Mr. Jasinowski.
In your testimony, you talked about the framework needed to
achieve this. Let's say that all the facts are there, the
science is there, and the economics are there. Would you
further develop the question that you brought out in your
testimony? How in the world would this work?
Mr. Jasinowski. I wish that I could develop it. But I have
to say that I don't know how. I have read widely what proposals
I think that if you just look at the enforcement question,
it is very hard to know who would enforce this. Is it enforced,
as some people have said, by the World Bank? Some people have
said it's by various European organizations. I don't know how
even to enforce it.
I don't honestly know what would be an appropriate goal. I
have looked at the science and you get everything from the
increases by the computer models to decreases by satellite and
other information. The computer models themselves have been
revised down by 30 percent over the last several years.
Now all that this tells me is that we have a situation
where we don't have enough facts to make a decision. I do think
that we really should debate this and get more facts.
I don't see why this cannot be postponed for several years.
That is what I think we should do. I know there is a rush
toward judgment. But let me tell you that the people who are
rushing toward judgment in the rest of the world want to do it
to put America at a competitive disadvantage.
Senator Hagel. Would any of the other panelists like to
pick up on the question I asked Mr. Jasinowski?
Dr. Repetto. Yes, sir. Just on the enforcement issue, the
experience in this country with the trading, the pollution
trading, has been moving toward reduction first, credit second.
It's make the reduction and then you have a credit which you
There are enforcement problems. But certainly that would be
the way to move toward solving it. All right, you've put in the
new plant, or the energy efficiency, or whatever, and then you
have some credit which you can then transact.
Senator Hagel. Thank you.
Senator Sarbanes, I understand we have about 7 minutes. I
think we will stand in recess. We will vote twice and then
Mr. Jasinowski, I understand you have a prior engagement.
Our best to the EPA Administrator.
Mr. Jasinowski. Thank you.
Senator Hagel. Thank you very much, Jerry.
Senator Hagel. The subcommittee will come to order.
Once again, we appreciate your tolerance of our schedule. I
think we are in some clear water now for the next 3 or 4 hours.
I'm not sure we'll ask you to stay that long, unless Senator
Sarbanes has volumes of questions. What we will do, if it is OK
with the panel, is have Senator Sarbanes and I take another
round of questions. Then we will ask the second panel to come
forward. Thank you.
I would like to pick up a little bit on where we left off
when Senator Sarbanes and I went to vote. I would like to go to
your testimony, Dr. Montgomery.
I was intrigued with your graphs on pages 4 and 5 of your
testimony. I would like you to develop those points a little
more, especially in light of Dr. Repetto's testimony. It seems
to me, as we work our way through this, that the connection of
international competition does matter, the cost of energy does
matter, and productivity is directly related to the cost of
energy. There is the leakage issue that you talked about and to
which Mr. Jasinowski referred. This is where I would like to
Could you more fully develop your point, Dr. Montgomery? I
would ask the other panelists to respond as well. Thank you.
Dr. Montgomery. Yes, sir. Thank you.
Beginning with the broader issue of how important are these
trade and cost advantages that developing countries will
achieve, I think that I would endorse in large part what Mr.
Jasinowski said, that it is not at the macro level that we need
to look at the issue, it is at the level of the individual
industries that will be affected.
The issue is not that somehow the developing countries are
going to gain tremendous overall benefits for their economies
from the OECD limiting emissions. In fact, I think that it is
probably, on balance, for many of the developing countries
going to be harmful to their economies as well. This is because
the markets for their imports are here in the OECD. We produce
a lot of the goods that they, in turn, import. If we have lower
rates of economic growth, we are going to buy less of their
imports and we are going to charge more for the goods we ship
So, in general, the developing countries' economies I think
may suffer as well.
The issue on competitiveness comes up when we look at
specific industries because there are specific industries in
the United States that are likely to suffer in competition with
those industries in other developing countries that gain cost
In many ways what it is expanding those energy intensive
industries in competition with the U.S. is kind of the best
effort that the developing countries can make in order to avoid
some of the harm that they are likely to see in general because
of shrinking markets here in the OECD. So that is the first
point, I think, that I do not want to disagree, that it is not
overall the status of the developing countries that is
important, it is their ability to compete in specific
industries, that the U.S. is largely facing harm from the
climate, from the emission limitations because directly of how
much it will cost us to produce goods for our own use, and
that, since we will have to spend more on energy, more on
energy conservation, we will be using more of our resources for
those purposes and have less resources available to produce
goods and services for our own citizens.
In addition, there are important trade effects for specific
industries and specific countries. This is what I tried to show
in these two figures, that we will see U.S. exports decline in
the aggregate because U.S. goods will cost more than those of
other countries and that there are other specific countries--
here I took India, Jamaica, China, and Indonesia--that are able
to take advantage of lower costs in order to expand their own
In the case of India, I think it is because that is a
country that is an oil importer. It is also a country with many
manufacturing industries and the infrastructure to compete with
I think I would take a somewhat different perspective than
Dr. Repetto on countries like China. What China would get from
being a nonparticipant in the Climate Change Treaty is a real
cost advantage over the OECD.
Now I agree that there are many cases in which the
developing countries have harmed their economies by subsidizing
energy use and using resources in efficiently. But they would
gain real cost advantages over the U.S., not artificial ones
supported by their own internal subsidies, and those real cost
advantages I think are what we see translating into significant
impacts on trade and particular industries.
The second chart I think shows which of the specific
industries we would see being affected by these cost
advantages. This is because the impact is very concentrated in
the U.S. economy. There are a number of industries that are
really at serious risk, and these are the ones that we
characterized here--cement, aluminum, metals, mining, the paper
industry, quarrying. These are industries that are likely to be
seriously affected because they, in particular, will face very
large cost disadvantages to their competitors.
Senator Hagel. Dr. Repetto, would you like to quickly
respond to that?
Dr. Repetto. Yes, please, sir.
I think we have to remember that trade is based on
comparative advantage. General price increases will be offset
over the long run by exchange rate adjustments. So I do agree
that, if we want to think about competitiveness effects, we
have to think about them in the context of particular
Some industries will have a competitive disadvantage, some
will have a competitive advantage.
Now China is a good example. If you examine the trade and
investment flows going into and out of China, it is absolutely
clear that their comparative advantage is in relatively labor
intensive industries, not in relatively energy intensive or
capital intensive industries. This is reflected in their actual
trade and investment flows.
Their labor cost advantage dominates, absolutely dominates,
any potential difference in energy cost. In fact, the heavy
industries, like cement and paper, are hopelessly inefficient
I think it is just totally unrealistic to expect that that
pattern of comparative advantage in a country like China or
India would be overturned or drastically modified by any
relative adjustments in energy costs in the long run.
Senator Hagel. Dr. Repetto, thank you.
Senator Sarbanes. Thank you, Mr. Chairman.
Mr. Cunningham, I would first like to put the question to
you that I put to Mr. Jasinowski. Do you think there is a
problem that we have to try to deal with with respect to global
Mr. Cunningham. Yes, Senator. We have not criticized the
need for a treaty. We have said that in the area of
environmental improvement worldwide, many of these issues
require global solutions--forestry, ocean dumping--and that
includes climate change. The only way to deal with a problem
like that is to deal with it worldwide through a treaty
Our criticisms have been at the kind of treaty, at the
nature of the treaty that the administration appears to be
locked into; that they have not set concentration levels; they
have not done it logically to set concentration levels as a
target; and then, to work backward, to see how each country
should fit into those, what the obligations of each country
Senator Sarbanes. I understand that. I just wanted to make
sure I understood the basic starting point.
So you don't take the position that there is really no
problem here and we should not be spending any time looking at
it, is that correct?
Mr. Cunningham. No, Senator. That is not our position.
Senator Sarbanes. Mr. Montgomery, would you respond to that
Dr. Montgomery. No. I think that the climate change issue
is a serious one which is important to address. In fact, one of
the reasons I ended my testimony the way I did is to try to
focus on the fact that I think it is possible to separate,
looking at the economic issues of what is the best way to get
to a particular concentration of greenhouse gases from the
issue of how should we balance the costs and benefits to the
world of climate change in order to choose a concentration
target. I think that is a very serious issue that actually has
not yet really been addressed in the negotiating process and
that we need to look at both sides of that, both the costs and
benefits of doing something in the long run.
Senator Sarbanes. Have you all had a chance to read this
study of Dr. Repetto's?
Mr. Cunningham. Yes.
Dr. Montgomery. No.
Senator Sarbanes. You have not had a chance?
Dr. Montgomery. No, I haven't, but I am catching up rapidly
Senator Sarbanes. And you have, Mr. Cunningham?
Mr. Cunningham. Yes.
Senator Sarbanes. Well, it strikes me as a very useful
analytical tool and I wondered whether you agree with that.
When you start making judgments about the assumptions and so
forth, obviously people can differ. But one of the things I am
concerned about is getting an analytical framework here where
everyone is operating on the same playing field, as it were,
and where we can try to identify the facts to the extent we
I was struck in that you testified, for instance, that the
price of coal would go up fourfold and Mr. Jasinowski said it
would double. Well, that is a fairly significant difference as
one tries to evaluate these things, although doubling is in and
of itself very substantial, obviously. But it seems to me that
is an important difference.
What is your view of this analytical framework? Do you
think it is useful to work with?
Mr. Cunningham. The models that we relied on, the ones that
we interpret as being most useful, are models like the DRI
model that the administration uses, the WEFA model, and others,
which look at adjustment problems in the economy when some kind
of shock hits the economy or some policy measure is introduced
like the ones that the administration is considering, the ones
that raise energy prices.
The models we find not useful are models that presuppose
some sort of instantaneous change in people's behavior and the
remolding of capital into different kinds of capital,
instantaneous adjustment of people from the suburbs and
remodeling their houses into apartment buildings in the city.
These kinds of instantaneous adjustments do not take place in
the real world. So we look at those models that are based upon
the past kinds of adjustments that people have had to make in
similar kinds of situations and think that those are the ones
that are most realistic to use.
Senator Sarbanes. Mr. Repetto, I take it that you looked at
all models, is that right, and constructed this analytical
framework to try to, in effect, put all of the models to use,
or I guess 16 of them.
Dr. Repetto. Certainly a large number, almost all of them
or virtually all of them.
Senator Sarbanes. So the models that Mr. Cunningham says he
thinks are the most realistic are encompassed within your
analysis? Is that correct?
Dr. Repetto. Yes, sir.
Senator Sarbanes. Did you want to add to that, Dr.
Dr. Montgomery. Yes, Senator, if you would not mind.
I have, I think, had an opportunity to look through it and
having heard Dr. Repetto's testimony, I would like to respond
to some of that.
I also wanted to congratulate him on his work. I think this
is a very helpful sorting out of the issues and I do appreciate
being included in the comparison. I think that these are key
points that need to be looked at in comparing the models.
Given that, though, I do disagree on some of the details,
in particular on, I think, points 1, 4, 5, and 6. Rather than
launch into a long exposition on each of those, let me just
Senator Sarbanes. I wasn't suggesting that because the
analytical framework may be useful that this meant that anyone
who acceded to that view was signing off on all of the details
of it. Obviously, you can differ. I would assume that Dr.
Repetto might make some evaluations with which you would differ
and so forth.
But we have to get into some kind of mode of thinking here
that enables people to have rational and reasoned exchanges
about this issue, so that we can come in from way out at the
edges and can kind of focus, to the extent we can, on having a
common ground on facts and analysis. Then we may differ on
I mean, some people will be more willing to impose costs,
others less. Some will value one aspect of this problem
differently than another.
But it seems to me we need to try to focus in on a way of
thinking that is helpful to us.
Dr. Montgomery. Yes, I agree. The only thing I would add to
that is I do find it helpful in many cases. I was concerned
about looking at the three green bars at the end of Dr.
Repetto's testimony indicating potential economic benefits from
That is where I am convinced that applying basic economic
principles will tell us that some of these results just cannot
be right. So, in one sense I appreciate Dr. Repetto setting out
the issues this way. But it is because I think that if we were
to focus on the issue of double dividend and tax recycling, I
could convince you that applying basic economic principles says
that the models at the green end just are not treating that
right. Therefore, it is a good thing to do to characterize what
are the assumptions behind these models because then it will
help us after we have had a chance to talk about the specific
issues to have a better appreciation of which of those general
results we agree with.
For the most part, all we hear is that a study said that
the climate treaty is going to decrease GDP by 2 percent and we
don't hear the assumptions that are behind it. I think it is
very important that we look at those.
Senator Sarbanes. Thank you, Mr. Chairman. My time is up.
Senator Hagel. Speaking of models and studies, we talked
last week during our hearing about the lack of any economic
model from the administration, even though it has said it would
come forward with one. Maybe one of you would like to enlighten
this panel as to why that has not happened. I understand it is
more than a year old.
But there is one model, one study, and some evidence, I
understand, that was developed over the last half year. It was
brought up this morning. I asked some questions about it last
week. It is the Argonne National Lab study.
I will start with you, Mr. Cunningham. I did not have a
chance to ask Mr. Jasinowski about it, but he referred to it in
his testimony in a knowing way. I am anxious to know what is
out there and why the administration has not released it.
Have you seen it? What do you know about it? Any of the
other panelists can also respond.
Mr. Cunningham. The Argonne studies were conducted in early
and mid-1996. I participated in two peer review workshops for
that study and I sat in on the third one.
Each of the six studies had a peer review workshop and
those studies were presented.
The studies included six industries. They were chemicals,
refining, cement, paper, steel, and aluminum. We were told at
that time that the studies would be released in July or August
of last year.
I called many times after that time period to find out when
the studies would be released and finally gave up when I
realized that they, apparently, just were not going to be
Senator Hagel. Why was that. Was it obviously not favorable
to the administration's position?
Mr. Cunningham. I never got an explanation for why the
studies were not released. Now and then I hear a rumor that
they will be released and I call around to see if that rumor is
true. Apparently they are still being held up for some reason.
But I think you might have to ask the administration as to what
the particular reasons are.
Senator Hagel. So you cannot shed any enlightened
commentary on either what was inside or outside or on what we
found or did not find?
Mr. Cunningham. Well, I know that each of the studies
showed a consistent pattern which probably the administration
does not view favorably. That pattern is that if you raise
energy prices significantly in the United States relative to
those prices in other countries as the treaty, in its current
mode, might do, the industries would begin moving out of the
country and the plants and jobs as well as the pollution and
emissions would also move out of the country. So you would have
a job loss and damage to these industries without doing very
much or anything at all about the emissions problem.
In fact, pollution from these industries could increase
because the requirements in the countries they are moving to,
the environmental requirements, are less stringent than those
in the United States.
But I think they were a very valuable set of studies. They
were very descriptive and I think that they would make a
valuable contribution to the dialog that is going on.
Senator Hagel. Well, we would all like to see them. Thank
Dr. Repetto, do you know about this study? Have you seen
Dr. Repetto. I think I can perhaps comment on the first
part of your question, about what has happened to the
administration's analysis. My understanding is that they used
three models, all three of which were also included in this
overview. I understand that their results are undergoing some
peer review from people inside and outside the administration.
How they are going to incorporate those review comments and
then release the results, I am not sure what that timetable is.
But I think that is what is happening now.
Senator Hagel. Dr. Montgomery?
Dr. Montgomery. I have nothing enlightened to say about
what is happening within the administration. But from what I
have seen of the reports and from what Mr. Cunningham
mentioned, I would say they certainly seem to be reaching
conclusions that are very much along the lines of the studies
that we have done.
As I mentioned, we have done some detailed work in fairly
complex analysis of the aluminum and pulp and paper industries
worldwide. Certainly we would confirm those conclusions, that
with the kind of cost differences that would exist between the
U.S. and other countries, you could build new aluminum plants
in developing countries for less than the cost of operating
aluminum plants in the United States. It's similar things for
the other industries that we looked at.
They did choose the energy intensive industries, and I
would say that our results certainly seem to confirm what I
have heard is in the Argonne reports.
Senator Hagel. Thank you.
Senator Sarbanes. Mr. Cunningham, you said you were on the
peer review for these Argonne studies?
Mr. Cunningham. Yes, Senator, for two of the studies.
Senator Sarbanes. Mr. Jasinowski in his statement says one
scenario, and then he writes out an estimate of energy price
increases. You should recall that.
I take it there were other scenarios with different
estimates, is that right?
Mr. Cunningham. In the study, which included the six
industries, they made an estimation of fuel price increases
that probably were based about on a $100 a ton increase, what a
$100 a ton increase in the carbon tax or a permit trading
system that did that same thing might do to the jobs and
production in that industry.
Senator Sarbanes. How much would that raise the price of
Mr. Cunningham. I think the threefold or fourfold increase
that Dr. Montgomery put forth was the right number for that.
Coal does vary a little bit in carbon content. But it is a
number that I also have to sit down and recalculate several
times to convince myself that it is really true. It has an
enormous impact on the coal price compared to natural gas
prices, for example.
Dr. Montgomery. Could I throw in a specific number here? A
$100 a ton carbon tax is $55 a ton of coal. Translating that
into proportions depends on what you assign to the price of
coal, which has varied a lot and varies across different kinds
of coal. But the $55 a ton of coal is a direct translation from
the tax to the carbon content of coal.
Senator Sarbanes. Now on this chart here that you have in
your statement, direct and indirect cost increases for the top
25 nonenergy industries, this is both the direct and the
indirect cost increases, is that correct?
Dr. Montgomery. That's correct. For a typical industry,
maybe half of that cost increase would come from the fuels that
they use within that industry and the other half would come
from higher costs in producing the materials that they had
purchased for that industry. It varies between industries.
Senator Sarbanes. So for the five industries--the six
industries--of the ones you've listed, the direct and indirect
cost increases would be over 5 percent. For the balance, it
would be below 5 percent, is that correct?
Dr. Montgomery. That's correct. The average is about 3.5
percent, if I remember correctly.
Senator Sarbanes. Thank you.
While I do have more questions, I think we had better go on
the second panel, Mr. Chairman.
Senator Hagel. Senator, thank you.
Again, on behalf of the panel, we wish to thank our
witnesses for your time this morning and particularly your
courtesies in allowing Senator Sarbanes and me to escape and do
the people's business.
We will keep the record open and I am sure we will be back
in touch with you to ask more questions. Thank you.
We will now have our second panel.
Dr. Michaels, are you all set up there?
Dr. Michaels. Yes, indeed.
Senator Hagel. First let me welcome each of you. We are
grateful that you would take time to come before this panel and
help us get through this issue.
Let me formally introduce each of our panelists. Dr.
Patrick Michaels is Professor of Environmental Sciences at the
University of Virginia. Dr. Michaels, thank you. Dr. Alan
Robock is Maryland State Climatologist, Department of
Meteorology, University of Maryland. Dr. Robock, thank you. Dr.
Michaels, would you like to begin?
STATEMENT OF DR. PATRICK MICHAELS, PROFESSOR OF ENVIRONMENTAL
SCIENCES, UNIVERSITY OF VIRGINIA, CHARLOTTESVILLE, VIRGINIA
Dr. Michaels. Yes, I would.
I would like to thank you very much for inviting my
testimony. You may want to refer to illustrations in my printed
version as I proceed over the next few minutes.
Nearly 10 years ago, I testified before the Senate Foreign
Relations Committee. At that time, I argued that forecasts of
dramatic and deleterious global warming were likely to be in
error because of the very modest climate changes that had been
observed to date. Further, it would eventually be recognized
that this more moderate climate change would inordinately be
directed into the winter and night, rather than the summer, and
that this could be benign or even beneficial.
I testified that the likely warming, based upon the
observed data, was between 1.0 and 1.5 degrees Celsius for
doubling the natural carbon dioxide greenhouse effect.
As you can see in Figure 1, since then the global mean
temperature of the Earth has not warmed a bit. We have three
independent measuring systems--surface thermometers, satellites
that sense the temperature of the lower atmosphere, and weather
balloons in the same region--and they all show no warming since
In science, regardless of how much external political and
social pressure is applied, it is inevitable that the observed
data and theoretical hypotheses or models, if you will, will
eventually reach an internally consistent equilibrium. This is
However, it was apparent that when the first so-called
consensus was imposed upon the issue of global warming by the
First Scientific Assessment of the United Nations
Intergovernmental Panel on Climate Change, or IPCC, such an
equilibrium had not been reached.
That report in 1990 stated, ``When the latest atmospheric
models are run with the present concentrations of greenhouse
gases, their simulation of climate is generally realistic on
The suite of climate models extant at that time predicted
that the globe's mean temperature should have risen by then
between 1.3 and 2.3 degrees Celsius. Slightly revised versions
of these models provided the technical background for the
Framework Convention on Climate Change, signed in 1992.
The observed warming since the late 19th Century has only
been 0.5 degrees Celsius, or less than one-third of the
predicted value. Critics argued, as I did before this
committee, that there would have to be a dramatic reduction in
the forecast of future warming in order to reconcile the facts
and the hypotheses.
By 1995, in its second full assessment of climate change,
the IPCC admitted the validity of the critics' position: ``When
increases in greenhouse gases only are taken into account, most
climate models produce a greater mean warming than has been
observed to date, unless a lower climate sensitivity to the
greenhouse effect is used. There is growing evidences that
increases in sulfate aerosols are partially counteracting the
warming due to increases in greenhouse gases.''
Let me translate this statement. It means either it is not
going to warm up as much as we said it would or something is
hiding the warming. I predict that every attempt will be made
to demonstrate the latter before admitting that the former is
Such attempts were made, and initial results, particularly
those published in ``Nature'' on July 4, 1996, appeared
initially to bolster the argument that the sulfates were
masking the expected warming. That particular study used
weather balloon data from 1963 through 1987. Most striking was
a warming of the middle of the Southern Hemisphere, which you
can see in the top of the figure on page 3. There is a box
around this dramatic warming region. It contributed most to the
apparent reality of the sulfate-greenhouse effect interaction.
However, when the entire set of weather balloon data from
1958 through 1995, rather than what was used in the paper was
used, this most pronounced region of warming shows no change
In the figure that I am referring to here on page 3, the
closed circles, the filled circles, are the data that were used
in the 1963 through 1987 study and all the circles are all the
In response to this, the senior author of that paper told
the December meeting of the American Geophysical Union that the
correspondence failed because greenhouse warming had
overwhelmed the cooling effect of sulfates since 1987.
As you can see from Figure 1, there was no net change in
temperature in the last decade. So this statement was clearly
In the on-line discussion published recently on this, the
explanation was now given that sulfate cooling leaked into the
Southern Hemisphere, or exactly the opposite of the explanation
that was given a mere 4 months earlier.
The fact that the sign of the explanations has changed so
quickly is prima facie evidence of a paradigm of rapid
greenhouse warming that is in serious, serious trouble. Let's
consider the default option, that it is not going to warm up as
much as the earlier projections had indicated. This is becoming
A new suite of climate models which now seems to fit the
observed history bears witness to this conclusion.
Figure 3, which is on page 4, shows the new result from the
UKMO, United Kingdom Meteorological Office, model. The top
line, the dashed line in the figure is the warming projected in
the paper as it is published. But if you read the manuscript
carefully, you will see that the changes in the greenhouse
effect that were assumed to occur over the 21st Century were
simply unrealistically high. When you put in the accepted mid-
range scenario from the United Nations IPCC, the warming
dropped to the lower figure, which is a solid line, or about
1.7 degrees Celsius by the year 2100.
Figure 4 on the lower right of the page is the analogous
new model from the U.S. National Center for Atmospheric
Research, as published in the May 16 issue of ``Science.'' It,
too, uses a change in the greenhouse effect that is 30 percent
greater than the known and projected changes. It changes the
greenhouse carbon dioxide effectively at 1 percent per year. It
is know that the change is 0.7 percent per year, and that is
the figure that is often used.
By the way, I have never gotten an adequate explanation as
to why this is the case. Dr. Trenberth told me at a meeting in
Ashville about a month ago that well, it is a standard modeling
experiment. My reply was all you have to do in the computer
code is write ``*.7 on one line of code,'' and it will give you
the right answer.
Why the wrong greenhouse effect was used, nonetheless, is
Anyway, this NCAR model, when you put in the correct
greenhouse effect, yields only about 1.3 degrees of warming out
to the year 2100. It does not have any cooling from sulfate
aerosols in it.
The cooling from sulfate aerosols is being revised downward
as we speak. Various and sundry empirical and laboratory
measurements now suggest that it would probably drop the
warming in that right hand curve by an additional 0.3 degree,
which puts it in the 1 degree range.
All of this may be irrelevant, Senator. We don't really
care whether it warms. What we do is we care how and how much
it warms. The nature of the observed changes in the atmosphere
are rather surprising given the level of concern about this
Greenhouse physics predicts that the driest air masses
should respond first and most strongly to changes in human
activities. These are, generally, the coldest air masses, such
as the great high pressure system that dominates Siberia in the
winter and its only slightly more benign cousin in North
America. When the jet stream catches a corner of that North
American cold anti cyclone, it kills orange trees in Florida.
A look at the trends in the satellite data, which is the
only true record of global temperature, is remarkably
revealing. It is on figure 5 on page 5.
I do not put trend lines in data unless they are
statistically significant. There is a statistically significant
net cooling in this record which is now 18.5 years old.
Now on page 6, what I have done at the top is plot out the
relative change in temperature on a latitude longitude basis in
the satellite record. What you see is a pronounced warming
trend of the regions of the Northern Hemisphere's coldest
winters, a band stretching from Siberia through Northern
Europe, Iceland, and Western North America. This is not global
warming. It is a regional warming superimposed upon a slight
cooling trend in this data.
Another way to appreciate this in a frame of reference that
is longer than the satellite--and we are often criticized for
using the satellite data because it only starts in 1979 and
most people know there was a jump in the temperature that took
place between 1977 and 1978, 20 years ago the last jump--
another way to appreciate this, though, would be to look at a
longer frame of reference, say the surface temperature record
for the last 50 years.
In figure 7, at the bottom on page 6, I subtracted from the
winter climate change the summer change. The redder it is, the
more change there is in the winter compared to the warm half-
It is very obvious that what you are seeing is a warming of
the coldest air masses in North America and Europe and very
Much has been made in recent years of an apparent increase
in what has been called extreme rainfall. Federal
climatologists recently produced a press release during last
winter's floods in California claiming that these intense rains
had increased by 20 percent. This was a gross distortion of
reality and deserves investigation.
The original study by Tom Karl and others showed that the
percent of rain in the United States that falls from storms of
2 inches or more in 24 hours has increased from 9 percent of
all rain to 11 percent of all rain. Senators, this is a change
of 2 percent.
However, in order to create a sensational effect, this 2
percent change was divided by the average amount of 10 percent,
resulting in a figure of 20 percent.
In reality, what Karl found was that, on the average, there
is only one more day in every 730 in which the 2 inch rainfall
threshold is exceeded. No one could notice that.
Karl also informed me that there is no significant change
in rain of 3 inches per 24 hours or more.
Is a 2 to 3 inch rainfall ``extreme?'' Is it ``intense?''
Or, given the fact that much of our agricultural regions are in
moisture deficit every summer--look outside--is it
``beneficial?'' Simple logic can make that value judgment.
Imagine if the truth had really been told. The percentage
of rainfall originating from storms of less than 2 inches per
24 hours has declined from 91 percent to 89 percent. That is a
real headline grabber. Unfortunately, there is no news and no
scare value in the truth.
Another view of the future will conclude my remarks.
I believe it is fair to say that the people once labeled as
a ``small band of skeptics,'' those who championed the position
that warming would be modest and primarily in the coldest air
masses, have won the day.
Many of these same scientists are now forming a new
environmental paradigm. It is that the concept of fragile Earth
may have to be abandoned.
I will depart from my remarks here to tell you of an
experience on Earth Day that I just had. Our Department of
Environmental Sciences at the University of Virginia is a very
highly rated department. Some say it is the best in the Nation,
and the President and the administration are very, very proud
We had an Earth Day fest on the environment, and I was
astounded to see how many of my colleagues were of the opinion
that the new paradigm was going to be the paradigm of
resiliency. This is the cutting edge department in the United
It asks the impertinent question--and it is an impertinent
question--since when is everything that man does to the planet
During the 20th Century, we have gone half-way toward
effectively doubling the national carbon dioxide greenhouse
effect and here is what happened. Life expectancy doubled in
the free and developed world. The developing world is catching
up as their emissions rise. Corn production per acre increased
five-fold. The growing season in the coldest latitudes
increased slightly, but enough to increase greenness in those
latitudes by 10 percent.
Rainfall in the world's breadbaskets increased slightly,
even as summer temperatures did not warm. Australia now reports
a massive increase in agricultural production that may be
related to climate.
There are thousands of laboratory and field experiments as
well as the practical activities of professional
horticulturists that demonstrate that rising carbon dioxide
makes most plants grow better. Don't listen to me. Consider the
writings of Sylvan Wittwer, the man who conducted some of the
very first experiments on this phenomenon. He ultimately became
chairman of the Board on Agriculture of the national Research
Quoting Wittwer, ``There is currently a blind spot in the
political and informational systems of the world. This is
accompanied by a corruption of the underlying biological and
physical sciences. It should be considered good fortune that we
are living in a world of gradually increasing levels of
atmospheric CO2. The rising level of atmospheric
CO2 does not make the United States the world's
worst polluter. It is the world's greatest benefactor. Unlike
other natural resources--land, water, energy--essential for
food production, which are costly and progressively in shorter
supply, the rising level of atmospheric CO2 is a
universally free premium on which we can all reckon for the
I recommend Wittwer's book, the compilation of his 750
articles and refereed scientific literature for a remarkable
view of this issue.
Now I will close by asking the questions that I think need
to be asked.
How much money are we willing to spend to stop this?
How much money are we willing to spend on the slight
amelioration of the coldest temperatures in the air masses that
are most inhospitable to unprotected life where there is human
How much money are we willing to spend to stop making the
Earth greener, more productive, and human life increasingly
long over the mass of the planet, and the mass of the planet
still does find us the envy of history?
[The prepared statement of Dr. Michaels follows:]
Prepared Statement of Patrick J. Michaels
Nearly ten years ago, I testified before the Senate Foreign
Relations Committee. At that time, I argued that forecasts of dramatic
and deleterious global warming were likely to be in error because of
the very modest climate changes that had been observed to that date.
Further, it would eventually be recognized that this more moderate
climate change would be inordinately directed into the winter and
night, rather than the summer, and that this could be benign or even
beneficial. I testified that the likely warming, based on the observed
data, was between 1.0 and 1.5+C for doubling the natural carbon dioxide
Since then, the global mean temperature of the earth has not warmed
a bit. Three independent measuring systems (and the only three that
exist)-surface measured temperature, temperatures of the lower
atmosphere measured by weather balloons, and temperature of the lower
atmosphere measured by orbiting satellites-all show no warming since
that testimony (see Figure 1).
In science, regardless of how much external political and social
pressure is applied, it is inevitable that observed data and
theoretical hypotheses will eventually reach an internally consistent
equilibrium. However, it was apparent that when the first ``consensus''
was imposed on the issue of global warming, by the First Scientific
Assessment of the United Nations Intergovernmental Panel on Climate
Change (1990), that such an equilibrium had not been reached.
That report stated that ``when the latest atmospheric models are
run with the present concentrations of greenhouse gases, their
simulation of climate is generally realistic on large scales.'' (1) The
suite of climate models extant at the time predicted that the globe's
mean temperature should have risen by 1.3+ to 2.3+C, with the larger
figure for the Northern Hemisphere, where most of us live. These models
provided the technical background for the Framework Convention on
Climate Change, signed in 1992.
The observed warming since the late 19th century was 0.5+C, or less
than one-third of the predicted value. Critics argued, as I did before
this Committee, that there would have to be a dramatic reduction in the
forecast of future warming in order to reconcile fact and hypothesis.
By 1995, in its second full Assessment of Climate Change, the IPCC
admitted the validity of the critics' position: ``When increases in
greenhouse gases only are taken into account ... most [climate models]
produce a greater mean warming than has been observed to date, unless a
lower climate sensitivity [to the greenhouse effect] is used ... There
is growing evidence that increases in sulfate aerosols are partially
counteracting the [warming] due to increases in greenhouse gases.'' (2)
I believe the secular translation of this statement is that either
it is not going to warm up as much as was previously forecast, or
something is hiding the warming. I predict every attempt will be made
to demonstrate the later before admitting that former is true. \1\
\1\ However, one of the United Kingdom's most prominent modelers,
who surely does not want his name revealed, informed me in Asheville,
North Carolina on June 5, 1997 that ``it appears we have overestimated
the sensitivity of the climate to greenhouse changes.''
Such attempts were made, and initial results, particularly those
published in Nature on July 4, 1996 (3), appeared to bolster the
argument that the sulfates were masking the expected warming. That
particular study used annual weather balloon data from 1963 through
1987. Most striking was a rapid warming of the middle of the Southern
Hemisphere, where there in fact are virtually no sulfates available to
counter greenhouse warming.
However, when the entire record of weather balloon data, from 1958
through 1995, was used, this most pronounced region of warming turned
out to show no change whatsoever (4) (Figure 2). In response to this,
the senior author of the original study told the December meeting of
the American Geophysical Union that the correspondence between the
sulfate-greenhouse model and reality vanished because greenhouse
warming had overwhelmed sulfate cooling since 1987. As there was no net
change in any of the temperature records in the last decade (Figure 1),
this statement was clearly wrong. In an on-line discussion recently
published, the explanation is now given that sulfate cooling ``leaked''
into the Southern Hemisphere, or exactly the opposite of the
explanation given a mere four months earlier.
Clearly the default option-that it's simply not going to warm as
much as the earlier projections had indicated-is increasingly
attractive. And a new suite of climate models, which now seem to fit
the observed history more accurately, bear witness to this conclusion.
Figure 3 shows the new result from the United Kingdom
Meteorological Office model (5). The published forecast is the higher
value, which still shows considerable warming. But a careful read of
the related manuscript reveals that the changes in the greenhouse
effect that were used are much greater than the observed and projected
changes. When the more accepted values (as given by the IPCC) are used,
the warming drops to the lower figure, or about 1.7+C by the year 2100.
Figure 4 is an analogous new model from the U.S. National Center
for Atmospheric Research, as published in the May 16 issue of Science
(6). It, too, uses a change in the greenhouse effect at least 30%
greater than the known and projected changes. The lower figure adjusts
this model for that error and it produces only 1.3+C of warming by
Notably this model does not include any cooling from sulfates.
While this effect was apparently overestimated, new, direct
measurements by Hobbs et al., indicate that it should reduce warming by
about 0.3+C over this period (7).
The Nature of Observed Change
Greenhouse physics predicts that the driest airmasses should
respond first and most strongly to changes induced by human activities.
These, in fact, are generally the coldest airmasses such as the great
high pressure system that dominates Siberia in the winter, and its only
slightly more benign cousin in northwestern North America. When the jet
stream attains a proper orientation, it is this airmass that migrates
south and kills orange trees in Florida.
A look at the trends in the satellite data-our only truly global
record of lower atmosphere temperature-is remarkably revealing (Figure
5). In spite of a statistically significant global cooling trend over
the 18.5 year period of record, there is a pronounced warming trend in
the coldest winter regions (Figure 6).
Another way to appreciate observed change in a frame of reference
longer than the satellite record is to look at the ground-based
thermometers for the last fifty years. In Figure 7, I have subtracted
the summer temperature changes from the winter ones. The redder the
map, the more pronounced is the warming in the winter versus the
Much has been made in recent years of an apparent increase in what
has been called ``extreme'' rainfall. Federal climatologists recently
produced a press release, during last winter's floods in California,
claiming that these rains had increased by 20%. This was a gross
distortion of reality.
The original study, by Thomas Karl and others (8), showed
that the percent of rain in the United States that falls from
storms of two inches or more in 24 hours has increased from 9%
of all rain to 11%. This is a change of 2%. However, in order
to create a sensational effect, this 2% change was divided by
the average amount of 10%, resulting in a figure of 20%! In
reality, what Karl found was that, on the average, there is one
more day in every 730 in which the two-inch threshold is
exceeded. Karl also informed me that there is no significant
change in rain of three inches per day or more. Is a two-to-
three inch rainfall ``extreme''? Or, given the fact that much
of our agricultural region is in moisture deficit every summer,
is it ``beneficial''? Simple logic can make that value
Imagine if the truth had been told: The percent of rainfall
originating from storms of less than two inches per 24 hours
has declined from 91% of all rain to 89%. Unfortunately, there
is no news and no scare value in the truth.
Another View of the Future
I believe that it is fair to say that the people once
labeled as ``a small band of skeptics'' - those who championed
the position that warming would be modest and primarily in the
coldest air masses-have won the day.
Many of these same scientists are now forming a new
environmental paradigm. It is that the concept of ``fragile
earth'' must be abandoned. And it asks the impertinent
question: since when is everything that man does to the planet
During the 20th century, we have already proceeded more
than half way to radiatively doubling the natural carbon
dioxide greenhouse effect. Here is what resulted:
Life expectancy doubled in the free and developed world.
The developing world is catching up as their emissions rise.
Corn production per acre increased fivefold. The growing season
in the coldest latitudes increased slightly, but enough to
increase greenness by 10% (8). Rainfall in the world's
breadbaskets increased slightly, even as summer temperatures
did not warm. Australia reports a massive increase in
agricultural production that may be related to climate (9).
There are thousands of laboratory and field experiments, as
well as the practical activities of professional
horticulturalists, that demonstrate that rising carbon dioxide
makes most plants grow better. Consider the writing of Sylvan
Wittwer, the man who conducted some of the very first
experiments on this phenomenon. He ultimately became chairman
of the Board on Agriculture of the National Research Council.
There is currently a blind spot in the political and
informational systems of the world. This is accompanied by a
corruption of the underlying biological and physical sciences.
It should be considered good fortune that we are living in a
world of gradually increasing levels of atmospheric
CO2 .... The rising level of atmospheric
CO2 does not make the United States the world's
worst polluter. It is the world's greatest benefactor. Unlike
other natural resources (land, water, energy) essential for
food production, which are costly and progressively in shorter
supply, the rising level of atmospheric CO2 is a
universally free premium on which we can all reckon for the
\2\ Members of the Senate would do well to read Wittwer's book,
Food, Climate and Carbon Dioxide (10) a distillation of his 750
articles in the refereed scientific literature.
I must ask this Committee the real questions of the day:
How much of the money of the citizens of this nation are you
willing to spend to stop this? How much to stop a slight
amelioration of the coldest temperatures, in the airmasses most
inhospitable to unprotected life where there is human
settlement? How much to stop making the earth greener, more
productive, and human life increasingly long over the mass of
the planet that still finds us the envy of history?
(1) Houghton, J.T., G.J. Jenkins, and J.J. Ephraums (Eds.)
(1990). Climate Change: The IPCC Scientific Assessment.
Cambridge: Cambridge University Press.
(2) Houghton, J.T., L.G. Meira Filho, B.A. Callander, N.
Harris, A. Kattenberg, and K. Maskell (Eds.) (1996). Climate
Change 1995: The Science of Climate Change. Cambridge:
Cambridge University Press.
(3) Santer, B.D., et al. (1996). A Search for Human
Influences on the Thermal Structure of the Atmosphere. Nature,
(4) Michaels, P.J. and P.C. Knappenberger, 1996. Human
Effect on Global Climate? Nature, 384, 522-523.
(5) Mitchell, J.F.B. and T.C. Johns (1997). On modification
of Global Warming by Sulfate Aerosols. Journal of Climate, 10,
(6) Kerr, R.A. (1997). Model Gets It Right-Without Fudge
Factors, Science, 276, 1041.
(7) Hobbs, P.V., et al. (1997). Direct Radiative Forcing by
Smoke from Biomass Burning, Science, 275, 1777.
(8) Karl, T.R. et al. (1995). Trends in high-frequency
climate variability in the 20th century. Nature, 337, 217-220.
(9) Myneni, et al. (1997). Increased plant growth in the
northern high latitudes from 1981 to 1991. Nature, 386, 698-
(10) Nicholls, N. (1997) Increased Australian wheat yield
due to recent climate trends. Nature, 387, 484--485.
(11) Wittwer, S.H. (I 995). Food, Climate and Carbon
Dioxide. CRC Press, Boca Raton, Fla. 236pp.
Senator Hagel. Dr. Michaels, thank you. Dr. Robock.
STATEMENT OF DR. ALAN ROBOCK, MARYLAND STATE CLIMATOLOGIST,
DEPARTMENT OF METEOROLOGY, UNIVERSITY OF MARYLAND, COLLEGE
Dr. Robock. Thank you very much. I only had a day to
prepare my statement, so I don't have any graphs like Pat has.
But I will just read from it and expand on it.
First, I would like to introduce myself and tell you who I
am and what my expertise is. I have a Ph.D. in Meteorology from
MIT, which I received in 1977, and I have been a Professor at
the University of Maryland ever since. I am also the State
Climatologist of Maryland. Pat is the State Climatologist of
I have been involved in climate research for the last 25
years. I published more than 125 articles on my research,
including some which address the detection issue. I have
published a paper recently showing that the cooling of the
stratosphere which was observed for the last 30 years is very
unlikely to have happened by chance and is probably a signal of
human impacts on the climate system.
I am the contributing author to 4 of the 11 chapters of the
most recent IPCC report, including chapter 8, the Detection of
Climate Change and Attribution of Causes.
The work I did in contributing information to these
chapters and in reviewing these and other chapters was done as
a volunteer at night, in my spare time, with no compensation.
I have grants from several U.S. agencies to support my
research at the university, from the National Science
Foundation, NASA, NOAA and Department of Energy. But I do not
receive any private financing of my research.
I am a member of the American Meteorological Society, the
American Geophysical Union, the American Association for the
Advancement of Science, and I serve on the Scientific Advisory
Board of the National Institute for Global Environmental
Change, Great Plains Regional Center, which is at the
University of Nebraska, in Lincoln. I have served on that since
its inception in 1992. This is funded by Department of Energy.
I worked as a Congressional Science Fellow 10 years ago for
Congressman Bill Green for a year, and I also worked on the
Energy and Environment Study Conference, which was chaired by
him and Senator Gore at the time, and wrote a report for
Congress on the greenhouse effect. I think it was the first one
that was put out by them.
I was a visiting scientist for a year at Princeton 2 years
ago, where I worked on climate research.
I agree with the conclusions of the 1995 Working Group I
report. ``The balance of evidence suggests that there is a
discernible human influence on global climate.''
Note that this says the ``balance of evidence.'' It does
not say that there is unambiguous proof.
The report points out, ``Our ability to quantify the human
influence on global climate is currently limited because the
expected signal is still emerging from the noise of natural
variability, and because there are uncertainties in key
factors. These include the magnitude and patterns of long-term
variability.'' I agree with that, too.
So what we are saying is that if we look at all of the
evidence, it supports that we are having a human impact on
climate, but it does not prove it unambiguously because there
is so much natural variability and we are trying to see a very
small signal so far.
What is the evidence we use? The evidence which supports a
human influence includes observations that the concentrations
of greenhouse gases produced by humans, especially carbon
dioxide, are increasing. These gases warm the surface by
enhancing the natural greenhouse effect. This is undisputed. We
can measure the increase of CO2.
But these gases are not the only cause of climate change.
When we take the most recent climate models and include these
effects plus the effects of aerosols, that is, particles in the
atmosphere, plus the effects of volcanic eruptions, plus ozone
depletion, solar variations, and El Ninos, then these models
produce simulations of climate for the past 100 years that
agree quite well with the past surface temperature record.
This is how science progresses. We do the simple experiment
first, putting in only CO2. Then we put in other
factors which we begin to understand are also important. If
this changes the result, this is scientific progress. It does
not mean that what was done originally was wrong or that the
people had a particular bias. It is just advancement and better
In addition, stratospheric temperatures are decreasing, the
sea level is rising, and glaciers are melting. All of these are
in agreement with these theoretical calculations.
So sea level rise, which has not been mentioned much here,
is another consequence of global warming. It is usually pointed
out that small island states would be one of the principal
people that would be affected. But I am from the State of
Maryland. Maryland is a small island State, too. We have small
islands in the Chesapeake Bay. As sea level rises, they will be
affected. In fact, there is already evidence of this in
There will be increasing effects all along the coast as the
sea level rises.
So these same models that we tested to explain the past
climate we use for projections of future climate. They say that
the average global temperature will rise by 2 to 6 degrees
Fahrenheit by the end of the next century. There is a typo in
my written report. It should be 6 degrees, not 9 degrees.
Even for the smallest increase projected, ``The average
rate of warming would probably be greater than any seen in the
last 10,000 years.''
So the IPCC goes on to say, ``The actual annual decadal
changes would include considerable natural variability.
Regional temperature changes could differ substantially from
the global mean value.''
This means that at any one location on the globe, the
probability of high temperatures will increase. But it will not
be warmer on each and every day.
There also could be some surprises. There could be some
rapid changes that we do not even understand or cannot predict
now. Ten years ago, when I worked here, I sat in on a lot of
hearings about ozone depletion and should we restrict freons,
and many industry people sat up here and said no, it will
destroy our industry if we can't have freons. Some scientists
said but the science shows that ozone is going to be depleted.
Two years ago, Sherry Rowland, Mario Molina, and Paul
Cruson received the Nobel Prize in Chemistry for their work
warning us about it more than 20 years ago.
The ozone hole appeared over the South Pole. Nobody
predicted it. Nobody thought that that would happen. We were
only worried about gradual ozone depletion. All of a sudden we
have this rapid depletion of ozone that nobody predicted.
We understand it now. It is a very complex interaction
between stratospheric clouds and atmospheric circulation. But
this was a surprise. It actually was much worse than we had
So I am giving you what we know now, this range. But the
rest is unknown. It could be that the warming could be less or
it could be more. We don't know. We need more research to find
Now what would be the consequences of this climate change?
Well, obviously, the most threatening one is our food supply.
If there would be an increase in the latitude of drought and
crop failures in the bread baskets of the world, that would
have a significant impact. The latest analysis from IPCC shows
very large or very small changes in agricultural production in
many different places around the world. But it is something
that is very poorly known at this point and needs a lot more
According to our current understanding, the average is that
it probably would not be so much of a problem, but we don't
Other potential impacts include stronger, more violent
storms, coastal flooding and erosion, forest declines,
spreading of deserts, more intense droughts and floods, the
spread of tropical diseases, poorer winter skiing and snow
boarding, increased human mortality and illness from heat, and
increased economic and geographical dislocations.
Ironically, the distribution of these impacts is not
uniform. It looks now that the developed nations would be less
impacted than the developing countries, even though the
developed nations are the ones that are producing, that are
major producers of greenhouse gases right now.
In the rest of my written statement, I have sort of taken
off my scientist hat and given you my opinion based on my
knowledge of the political process and what should be done
about it. So I don't want really to dwell too much on that
except to say that improved knowledge is one of the things that
we still need. We still need to know a lot about what is going
There is going to be warming no matter what we do, no
matter what treaties we sign, because all the greenhouse gases
that we have put in in the past up until today are going to
influence climates for decades to come. So if we try to
restrict emissions of gases, we will change the rate of climate
change. We will make it slower and allow us more time to adapt
and to deal with the problems.
In order to adapt and to know what the patterns are, we
need more research to understand what these patterns are.
I will just close by giving you an analogy of this very
different problem of detecting an anthropogenic climate change.
Suppose you have a car and you are driving down the road, but
the front wheels are really loose and are wobbling back and
forth. So you just hold straight to the steering wheel. But the
car is going to be going back and forth, and back and forth.
You cannot predict at any one time exactly where it is going to
That is how the climate changes now because of all the
noise generated by storms, by the changing storms. For the same
reason that we cannot predict the weather more than a week in
advance, those same storms, which are unpredictable, produce
changes of climate.
Now if we turn the wheel of the car a little bit, which is
the analogy to putting in greenhouse gases, the car is going to
curve a little bit. But at any individual time it is going to
be left or right of the place that you are pointing to.
Right now, we are trying to measure this wiggly signal
coming out of the noise of climate change and we are just about
at the edge. It is very hard to say, and we are looking for
particular patterns that would not have occurred naturally. The
change of vertical temperature is one of them. The changes from
different hemispheres is another one. But the balance of
evidence, all of our theoretical understanding, points to that
there really is a greenhouse warming effect and we are seeing
[The prepared statement of Dr. Robock follows:]
Prepared Statement of Alan Robock
First I would like to introduce myself. I earned a Ph.D. in
Meteorology at the Massachusetts Institute of Technology in 1977. Since
then I have been on the faculty of the Department of Meteorology of the
University of Maryland, where I am now a Professor and the State
Climatologist of Maryland. My research involves many aspects of climate
change, including the greenhouse effect, impacts of climate change and
satellite observations. I have published more than 125 articles on my
research, more than half of these in the peer-reviewed literature. I
conduct both observational analyses and climate model simulations.
I have published papers on the creation of regional climate change
scenarios for impact analysis and on the effects of climate change on
corn production in Venezuela. I recently published a paper (Vinnikov,
Konstantin Ya., Alan Robock, Ronald J. Stouffer, and Syukuro Manabe,
1996: Vertical patterns of free and forced climate variations. Geophys.
Res. Lett., 23, 1801-1804) which showed that the cooling of the
stratosphere which has been observed during the past 30 years has a
very small chance of having happened due to natural climate
fluctuations, and is most likely a signal of human impacts on the
I am a contributing author to 4 of the 11 chapters of the most
recent EPCC 1995 Working Group I report, including Chapter 8,
``Detection of Climate Change and Attribution of Causes.'' The work I
did in contributing information to these chapters, and in reviewing
these and other chapters, was done as a volunteer, at night and in my
spare time, with no compensation. I currently have grants from the
National Science Foundation, the National Aeronautics and Space
Administration (NASA), the National Oceanic and Atmospheric
Administration (NOAA), and the US Department of Energy (DOE) that
support my scientific research. I have no private financing of my
research or publications.
I am a member of the American Meteorological Society, the American
Geophysical Union, and the American Association for the Advancement of
Science (AAAS). I serve on the Scientific Advisory Board of the
National Institute for Global Environmental Change, Great Plains
Regional Center, at the University of Nebraska in Lincoln, and have
since its inception in 1992. This center is funded by DOE. I am the
Associate Editor for Meteorology of Reviews of Geophysics. I serve on
the International Climate Commission of the International Association
for Meteorology and Atmospheric Science (IAMAS) and the American
Meteorological Society Committee on Climate Variations. I was awarded a
AAAS Congressional Science Fellowship in 1986, and served as
Legislative Assistant to Congressman Bill Green (R-NY) and as a
Research Fellow with the Environmental and Energy Study Conference from
September, 1986, through August, 1987, where I authored the report The
Greenhouse Effect: Global Warming Raises Fundamental Issues. During the
1994-95 academic year I was a Visiting Research Scientist at Princeton
University in the Atmospheric and Oceanic Sciences Program, conducting
climate research at NOAA's Geophysical Fluid Dynamics Laboratory.
Scientific Consensus on Global Warming
I agree with the conclusions of the 1995 IPCC Working Group I
report that ``the balance of evidence suggests that there is a
discernible human influence on global climate.'' Note that this is the
balance of evidence, NOT unambiguous proof. The report points out that
``our ability to quantify the human influence on global climate is
currently limited because the expected signal is still emerging from
the noise of natural variability, and because there are uncertainties
in key factors. These include the magnitude and patterns of long term
variability....'' [Both these quotes are from p. 5 of the Summary for
Policymakers.] I agree with this part of the assessment, too.
What is the evidence we use? The evidence which supports a human
influence on climate includes observations that the concentrations of
``greenhouse gases'' which are produced by human activity, especially
carbon dioxide, are increasing and that these gases warm the surface by
enhancing the natural greenhouse effect. These facts are undisputed.
But these gases are not the only cause of climate change. When the most
recent climate models include the effects of greenhouse gases, aerosols
(particles in the atmosphere), volcanic eruptions, solar variations,
and El Ninio in their calculations, they produce simulations of climate
change of the past 100 years that agree quite well with the past
surface temperature record. In addition, stratospheric temperatures are
decreasing, sea level is rising, and glaciers are melting, all in
agreement with these theoretical calculations.
It is these same models that we use for projections of future
climate, and they say that the global average temperature will rise by
2 to 9+F by the end of the next century. Even for the smallest increase
projected, ``the average rate of warming would probably be greater than
any seen in the last 10,000 years.'' [p. 6 of the EPCC Summary for
Policymakers.] The EPCC goes on to say, ``actual annual to decadal
changes would include considerable natural variability. Regional
temperature changes could differ substantially from the global mean
value.'' This means that at any one location on the globe, the
probability of high temperatures will increase, but it will not be
warmer on each and every day.
Of the projected consequences of global warming to society, I see
the threat of midlatitude drought, and resulting crop failures in the
breadbaskets of the world, as a significant potential danger. The food
supply of a planet that will have many more mouths to feed is
threatened. It is difficult to quantify this threat. While IPCC studies
show possible large increases and decreases in crop productivity in
different regions of the world, with no net large changes in current
production, much more work is need in this area.
Other potential impacts on humans include stronger and more violent
storms, coastal flooding and erosion, forest declines, spreading of
deserts, more intense droughts and floods, spread of tropical diseases,
poorer winter skiing and snowboarding, increased human mortality and
illness from heat, and increased economic and geographical
dislocations. The distribution of impacts is not uniform around the
world. Ironically, while the developed nations of the world produce the
majority of greenhouse gases, it appears that developing countries will
be more severely affected. However, quantified estimates of total
damage to society are currently quite uncertain.
What Should We Do?
Here I give you my professional opinion based on my scientific and
political knowledge. We need to take measures as insurance against
possible serious consequences. Policy responses will have to made in an
environment of uncertainty, but not in an environment of ignorance.
Our response to the threat of global warming at this time should be
one of adaptation, improved knowledge, and mitigation. ``No regrets''
responses should be strongly pursued. I will briefly comment on each of
Adaptation. No matter what our response, the planet will warm. The
most we can hope to achieve is to slow the rate of warming in the next
century. Therefore, in the case of each threat to society listed above,
all the threats not mentioned, and the threats that will appear that we
are not smart enough to imagine now, we will have to adapt to minimize
the negative impacts. This adaptation will require much better
information and technological innovations. This represents a
significant business opportunity in the United States to develop the
necessary devices and products and to market them to the world.
Improved knowledge. We need better data, better models, better
computers, and more trained scientists and engineers to address the
problems presented by global warming. Investing in the nation's
scientific research establishment is a very inexpensive and very
rewarding allocation of the nation's resources. We have to know where
and when temperature, precipitation, storm, and sea level changes will
take place. We need to know the biological response of agricultural and
natural ecosystems to the changed climate. Only then can we gauge the
impacts of our actions, and help to adapt precisely to the changes.
Mitigation. If climate change is slowed down and more gradual,
society will have more time to learn to live in this new world. This
means stopping the global growth in the emission of carbon dioxide, and
slowly reducing it. The only way to do this is to include burning less
coal and oil in the response. Any combination of conservation, energy
efficiency, energy tax, and public transportation enhancements will
result in less gasoline being burned and less coal being burned.
``No regrets'' policies. Reduced usage of energy will have many
positive benefits to society, while exacting small costs, even if
projected global warming turns out to have been exaggerated (which is
just as likely as that the warming turns out to have been
underestimated). We would have cleaner air, less acid rain, greater
visibility in the atmosphere, cooler central regions of cities, more
trees, and less dependence on foreign oil supplies (currently about
half of our usage). There are many proposals along this line that will
not reduce American living standards, and our productivity will
increase in the long run as we use energy more efficiently.
Legislative response. In light of the above discussion, I cannot
support the Byrd/Hagel Senate Resolution 98 which seeks to limit
current US participation in a climate treaty unless developing
countries are also included now. The United States agreed in Berlin in
1995 that the current round of negotiations will only commit
industrialized nations to emissions targets, and that the developing
countries will produce commitments in the subsequent round of talks.
There is no reason to change this now. The latest scientific research
supports this position.
The fact is that each US citizen currently produces more than 5
times the greenhouse gas emission as the average person on earth. Once
industrialized countries set an example, as we have in so many other
social, moral, and environmental issues, the developing world will
accept its responsibility to restrict greenhouse gas emissions as
already agreed in the next few years.
Senator Hagel. Dr. Robock, thank you very much.
To both of you, thank you again.
Dr. Robock, you heard your colleague, Dr. Michaels, say, I
believe, that over the last 18.5 years there has been a net
cooling. Obviously you disagree with that.
Dr. Robock. No. He has a graph here showing the data from
the satellites. He has another graph showing the data from the
surface temperature observations.
These are measuring different things. So the question is
what are you talking about, surface temperatures or
temperatures in the middle part of the atmosphere.
In both cases, it looks like the average temperature of the
last 20 years has been about constant. It has not gone up very
much and if there is a negative trend, it is tiny. So the trend
is much smaller than the individual year to year variations.
The largest volcanic eruption of the past century, the
Pinatubo eruption, took place in 1991 and produced substantial
cooling for several years. 1992 was quite cold compared to the
years before that and we are only just now recovering from that
cooling. So he has picked a very short period of time, only 20
years, and at the end of that period there are the effects of a
volcanic eruption. So you have to interpret this in light of
all the causes of climate change, not just greenhouse warming.
This does not conflict with our understanding of how the
climate system should behave. This is a response to greenhouse
warming, to El Ninos which take place. There was the largest El
Nino of the whole last 100 years at the beginning of this
period, in 1982-1983. So it was a warm period caused by an El
Nino at the beginning and a cold period at the end caused by a
volcanic eruption. That, superimposed on the greenhouse gases
that come up, can explain the entire record. So it is not
inconsistent with a global warming theory.
Senator Hagel. Let me ask Dr. Michaels to respond to that.
Dr. Michaels. The satellite record can be broken into
hemispheres. One of the things that scientists like to do is to
look at the Southern Hemisphere because it is thought to be
relatively pristine compared to the Northern. It does not have
a lot of the particulate emissions. It does have the changes in
the greenhouse effect, though, because the greenhouse gases are
There is a statistically significant negative trend in the
Southern Hemisphere satellite data as well. But, moreover, if
we take out the period 1992 through 1994, which is when the
Pinatubo cooling is in that record, the cooling remains
statistically significant. Pinatubo did not do that.
Dr. Robock. Well, you don't know that the Pinatubo effect
ended in 1994.
Dr. Michaels. Except that the temperature went back to
where it was by mid-1994.
Dr. Robock. Yes. But it might have been much warmer if
there had not been an eruption.
Dr. Michaels. Well, if you take a look at the modeling
simulation from Hansen, which he was talking about in
``Science'' magazine a few years ago, a couple of years ago, he
said that they had correctly diagnosed both the magnitude and
the period of the Pinatubo cooling, and he hit the bottom about
10 months or 11 months after the eruption and then got it back
to the background temperature about 2 years after the eruption,
Senator Hagel. Obviously we have a little difference of
opinion here. I think this really makes the case on why, along
with, I suspect a lot of U.S. Senators, am rather confused
about what do we have here. What is the problem, what is the
issue. Do we have an issue? Do we have a problem?
But moving along from there Dr. Robock, there are your
comments about food supply and agricultural production. Your
colleague Dr. Michaels as well as the President of the Nebraska
Farm Bureau, talked about the incredible increases in
agricultural production which have occurred in this country,
Australia and other places. Your testimony does not give that
same indication of an increase in productivity.
Dr. Robock. Well, just like climate change, there are many
things that cause changes in agricultural productivity.
If you look at agricultural productivity over the most
recent time, climate has not been the most significant factor.
It has been changes of fertilizers, technology, energy, new
seeds. So, because of technological inputs to farming, there
indeed has been an increase in agricultural productivity.
If you look at figures of that, little wiggles on those
impacts of climate. The drought in 1988 I am sure had an impact
on climate productivity. There was an extreme. But to predict
technological responses and human responses and how they will
deal with a gradually changing climate and to know what the
total agricultural productivity will be in the future is very
difficult to do. I don't know how to do that.
Indeed, it is true that right now, in our country and in
the world, except for extreme cases, the climate change is not
the most dominant thing for food supplies.
But what we are talking about is the most rapid climate
change ever before experienced in the history of our species
happening much more rapidly than has happened in the past.
Current model projections show that there will be significant
drought in the summertime, much more than we have ever before
So the threat is that there will be much larger climate
extremes that we will have to deal with and it may not be
possible to deal with that the way we are dealing with it now.
Senator Hagel. I am going to ask Dr. Michaels to respond. I
am sure he wishes to. But I can tell you that if Mr. Neidig,
the Nebraska Farm Bureau President, was sitting here and
listening to some of that, he might bring up the Dust Bowl of
Dr. Robock. I didn't bring that up.
Senator Hagel. No, I did, because your point was that the
productivity increases have come as a result of fertilizer,
technology and so on and that climate did not have much to do
with it. Those in Nebraska and the Midwest would tend to
Dr. Michaels, you might have a response.
Dr. Michaels. Well, the fact of the matter is that as a
percentage of the yield of crops from year to year, the weather
component drops more and more and more as the technological
component goes up. That is a peculiarity of our society that
many people do not realize; that we actually engineer out these
big drops in agricultural productivity.
Let me tell you a little story about this. It's
I actually got my Ph.D. in crops and how they change around
the world as the climate fluctuates. I did a bunch of work
after that in the area.
Now Al is right. There is a tremendous increase in the
technological component of yield and it is about to jump up
again, I think, by the way, as selective genetic engineering
makes plants more efficient with respect to water use and
We were looking at a study of Eastern agriculture. What we
do in these models is try to put some estimator of the
technological change in. Every time we did, we could not quite
explain the increase.
Well, now we are seeing research by Neville Nichols in
Australia saying well, maybe the reason for some of this
increase is climate change itself or, as Sylvan Wittwer would
say, the fact that you have put more carbon dioxide in the air.
This is not a one-way street. Everything you do is not bad
and technology has its way of ameliorating some of the
Senator Hagel. Did you want to respond, Dr. Robock?
Dr. Robock. I just wanted to say that I think maybe I was
I agree with you that the Dust Bowl had a significant
impact on agriculture. So if you look to include that in the
record, certainly the increase in productivity was because the
climate is more beneficial now than during the Dust Bowl.
Dr. Michaels. Thirty seconds. After the Dust Bowl----
Dr. Robock. Just let me say one other thing.
Dr. Michaels. Sure.
Dr. Robock. About the CO2 fertilization issue
which Dr. Michaels brought up, increased CO2 can
also make weeds grow faster. It can also make insects eat more
plants than they have before in order to get enough nutrition.
So it is not clear and we don't understand well enough yet
what the total mix of the influence of increased CO2
fertilization will be on productivity because it can affect
lots of other things and not just the growth of crops.
Senator Hagel. Dr. Michaels, we will finish with this and
then pass the ball on to Senator Sarbanes.
Dr. Michaels. I would just argue that if there are more
insects eating more plants, there have to be more plants for
the insects to eat.
Senator Hagel. Well, would you like to pick up on that,
Senator Sarbanes. Well, in a way.
I take it, Dr. Michaels, that as you just said, it is not a
one-way street. In fact, as I read your statement, you think it
is so much a two-way street that I take it you would be in
favor of more emission of carbon dioxide. Would that be
Dr. Michaels. No, I didn't say that.
Senator Sarbanes. Let me read your statement.
Dr. Michaels. Let me tell you what I am in favor of.
Senator Sarbanes. No, let me read your statement. ``During
the 20th Century, we have already proceeded more than half-way
to radiatively doubling the natural carbon dioxide greenhouse
effect. Here is what resulted. Life expectancy doubled in the
free and developed world.''
So you link the increase in life expectancy to the increase
in carbon dioxide greenhouse effect?
Dr. Michaels. No. No, sir. No.
The society that developed, the technological society that
developed that was based upon fossil fuel developed technology
and lifestyles that clearly doubled the life expectancy. It was
not caused by carbon dioxide nor was the fivefold increase in
corn yield. It was the society that developed as a result of
this. Other societies want to do the same.
Senator Sarbanes. So it really says nothing as to whether
the increase in carbon dioxide greenhouse effects is related to
In other words, if you had developed a society which had
exercised better control over its greenhouse effects, you might
have still had these results, is that correct?
Dr. Michaels. We cannot run that experiment.
Senator Sarbanes. Well, would you run it now?
Dr. Michaels. I don't have the ability to run it.
Senator Sarbanes. No, I mean that we can just let this
thing go. Do you think there is any problem here? On the basis
of this analysis, I take it one would simply say well, just let
Dr. Michaels. Why do something drastic right now? Yes, I
agree. I certainly don't think there is any need to do anything
Senator Sarbanes. Would you do anything?
Dr. Michaels. I would believe our greener friends.
Senator Sarbanes. Pardon?
Dr. Michaels. I would believe our greener friends who have
told us that technology of the future will become more energy
effective and cost effective with respect to the current mix of
technology. When it does that, that technology becomes cheaper.
Senator Sarbanes. But why should we bother to do that if
there are no harmful consequences of a greenhouse effect?
Dr. Michaels. Well, we will run that experiment, won't we?
Senator Sarbanes. But why should we do it if there are no
Dr. Michaels. Because if the technology is cost
competitive, people are going to buy it no matter what, and
that is what we are being told. We can buy a lot more of it in
the year 2020 than we can in the year 1996.
Senator Sarbanes. Why do we want a technology that reduces
the greenhouse effect if the greenhouse effect is not harmful?
Dr. Michaels. I don't think that's the point, Senator. I
think we want a technology that produces energy efficiently,
whether it emits carbon dioxide or not. That is where we are
told we are heading.
Senator Sarbanes. Now let me ask you this. I am interested
in this assertion. You don't think there is any problem, I take
it, in a rising level in the oceans.
Dr. Michaels. I will tell you that many recent studies,
notably by John Mather at the University of Delaware, who is a
very esteemed climatologist, and several others that I could
cite if I could get into my little white book here, now
indicate sea level rise not to be thought to be as much as
Now hold on for a second.
Senator Sarbanes. No, I don't want to get into that
Dr. Michaels. I do.
Senator Sarbanes. [continuing]. as to whether it is more or
less. Do you think there is sea level rise?
Dr. Michaels. The sea level has risen a few inches in the
20th Century. Much of the rise was before much of the
Senator Sarbanes. Now I take it you say if the heat is at
the ice caps, it doesn't matter because they are well below
freezing in any event, is that correct?
Dr. Michaels. In the winter, yes.
What you do is you actually increase the amount of snow in
the highest latitudes. The simulations that I am referring to
by Mather--and there are several of them; Al can probably help
me out with this--now indicate that the two largest areas of
ice on the planet in toto, which is Greenland and Antarctica,
actually grow a bit if you warm the atmosphere some because of
the propensity for winter warming.
Dr. Robock. No. As I understand it, Greenland would melt
slightly but Antarctica might grow.
Dr. Michaels. And the net is positive between those two.
Dr. Robock. But the total amount of contribution to sea
level rise from melting ice is much smaller than the
contribution just from thermal expansion; that is, you heat the
water and it becomes thicker.
So it is not a significant part of the projected sea level
rise, anyway. It may be a third of it. There are a lot of
glaciers on land that are melting.
I was just in Glacier Bay, Alaska. The glacier has
retreated 50 miles in the last 200 years. When the first
explorers came there, there was a huge sheet of ice and how it
has contributed to sea level rise. Glaciers around the world on
land are melting. That is the main contribution from glaciers.
But it is much less than the contribution just from heating
the ocean and it is getting thicker.
Dr. Michaels. If you melt all the land glaciers on the
surface of the planet, I believe you raise the sea level by 7
inches. Isn't that right?
Dr. Robock. Yes. So that's not very important. The thermal
expansion is much more important.
Dr. Michaels. Thermal expansion has given us half, it has
generally given us 50 percent of the contribution, an equal
contribution that you get from melting ice.
I don't think that you are going to disagree with me that
warming in models is coming down. Nature is trying to tell us
something. The NCAR model is sitting there at about 1.3 degrees
with the right greenhouse effect in it. PKMO is down there.
Nature has not really warmed us up very much in the last 20
years, as you have said. So what about all this thermal
Dr. Robock. There are about five things there that I would
like to disagree with.
Senator Sarbanes. Well, go ahead and do it.
Senator Hagel. Yes, we have time.
Dr. Robock. The argument that models are giving different
answers now than they did before and that that trend signifies
anything about the future is really misleading.
If you put in aerosols into a model, which tend to cool,
then the warming will be less than if you are only put in
greenhouse gases. We knew that. I published a paper in 1978
showing that and showing that the Northern Hemisphere would
warm less than the Southern Hemisphere because of the aerosols.
So we have known that for a long time. It is just that
these very sophisticated models have not had the technology to
put in the effects of aerosols in a correct way. So now that we
do it, we get the result that we expect.
This gives us further confidence in the models, not less.
If you increase carbon dioxide by 0.7 percent a year rather
than 1.0 percent a year, of course you will get less warming.
There is nothing controversial about that.
Any projection of future climate depends on how much
CO2 will be in the atmosphere. That means we have to
predict human behavior. We have to predict what the human
emissions will be.
So you can take any scenario you want and then get the
answer based on those assumptions. If Pat is saying that we put
in a better estimate of past CO2 changes and we get
a better estimate from the models, that strengthens our
confidence in the models, not weakens it.
Dr. Michaels. The person who, I guess, ignited, the
scientific witness who ignited the ``Bonfire of the Greenhouse
Vanities'' was James Hansen from NASA in his 1988 testimony. He
is often thought of as quite an authority.
Let me read to you from the May 16 ``Science'' magazine his
opinion of sulfate aerosols. I am quoting from an article by
Richard Caere. ``But the assumptions about how hazes''--that's
the aerosols--``affect the climate may have taken a hit
recently from climatologist James Hansen, the man who told
Congress in 1988 he believed `with a high degree of confidence'
that greenhouse warming had arrived. In a recent paper, Hansen
and his colleagues pointed out that recent measurements suggest
that aerosols don't just cool, they warm the atmosphere by
absorbing sunlight. The net effect of this reflection and
absorption Hansen estimates would be small--too small to have
an effect on temperature.''
Dr. Robock. What Pat is talking about is the direct effect
of aerosols; that is, aerosols just scatter some of the
sunlight back to space and that heat doesn't get to the ground.
Indeed, recent studies off the coast of Virginia last year,
the TARFOX experiment, showed that a lot of the haze is carbon
based not sulfate aerosols----
Dr. Michaels. That would cause warming.
Dr. Robock. [continuing]. which would cause warming.
Dr. Michaels. And it didn't warm.
Dr. Robock. So what Hansen is saying, which is the part Pat
didn't read, is that, therefore, the effect of aerosols must be
the indirect effect that is causing the cooling. This indirect
effect of aerosols is when they go into clouds. When aerosols
go into clouds, they produce smaller cloud droplets and make
the clouds brighter. It increases their reflectivity. This
indirect effect cools by reflecting more sunlight.
You can see this if you look at a satellite picture of ship
tracks. You can see a line in the clouds as a ship steams
underneath it because the pollution from the smokestack of the
ship goes up into the cloud and makes this bright white line.
This area of indirect effects of aerosols on clouds is an
area of active research and is very difficult to quantify by
observations because you cannot do in the real world an
experiment with and without the aerosols. But, based on the
observations that were taken of how it changes over time and
based on our climate models, the climate models will give you
any answer you want depending on what assumptions you make
about the theory.
But Hansen's conclusion is that there has to be something
missing that caused the cooling that prevented the warming that
the models say, and it was this indirect effect of aerosols.
So, indeed, I can agree with Pat that there are things that
we don't understand yet. But that does not change the
conclusion that the balance of evidence supports it. Nobody has
found any evidence to prove that greenhouse warming is wrong,
that the theory is wrong.
Senator Hagel. Dr. Michaels, you have 15 seconds and then
we will move on with our series of questions.
Dr. Michaels. The question, again, is one of sensitivity.
I believe you were at the American Geophysical Union
meeting in December in San Francisco----
Dr. Robock. Yes.
Dr. Michaels. [continuing]. where Hansen gave the paper and
said the effect of aerosols on the temperature of the last 20
years is negligible. So you are right, it depends upon the
model that you use.
Senator Hagel. Thank you.
Dr. Robock, I would like to read the last page from your
statement. Senator Byrd will be concerned to hear that you
cannot support the Byrd-Hagel Resolution, but I am going to
pass it on anyway. Moving on to what I think is the more
important point, you say the United States agreed in Berlin in
1995 that the current round of negotiations will only commit
industrialized nations to emissions targets and that the
developing countries will enter commitments in a subsequent
round of talks. There is no reason to change this now. The
latest scientific research supports this position.
Considering what we have just witnessed here, and given the
latest scientific research presented by our two distinguished
panelists, I am not sure that is exactly right. But I would
like to ask a couple of questions about that.
First of all, why must we rush into this in 6 months,
allowing the developing countries not to commit in any binding
Second, I keep coming back to a figure that was shown last
week with which Secretary Wirth agreed, and with which I assume
you agree as well. It indicated that China will be the largest
contributor of greenhouse gas emissions in the world by the
If, as I said, and as Secretary Wirth agreed that is true,
why would we let China and the developing countries out of
this, while we must stick with the way it is in the protocol
and implement it immediately?
Dr. Robock. Well, I will give you my opinion as an amateur
politician. I am not an expert on this.
The way I see it is that the U.S. has to exert a leadership
role in the world and take actions so that other people will
Indeed, you are correct that China and India will be much
larger emitters of greenhouse gases in the near future than the
developed countries are as they develop. What if everybody in
China wants a refrigerator or a car? They will make the same
mistakes we did.
So the challenge really is to produce technology so that
people can live at a better style of life using energy much
If the U.S. begins this process now, we can develop that
technology and it can even be an economic boon to us to produce
that technology that the world will demand to use energy more
As far as timing, whether it is 6 months or a year, as I
understand it, the developing countries will agree to some
targets for themselves subsequently. But if the U.S. does
nothing, you cannot expect them to do anything, either.
So it is just that we should set an example and do what we
have to, even though for 50 or 100 years we will still be using
much more energy per person than people in China. We have to
make some commitment to demonstrate that it is a problem.
If we don't think it is a problem, how can we expect them
to take any action at all?
Senator Hagel. I would suggest that this goes well beyond
setting an example.
Dr. Michaels, you might want to respond to this.
Dr. Michaels. Well, the fact of the matter is that energy
per capita is somewhat of a misleading unit in this debate.
What you really want to look at is the amount of energy per
unit of GDP.
In the United States, we now use only 60 percent as much
energy as we did in the early 1970's to produce a unit of
deflated Gross Domestic Product. That didn't happen because of
somebody who was scared of the greenhouse effect. It happened
because somebody was scared of high prices, and industry
invested its capital in increased efficiency. That is going to
continue to happen in the future whether or not we try to force
So I would suspect that we are going to see increasing
energy efficiency and economies of scale to be the rule in the
21st Century whether or not we mandate it.
Senator Hagel. Senator Sarbanes.
Senator Sarbanes. You don't see any dangers posed by the
developing world in its use of energy as far as greenhouse
Dr. Robock. Are you asking me?
Senator Sarbanes. No, I'm asking him.
Dr. Michaels. You need to make more question more specific.
Senator Sarbanes. Well, people say China should be brought
into this thing because they will be emitting more than the
U.S. by the year 2015. But you don't see that as a problem?
Dr. Michaels. What I would suggest, again, is that the
Chinese are going to want to become more energy efficient. I
believe many of the things that the first panel said.
You will see--and this is certainly an economic opinion. I
am out of my field and probably should say nothing. You will
doubtless see more energy efficient technologies being exported
from the United States whether or not we mandate emissions
reductions because everybody has to compete in an economy that
rewards the efficient.
When I lived in Chicago, there was a company called
Northern Illinois Gas which had a great slogan. It was, ``The
future belongs to the efficient.'' Nothing could be truer.
Senator Sarbanes. So your view is that that will take care
of the problem, that there won't be a problem because that will
take care of it?
Dr. Michaels. Well, we see all kinds of interesting little
things along this line, you know. People have a difficult time
explaining what made the United States become so much more
efficient with respect to GDP production over the last 30
Senator Sarbanes. What do you think there?
Dr. Michaels. If somebody could explain that that was
caused by regulation, I'd like to hear the explanation. It was
clearly caused by economies of scale.
Senator Sarbanes. By what?
Dr. Michaels. By economies of scale and people wanting to
be more efficient.
Senator Sarbanes. Because of increase in costs, energy
Dr. Michaels. Increasing price.
Senator Sarbanes. Yes.
Dr. Michaels. That is supply and demand.
Dr. Robock. If I could just make one comment about the
latest scientific research, the reason I said that is there is
a time lag built into this whole problem. The greenhouse gases
we put in today and that we put in during the time we delay any
restriction will have an impact for decades into the future.
All the greenhouse gases we put in the past, there is nothing
we can do about those. The climate is going to change in the
next few decades even if we stop emitting all greenhouse gases
now. It would still continue to change based on that.
There is a long time lag. So we cannot wait until we see
terrible problems. Then there is nothing we can do. There will
still continue to be effects for decades and it will be too
late to do anything about it.
So we have to take a cautious attitude, looking at it from
the viewpoint of insurance, to what if it is right, what can we
do that would be a good thing to do anyway. What if it is going
to be much worse? What if there is going to be a huge change in
ocean circulation, as some people have suggested, possibly as a
surprise and there will be a rapid climate change that nobody
So it is not like aerosols where if you stop burning today,
in a week or two they will all be out of the atmosphere. The
greenhouse gases last for decades. So there is a big time lag.
We cannot reverse it if we come to a point where we say oh,
yes, it really is a problem now.
Dr. Michaels. But Al, this leads to what you and I know is
the great conundrum about this issue, which is if you really
believe in the gloom and doom models, you have to reduce
emissions by about 60 to 80 percent. No one knows how to do
If you don't believe in them, if you believe in the modest
climate change scenario, you have to ask yourself the question
why bother. When we look at the emissions proposals that are
coming out, you and I know that if you believe the 4 degree
warming--and I don't and I'm not so sure you do, for a
doubling--but if you believe that, how much would it change the
temperature by the year 2050? The answer is probably somewhere
around a tenth of a degree or so.
These policies are not credible as far as stopping
deleterious and dramatic climate change. The magnitude is just
simply too small. I believe that that is the crux of the issue,
Senator Sarbanes. No. Part of the crux of the issue is
whether you think there is any problem at all, and I take it
you don't think there is a problem.
Dr. Michaels. Again, I think the problem that we have is
the lack of warming given how much was predicted.
I think Al will agree that the climate models that were
used as the basis for the Framework Convention predicted that
it should have warmed between 1.3 degrees and 2.3 degrees by
Dr. Robock. No, I don't agree with that.
Dr. Michaels. This is Mitchell, 1995.
Dr. Robock. No. They said only if you put in greenhouse
Dr. Michaels. Correct.
Dr. Robock. They don't take into account everything else.
They never said that that's how the real climate would behave
because they know there are lots of other things that cause
Dr. Michaels. In the 1990 IPCC report, there was precious
little reference to sulfate cooling except a slight
Senator Hagel. Senator, do you have any more questions?
Senator Sarbanes. Well, I didn't really get an answer to my
question, but I don't think I am going to.
Senator Hagel. All right. Let's close it up in 60 seconds.
Senator Sarbanes. Well, I don't really think I am going to.
So it's all right.
Senator Hagel. Would one of you like to take another run at
Dr. Michaels. Sure.
Senator, if you don't think you are going to get an answer,
I am trying my best to give you what I think is the answer. The
answer is that, one, more efficient technologies we are told
will come on the line. Two, they will result in reductions in
Senator Sarbanes. Do you want to reduce greenhouse
Dr. Michaels. I want efficient technology.
Senator Sarbanes. Do you want to reduce greenhouse
Dr. Michaels. If that reduces greenhouse emissions, so be
Senator Sarbanes. If it doesn't?
Dr. Michaels. No comment.
Senator Sarbanes. So be it. All right. That's my answer.
Senator Hagel. Gentlemen, thank you both. This is the great
I think, again, it reflects that we, at least in this
humble Senator's opinion, have a long way to go before we have
a strong, significant scientific base to give us some solid,
clear direction on this.
We are adjourned.
[Whereupon, at 12:58 p.m., the subcommittee adjourned, to
reconvene subject to the call of the Chair.]
A P P E N D I X
June 19, 1997 Hearing
November 8, 1996.
The White House,
Washington, DC 20500
Dear Mr. President: Last summer, participants in the second
Conference of Parties of the United Nations' Framework Convention on
Climate Change (UNFCCC) agreed to negotiations for legally binding
numeric limits on greenhouse gas emissions. This dramatic shift from
voluntary to enforceable caps on greenhouse gases was led by the U.S.
According to your spokespeople, there is now a consensus in the world
scientific community which demands urgent action to reduce greenhouse
There is less than agreement outside the United Nations' scientific
body. Furthermore, there is still a lively debate among respected
scientists about the human versus natural sources of greenhouse gases
and their effect on climate. Controversy notwithstanding, the climate
change treaty is moving full-speed ahead with the Administration's
enthusiastic support. A final agreement is scheduled to be completed in
December of 1997, with ratification by individual countries beginning
in 1998. If ratified by the U.S. Senate, the treaty will be binding on
the U.S. and other developed countries and may be incorporated into
U.S. law. However, developing countries will not have to comply.
Of great concern to agriculture are reports under consideration by
the U.N. scientific panel which blame agriculture for more than 20
percent of human-caused greenhouse gas emissions. Specifically, we are
concerned about proposals for the following:
fuel economy requirements
reduction or phaseout of the use of diesel fuel
limitations on production per acre for some crops
requirements for ``plowless'' soil preparation
mandatory fallowing of crop land
limits and restrictions on livestock production to reduce
restrictions on use of fertilizer
restrictions on timber harvesting
restrictions on processing, manufacturing and transportation
of food products
Unfortunately, these proposals ignore agriculture's positive role
in reducing greenhouse gases by removing carbon dioxide from the
atmosphere through photosynthesis. Most importantly, they cavalierly
disregard the most valuable function of modern agriculture--feeding a
hungry world. Ironically, rice production has been singled out as the
number one culprit in human-caused methane emissions.
We are very concerned that these recommendations or similar ones
will be incorporated in the final climate change agreement, ratified
and imposed on U.S. farmers and ranchers through U.S. laws. Binding and
enforceable controls would apply only to developed countries and would
severely disadvantage U.S. farmers and ranchers in today's global
Moreover, we are deeply concerned and surprised that the
Administration has not actively consulted with agriculture as the
agreement has been developed. We respectfully request that the
Administration take the following actions:
(1) The Administration must fully and actively consult with
agriculture. Agricultural interests have not been considered by the
Department of State and other U.S. agencies which are closely involved
with the development of the climate change agreement. The agreement
must include an open and extensive public debate which involves
agricultural producers and members of Congress, USDA and other
(2) The Administration should withdraw its support for legally
binding and enforceable caps on emissions until there is a stronger
consensus from the scientific community that they are justified. If it
is determined that controls are justified, they should be accomplished
voluntarily or in ways which minimize disruption of U.S. agricultural
(3) The final climate change agreement, scheduled for completion in
December of 1997, must be delayed to provide sufficient time for
consultation with agriculture and for adequate risk, cost and benefit
Without proper scientific and economic analyses and assessment,
U.S. farmers and ranchers may be placed at a serious disadvantage with
agricultural producers in countries which do not plan to reduce
If the Administration does not adequately address the above
concerns, we may raise them with Congress during the ratification
AMERICAN FARM BUREAU FEDERATION
AMERICAN CROP PROTECTION ASSOCIATION
AMERICAN SHEEP INDUSTRIES ASSOCIATION
AMERICAN SOYBEAN ASSOCIATION
NATIONAL ASSOCIATION OF WHEAT GROWERS
NATIONAL CATTLEMEN'S BEEF ASSOCIATION
NATIONAL CORN GROWERS ASSOCIATION
NATIONAL COTTON COUNCIL
NATIONAL FOOD PROCESSORS ASSOCIATION
NATIONAL MILK PRODUCERS FEDERATION
NATIONAL PORK PRODUCERS COUNCIL
THE FERTILIZER INSTITUTE
UNITED AGRIBUSINESS LEAGUE
UNITED FRESH FRUIT AND VEGETABLE ASSOCIATION
WESTERN GROWERS ASSOCIATION
``There's a lot of noise in the data. It is hard to isolate cause
and effect. But there is now an effective consensus among the world's
leading scientists and serious and well informed people outside the
scientific community that there is a discernible human influence on the
climate, and a link between the concentration of carbon dioxide and the
increase in temperature....
``The time to consider the policy dimensions of climate change is
not when the link between greenhouse gases and climate change is
conclusively proven--but when the possibility cannot be discounted and
is taken seriously by the society of which we are part.
``We in BP have reached that point.''
--John Browne, Group Chief Executive,
British Petroleum (BP America),
Sanford University, 19 May 1997
Climate Change Speech
By John Browne, Group Chief Executive, British Petroleum (BP America)
Stanford University, 19 May 1997
Dean Spence, Ladies and Gentlemen, good morning.
It is always marvelous to come pack to Stanford and it is a
pleasure and a privilege to be here to speak to you today on a subject
which I believe is of the utmost importance.
I can't think of anywhere better than Stanford to discuss in a calm
and rational way a subject which raises great emotion and which
requires both analysis and action.
I think it's right to start by setting my comments in context.
Following the collapse of Communism in Europe and the fall of the
Soviet Empire at the end of the 1980s, two alternative views of the
consequences for the rest of the world were put forward.
Francis Fukuyama wrote a book with the ironic title ``The End of
History''. Jacques Delors, then President of the European Commission,
talked about the ``Acceleration of History''.
In the event, history has neither accelerated nor stopped. But it
The world in which we now live is one no longer defined by
ideology. Of course, the old spectrums are still with us--of left to
right--of radical to conservative, but ideology is no longer the
ultimate arbiter of analysis and action.
Governments, corporations and individual citizens have all had to
redefine their roles in a society no longer divided by an Iron Curtain
separating Capitalism from Communism.
A new age demands a fresh perspective of the nature of society and
The passing of some of the old divisions reminds us we are all
citizens of one world, and we must take shared responsibility for its
future, and for its sustainable development.
We must do that in all our various roles as students and teachers,
as business people with capital to invest, as legislators with the
power to make law, as individual citizens with the right to vote, and
as consumers with the power of choice.
These roles overlap, of course. The people who work in BP are
certainly business people, but they're also people with beliefs and
convictions, individuals concerned with the quality of life for
themselves and for their children.
When they come through the door into work every morning they don't
leave behind their convictions and their sense of responsibility.
And the same applies to our consumers. Their choices determine our
success as a company. And they too have beliefs and convictions.
Now that brings us to my subject today--the global environment.
That is a subject which concerns us all--in all our various roles
I believe we've now come to an important moment in our
consideration of the environment.
It is a moment when because of the shared interest I talked about,
we need to go beyond analysis to seek solutions and to take action. It
is a moment for change and for a rethinking of corporate
A year ago, the Second Report of the Inter-Governmental Panel on
Climate Change was published. That report and the discussion which has
continued since its publication, shows that there is mounting concern
about two stark facts.
The concentration of carbon dioxide in the atmosphere is rising,
and the temperature of the earth's surface is increasing.
Karl Popper once described all science as being provisional. What
he meant by that was that all science is open to refutation, to
amendment and to development.
That view is certainly confirmed by the debate around climate
There's a lot of noise in the data. It is hard to isolate cause and
effect. But there is now an effective consensus among the world's
leading scientists and serious and well informed people outside the
scientific community that there is a discernible human influence on the
climate, and a link between the concentration of carbon dioxide and the
increase in temperature.
The prediction of the IPCC is that over the next century
temperatures might rise by a further 1 to 3.5 degrees centigrade, and
that sea levels might rise by between 15 and 95 centimeters. Some of
that impact is probably unavoidable, because it results from current
Those are wide margins of error, and there remain large elements of
uncertainty--about cause and effect and even more importantly about the
But it would be unwise and potentially dangerous to ignore the
The time to consider the policy dimensions of climate change is not
when the link between greenhouse gases and climate change is
conclusively proven, but when the possibility cannot be discounted and
is taken seriously by the society of which we are part.
We in BP have reached that point.
It is an important moment for us. A moment when analysis
demonstrates the need for action and solutions.
To be absolutely clear--we must now focus on what can and what
should be done, not because we can be certain climate change is
happening, but because the possibility can't be ignored.
If we are all to take responsibility for the future of our planet,
then it falls to us to begin to take precautionary action now.
But what sort of action? How should we respond to this mixture of
concern and uncertainty?
I think the right metaphor for the process is a journey.
Governments have started on that journey. The Rio Conference marked
an important point on that journey. So was the Berlin review meeting.
The Kyoto Conference scheduled for the end of this year marks another
It will be a long journey because the responsibilities faced by
governments are complex, and the interests of their economies and
peoples are diverse, and sometimes contradictory. But the journey has
begun, and has to continue.
The private sector has also embarked upon the journey, but now that
involvement needs to be accelerated.
This too will be long and complex, with different people taking
different approaches. But it is a journey that must proceed.
As I see it, there are two kinds of actions that can be taken in
response to the challenge of climate change.
The first kind of action would be dramatic, sudden and surely
wrong. Actions which sought, at a stroke, drastically to restrict
carbon emissions or even to ban the use of fossil fuels would be
unsustainable because they would crash into the realities of economic
growth. They would also be seen as discriminatory--above all in the
The second kind of action is that of a journey taken in partnership
by all those involved. A step by step process involving both action to
develop solutions and continuing research that will build knowledge
BP is committed to this second approach, which matches the
agreement reached at Rio based on a balance between the needs of
development and environmental protection. The Rio agreements recognize
the need for economic development in the developing world. We believe
we can contribute to achievement of the right balance by ensuring that
we apply the technical innovations we're making on a common basis--
everywhere in the world.
What we propose to do is substantial, real and measurable. I
believe it will make a difference.
Before defining that action I think it is worth establishing a
factual basis from which we can work.
Of the world's total carbon dioxide emissions only a small fraction
comes from the activities of human beings, but it is that small
fraction which might threaten the equilibrium between the much greater
You could think of it as the impact of placing even a small weight
on a weight scale which is precisely balanced.
But in preserving the balance we have to be clear where the problem
Of the total carbon dioxide emissions caused by burning fossil
fuels only 20% comes from transportation.
80% comes from static uses of energy--the energy used in our homes,
in industry and in power generation. Of the total 43 per cent comes
We've looked carefully using the best available data at the precise
impact of our own activities.
Our operations--in exploration and in refining--produce around 8
megatonnes of carbon.
On top of that a further 1 megatonne is produced by our Chemical
operations. If you add to that the carbon produced by the consumption
of the products we produce--the total goes up to around 95 megatonnes.
That is just one per cent of the total carbon dioxide emissions
which come from all human activity.
Let me put that another way--to be clear.
Human activity accounts for a small part of the total volume of
emissions of carbon--but it is that part which could cause
Only a fraction of the total emissions come from the transportation
sector--so the problem is not just caused by vehicles. Any response
which is going to have a real impact has to look at all the sources.
As a company, our contribution is small, and our actions alone
could not resolve the problem.
But that does not mean we should do nothing.
We have to took at both the way we use energy--to ensure we are
working with maximum efficiency--and at how our products are used.
That means ensuring our own house is in order. It also means
contributing to the wider analysis of the problem--through research,
technology and through engagement in the search for the best public
policy mechanisms--the actions which can produce the right solutions
for the long term common interest.
We have a responsibility to act, and I hope that through our
actions we can contribute to the much wider process which is desirable
BP accepts that responsibility and we're therefore taking some
To control our own emissions,
To fund continuing scientific research,
To take initiatives for joint implementation,
To develop alternative fuels for the long term,
And to contribute to the public policy debate in search of the
wider global answers to the problem.
First we will monitor and control our own carbon dioxide emissions.
This follows the commitment we've made in relation to other
environmental issues. Our overall goal is to do no harm or damage to
the natural environment. That's an ambitious goal which we approach
Nobody can do everything at once. Companies work by prioritising
what they do. They take the easiest steps first--picking the low
hanging fruit--and then they move on to tackle the more difficult and
complex problems. That is the natural business process.
Our method has been to focus on one item at a time, to identify
what can be delivered, and to establish monitoring processes and
targets as part of our internal management system and to put in place
an external confirmation of delivery.
In most cases the approach has meant that we've been able to go
well beyond the regulatory requirements.
That's what we've done with emissions to water and to air.
In the North Sea, for instance, we've gone well beyond the legal
requirements in reducing oil discharges to the sea.
And now at our crude oil export terminal in Scotland--at Hound
Point--which handles 10% of Europe's oil supplies--we're investing
$100m to eliminate emissions of volatile organic compounds.
These VOCs would themselves produce carbon dioxide by oxidation in
No legislation has compelled us to take that step--we're doing it
because we believe it is the right thing to do.
Now, as well as continuing our efforts in relation to the other
greenhouse gases, it is time to establish a similar process for carbon
Our carbon dioxide emissions result from burning hydrocarbon fuels
to produce heat and power, from flaring feed and product gases, and
directly from the process of separation or transformation.
So far our approach to carbon dioxide has been indirect and has
mainly come through improvements in the energy efficiency of our
production processes. Over the last decade, efficiency in our major
manufacturing activities has improved by 20%.
Now we want to go further.
We have to continue to improve the efficiency with which we use
And in addition we need a better understanding of how our own
emissions of carbon can be monitored and controlled, using a variety of
measures including sequestration. It is a very simple business lesson
that what gets measured gets managed.
It is a learning process--just as it has been with the other
emissions we've targeted but the learning is cumulative and I think it
will have a substantial impact.
We have already taken some steps in the right direction.
In Norway, for example, we've reduced flaring to less than 20% of
1991 levels, primarily as a result of very simple, low cost measures
The operation there is now close to the technical minimum flare
rate which is dictated by safety considerations.
Our experience in Norway is being transferred elsewhere--starting
with fields in the UK sector of the North Sea and that should produce
further progressive reductions in emissions.
Our goal is to eliminate flaring except in emergencies.
That is one specific goal within the set of targets which we will
Some are straightforward matters of efficient operation--such as
the reduction of flaring and venting.
Others require the use of advanced technology in the form of
improved manufacturing and separation processes that produce less waste
and demand less energy.
Other steps will require investment to make existing facilities
more energy efficient. For instance we're researching ways in which we
can remove the carbon dioxide from large compressors and reinject it to
improve oil recovery. That would bring a double benefit--a cut in
emissions and an improvement in production efficiency.
The task is particularly challenging in the refining sector where
the production of cleaner products require more extensive processing
and a higher energy demand for each unit of output.
That means that to make gasoline cleaner, with lower sulphur
levels, takes more energy at the manufacturing stage. That's the trade
In each case our aim will be to establish a data base, including
benchmark data; to create a monitoring process, and then to develop
targets for improvement through operational line management.
Monitoring and controlling emissions is one step.
The second is to increase the level of support we give to the
continuing scientific work which is necessary.
As I said a few moments ago, there are still areas of significant
uncertainty around the subject of climate change. Those who tell you
they know all the answers are fools or knaves.
More research is needed--on the detail of cause and effect; on the
consequences of what appears to be happening, and on the effectiveness
of the various actions which can be taken.
We will increase our support for that work.
That support will be focused on finding solutions and will be
directed to work of high quality which we believe can address the key
Specifically, we've joined a partnership to design the right
technology strategy to deal with climate change. That partnership which
will work through the Batelle Institute includes the Electric Power
Research Institute and the US Department of Energy. We're also
supporting work being done at MIT in Cambridge and through the Royal
Society in London.
We're also joining the Greenhouse gas programme of the
International Energy Agency which is analysing technologies for
reducing and offsetting greenhouse gas emissions from fossil fuels.
The third area is the transfer of technology and the process of
joint implementation which is the technical term for projects which
bring different parties together to limit and reduce net emission
levels of greenhouse gases.
Joint implementation is only in its infancy, but we believe it has
great potential to contribute to the resolution of the climate change
problem. It can increase the impact of reduction technology by lowering
the overall cost of abatement actions.
We need to experiment and to learn and we'd welcome further
partners in the process. The aim of the learning process must be to
make joint implementation a viable and legally creditable concept that
can be included in international commitments.
We've begun by entering into some specific programmes of
reforestation and forest conservation programmes in Turkey and now in
Bolivia, and we're in discussion on a number of other technology based
joint implementation projects.
The Bolivian example I think shows what can be done.
Its a programme to conserve 1.5 million hectares of forests in the
province of Santa Cruz. It is sponsored by the Nature Conservancy and
American Electric Power and sanctioned by the US Government.
We're delighted to be involved, and to have the chance to transfer
the learning from this project to others in which we are involved.
Forest conservation projects are not easy or simple, and that learning
process is very important.
Technology transfer is part of the joint implementation process but
it should go wider and we're prepared to engage in an open dialogue
with all the parties who are seeking answers to the climate change
So those are three steps we can take--monitoring and controlling
our own emissions, supporting the existing scientific work and
encouraging new work, and developing experiments in joint
implementation and technology transfer.
Why are we doing all those things? Simply because the oil industry
is going to remain the worlds predominant supplier of energy for the
Given that role we have to play a positive and responsible part in
identifying solutions to a problem which is potentially very serious.
The fourth step--the development of alternative energy--is related
Looking ahead it seems clear that the combination of markets and
technology will shift the energy mix.
The world's population is growing by 100 million every year. By
10,000 just since I started speaking.
Prosperity is spreading. By the end of the century 60 per cent of
the world's economic activity will be taking place in the South--in
areas which ten years ago we thought of as Third World countries.
Both these factors will shade a crowing level of demand for energy.
At the same time technology moves on.
The sort of changes we've seen in computing--with continuing
expansion of semiconductor capacity is exceptional but not unique.
I think it is a reasonable assumption that the technology of
alternative energy supplies will also continue to move forward.
One or more of those alternatives will take a greater share of the
energy market as we go into the next century.
But let me be clear. That is not instead of oil and gas. It is
We've been looking at alternative energies for a long time, and our
conclusion is that one source which is likely to make a significant
contribution is solar power.
At the moment solar is not commercially viable for either peak or
base load power generation. The best technology produces electricity at
something like double the cost of conventional sources for peak demand.
But technology is advancing, and with appropriate public support
and investment I'm convinced that we can make solar competitive in
supplying peak electricity demand within the next 10 years. That means,
taking the whole period from the time we began research work, that 25
to 30 years will have elapsed.
For this industry that is the appropriate time scale on which to
We explore for oil and gas in a number of areas where production
today wouldn't be commercially viable at the moment.
Thirty years ago we did that in Alaska.
We take that approach because we believe that markets and
technology do move, and that the frontier of commercial viability is
We've been in solar power for a number of years and we have a 10
per cent share of the world market.
The business operates across the world--with operations in 16
Our aim now is to extend that reach--not least in the developing
world, where energy demand is growing rapidly.
We also want to transfer our distinctive technologies into
production, to increase manufacturing capacity and to position the
business to reach $1bn in sales over the next decade.
I am happy to report that there will be significant investment in
the USA and we'll be commissioning a new solar manufacturing facility
here in California before the end of this year.
The result of all is that gradually but progressively solar will
make a contribution to the resolution of the problem of carbon dioxide
emissions and climate change.
So a series of steps on the journey. These are the initial steps.
We're examining what else we should do, and I hope to be able to
announce some further steps later in the year.
Of course, as I said at the beginning, nothing we can do alone will
resolve the concern about climate change. We can contribute, and over
time we can move towards the elimination of emissions from our own
operations and a substantial reduction in the emissions which come from
the use of our products.
The subject of climate change, however, is a matter of wider public
We believe that policy debate is important. We support that debate,
and we're engaged in it, through the World Business Council on
Sustainable Development, through the President's own Council here in
the United States, and in the UK where the Government is committed to
making significant progress on the subject.
Knowledge in this area is not proprietary, and we will share our
expertise openly and freely.
Our instinct is that once clear objectives have been agreed, market
based solutions are more likely to produce innovative and creative
responses than an approach based on regulation alone.
Those market based solutions need to be as wide ranging in scope as
possible because this is a global problem which has to be resolved
without discrimination and without denying the peoples of the
developing world the right to improve their living standards.
To try to do that would be arrogant and untenable--what we need are
solutions which are inclusive, and which work through cooperation
across national and industry boundaries.
There have been a number of experiments--all of them partial, but
many of them interesting because they show the way in which effective
markets can change behaviour.
We're working, for instance. with the Environmental Defence Fund to
develop a voluntary emissions trading system for greenhouse cases,
modelled on the system already in place in respect of sulphur.
Of course, a system which just operates here in the United States
is only a part of the solution. Ideally such structures should be much
But change begins with the first step and the development of
successful systems here will set a standard which will spread.
Ladies and Gentlemen, I began with the issue of corporate
responsibility. The need for rethinking in a new context.
No company can be really successful unless it is sustainable--
unless it has capacity to keep using its skills and to keep growing its
Of course, that requires a competitive financial performance .
But it does require something more, perhaps particularly in the oil
The whole industry is growing because world demand is growing. The
world now uses almost 73 million barrels of oil a day--16% more than it
did 10 years ago.
In another ten years because of the growth of population and
prosperity that figure is likely to be over 85 mbd, and that is a
cautious estimate. Some people say it will be more.
For efficient, competitive companies that growth will be very
But sustainability is about more than profits. High profitability
is necessary but not sufficient.
Real sustainability is about simultaneously being profitable and
responding to the reality and the concerns of the world in which you
operate. We're not separate from the world. It's our world as well.
I disagree with some members of the environmental movement who say
we have to abandon the use of oil and gas. They think it is the oil and
gas industry which has reached the end of history
I disagree because I think that view underestimates the potential
for creative and positive action.
But that disagreement doesn't mean that we can ignore the mounting
evidence about climate change and the growing concern.
As businessmen, when our customers are concerned, we'd better take
To be sustainable, companies need a sustainable world. That means a
world where the environmental equilibrium is maintained but also a
world whose population can all enjoy the heat, light and mobility which
we take for granted and which the oil industry helps to provide.
I don't believe those are incompatible goals.
Everything I've said today--all the actions we're taking and will
take are directed to ensuring that they are not incompatible.
There are no easy answers. No silver bullets. Just steps on a
journey which we should take together because we all have a vital
interest in finding the answers.
The cultures of politics, and of science, and of enterprise, must
work together if we are to match and master the challenges we all face.
I started by talking about the end of history. Of course it hasn't
ended. It's moved on.
Francis Fukuyama who coined that phrase describes the future in
terms of the need for a social order--a network of interdependence
which goes beyond the contractual. An order driven by the sense of
common human interest. Where that exists, societies thrive.
Nowhere is the need for that sort of social order--at the global
level--more important than in this area. The achievement of that has to
be our common goal.
Thank you very much.
June 18, 1997.
Greenpeace Dumps Coal and Oil Barrels on Capitol Steps to Protest
``Byrd-Brained'' Attempt to De-Rail Climate Treaty
WASHINGTON, D.C. (GP)--Today, Greenpeace dumped four tons of coal
and seven barrels of oil in front of the US Capitol to protest a
resolution introduced by Senator Robert Byrd (D-WV) and 45 other
senators. The Resolution (S. 98) threatens to derail international
negotiations of the Framework Convention on Climate Change, first
signed by President Bush at the Rio Summit in June 1992.
Under the terms of the Climate Convention, to which the US
government is a signatory, countries such as the United States must
take the first steps to cut greenhouse gas emissions caused by the
burning of coal and oil. The US has been and continues to be the number
one emitter of greenhouse gases that cause global warming and climate
change. Now, Senator Byrd and 45 other co-signers are threatening to
renege on this international agreement by mandating that some of the
world's poorest nations and lowest greenhouse gas emitters assume the
same international commitments as industrialized countries.
``Greenpeace will remove the coal and oil from the Capitol when all
of the 45 Senators remove their names from the resolution,'' said Kalee
Kreider, Director of the Greenpeace Climate Campaign. ``The Senator's
Byrd-brained scheme will only perpetuate our dependence on coal and oil
rather than allow us to save the climate and make the twenty-first
century the solar century,'' she continued.
The coal and oil industry together have spent millions of dollars
in paid advertising and propaganda to downplay the threat of global
warming and climate change. Currently, the Business Roundtable (an
industry group) is engaged in a $1 million dollar campaign to draw
attention to the ``economic consequences'' of the climate treaty.
``Interestingly, the industry's language concerning the Climate Treaty
is markedly similar to the language of senator Byrd's resolution,''
stated Kreider. ``By threatening to derail the climate negotiations
these Senators show a criminal disregard for human health and the
In 1995, 2,500 of the world's global warming and climate change
experts concluded that human activities, such as burning coal and oil,
are causing the temperature and seas to rise. In response to the
overwhelming consensus of opinion in this scientific body (the
Intergovernmental Panel on Climate Change) Greenpeace advocates that
industrialized countries reduce greenhouse gas emissions 20 percent by
2005 and stop new oil exploration in frontier areas such as Alaska and
FOR MORE INFORMATION CONTACT:
Kalee Kreider 202-253-1295 (cell phone) 202-319-2523 (office)
Deborah Rephan 202-319-2492 (office)
ATTENTION BROADCASTERS--SATELLITE FEED OF TODAYS ACTION AVAILABLE AT:
3:00 [email protected] 3:30P (EST) ON GALAXY C4, TRANSPONDER 9.
1436 U Street. NW--Washington, DC 20009 Tel (202) 462-1177--Fax (202)
June 18, 1997.
AUTHORS OF ECONOMISTS' STATEMENT ON CLIMATE CHANGE URGE ACTION AT THE
SUMMIT OF THE EIGHT IN COLORADO
2,600 Economists Declare that Policies to Slow Global Warming are
``The greatest risk lies with inaction.''
The authors of the widely circulated ``Economists' Statement on
Climate Change'' urged the United States government, the other Group of
Seven nations, and Russia to address the topic of global climate change
at their upcoming meeting in Denver, Colorado.
``A meaningful climate change treaty must contain significant
commitment to a reduction in greenhouse emission. The G-7 countries and
Russia must take the first steps in emission control since they can
best afford them and are the source of most of the emissions,'' stated
Stanford University economist and Nobel-laureate Kenneth J. Arrow.
Added Dale W. Jorgenson, Chairman of the Economics Department at
Harvard University: ``The Kyoto summit on climate change is just six
months away. Without leadership among the developed world, it is
unlikely we will see any progress in Kyoto. The Summit of the Eight
provides an excellent chance to lay the groundwork toward a meaningful
Arrow and Jorgenson, along with Nobel-winner Robert M. Solow of the
Massachusetts Institute of Technology, Paul R. Krugman of the
Massachusetts Institute of Technology, and William D. Nordhaus of Yale
University, crafted the statement in January 1997. To date, more than
2,600 economists have joined in signing the statement, including eight
Nobel Laureates of Economics. The effort was sponsored by Redefining
Progress, a nonpartisan, non-profit public policy organization.
The statement makes three major points:
A review of the evidence has found a discernible human
influence on global climate. Climate change ``carries with it
significant environmental, economic, social, and geopolitical
risks'' and ``preventative steps are justified.''
Economic studies have determined that there are many
potential policies for which the benefits outweigh the costs.
Policy options are available that would slow climate change
without harming employment or U.S. living standards and these
may be economically beneficial in the long run.
The economists emphasize the importance of market
mechanisms, such as carbon taxes or trading of marketable
emissions permits among countries. It is essential that nations
coordinate their policies so that the costs of attaining the
climate objectives can be minimized. Revenues raised from such
taxes or permits can be used to reduce the budget deficit or to
lower existing taxes.
One of the concerns of policymakers is whether the U.S. can reduce
greenhouse gas emissions (predominantly carbon dioxide emissions from
energy use) without damaging the economy. The economists' statement
emphasizes that well-designed policies relying on market mechanism can
be economically beneficial and ``may in fact improve U.S. productivity
in the longer run.'' The statement specifically endorses market-based
policies such as carbon taxes and the auction of internationally
tradable emissions permits as a way of reducing the costs of slowing
``A panel of the world's foremost scientists, under the auspices of
the Intergovernmental Panel on Climate Change, have concluded that the
balance of evidence suggests a discernible human influence on global
climate,'' said Stephen DeCanio, senior economic fellow for Redefining
Progress and a former senior staff economist with President Reagan's
Council of Economic Advisors.
``This statement will be extremely valuable to the G-7 and Russian
leaders when they address climate change policy options in Denver,''
DeCanio went on to say. ``Many people remain unaware that ongoing
changes in the Earth's climate pose large economic and environmental
risks. Some groups have asserted that we cannot address the global
climate problem without incurring serious economic harm. These 2,600
economists have said essentially the opposite--that the greatest risk
lies with inaction.''
June 26, 1977 Hearing
I. DECISIONS ADOPTED BY THE CONFERENCE OF THE PARTIES
The Berlin Mandate: Review of the adequacy of Article 4, paragraph 2
(a) and (b), of the Convention, including proposals related to a
protocol and decisions on follow-up
The Conference of the Parties, at its first session,
Having reviewed Article 4, paragraph 2(a) and (b), of the United
Nations Framework Convention on Climate Change, and
Having concluded that these subparagraphs are not adequate,
Agrees to begin a process to enable it to take appropriate action
for the period beyond 2000, including the strengthening of the
commitments of the Parties included in Annex I to the Convention (Annex
I Parties) in Article 4, paragraph 2(a) and (b), through the adoption
of a protocol or another legal instrument:
1. The process shall be guided, inter alia, by the following:
(a) The provisions of the Convention, including Article 3, in
particular the principles in Article 3.1, which reads as follows: ``The
Parties should protect the climate system for the benefit of present
and future generations of humankind, on the basis of equity and in
accordance with their common but differentiated responsibilities and
respective capabilities. Accordingly, the developed country Parties
should take the lead in combating climate change and the adverse
(b) The specific needs and concerns of developing country Parties
referred to in Article 4.8; the specific needs and special situations
of least developed countries referred to in Article 4.9; and the
situation of Parties, particularly developing country Parties, referred
to in Article 4.10 of the Convention;
(c) The legitimate needs of the developing countries for the
achievement of sustained economic growth and the eradication of
poverty, recognizing also that all Parties have a right to, and should,
promote sustainable developments;
(d) The fact that the largest share of historical and current
global emissions of greenhouse gases has originated in developed
countries, that the per capita emissions in developing countries are
still relatively low and that the share of global emissions originating
in developing countries will grow to meet their social and development
(e) The fact that the global nature of climate change calls for the
widest possible cooperation by all countries and their participation in
an effective and appropriate international response, in accordance with
their common but differentiated responsibilities and respective
capabilities and their social and economic conditions;
(f) Coverage of all greenhouse gases, their emissions by sources
and removals by sinks and all relevant sectors;
(g) The need for all Parties to cooperate in good faith and to
participate in this process.
2. The process will, inter alia:
(a) Aim, as the priority in the process of strengthening the
commitments in Article 4.2(a) and (b) of the Convention, for developed
country/other Parties included in Annex 1, both
to elaborate policies and measures, as well as
to set quantified limitation and reduction objectives within
specified time-frames, such as 2005, 2010 and 2020, for their
anthropogenic emissions by sources and removals by sinks of
greenhouse gases not controlled by the Montreal Protocol,
taking into account the differences in starting points and approaches,
economic structures and resource bases, the need to maintain strong and
sustainable economic growth, available technologies and other
individual circumstances, as well as the need for equitable and
appropriate contributions by each of these Parties to the global
effort, and also the process of analysis and assessment referred to in
section III, paragraph 4, below:
(b) Not introduce any new commitments for Parties not included in
Annex I, but reaffirm existing commitments in Article 4.1 and continue
to advance the implementation of these commitments in order to achieve
sustainable development, taking into account Article 4.3, 4.5 and 4.7.
(c) Take into account any results from the review referred to in
Article 4.2(f), if available and any notification referred to in
(d) Consider, as provided in Article 4.2(e), the coordination among
Annex I Parties, as appropriate, of relevant economic and
administrative instruments, taking into account Article 3.5;
(e) Provide for the exchange of experience on national activities
in areas of interest, particularly those identified in the review and
synthesis of available national communications; and
(f) Provide for a review mechanism.
3. The process will be carried out in the light of the best
available scientific information and assessment on climate change and
its impacts, as well as relevant technical, social and economic
information, including, inter alia, reports of the Intergovernmental
Panel on Climate Change. It will also make use of other available
4. The process will include in its early stages an analysis and
assessment, to identify possible policies and measures for Annex I
Parties which could contribute to limiting and reducing emissions by
sources and protecting and enhancing sinks and reservoirs of greenhouse
gases. This process could identify environmental and economic impacts
and the results that could be achieved with regard to time horizons
such as 2005, 2010, and 2020.
5. The protocol proposal of the Alliance of Small Island States
(AOSIS), which contains specific reduction targets and was formally
submitted in accordance with Article 17 of the Convention, along with
other proposals and pertinent documents, should be included for
consideration in the process.
6. The process should begin without delay and be conducted as a
matter of urgency, in an open-ended ad hoc group of Parties hereby
established, which will report to the second session of the Conference
of the Parties on the status of this process. The sessions of this
group should be scheduled to ensure completion of the work as early as
possible in 1997, with a view to adopting the results at the third
session of the Conference of the Parties.
9th plenary meeting
7 April 1995
Framework Convention on Climate Change
18 July 1996
CONFERENCE OF THE PARTIES
Geneva, 8-19 July 1996
Agenda item 5
REVIEW OF THE IMPLEMENTATION OF THE CONVENTION AND OF DECISIONS OF THE
FIRST SESSION OF THE CONFERENCE OF THE PARTIES
The Ministers and other heads of delegations present at the second
session of the Conference of the Parties to the United Nations
Framework Convention on Climate Change,
Noting that this, our meeting at Ministerial level under the
Convention, is a demonstration of our intention to continue to take an
active and constructive role in addressing the threat of climate
*This text was introduced by the President at the 6th plenary
meeting, on 18 July.
1. Recall Article 2 of the Convention; the principles of equity and
of common but differentiated responsibilities and respective
capabilities in Article 3.1 of the Convention; and the provisions of
Article 3.3 concerning precautionary measures; as well as the specific
national and regional development priorities, objectives and
circumstances of the Parties to the Convention;
2. Recognize and endorse the Second Assessment Report of the IPCC
as currently the most comprehensive and authoritative assessment of the
science of climate change, its impacts and response options now
available. Ministers believe that the Second Assessment Report should
provide a scientific basis for urgently strengthening action at the
global, regional and national levels, particularly action by Annex I
Parties to limit and reduce emissions of greenhouse gases, and for all
Parties to support the development of a Protocol or another legal
instrument; and note the findings of the IPCC, in particular the
The balance of evidence suggests a discernible human
influence on global climate. Without specific policies to
mitigate climate change, the global average surface temperature
relative to 1990 is projected to increase by about 2C (between
1C and 3.5C) by 2100; average sea level is projected to rise by
about 50 centimetres (between 15 and 95 centimetres) above
present levels by 2100. Stabilization of atmospheric
concentrations at twice preindustrial levels will eventually
require global emissions to be less than 50 per cent of current
The projected changes in climate will result in significant,
often adverse, impacts on many ecological systems and socio-
economic sectors, including food supply and water resources,
and on human health. In some cases, the impacts are potentially
irreversible; developing countries and small island countries
are typically more vulnerable to climate change;
Significant reductions in net greenhouse gas emissions are
technically possible and economically feasible by utilizing an
array of technology policy measures that accelerate technology
development, diffusion and transfer; and significant no regrets
opportunities are available in most countries to reduce net
greenhouse gas emissions;
3. Believe that the findings of the Second Assessment Report
indicate that the continued rise of greenhouse gas concentrations in
the atmosphere will lead to dangerous interference with the climate
system, given the serious risk of an increase in temperature and
particularly the very high rate of temperature change;
4. Recognize also the need for continuing work by the IPCC to
further reduce scientific uncertainties, in particular regarding socio-
economic and environmental impacts on developing countries, including
those vulnerable to drought, desertification or sea-level rise;
5. Reaffirm the existing commitments under the Convention,
including those intended to demonstrate that Annex I Parties are taking
the lead in modifying longer-term trends in emissions by sources and
removals by sinks of greenhouse gases not controlled by the Montreal
Protocol, and agree to strengthen the process under the Convention for
the regular review of the implementation of present and future
6. Take note that Annex I Parties are fulfilling their commitments
to implement national policies and measures on the mitigation of
climate change. Also take note that this is not the only commitment
that Annex I Parties have made and that many of these Parties need to
make additional efforts to overcome difficulties that they face in
achieving the aim of returning their emissions of greenhouse gases to
1990 levels by 2000;
7. Acknowledge the considerable work done by the Ad Hoc Group on
the Berlin Mandate (AGBM) since the first session of the Conference of
the Parties, including the substantive proposals presented by a number
of Parties, and call on all Parties to come forward with proposals to
facilitate substantive negotiations beginning at the fifth session of
AGBM in December 1996;
8. Instruct their representatives to accelerate negotiations on the
text of a legally-binding protocol or another legal instrument to be
completed in due time for adoption at the third session of the
Conference of the Parties. The outcome should fully encompass the remit
of the Berlin Mandate, in particular:
--commitments for Annex I Parties regarding:
policies and measures including, as appropriate, regarding
energy, transport, industry, agriculture, forestry, waste
management, economic instruments, institutions and mechanisms;
quantified legally-binding objectives for emission
limitations and significant overall reductions within specified
timeframes, such as 2005, 2010, 2020, to their anthropogenic
emissions by sources and removals by sinks of greenhouse gases
not controlled by the Montreal Protocol;
--commitments for all Parties on continuing to advance the
implementation of existing commitments in Article 4. 1;
--a mechanism to allow the regular review and strengthening of the
commitments embodied in a Protocol or other legal instrument;
--commitments to a global effort to speed up the development,
application, diffusion and transfer of climate-friendly
technologies, practices and processes; in this regard, further
concrete action should be taken;
9. Welcome the efforts of developing country Parties to implement
the Convention and thus to address climate change and its adverse
impacts and, to this end, to make their initial national communications
in accordance with guidelines adopted by the Conference of the Parties
at its second session; and call on the GEF to provide expeditious and
timely support to these Parties and initiate work towards a full
replenishment in 1997;
10. Recognize that the continuing advancement of existing
commitments by developing country Parties, in the context of their
national priorities for sustainable development, requires determined
and timely action, in particular by Annex II Parties. Access to
financial resources and to environmentally-sound technologies
consistent with Articles 4.3, 4.4, 4.5 and 4.7 will be most critical;
11. Thank the Government of the Swiss Confederation for its
contribution to the work of the second session of the Conference of the
Parties in Geneva and look forward to meeting again at the third
session in Kyoto, in 1997, thanks to the generous offer of the
Government of Japan.
The Business Roundtable,
July 8, 1997.
The Hon. Chuck Hagel
Chairman, Senate Foreign Relations
Subcommittee on International Economic Policy,
Export and Trade Promotion
450 Dirksen Senate Office Building
Washington, D.C. 20510
Dear Mr. Chairman: The Business Roundtable is pleased to provide
comments for inclusion in the record of the June 19 and 26 Senate
Foreign Relations Subcommittee on International Economic Policy, Export
and Trade Promotion's hearings on issues related to global climate
The Roundtable is a public policy organization comprising the chief
executive officers of over 200 of the nation's largest corporations. We
view global climate change as an important and complex issue with
significant potential environmental and economic implications. We
congratulate you on the dialogue begun in your committee, and your
engagement of the Administration as it prepares for the upcoming
negotiations on this subject. The Roundtable is committed to full and
open public dialogue on this issue.
While the science of global warming is far from clear, the Second
Assessment Report of the Intergovernmental Panel on Climate Change has
concluded that the concentration of greenhouse gases in the earth's
atmosphere are increasing and this may contribute to climate change.
This fact has the attention and concern of the Roundtable and its
member companies. At the same time, the analytical methods used to
predict the extent and timing of future climate changes related to
these increases in greenhouse gases are imprecise, indicating the need
to be cautious in our approach to global climate policy.
Climate change predictions currently are based on three-dimensional
General Circulation Models (GCMs) which must take into account a range
of complex and naturally variable factors. While scientists are
improving the state of three-dimensional GCMs, they remain an inexact
tool for measuring the complex and naturally variable factors linked to
global transfer of heat from myriad sources. As a recent summary
article in the May 16, Science Magazine stated: ``... most modelers now
agree that the climate models will not be able to link greenhouse gas
warming unambiguously to human actions for a decade or more.''
However, The Roundtable believes our inability to accurately
predict the effects of greenhouse gases need not delay discussion of
this important issue. Rather, the current state of the science should
only give pause to taking precipitous action on a unilateral basis
without judging the economic consequences. We would note that the
documented .5 degree centigrade increase in global temperature in the
last 120 years may be within the normal range of variability. Moreover,
most of this increase occurred prior to 1940, while most of the
increase in man-made greenhouse gas emissions occurred after that date.
Because the science is less than compelling, the current debate
over global climate change creates difficult policy choices. At one
extreme we may indeed face the prospect of dramatic climate changes
with severe economic impacts for ours or future generations. At the
other extreme, if we rush to judgment and take drastic measures, we
could do irreparable harm to our economy. This is why The Roundtable is
adamant about the need for a full and open public debate of the
scientific and economic issues in order to steer a more reasonable
course. And we have welcomed the Administration's most recent responses
to engage in this debate prior to committing to any specific course of
action later this year in Kyoto.
The Roundtable believes that a dialogue should begin between the
many stakeholders affected by this issue with the objective of
developing policies that stimulate reductions in greenhouse gas
emissions, while also stimulating continued economic growth. This, we
believe, can be achieved through innovative tax and capital formation
policies that reward development of low greenhouse gas emissions
technology and the actions of those companies that have proven records
of greenhouse gas emissions reductions. A pro-investment strategy is a
pro-environment policy. As noted environmental scholar Jesse Ausubel of
The Rockefeller University notes: ``... over the last two centuries we
have been freeing ourselves from carbon and dramatically increasing our
energy efficiency at the same time.'' New policies should encourage
this natural tendency of the free market system toward greater
efficiencies, not burden it with additional regulations. The Roundtable
believes it would be unfortunate if we imposed the same punitive,
command and control approach to what is a more complicated problem
involving virtually every aspect of our society.
The Roundtable is opposed to tax and regulatory structures which
would impose unnecessary burdens on our economy in advance of more
compelling scientific insight into the problem. A DRI/McGraw Hill study
shows stabilizing emissions at 1990 levels by the year 2000 would
require a tax equal to $16/barrel of oil or a $0.40/gallon of gasoline
in the U.S. This study also shows such a tax would reduce GDP by 2.3%/
year and cost the average American family $900/year. A larger 20%
reduction from 1990 levels by year 2020 would require a tax of $80-$85/
barrel of oil or a gasoline tax of nearly $2/gallon. Dr. Lawrence
Horowitz of Primark Decision Economics argues that taxes necessary to
reduce emissions to 1990 levels by 2010 would reduce US GDP by more
than 4% annually or over $350 billion/year; household disposable income
would fall 1.2%; wages would drop; and electricity prices could double
from $0.07 per kwh to $0.15-$0.16 per kwh.
Among the more recently discussed policy options for reducing
greenhouse emissions are those which focus on a system of tradable
emissions between countries. Notwithstanding how such a system would be
enforced on a multilateral basis, such a system does recognize that a
ton of carbon dioxide emitted in a developing country has the same
effect as one in a developed economy. If economic projections are
correct, sometime in the early part of the next century, the developing
world will emit the majority of greenhouse gases. Soon afterwards,
China will become the leading source of greenhouse gas emissions.
According to the United Nations, developing nations are producing 52
percent of all new emissions of greenhouse gases and are expected to
contribute 75 percent of all carbon dioxide emissions by the year 2050.
A critical role for our government is to lead the way toward a
sound, achievable multilateral policy on global climate change; one
which does not put our economy at a competitive disadvantage. For this
reason, The Roundtable supports the climate change resolution offered
by Senator Byrd now pending before the Senate.
Proposals to limit future emissions of greenhouse gases involve
possible consequences and tradeoffs that could affect not only the
environment, but also economic development, employment, trade,
investment, energy security and national sovereignty. The decisions
made on how best to address global climate change may well be the among
the most important we will make in the next decade. For this reason The
Roundtable believes specific plans to reduce greenhouse gas emissions
need to be carefully reviewed for their overall impacts.
The Roundtable plans to be an active participant in analyzing such
plans and for developing its own recommendations. We clearly need a
public debate that engages us in reconciling the uncertainties in the
science in a way which balances prudent action and sound economics.
In sum, The Business Roundtable believes that:
Climate change is an issue which will evolve over many
decades, and strategies must incorporate such a long term
Policy and long term goals should recognize the scientific
uncertainty and consider the associated range of environmental
and economic consequences.
A climate change policy that fails to meaningfully include
all nations should be opposed.
There is a need for policy flexibility so that government
and the private sector can craft individual responses to their
own situations, with maximum emphasis on performance based
approaches rather than prescriptive measures.
Any policy options also should have the objective of
stimulating economic growth through innovative tax, capital
formation and technology policies.
Until the scientific and economic issues are better understood,
there should be no rush to impose dramatic climate change policy
measures, either by individual nations or, collectively. Further
agreements reached must include a requirement or negotiating process to
bring all countries, developed and developing, into the commitment
The member companies of The Roundtable look forward to continuing
to participate in these discussions and congratulate the subcommittee
for their leadership in further engaging this discussion.
Robert N. Burt,
Chairman and CEO, FMC Corporation,
Chairman, Environment Task Force, The Business Roundtable
Association of American Railroads,
June 24, 1997.
The Honorable Chuck Hagel
Chairman, Subcommittee on
International Economic Policy,
Export, and Trade Promotion
Committee on Foreign Relations
United States Senate
Washington, DC 20510
Dear Mr. Chairman: The Association of American Railroads (AAR) \1\
submits these comments in connection with the Subcommittee's July 26,
1997 hearing on the issue of global climate change. AAR asks that its
comments be made a part of the hearing record.
\1\ AAR is a trade association whose members account for 77 percent
of total linehaul mileage, produce 93 percent of total freight revenue,
and employ 91 percent of the freight railway workforce.
AAR favors continued efforts by the scientific community to narrow
the range of uncertainty about climate change. At present, however, the
state of scientific knowledge does not justify the extreme measures
being contemplated on the international level.
In 1992, the United States and other nations ratified the Framework
Convention on Climate Change whose objective is to reduce
concentrations of greenhouse gases in the atmosphere to a level that
will prevent dangerous interference with the Earth's climate.
While scientists generally agree that the Earth's climate has
warmed about 0.5 degree C since the late 19th century, uncertainty
remains about whether this is the result of human-induced climate
change, or simply fluctuation within the range of normal climate
As recently as last month, the respected journal Science reported,
``Many climate experts caution that it is not at all clear yet that
human activities have begun to warm the planet.'' Likewise, the
Intergovernmental Panel on Climate Change, the world's leading body of
climate experts, said in its latest report on climate change that
slight variations in temperature ``...cannot be considered compelling
evidence of a clear cut cause-and-effect link between anthropogenic
forcing [human activity] and changes in the Earth's surface
Despite these cautionary notes, the signatories to the Framework
Convention on Climate Change in 1995 approved the so-called ``Berlin
Mandate'' which calls for the adoption of a protocol or other legal
instrument in Kyoto, Japan in December 1997 strengthening emissions
reduction commitments for developed nations after the year 2000. The
Berlin Mandate, however, specifically exempts developing countries from
any new commitments--despite the fact that their greenhouse gas
emissions are rapidly increasing and are expected to surpass emissions
of the U.S. and other OECD countries as early as 2015.
Near-term requirements to stabilize or reduce carbon emissions
would be likely to produce significant economic dislocation in the
United States, including profound job losses and major economic
A DRI/McGraw-Hill study of carbon taxes as a means of reducing
carbon emissions to 1990 levels by the year 2010 suggests that such an
approach would lead to job losses averaging more than 500,000 per year.
Economist Alan Manne of Stanford University, who studied abatement
proposals intended to reduce carbon emissions to 80 percent of their
1990 level by the year 2010, found that such steps would result in
annual losses ranging from 1.0-2.5 percent of the nation's gross
Emissions reduction requirements would also have a sharply
negative impact on international trade, with resulting higher fuel
prices adversely affecting both industries whose production processes
are energy-intensive as well as industries which are dependent upon
transportation between distant suppliers and manufacturing locations,
and between manufacturing locations and ocean ports.
Nowhere in the world is the importance of transportation greater
than it is in the U.S. In Western Europe, most manufacturing centers
are located no more than a few hundred miles from ports. Distances to
ports are even less in Japan, Taiwan, and Korea.
In the U.S., however, major manufacturing centers are often
located far from ports. One critical industrial concentration is in the
upper Midwest. An efficient transportation system is essential for
these industries to play a vital role in the global marketplace.
Policies aimed at stabilizing or reducing greenhouse gas emissions
levels would have a strongly negative effect on railroad customers and
revenues. Based upon available sectoral analyses--and depending upon
the reduction targets and implementation alternatives selected--AAR
estimates that rail carloads would drop 8-16 percent by 2010, rail
tonnage would drop 11-24 percent, and freight revenue would drop 7-15
In particular, emissions reduction requirements would have a
pernicious effect on domestic coal production, which accounts for 59
percent of the fuel burned in electric utilities and comprises the
largest source of revenue for the railroad industry. AAR estimates that
such requirements would lead to a reduction in coal traffic and coal-
related revenue of 25-54 percent. Chemical, auto, mining, pulp, and
paper production would also suffer, causing further industrial and rail
S. Res, 98
AAR commends you and Senator Robert Byrd for introducing S. Res.
98, a resolution calling upon the U.S. to refrain from signing any
agreement regarding the Framework Convention on Climate Change which
would cause serious harm to the economy or which would mandate new
commitments to reduce greenhouse gases in developed nations unless the
agreement also mandates ``new specific scheduled commitments to limit
or reduce greenhouse gas emissions for developing countries within the
same period.'' The fact that the resolution has more than 60 Senate
sponsors indicates that there is a high level of concern regarding
precipitate governmental action.
AAR agrees with the Transportation Trades Division of the AFL-CIO,
which earlier this year adopted a resolution calling on the Clinton
administration to renegotiate the terms of the Berlin Mandate so that
``all nations bear an equal level of responsibility for addressing
concerns arising out of greenhouse emissions.''
Until the world community reaches such agreement--given the
potential for crippling costs that would be inflicted with aggressive
emissions abatement policies--reasoned concern and study appear to be
the most responsible ways to proceed. In that respect, AAR supports a
coordinated international research effort, in addition to the
continuation of the multi-billion dollar U.S. climate research program.
M.B. Oglesby, Jr.
Prepared Statement of Richard K. Davidson
Chairman Hagel, Members of the Committee, thank you for the
opportunity to share our perspective on the pending global climate
treaty and its potential economic impact on us and our customers. Union
Pacific is a diversified transportation company with primary operations
in rail, trucking and logistics. Through our various operating
companies, we serve all 50 states and employ more than 65,000 people.
Our core business is the Union Pacific Railroad, headquartered in
Omaha, Nebraska. Since the merger of Union Pacific Railroad with the
Southern Pacific, we now operate a 36,000 mile rail network linking 23
states from the Midwest to the West and Gulf Coasts.
As the international community takes steps to reduce the levels of
greenhouse gases in the environment, it is important that the United
States not be saddled with a disproportionate share of the burden in
the effort to improve our environment. Union Pacific Railroad ships
hundreds of commodities for use in every component of the economy from
coal to agricultural products to automobiles. We can safely say that
every one of our customers will be adversely affected by this Treaty if
it is implemented--because of their and our need for readily available,
reasonably priced energy. Accordingly, we join our customers in the
agriculture, automotive, coal, petroleum, steel, chemical and
intermodal sectors, as well as our unionized workforce in urging the
United States not to enter an international treaty that would
jeopardize our economy, our transportation network and the thousands of
jobs they support.
As the Committee is aware, in 1992, the United States signed the
Rio Framework Convention on Climate Change. This agreement required a
reduction in greenhouse gases, such as carbon dioxide, to the 1990
levels by the year 2000. Following that, in 1995, the United States
agreed, in the so called Berlin Mandate, for a process of negotiations
to establish emission goals for the next century. Under this Mandate,
developed countries, including the United States, must take the lead in
fighting climate change. However, developing countries are excluded
from any obligation to further reduce greenhouse gases. Under this
scenario, the United States is being asked to significantly reduce
greenhouse emissions from all sources, while countries that are now
developing their production capacity will bear a minimal burden from
this Treaty. Current treaty proposals could do significant damage to
the U.S. economy without achieving any appreciable benefit to the
environment. Developing countries like China and India, which by early
in the next century will be the worlds largest emitters of greenhouse
gases, do not have to participate. This situation will force U.S.
companies to shift production to developing countries, thus
jeopardizing our current economic base and the jobs it supports. More
importantly, by shifting production to developing countries and giving
them the upper hand with respect to this Treaty, the goal of reducing
greenhouse gases will have been missed entirely. There will simply be
fewer emissions from the United States, but significantly more
emissions from developing countries. There will also be fewer jobs in
the United States, fewer automobiles to ship, less coal to meet our
energy needs and fewer chemicals for manufacturing and household needs.
This Treaty makes it very difficult for us to run the race if we are
forced to shoot ourselves in the foot with the starting gun.
The United Nations is currently in the midst of negotiations over
the magnitude of reductions and the time frame that will be imposed for
meeting those reductions under the Berlin Mandate. In order to meet the
goals being considered, the American Mining Congress estimates that
coal production would be curtailed by a minimum of 25 percent. Coal is
currently the largest single commodity shipped by domestic railroads,
representing more than 40 percent of the tons originated and nearly 22
percent of the rail revenue. New energy taxes would need to be imposed,
a new permit trading program would be required for consumers of fossil
fuels and gasoline and diesel prices would soar. DRI/McGraw Hill
estimates the cost of holding emissions at 1990 levels by the year 2000
would require a minimum new fuel tax equal to $16 per barrel of oil or
$0.40-0.50 per gallon. The rail industry currently consumes more than
3.5 billion gallons of diesel fuel annually. Of that amount, Union
Pacific uses nearly 1.4 billion gallons of diesel fuel per year, making
us the largest private consumer of diesel fuel in the United States. In
spite of these figures, railroads are highly fuel efficient and
recognized as the most environmentally friendly method of surface
transportation. A significant increase in the cost of fuel, coupled
with diminished car loadings, as would be the case under the Treaty,
would have a devastating impact on Union Pacific and all the other
freight railroads. In fact, the Association of American Railroads
estimates a $1.8-4.0 billion decline in annual rail revenues under this
Quite frequently big business and labor are at odds over various
government policies. With respect to this Treaty, however, business and
labor are together. In fact, the AFL-CIO passed a resolution expressing
concern that the Administration has not completed a thorough analysis
of the effects of the proposed treaty on the U.S. economy, and that the
proposals under discussion will cause the loss of U.S. jobs to such
countries as China, Mexico and Korea. With unionized labor representing
more than 85 percent of freight rail employment, we are pleased to say
that we have reached agreement on this issue before we had to go to the
Before the U.S. takes the next step, the Administration needs to
provide important details about global climate change and the potential
ramifications of this Treaty. These details should include targets,
timetables and other components of the U.S. proposal contingent upon
commitments for binding emission reductions from developing countries.
Given the scientific uncertainty surrounding the benefits of any
greenhouse gas reduction treaty, an accurate assessment of the cost
becomes critical. Key assumptions as well as an assessment of the
impact on the economy and employment need to be thoroughly addressed
before we move forward with this Treaty. Corporate America has a
responsibility to ensure a healthy economy and an ever-increasing
standard of living for current and future generations, and an equal
responsibility to protect our environment. We know that it is possible
to do both with a balanced approach. A balanced approach is not
possible however without careful study, input from a wide variety of
sources, and extensive public debate prior to the Administration
negotiating a U.S. position in Kyoto this December.
Chairman Hagel, again I want to thank you and the Members of the
Committee for the opportunity to share our views on this critical
issue. On behalf of Union Pacific, I especially wish to convey my
appreciation to you and Senator Byrd for your work on Senate Resolution
98. This Sense-of-the-Senate Resolution calls upon the United States to
refrain from signing any protocol or agreement that would seriously
harm the U.S. economy. Additionally, the Resolution calls for greater
parity between developed and developing nations as we try to meet
mutual environmental goals. Your willingness to carefully review the
ramifications of this Treaty is of vital importance to us and our
hundreds of customers and employees throughout the country.
Global Warming and Avoiding Dangerous Human Interference with the
The United Nations Environment Programme Advisory Group on
Greenhouse Gases has calculated indicators of ``ecological limits'' to
total amounts of temperature change and sea level rise and to the rates
of change that human health and the environment can tolerate.
Staying within ecological limits is a central objective of the
Framework Convention on Climate Change, signed at Rio in 1992. The
Convention clearly states that ``stabilization of greenhouse gas
concentrations in the atmosphere at a level that would prevent
dangerous anthropogenic (human made) interference with the climate
system.'' It adds that ``Such a level should be achieved within a
timeframe sufficient to allow ecosystems to adapt naturally to climate
change, to ensure that food production is not threatened and enable
economic development to proceed in a sustainable manner.''
Greenpeace has adopted these United Nations Environment Programme
indicators of ecological limits as a means to protect both ecosystems
as well as human systems.
Sea Level Rise
maximum rate of rise 2 millimeters per decade
maximum 0.2 meters above the 1990 global mean sea level
Global Mean Temperature
maximum rate of 0.1 C degrees per decade
maximum increase of 1.0 degree C
The United Nations report continues to say that above 1.0 C there
may be ``rapid, unpredictable and non-linear responses that could lead
to extensive ecosystem damage.'' A total of 2 degrees C increase is
viewed as an upper limit beyond which the risks of grave damage to
ecosystems, and of non-linear response, are expected to increase
rapidly. (The report identified the carbon dioxide--CO2--
equivalent concentrations corresponding to these potential temperature
changes as 330-400ppm for 1 degree C and 400-560ppm for 2 degrees C.
Carbon dioxide is the primary greenhouse gas which causes global
warming and is emitted when oil, coal and gas are burned).
The global mean temperature already has risen 0.3-0.6 C degrees
above pre-industrial levels and current rates of increase are around
0.2 C degrees per decade.
Global Warming and the Carbon Budget
In order to avoid dangerous human interference with the earth's
climate svstem, using the IPCC science, Greenpeace has calculated a
global carbon budget. This budget demonstrates how much carbon dioxide
(CO2) may be emitted while remaining within the limits human
identified by the United Nations Environment Programme health and the
environment can endure. Carbon dioxide is the primary Greenhouse gas
and the main sources are fossil fuels--oil, coal and gas. The logic
which follows is that in order to limit emissions of carbon dioxide, we
must limit the exploration for and use of fossil fuels.
Each year, the world releases over 6 billion metric tonnes of
carbon for a total of approximately 240 billion tonnes since
industrialization (1860). The United States historically has been and
continues to be the largest emitter of greenhouse gases.
Currently, the world has over 1,000 billion tonnes of carbon in
current economically recoverable reserves of oil, coal and gas. If all
of these reserves were burnt, it would lead to over 4 degree C increase
in global temperature in the long far above what would be safe for
human health and the environment.
The fossil fuel resource base is well over 4,000 billion tonnes of
carbon. Over time, and with the development of technology to extract
oil. coal and gas, these resources will become available as economic
The Carbon Budget
To limit ecological damage, the carbon budget calculated by
Greenpeace demonstrates that only approximately 150-270 billion tonnes
of carbon may be emitted.
If no action is taken to stop deforestation then only around 150
billion tonnes can be emitted.
With action to halt deforestation and with a significant
afforestation program around 230 billion tonnes may be emitted. At
current rates of fossil fuel use this amount would be used up in less
than 40 years.
With a major afforestation program then around 270 billion tonnes
may be emitted.
The inescapable conclusion: not only must new exploration for oil,
coal and gas be stopped but also fossil fuel use be phased out.
Reserves and future resources of oil, coal and gas cannot all be burnt
if we are to protect human health and the environment from global
Global Warming and the Greenpeace Solution
The Greenpeace Position
In order to protect human health and the environment by ensuring we
do not exceed ecological limits. Greenpeace believes that US policy
should be set to achieve the carbon budget (150-270 billion tonnes of
carbon). In order to meet these ecological and policy goals, immediate
action must be taken to stop new exploration for oil, coal and gas and
to stop deforestation.
The carbon logic demonstrates that unless fossil emissions are
reduced soon a complete Global phase out will be necessary within 30-40
years on current trends in fossil fuel use.
What the Governments Can Do
Achieving a fossil fuel phase out on such a timescale is the only
way to achieve the necessary dramatic reductions in emissions of
greenhouse gases such as carbon dioxide. As a first step, Greenpeace is
calling on governments of industrialized nations to agree to reduce
carbon dioxide emissions to 20 percent below 1990 levels by 2005 for
the December 1997 Climate Convention in Kyoto, Japan.
In addition to adopting strong stance at the treaty negotiations,
Greenpeace also is advocating that as a first step toward a fossil fuel
phase out that governments in industrialized nations stop new oil
exploration. Given that society cannot afford to burn even a quarter of
oil, coal and gas reserves, continued exploration for more fossil fuels
is irresponsible. As well, governments should stop offering subsidies
to fossil fuel companies and encouraging aggressive new oil, gas and
For example, the US government currently subsidizes the coal, oil,
gas and nuclear industry at a rate of $33 billion per year. In
contrast, aid to welfare mothers (Aid to Families with Dependent
Children) totals only $18 billion and subsidies to clean, renewable
energy is a mere $1 billion (Federal Energy Subsidies, April 1993,
Department of Health and Human Services). In the European Union, close
to $15 billion US dollars of taxpayers' money has been used every year
since 1990 to prop up the fossil fuel and nuclear industry.
The United States has a special responsibility to act on global
warming and climate change. The US is: responsible for about one
quarter of historical and current global emissions of C02 from coal,
oil and gas; the world's largest economy; and, a technological and
market leader in delivering clean energy solutions such as solar power.
In order to protect the climate, which is the aim of the international
agreements under the climate treaty, substantial cuts in emissions of
C02 must be achieved.
Therefore, Greenpeace is calling upon all industrialized
governments attending the Kyoto meeting in December 1997 to agree
mandatory cuts in emissions of C02 to 20 per cent belowl990 levels to
be achieved by 2005.
Additionally, Greenpeace calls on the US government to:
Shift subsidies away from dirty energy sources such as coal,
oil, gas and nuclear power to renewable energy such as solar
and wind power,
Stop new oil exploration in Alaska, and
Recognize that the world cannot afford to burn more than a
fraction of the coal, oil and gas reserves known to exist, much
less to search for additional reserves. Therefore, the US must
take a lead in beginning a phase out of fossil fuels over the
next 30 to 40 years.
Work closely with labor unions to create an economic justice
package to help American workers transition from a fossil fuel
economy to a renewable energy economy.
Raise car fuel efficiency standards (so that automobiles run
more efficiently and on less gas);
Increase and improve energy efficiency programs;
Begin to invest in renewable energy sources for federal
Government buildings and facilities; and,
Use funds to rebuild homes destroyed by natural disasters
with solar and renewable energy.