[Senate Hearing 106-1140]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 106-1140
 
                      SOLUTIONS TO CLIMATE CHANGE

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 21, 2000

                               __________

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                             Transportation







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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION


                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine              JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                  Mark Buse, Republican Staff Director
               Ann Choiniere, Republican General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 21, 2000...............................     1
Statement of Senator Brownback...................................     5
    Prepared statement...........................................     5
Statement of Senator Kerry.......................................     3
Statement of Senator McCain......................................     1
    Prepared statement...........................................     2

                               Witnesses

Feinstein, Hon. Dianne U.S. Senator from California..............     7
Mesnikoff, Ann R., Washington Representative, Sierra Club, Global 
  Warming and Energy Program, Washington, DC.....................    10
    Prepared statement...........................................    13
Morgheim, Jeff, Climate Change Manager, BP, Houston, TX..........    19
    Prepared statement...........................................    21
Palmer, Fredrick D., General Manager and Chief Executive Officer, 
  Western Fuels Association, Inc., Arlington, VA.................    22
    Prepared statement...........................................    24
Romm, Dr. Joseph J., Director, Center for Energy and Climate 
  Solutions, Annandale, VA.......................................    28
    Prepared statement...........................................    32
Rosenberg, Dr. Norman, Senior Staff Scientist, Pacific Northwest 
  National Laboratory, Battelle Washington Operations, 
  Washington, DC.................................................    38
    Prepared statement...........................................    40

                                Appendix

Response to written questions submitted by Hon. John McCain to:
    Ann Mesnikoff................................................    61
    Fredrick D. Palmer...........................................    65
    Dr. Norman Rosenberg.........................................    68
    Dr. Joseph Romm..............................................    69
Kelly, Glenn, Executive Director & CEO, Global Climate Coalition, 
  prepared statement.............................................    70


                      SOLUTIONS TO CLIMATE CHANGE

                              ----------                              


                      THURSDAY, SEPTEMBER 21, 2000

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:32 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    The Chairman. Good morning. Earlier this year we examined 
the science of global warming as a means of defining the issue 
of climate change. We followed that hearing with a discussion 
of the impact of climate change on the United States, 
specifically the national assessment report. Today we hope to 
examine a few of the many solutions or approaches to reducing 
greenhouse gas emissions, the suspected cause of global 
temperature increases.
    I hope to have an honest and open discussion of these 
solutions so that the members of the Committee can be better 
informed on our policy options as we look to the future and 
address this very important issue. Today's discussion does not 
represent, nor should it be implied, the totality of solutions 
available. Today's discussion represents only a sampling of 
these solutions.
    I am pleased to hear that several companies are taking 
voluntary actions to reduce emissions and become more efficient 
in their operations. I know that these efficiencies often lead 
to cost savings, which further motivates their actions. 
Nevertheless, reduced emissions are helping the environment.
    These actions are leading some critics to claim that 
industry is doing more on a voluntary basis than Congress. If 
this is true, then it is time that Congress steps up to the 
plate. The Federal Government will continue to support 
scientific research concerning climate change. However, we must 
depend on the industrial base of this country to implement 
these scientific findings. I would hope that they would apply 
their ingenuity by using technologies to bring about a cleaner 
environment.
    I am pleased that our witnesses today represent those on 
the front line of industries who are implementing programs to 
reduce greenhouse gas emission. I am also interested in hearing 
about what else the government can do to improve the current 
situation or, again, if anything at all should be done.
    During the past two hearings, we have heard about the 
complexity of climate change and the difficulty of 
understanding the interaction between the atmosphere, oceans, 
and land. I believe there are many questions yet to be 
answered. Many of these are further complicated by the mixing 
of politics and science. I hope to add some clarity to this 
situation by proposing an international commission of 
scientists to study climate change and to provide unbiased, 
sound scientific analysis to anyone in search of the facts on 
global warming.
    We plan to introduce legislation in the near future to this 
effect. I hope others will rally and support it to help bring 
international understanding to this contentious issue.
    I welcome all the witnesses today. Finally, there are 
probably only 2 or 3 weeks left in this session of Congress, so 
we may not have other hearings this year. I intend to work with 
Senator Kerry and others to take up this issue again early next 
year, since I have become convinced that there are changes 
taking place that we need to better understand, and at some 
point we need to develop some kind of plan of action.
    [The prepared statement of Senator McCain follows:]

                Prepared Statement of Hon. John McCain, 
                       U.S. Senator from Arizona
    Earlier this year we examined the science behind global warming as 
a means of defining the issue of climate change. We followed that 
hearing with a discussion of the Climate Change Impact On the United 
States, the National Assessment Report. Today, we hope to examine a few 
of the many solutions or approaches to reducing greenhouse gas 
emissions, the suspected cause of global temperature increases.
    I hope to have an open and honest discussion of these solutions so 
that the members of this Committee can be better informed on our policy 
options as we look to the future and address this very important issue. 
Today's discussion does not represent, nor should it be implied, the 
totality of solutions available. Today's discussion represents only a 
sampling of these solutions.
    I am pleased to hear that several companies are taking voluntary 
actions to reduce emissions and become more efficient in their 
operations. I know that these efficiencies often lead to cost savings 
which further motivates their actions. Nevertheless, the reduced 
emissions are helping the environment.
    These actions are leading some critics to claim that industry is 
doing more on a voluntary basis than Congress. If this is true than 
it's time that Congress steps up to the plate.
    The Federal Government will continue to support scientific research 
concerning climate change. However, we must depend on the industrial 
base of this country to implement these scientific findings. I would 
hope that they would apply their ingenuity by using technologies to 
bring about a cleaner environment. I am pleased that our witnesses 
today represent those on the front line of industry implementing 
programs to reduce greenhouse gas emission.
    I am also interested in hearing about what else the government can 
do to improve the current situation or again, if anything at all 
actually should be done. Over the past two hearings, we have heard 
about the complexity of climate change and the difficulty of 
understanding the interaction between the atmosphere, oceans, and the 
land.
    I believe there are many questions yet to be answered. Many of 
these are further complicated by the mixing of politics and science. I 
hope to add some clarity to this situation by proposing an 
international commission of scientists to study climate change and to 
provide unbiased, sound scientific analysis to anyone in search of the 
facts on global warming. I plan to introduce legislation in the near 
future to this effect and hope that others will rally and support it to 
help bring mutual international understanding about this contentious 
issue.
    I welcome all of our witnesses here today.

    The Chairman. Senator Kerry.

                 STATEMENT OF HON. JOHN KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you very much for having 
these series of hearings. I really want to congratulate you on 
doing that. I think you are the only chairman in the Senate 
providing at this point any ongoing dialog on this subject, and 
so I personally want to thank you because I think what it needs 
more than anything else, frankly, is leadership.
    As you know, Mr. Chairman--and I'm sort of tired of 
repeating it a little bit, but I say it as a preface to where I 
am coming from on it. I have been following this for a long 
time now through the work on this Committee, beginning when the 
Vice President served here on the Committee and we became 
interested in this as members of the Subcommittee. Obviously, 
his views on the issue are now a matter of record 
internationally.
    One thing we do not want to do is insert politics into it 
and I do not want to do that. I have now followed the emerging 
science since the 1980s and I have participated in the 
negotiations for the United Nations Framework Convention. I 
have been to Rio, been to Buenos Aires, been to Kyoto, watched 
this emerge, and I have talked and met with people I have 
enormous respect for: John Prescott, Deputy Prime Minister in 
England, others who are leading on this issue, and many people 
on the European continent, who just have built a consensus.
    An enormous scientific consensus exists internationally on 
this subject. And while you cannot prove precisely that global 
warming has caused this particular event or that particular 
event, the following are all consistent with models of 
projected climate change:
    No. 1, the 1990s were the hottest decade on record.
    No. 2, the hottest 11 years on record have all occurred in 
the past 13 years.
    Ranges of infectious diseases are spreading. Cases of 
infection are increasing around the world.
    This shift in temperature that is accompanying that, some 
parts of the world have warmed by 5 degrees Fahrenheit or more 
in the last 100 years, the average temperature of the entire 
planet having risen 1 degree.
    Again, all of these are consistent. In 1995, after a period 
of unusual warming, 4.5 degrees Fahrenheit above normal, a 48 
by 22 mile chunk of the Larsen Ice Shelf in Antarctica 
collapsed, and in subsequent years we have seen remarkable 
sizes of ice falling off.
    This summer a section of the North Pole was water for the 
first time in recorded history. I think it was about a mile 
wide area of water. And for the first time in recorded history, 
a trip was taken retracing a trip of yore which took 2 years, 
and this trip took only about a month to do because there was 
no ice in the Northwest Passage.
    The reason I say all of this, Mr. Chairman, is that the 
``solution'' to climate change--and we are going to hear from 
Senator Feinstein, we are going to hear from other members 
today--has proven to be elusive. I just want to say to you 
there are two reasons for this, and I will be very quick. The 
first reason is, obviously, self-interest. Whether it is a 
country, a company, or citizens in a State, we all benefit from 
the status quo and everybody is resistant to change. At the 
international level, we, the United States, are increasingly 
the butt of cynicism and doubts about our seriousness because 
other nations, developing nations, remain very critical of the 
developed nations for the past emissions and for their desire 
to hold onto the status quo, while we remain very suspicious of 
developing nations that think they can not be part of the 
consensus and do not have to buy into Kyoto. So we are locked 
into this unfortunate gridlock now where things get worse and 
nobody is doing anything.
    Within the United States, we have different industrial 
sectors defending their position, each of them arguing that the 
pollution cut should come from somewhere else. Energy points to 
the transportation sector, transportation points to 
manufacturing, and so you go back and forth.
    The second reason is the difficulty of the underlying 
problem. I know that some of the work of Dr. Romm and his 
colleagues, such as Amory Lovins, points to how existing 
technology has the potential to reduce emissions. I buy into 
that, I accept that.
    But the challenge is using that technology domestically and 
internationally, and there you run into this huge political 
resistance because corporations and governments have invested 
billions of dollars in the current energy, current 
transportation, current manufacturing, and current building 
infrastructures, and those investments are intended to last 30 
years or longer. So you have this enormous economic resistance 
to a reality that is growing around us.
    So the question for us, Mr. Chairman--and that is why I 
applaud your having these hearings and focusing on this--is how 
we take this consensus that has been built internationally 
about a certain set of scientific facts and translate that into 
political action here in the United States. It is going to take 
a massive educational effort. It is going to take wise and 
forceful political leadership, and we need the corporate sector 
to be part of the solution. We cannot make this a war between 
politicians and the economy. We have to harness the best 
creativity of our economy, the best entrepreneurial spirit of 
our corporations, to implement the solutions.
    I believe we can do that and I hope we will do it, Mr. 
Chairman. The framework is there, but we are going to have to 
exert enormous political leadership consistent with good common 
sense in order to make it happen.
    So again I thank you for your leadership on this and I look 
forward to these hearings.
    The Chairman. Well, I thank you, Senator Kerry. Your 
involvement predates mine by a number of years and that is why 
it is important for us to work together with other members such 
as Senator Brownback, who has shown a great interest in the 
issue as well.
    Before we turn to Senator Feinstein, Senator Brownback.

               STATEMENT OF HON. SAM BROWNBACK, 
                    U.S. SENATOR FROM KANSAS

    Senator Brownback. Thank you very much, Mr. Chairman. Thank 
you, John, for your leadership that you have provided on this.
    I would like to put my entire opening statement in the 
record.
    The Chairman. Without objection.
    Senator Brownback. I just would point out a couple of quick 
things. No. 1 is Senator Kerry has really encapsulated the 
issue quite nicely. I would hope that we would focus, not on 
where we disagree, but where we can move forward and progress. 
There is a lot of dispute about Kyoto. There is a lot of 
dispute about how we got to the place we are today. But there 
is not so much dispute about what we can do of common sense 
steps today to solve some of these problems and start down the 
right path.
    That is what I see in the panel you have got here, is 
people talking about some rational steps we can start now 
moving forward. I have put in two bills, one to deal with 
carbon sequestration, one on an international basis, one on a 
domestic basis. The international one would provide tax credits 
to companies that work to keep land from being developed, 
particularly rain forest areas that are big carbon sinks.
    I am going to be going to Brazil to see one of these 
projects later this year, and I am hopeful that some other 
members can go as well. This is where private companies, along 
with NGO's, the Nature Conservancy, have set aside a very large 
tract of land. It is good for biodiversity and a number of 
other purposes, but it is also very good carbon sequestration, 
a carbon sink.
    The second one is in U.S. agriculture, what all we can do 
in different farming practices to incentivize carbon 
sequestration and pulling carbon out and not releasing it back 
up. The science is developing well. You have got one presenter 
here today that is going to be commenting about that. At Kansas 
State University they are doing a great deal of research on how 
we can farm to fix carbon or carbon farming, as it is being 
referred to.
    I put in a bill to incentivize that in the U.S., because I 
think we have got great promise here as well on pulling carbon 
out of the air, fixing it into the soil, that it is good for 
farming and it is good for getting some of the CO2 
out of the air.
    To me, these are rational, common sense approaches that we 
can look at and say, well, I do not know about Kyoto Treaty, I 
do not know about how we got here, but I do know we have got 
some solutions that we could pretty much all agree on, and that 
is the track that I would hope we can move down.
    I applaud your holding these hearings.
    [The prepared statement of Senator Brownback follows:]

   Prepared Statement of Hon. Sam Brownback, U.S. Senator from Kansas
    Mr. Chairman,
    I'd like to first thank you for holding this hearing and for your 
continued persistence on this important topic.
    With respect to the issue of Global Climate Change, we must be 
persistent. That this will be a debate that might affect global weather 
patterns, we must be persistent. That this will be a debate that will 
almost certainly affect the future of our national economy, we must be 
persistent. It is my opinion, that whether our persistence is for the 
better or worse, will be determined by the extent to which our 
persistence is tempered by wisdom.
    In my faith we are each called on to be both gentle and wise. This 
advise also strikes me as good counsel for how we are to proceed as we 
pursue the debate on how this nation will address global climate 
change.
    We must be gentle.
    There is no shortage of emotional rhetoric on either side of this 
debate. For some global climate change is a coming apocalypse that will 
forever change and perhaps end life as we know it on this planet. On 
the other side of the debate, there are those who would argue that 
there is no problem and that the regulations which might be required to 
stem climate change would result in complete economic collapse.
    If, as legislators, we are not gentle in this debate we will be 
swept into the rhetoric of one or the other extreme. As we have seen in 
past environmental legislation, we will end up with either the 
impractical and unworkable, or the ineffective and unsuccessful.
    We must be wise.
    The central questions of the debate on how to address Climate 
Change are scientific. We can not ignore what the preponderance of 
scientific evidence tells us about Climate Change. As was stated in the 
U.S. Climate Action Report 2002, ``greenhouse gases are accumulating in 
Earth's atmosphere as a result of human activities causing global mean 
surface air temperature and subsurface ocean temperature to rise.''
    However, neither can we pretend that the science tells us something 
that it does not. According to the oft quoted National Research Council 
report on Climate Change ``. . . because there is considerable 
uncertainty in current understanding of how the climate system varies 
naturally and reacts to emissions of greenhouse gases and aerosols, 
current estimates of the magnitude of future warming should be regarded 
as tentative and subject to future adjustments (either upward or 
downward.)''
    While it would be convenient to embrace the scientific evidence 
which supports our position and ignore that which is counter, it would 
be unwise.
    All of this said, I admire my colleagues for their persistence in 
the pursuit of the legislation we consider today. However, I 
respectfully disagree with my colleagues that we are at a point in this 
debate at which we ought to be considering this kind of a ``cap and 
trade'' regime. The scientific evidence showing human activity has an 
effect on Climate Change is significant. Yet, the science is still 
ambiguous as to the extent of the problem. It is premature to state 
that this or any regulatory regime is necessary to, or capable of, 
slowing down or reversing Climate Change.
    This is not to say that there is nothing to be done on the issue of 
Climate Change. As Mr. Mahoney will point out, we must fill the gaps 
where there is a paucity of research, so that we might answer the 
lingering questions. There are increases requested for additional 
research. I assume that this body and the House will work together to 
make sure those requests are met.
    Additional research is not where our dedication to this issue 
should end. There are things we can do to positively effect our net 
national carbon emissions that have other environmental benefits and 
which can have a positive effect on the economy. I am referring to 
carbon sequestration and conservation practices. I know that Mr. Krupp 
will tell us about some of the innovative projects that his 
organization has worked on in the Pacific North-West. These are 
projects that not only suck carbon out of the atmosphere, but have the 
more tangible benefits of improving water quality and preserving 
wildlife habitat.
    In my home state of Kansas, the potential for bringing carbon into 
the soil is vast. As we speak the Chicago Climate Exchange is working 
out the details of a project that will all at once provide a new 
revenue stream for farmers, improved soil conservation techniques and 
reduce our net carbon output. Some estimates I have seen believe that 
the potential for sequestering carbon in this pilot project could 
exceed the amount of carbon that Germany emits each year.
    I look forward to working with the chairman and this Committee to 
consider this part of the Climate Change debate. I believe that if we 
are gentle and wise carbon sequestration is the crossroad at which the 
various sides of this debate can meet, while additional research is 
going forward. I look forward to hearing from the witnesses.
    Thank you, Mr. Chairman.

    The Chairman. Thank you.
    Senator Feinstein, welcome and thank you for coming before 
the Committee today. We are aware of your recent accident and 
we wish you a speedy recovery.

              STATEMENT OF HON. DIANNE FEINSTEIN, 
                  U.S. SENATOR FROM CALIFORNIA

    Senator Feinstein. Thanks very much, Mr. Chairman, Senator 
Kerry, Senator Brownback. I am delighted to be here this 
morning.
    I would recommend, Mr. Chairman, that the Committee 
consider three policies that would most comprehensively address 
the global warming issue. The first is increasing Corporate 
Average Fuel Economy standards, or CAFE for short, for our 
Nation's cars and trucks. The second is increasing the use of 
energy efficient vehicles, buildings, and appliances and 
expanding our reliance on renewable energy. The third is 
encouraging the Senate to take a leadership role and join the 
29 other countries which have already ratified the Kyoto 
Protocol.
    I would like to limit my comments this morning to fuel 
efficiency because I believe that improving fuel efficiency is 
the most important first step we can take. It produces the 
largest bang for the buck.
    Earlier this year I spent a day at the Scripps Institute in 
San Diego meeting with various climate change and global 
warming experts, like Dan Cayan, the Director of the Climate 
Research Division, Ron Rumunathan, the Director of the Center 
for Atmospheric Science, Michael Molitor, the Coordinator of 
Climate Change at UC-San Diego's Institute for Global Conflict 
and Cooperation, and Charles Kennel, the former head of the 
National Science Foundation.
    All said that there is overwhelming evidence to show that 
global warming is real and is happening now. Measurements taken 
in La Jolla, California, at Scripps, at the Institute of 
Oceanography, since 1925 and in San Francisco show a rise in 
the sea level of 9 inches over the last 75 to 100 years at both 
locations. According to these scientists, these changes we are 
now seeing in the climate are unprecedented over a period of 
400,000 years. So I think that is good evidence that there is a 
real problem.
    Carbon dioxide emissions from vehicles in the United States 
exceed the total CO2 emissions of all but three 
other countries. Carbon dioxide is the No. 1 greenhouse gas. 
Therefore, if you attack carbon dioxide you attack the 
greenhouse problem.
    CAFE standards regulate how many miles a vehicle will 
travel on a gallon of gasoline. Better fuel efficiency simply 
lowers vehicular emissions of pollutants and carbon dioxide. 
There is what is known as an SUV loophole which allows sports 
utility vehicles and other light duty trucks to meet lower fuel 
efficiency standards than passenger cars. So they have lower 
standards than passenger cars, although SUV's are, in fact, 
passenger cars.
    Fuel economy standards for automobiles average 27.5 miles 
per gallon, while the standards for SUVs and light trucks 
average 20.7 miles per gallon. So there is a 7 mile 
differential. When fuel economy standards were first 
implemented in 1975, a separate tier was permitted for trucks, 
which were not thought to be passenger vehicles. So it is easy 
to see that SUVs, which were thrown then into the truck 
category later and are predominantly used as passenger 
vehicles, escape the stricter standards.
    Now, I believe there is no reason to think they should not 
have to meet the same CAFE standards as station wagons and 
other cars. Standards for cars have not increased in 14 years 
and the truck standards have essentially stayed the same since 
1981. But since many consumers have traded in their cars for 
SUVs, overall vehicular carbon dioxide emissions have begun to 
increase significantly.
    If SUVs and other light duty trucks were simply required to 
meet the same fuel economy standards as automobiles, we would 
reduce CO2 emissions by 237 million tons each year. 
That would result alone in a saving of a million barrels of oil 
a day, so it is a consequential change.
    A provision in the transportation appropriations bill for 
the past 5 years has prevented the Department of Transportation 
from even studying fuel economy standards and whether those 
standards should be increased, and that is the product of the 
lobbying of Detroit. Finally this past June, Senator Gorton, 
Senator Bryan and I had a breakthrough on the floor and, thanks 
to a compromise we were able to reach, the National Academy of 
Sciences will be working with DOT to look at whether these 
standards can be increased without costing domestic 
manufacturing jobs and without compromising safety. Now, we 
were not able to achieve any kind of a resolution that said 
just go do it. It is a study. But up to this point we had not 
even been able to get a study, so it is just a small step 
forward.
    I am hopeful that the study will disprove once and for all 
all the excuses used by car manufacturers and their allies to 
fight raising CAFE standards in this area.
    In light of the fuel prices that we have been seeing at the 
pump this year, raising these standards would also be a big 
help to the country and to consumers. Closing the SUV loophole 
would not only save the United States the one million barrels 
of oil a day, it would also save SUV owners hundreds of dollars 
a year at the pump. With gas hovering near two dollars a 
gallon, this is a big deal. I think it also shows that reducing 
our greenhouse gases can help consumers in very easy to 
quantify ways. We can measure it. We know what it will do. We 
know it is the largest single and easiest thing we can do.
    Now, that is not all we can do. I hope we can explore how 
to encourage the production of alternative fuel, hybrid 
vehicle, and fuel cell vehicles. Cars and SUVs are not going to 
go away, but we can certainly find ways to make them run 
cleaner and more efficiently. Hybrid vehicles, which run partly 
on gas and partly on an electric battery that never needs 
recharging, are already on the market. I understand that fuel 
cell technology which would make zero emission vehicles, 
creating water as the only waste byproduct, are just a few 
years away.
    If we can figure a way to get more of these vehicles onto 
the roads, we will undoubtedly reduce our country's carbon 
dioxide emissions by millions of tons and go a long way toward 
combatting global warming. I would hope that this Committee 
would look at a Federal Government fleet purchase and whether 
we can find ways to ensure that these vehicles meet the highest 
possible fuel efficiency standards.
    Federal vehicles alone comprise about 1 percent of all 
vehicles sold each year in the United States and local 
government and State fleets compromise another 1 percent. So if 
both together would agree to use cleaner, more efficient 
vehicles, perhaps hybrid vehicles, essentially 2 percent of all 
of the vehicles on the road, government-issue cars, would be 
environmentally friendly.
    If government vehicles were required to achieve better fuel 
efficiency, it would make a real difference in reducing 
greenhouse gas and provide incentives for car and truck 
manufacturers to bring these vehicles more freely to market.
    So I urge the Committee to consider some of these 
solutions. What we wind up doing or not doing on global warming 
as early as the next Congress may well be evaluated for 
generations to come. I would hope that our children and our 
grandchildren will be able to look back on the country in this 
early 21st Century and say that the United States was a leader, 
not a laggard.
    I thank the chair. I thank the Committee.
    The Chairman. Thank you very much, Senator Feinstein. We 
appreciate your long-time involvement in this issue. I know how 
important it is to the State of California. We look forward to 
working with you.
    Senator Feinstein. I thank you very much, Mr. Chairman.
    The Chairman. Did you want to say something?
    Senator Kerry. I would like to say something. I would like 
to thank Senator Feinstein for her testimony and for her 
leadership on this. I simply could not agree with her more, Mr. 
Chairman. The technology exists today. We can do this. I do not 
know anybody here who has not driven down a road and has gotten 
some truck in front of you and it steps on the gas at a light 
and belches out incredible plumes of black smoke, particulates 
that you can see. You have to practically hold your breath in 
your own car to drive through it.
    We have allowed a loophole to exist. It is an extraordinary 
loophole. It does not have to exist, and it exists frankly, Mr. 
Chairman, for one of the reasons that you have been such a 
leader in pointing out to Americans, the connection between 
campaign contributions and what happens in Washington, and the 
amount of money that gets thrown out by interests that do not 
want these good things to happen.
    The technology is there. I visited California and Los 
Angeles, went for a ride in one of your fleet, compressed 
natural gas cars, went out to the station where you could 
refuel. It is extraordinary how fast and easy it is. You see 
the infrastructure beginning to be built in California, the 
networks that allow you to get from here to there and refuel.
    We should be doing that all over the country and the 
leadership should be coming from governmental fleet entities 
and from our effort to help put the infrastructure in place and 
create the tax incentives and the ability to do it.
    So I thank you for your testimony today, and I hope my 
colleagues will take note.
    The Chairman. Thank you.
    Thank you, Senator Feinstein. Get well soon.
    Senator Feinstein. Thanks very much, Mr. Chairman.
    The Chairman. On our next panel are: Ms. Ann Mesnikoff, the 
Washington Representative of the Sierra Club Global Warming and 
Energy Program; Mr. Jeff Morgheim, the Climate Change Manager 
at BP of Houston, Texas; Mr. Frederick Palmer, the General 
Manager and Chief Executive Officer of Western Fuels 
Association; Mr. Joseph Romm, Director, Center for Energy and 
Climate Solutions; and Dr. Norman Rosenberg, a Senior Staff 
Scientist, Pacific Northwest National Laboratory, Battelle 
Washington Operations.
    We want to welcome all of the witnesses. Mr. Morgheim, is 
that a proper pronunciation of your name?
    Mr. Morgheim. Yes, it is, Senator.
    The Chairman. Ms. Mesnikoff, is that a proper 
pronunciation?
    Ms. Mesnikoff. Yes, it is.
    The Chairman. Thank you. I will not ask the others.
    We will begin with you, Ms. Mesnikoff, and thank you for 
joining us.

           STATEMENT OF ANN R. MESNIKOFF, WASHINGTON 
REPRESENTATIVE, SIERRA CLUB, GLOBAL WARMING AND ENERGY PROGRAM, 
                        WASHINGTON, D.C.

    Ms. Mesnikoff. Thank you, Mr. Chairman, and thank you, 
members of the Committee.
    Certainly Senator Feinstein has made my job much easier. I 
was asked today to focus on the Corporate Average Fuel Economy 
standards for cars and light trucks and I think Senator 
Feinstein has been a leader on this issue for the past several 
years in Congress along with Senators Bryan and Gorton, and we 
certainly thank her for her leadership on this important issue 
and bringing us to the agreement we reached this past year to 
allow the National Academy of Sciences to begin a study.
    But I would like to point out briefly on that point that 
even with today's high oil prices, the Department of 
Transportation still cannot implement the Corporate Average 
Fuel Economy law. It cannot issue new standards for our cars 
and light trucks to reduce oil consumption and thereby reduce 
the greenhouse gas emissions that are coming out of our cars 
and light trucks.
    The Chairman. Why not?
    Ms. Mesnikoff. It is an important step forward, but it is a 
study. It will not allow DOT to actually implement the law and 
do its job.
    I would just briefly like to thank you for holding this 
series of hearings on climate change and I think this, perhaps, 
might be the most important because it is a serious problem. I 
think this map, which the Sierra Club--unfortunately, I do not 
have mounted--produced with other environmental organizations, 
tells the worldwide story of global warming impacts. It tells 
about the fingerprints and harbingers of global warming from 
droughts, spreading infectious diseases, heat waves, and the 
like.
    I think it is a story that demands action on what is a very 
serious pollution problem. And it is a pollution problem, and 
America's cars and light trucks are 20 percent of U.S. 
greenhouse gas emissions. They guzzle 40 percent of the oil we 
use and transportation is the fastest growing sector of 
greenhouse gas emissions in the United States.
    I think that it is a pollution problem, and the good news 
is we can do something about it. I think Senator Feinstein made 
all the key points. I would just like to add a few points to 
what Senator Feinstein said. I think that actually a report 
that you asked the Government Accounting Office to do, Mr. 
Chairman, on CAFE standards which was released in August 2000 
does conclude that raising CAFE standards can help reduce U.S. 
oil consumption and thereby reduce global warming pollution 
coming out of America's cars and light trucks.
    I think the critical point to start is with light trucks. 
The loophole that Senator Feinstein referred to has been in 
existence since the original law was passed in 1975. Light 
trucks then were only 20 percent of the vehicle fleet. Now they 
are about 50 percent. Minivans, SUVs, these vehicles did not 
really exist. Light trucks were work trucks. Now we see them 
being used as passenger vehicles in cities across the country.
    A 14 mile-per-gallon SUV will emit more than 130 tons of 
carbon dioxide over its lifetime. The average new car will emit 
only 74 tons, but the new Honda Insight, which utilizes 
gasoline-electric hybrid technology, will emit only 27 tons.
    Even Ford Motor Company has recognized that SUVs threaten 
the environment by emitting more global warming pollution and 
more smog-forming pollution and that they also pose a safety 
hazard for other motorists. I think closing the light truck 
loophole would slash CO2 emissions by 240 million 
tons of carbon dioxide a year when it is fully phased in.
    It is an essential first step to take, but we must also 
consider raising CAFE standards for all of our cars and light 
trucks to even beyond 27.5 miles per gallon. That is a first 
step, but it is not the last step. The key point to make here 
is that the technology does exist. The gasoline-electric hybrid 
technology which Honda is using on its Insight vehicle today, 
which Toyota is selling in its Prius vehicle, which Toyota has 
already shown at the Tokyo Auto Show, could make a minivan get 
42 miles per gallon, and Ford Motor Company, which has pledged 
to put hybrid technology into its small SUV, the Escape. I 
think in the year 2004.
    So I think we are seeing progress in fuel economy and that 
these technologies will allow our automakers to be leaders in 
the world, to show that we can do even better than 27.5 miles 
per gallon, which has been in place for 14 years, that we can 
vastly improve the fuel economy of the American fleet of 
vehicles and make a real difference and show the world that we 
are no longer sitting around and waiting for somebody else to 
move forward, that we are going to take a real step, the 
biggest single step that we could take to curb global warming.
    I think that it is also important to note that, while these 
technologies are being used today, we need to make sure that 
they are not being used on single vehicles to reduce oil 
consumption or pollution, but to make sure that all vehicles 
are using this technology, so that we see real improvements 
across the board by all manufacturers in all vehicles.
    The auto manufacturers are having real problems meeting the 
current CAFE standard, the 20.7 mile per gallon standard for 
light trucks. They are using all different kinds of games to 
meet that existing standard. Hybrid technology should not be 
one more tool in the toolbox to avoid making real improvements. 
We need to see dramatic changes and we need to see a higher 
CAFE standard.
    Ford and General Motors have made pledges in regard to 
their light trucks, to improving the fuel economy of their 
light trucks. But again, we need to see all manufacturers 
moving forward and we need to make sure that the standards 
which are in the original CAFE law, maximum feasible 
technology, cost savings, the need to save oil, that all these 
factors are considered to get the highest CAFE standard and the 
best CAFE standard that we can.
    The Sierra Club has been calling for a 45 mile per gallon 
CAFE standard for our cars and a 34 mile per gallon standard 
for our light trucks. I think that is an important step to 
take.
    I think that the polls show that Americans consistently 
support using fuel economy standards to reduce our oil 
consumption and to reduce our greenhouse gas emissions. Two 
examples: The World Wildlife Fund from August 1999, a poll of 
light truck owners showed that 73 percent believe that their 
light truck should be cleaner and fully two-thirds would pay a 
significant amount more for their next light truck if it were a 
cleaner vehicle. 70 percent believe that automakers will not 
clean up their light trucks unless they are required to do so.
    A Zogby International poll of predominantly independent and 
Republican voters in New Hampshire revealed that 75 percent 
favored increasing fuel economy to address global warming, even 
at an increased cost of $300 per vehicle.
    I think the Union of Concerned Scientists has done studies 
that show that the gas-guzzling Ford Explorer, which is the 
most popular SUV sold in this country, and obviously known in 
the news for other reasons these days, but that vehicle could 
go from 19 miles per gallon to 34 miles per gallon using 
today's technology, and that technology would cost about $900 
and certainly at today's high gasoline prices, a consumer would 
make that money back at the gas pump in about 2 years. These 
are cost effective ways of reducing our emissions and they 
should be taken.
    I think, briefly, I would like to touch upon a couple of 
other things that we should be doing. Certainly, cleaning up 
our power plants, making our homes and our buildings much more 
energy efficient are steps we must take. Many electric 
utilities still use coal in this country. I would just point 
out that coal is an especially dirty fuel, producing nearly 
twice as much CO2 per unit of heat produced as 
natural gas and about a third more than oil. I think we can 
begin to convert these plants to natural gas, which is cleaner 
burning. We can do more by saving energy in our homes and in 
our buildings by issuing new energy efficiency standards for 
lighting, appliances, heating, and air conditioning.
    All these things can help reduce our demand for electricity 
and energy and make us more efficient. We can also begin to 
look at wind power and solar power and clean renewable energy 
that will again reduce our emissions of CO2.
    I think in today's high oil price situation, we should 
begin to look at CAFE standards because they will save us oil, 
they will reduce our U.S. greenhouse gas emissions. It is a 
sensible and essential solution to the global warming problem. 
It is something we can do now. The technology is here, hybrid 
technology. Fuel cell technology is on the horizon. We will see 
those vehicles on the road soon.
    I have to point out that there are high costs to inaction. 
If we fail to act to curb global warming, we will impose on our 
children enormous impacts on their health, on our coasts, on 
agriculture, and our infrastructure. Then we have to look at 
the fact that, what kind of a price tag can we put on the lost 
lives to heat waves and spreading infectious diseases?
    Experts have joined in emphasizing that global warming has 
begun and now is the time to take action. I would urge that we 
look at the fuel economy solution, to allow the Department of 
Transportation to begin to implement the law, to look at the 
study that the National Academy of Sciences does, but to move 
forward so that we can begin to save oil and begin to make a 
real dramatic difference in U.S. greenhouse gas emissions.
    Thank you.
    [The prepared statement of Ms. Mesnikoff follows:]

  Prepared Statement of Ann R. Mesnikoff, Washington Representative, 
    Sierra Club, Global Warming and Energy Program, Washington, DC.
Introduction
    Thank you Mr. Chairman and members of the Committee. I am Ann 
Mesnikoff, Washington Representative of Sierra Club's Global Warming 
and Energy Program. I appreciate the opportunity to testify today on 
behalf Sierra Club's more than half-million members nationwide on 
solutions to global warming. My testimony will focus on the key 
solution of raising Corporate Average Fuel Economy (CAFE) standards for 
cars and light trucks.
    Global warming is the most significant environmental threat we 
face. Yet, the United States has entered the 21st century relying on 
dirty, polluting 19th century fossil fuel technology. In contrast, our 
economic competitors, Japan and Europe, use only half the energy we do 
to achieve roughly the same standard of living.
    The key to curbing global warming is improving energy efficiency. 
Cars and light trucks alone emit 20 percent of U.S. carbon dioxide 
pollution and guzzle 40 percent of the oil used in this country. 
Raising CAFE standards is the biggest single step the U.S. can take to 
stem global warming. Our power plants, homes and buildings could also 
be made much more efficient by simply installing the best current 
technology. Energy efficiency is the cleanest, safest, most cost-
effective way we can begin to deal with global warming.
Global Warming
    The human race is engaged in the largest and most dangerous 
experiment in history--an experiment to see what will happen to our 
health and the health of the planet when we make drastic changes to our 
climate. This is not part of some deliberate scientific inquiry. It is 
an uncontrolled experiment on the Earth, and we are gambling our 
children's future on its outcome.
    The rapid buildup of carbon dioxide and other ``greenhouse gases'' 
in our atmosphere is the source of the problem. Over the last 100 years 
we have increased the concentrations of key global warming pollutants 
in our atmosphere. For example, carbon dioxide (CO2), the 
primary global warming gas, has increased by 30 percent. By burning 
ever increasing quantities of coal, oil, and gas we are literally 
changing the atmosphere.
    The results of global warming pollution are already significant. 
Many regions of the world have warmed by as much as 5 degrees 
Fahrenheit. Physicians at Harvard and Johns Hopkins Medical Schools and 
other medical institutions have issued grim assessments that global 
warming may already be causing the spread of infectious diseases and 
increasing heat wave deaths. Increased flooding, storms, and 
agricultural losses could devastate our economy. Sea level rise 
threatens to inundate one-third of Florida and Louisiana and entire 
island nations. If we do not curb global warming pollution, our 
children and grandchildren will live in a world with a climate far less 
hospitable than today.
The Evidence of Global Warming Mounts
    For years climate experts have used powerful computers to predict 
the likely results of global warming. Scientists are now becoming 
increasingly alarmed as more and more of these predictions come true.
    A series of disturbing climate-related events offer a taste of what 
global warming may have in store for us. The Sierra Club joined with 
seven other environmental organizations to produce a map of the world 
showing evidence and harbingers of global warming. The image is 
dramatic and demands action (Attachment A *).
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    While we cannot yet prove that global warming has caused any one 
event, the list below is all consistent with the projections of climate 
models.

   The 1990s were the hottest decade on record.

   The hottest 11 years on record have all occurred in the past 
        13 years.

   Ranges of infectious disease are spreading, and cases of 
        infection are increasing around the world. Dengue fever 
        infected victims in Texas in 1995, and in recent years malaria 
        infections have occurred as far north as New York, New Jersey, 
        and Michigan.

   Major shifts in temperature are already being felt. Some 
        parts of the world have warmed by 5 degrees Fahrenheit or more 
        in the last 100 years. The average temperature of the entire 
        planet has risen 1 degree Fahrenheit.

   In 1995, after a period of unusual warming--4.5 degrees F. 
        above normal--a 48 by 22 mile chunk of the Larsen ice shelf in 
        Antarctica collapsed. In subsequent years we have seen 
        additional chunks of the ice shelf breaking off.

   Sea ice is thinning dramatically in the Arctic.

   Scientists have documented shifting populations and altered 
        migratory behavior as animals, trees and plants attempt to 
        adapt to a changing climate. Many species that cannot adapt are 
        in decline.

   Sea levels have risen an average of 4-10 inches over the 
        last century, destroying beaches and wetlands around the world, 
        and flooding coastal areas.

   We are experiencing more common and severe winter floods, 
        storms and summer droughts. More precipitation is falling in 
        extreme weather events, and less in normal, gentle rains.

   Glaciers are melting on 5 continents and snow cover is 
        disappearing, adding to sea level rise. Species that rely on 
        cold waters and polar climates are shifting their ranges in an 
        effort to escape the warming climate.

    More than 2500 of the world's leading climate scientists, 
participating in the United Nations-sponsored Intergovernmental Panel 
on Climate Change (IPCC), examined this and other evidence. They have 
concluded, ``The balance of evidence suggests a discernible human 
influence on global climate.'' The IPCC scientists project that during 
our children's and grandchildren's lifetimes global warming will raise 
the world's average temperature by 2 to 6 degrees Fahrenheit. By 
comparison, the Earth is only 5 to 9 degrees Fahrenheit warmer today 
than it was 10,000 years ago during the last ice age.
    Throughout history, major shifts in temperature have occurred at a 
rate of a few degrees over thousands of years. They were accompanied by 
radical changes, including the extinction of many species. Manmade 
global warming is occurring much faster; faster in fact than at any 
other time in human history. Unless we slow and ultimately reverse the 
buildup of greenhouse gases, we will have only decades, not millennia, 
to try to adapt to major changes in weather patterns, sea levels, and 
serious threats to human health. Plants and animals that cannot adapt 
to the new conditions will become extinct.
    Like the tobacco industry, many of the corporations that produce 
carbon dioxide pollution are seeking to deny the truth. Rather than 
face the fact that our increasing dependence on coal, oil, and gas is 
altering our climate, many in industry have spent millions of dollars 
in an effort to discredit the IPCC, deny the reality of global warming 
and prevent action to curb it.
The Culprits: Fossil Fuels
    Global warming is a pollution problem. Gas-guzzling cars and light 
trucks such as mini-vans and sport utility vehicles, are major sources 
of this pollution--about 20 percent of U.S. CO2 pollution. 
Global warming pollution also comes from the burning of coal, oil, and 
to a lesser extent, natural gas, in our power plants. Coal is 
especially ``dirty,'' producing nearly twice as much CO2 per 
unit of heat produced as natural gas, and a third more than oil. 
Deforestation also contributes to global warming. Trees ``breath in'' 
CO2, and can work to remove part of the pollution we release 
from the air. When trees are cut down or burned, however, they release 
carbon dioxide back into the air. The burning of massive areas of 
forest for farming in the Amazon, Asia and other areas of the world 
releases enormous large of carbon dioxide into the atmosphere.
Solutions: We Can Curb Global Warming
    The good news is we can curb and eventually stop global warming, 
but we must begin to act now. We can do this while strengthening the 
U.S. economy, especially in the face of very high oil prices, and 
creating jobs. The key to curbing global warming is improving energy 
efficiency. Our cars and light trucks, homes, and power plants could be 
made much more efficient by simply installing the best current 
technology. Energy efficiency is the cleanest, safest, most cost-
effective way we can begin to deal with global warming.
The Biggest Single Step: Raising CAFE Standards
    America's cars and light trucks spew out more CO2 than 
the total emissions of all sources in all but three other countries 
(China, Russia and Japan).
    While there is no technology to scrub CO2 from our cars' 
exhausts, we can make them pollute less by making them more fuel-
efficient. By using today's technology, car makers could safely 
increase the fuel economy of cars and light trucks without 
significantly changing their size or performance. The biggest single 
step we can take to curb global warming is to make our cars and sport 
utilities go further on a gallon of gas by raising Corporate Average 
Fuel Economy (CAFE) standards to 45 mpg for cars and 34 mpg for light 
trucks.
Background
    In 1975, Congress passed the most successful energy savings measure 
it has ever adopted--the provision setting miles per gallon standards 
for cars and light trucks. Responding to the oil crisis, Congress 
determined that making automobiles go further on a gallon of gasoline 
was essential to saving oil and reducing U.S. dependence on foreign 
oil. The corporate average fuel economy law passed with bipartisan 
support, and was signed into law by President Gerald Ford.
    Congress established the initial standards, and delegated 
responsibility for setting new standards to the Administration, 
specifically the Department of Transportation. Congress provided the 
Administration with four factors to consider in setting new standards: 
technical feasibility, economic practicability, the effect of other 
federal motor vehicle standards on fuel economy, and the need of the 
United States to conserve energy.
Benefits of Existing Fuel Economy Standards
    The existing standards save more than 3 million of barrels of oil 
per day and reduce U.S. dependence on imported oil. Without these 
savings, the U.S. would be importing at least 1.5 million barrels more 
every day than today's current levels. Even with the oil savings from 
CAFE, cars and light trucks consume 40 percent of the oil used in the 
U.S. every day--almost as much as we import.
    A gallon of gas is essentially pure carbon and weighs about 7 lbs. 
When burned, the weight of the carbon is nearly tripled by the addition 
of the two oxygen atoms, forming CO2. Thus, every gallon of 
gas burned directly emits 19 lbs. of carbon dioxide from the tailpipe. 
Including upstream emissions from refining, transport, and refueling, 
each gallon of gasoline burned emits a total of 28 pounds of CO2 
into the atmosphere. Raising CAFE therefore dramatically reduces 
CO2 emissions.
    CAFE standards have additional benefits. CAFE standards help in the 
effort to clean the air. By reducing oil consumption, the standards 
keep 500,000 tons per year of carcinogenic hydrocarbon emissions, a key 
smog-forming pollutant, from upstream sources--refining and 
transporting of oil and refueling at the pump--and out of the air we 
breathe. The standards, therefore, improve air quality, helping 
polluted cities and states achieve Clean Air Act requirements. Because 
fuel economy for cars doubled between 1975 and the late 1980s, a new 
car purchaser saves an average of $3,000 at the gas pump over the 
lifetime of the car. With today's high fuel prices, CAFE delivers more 
than $40 billion annually in consumer savings. Consumers can spend 
these dollars in their communities on food, housing, and clothing, 
instead of on imported oil.
Curbing Global Warming: Raising Fuel Economy Standards
    Transportation is the fastest growing sector of U.S. greenhouse gas 
emissions. Raising CAFE standards for passenger vehicles, which account 
for 20 percent of U.S. emissions, is an essential part of a domestic 
strategy to reduce greenhouse gas pollution. In its August 2000 report 
entitled ``Automobile Fuel Economy: Potential Effects of Increasing the 
Corporate Average Fuel Economy Standards,'' the General Accounting 
Office concluded that raising CAFE standards can reduce oil consumption 
and thereby reduce global warming pollution.
    A critical starting point is closing the loophole that allows light 
trucks to meet a lower fuel economy standard than cars. The CAFE 
standard for cars is 27.5 mpg, while for light trucks the standard is 
only 20.7 mpg. Moreover, while the fuel economy standard for light 
trucks has stagnated for 19 years, the market share of these vehicles 
has jumped from 20 percent in the 1970s to nearly 50 percent of new 
vehicle sales in 1999. As a result, these vehicles are driving demand 
for oil to an all time high, and driving up emissions of global warming 
pollution. Light trucks in the U.S. alone spew 237 million tons of 
CO2 into the atmosphere each year. Even Ford Motor Company 
has recognized the serious emission problem posed by SUVs, admitting 
that SUVs threaten the environment by emitting more global warming and 
smog-forming pollution than cars. The company also recognizes that SUVs 
endanger other motorists.
    The Sierra Club has documented the importance of addressing the 
issue of SUV fuel economy in a new report entitled ``Driving up the 
Heat: SUVs and Global Warming.''
    (Attachment B *.)
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    As of last year, the explosive growth in light truck sales had 
already brought the average fuel economy of all the Nation's new 
vehicles to its lowest point since 1980, according to EPA's 1999 Fuel 
Economy Trends Report. Indeed, while a 14-mile per gallon SUV emits 
more than 130 tons of carbon dioxide over its lifetime, the average new 
car emits 74 tons. A new Honda Insight will emit only 27 tons.
    Closing the light truck loophole alone would slash U.S. CO2 
emissions by 240 million tons per year when fully phased in.
     Importantly, raising CAFE standards for light trucks will save oil 
and reduce U.S. dependence on imports--a key consideration in the 
original CAFE law. According to the 1999 EPA Fuel Economy Trends 
Report: ``Based on lower average fuel economies and projected longer 
useful lives, EPA estimates that the new light-duty trucks sold in 1999 
will consume, over their lifetimes, almost 60 percent of the fuel used 
by all of the new light vehicles sold in 1999.''
    The technology is available to ensure that tomorrow's SUVs are more 
efficient, and therefore pollute less. According to the Union of 
Concerned Scientists, the best-selling Ford Explorer, which gets only 
19 mpg, could be a 34-mpg vehicle by putting today's technology to 
work. The cost of the technology is made back by the consumer in about 
two years from savings at the gas pump.
    Gasoline-electric hybrid technology will allow automakers to 
achieve improved CAFE standards for all vehicles. Both Honda and Toyota 
are pressing ahead with hybrid gasoline-electric technology. Honda's 
Insight gets more than 60 mpg, and Toyota's 5-passenger Prius travels 
50 miles to the gallon. Ford has announced that it will put hybrid 
technology into its Escape SUV to achieve 40 mpg. And, Toyota unveiled 
a 42-mpg hybrid minivan at the 2000 Tokyo auto show.
    It is critical that hybrid or other technologies, such as fuel 
cells, are not used only to reduce oil consumption and pollution 
spewing from individual vehicles, or simply to assist manufacturers in 
complying with the existing low standards, but rather are used to 
ensure that real improvements are made to the entire fleet. Because 
their vehicles remain so inefficient, Ford, General Motors and 
DaimlerChrysler are all having problems meeting the low 20.7-mpg CAFE 
standard for light trucks. Because CAFE is an average standard, hybrid 
technology could become one more tool which automakers use to enable 
them to comply with the existing standard. Ford's Escape, for example, 
could be used to offset the low mileage of the other vehicles in the 
automaker fleet, and not result in overall improvement.
    While both Ford and General Motors have made important pledges to 
raise the fuel economy of their light trucks, progress by all 
automakers in all passenger vehicles must be assured. Raising the CAFE 
standard for both cars and light trucks will ensure that the fuel 
economy improvements reflect what is technologically feasible and 
result in the maximum reductions in CO2. This step will show 
the rest of the world that the U.S. is taking real actions to reduce 
the threat of global warming.
    Raising CAFE standards will also further reduce hydrocarbon 
emissions, save consumers money at the pump and create jobs. An 
analysis by the American Council for an Energy Efficient Economy 
concludes that the consumer savings at the pump would translate into a 
net increase of 244,000 jobs nationwide, with 47,000 of these in the 
auto industry.
CAFE and Safety
    CAFE standards have no impact on auto safety. The rate of traffic 
fatalities decreased by 50 percent over the same time that fuel economy 
doubled under the existing standards. The auto industry has 
consistently opposed the CAFE law using the safety argument. In 1974, a 
Ford representative argued before Congress that CAFE would result in a 
``product line consisting of either all sub-Pinto-sized vehicles or 
some mix of vehicles ranging from a sub-sub-compact to perhaps a 
Maverick.'' Of course, this dire prediction proved to be untrue, just 
as today's parade of horribles will be.
    The auto industry met CAFE requirements while providing consumers 
with a full range of cars and light trucks. In fact, when Congress 
passed the CAFE law, America had the industrialized world's least 
efficient fleet of vehicles. The CAFE law spurred development of 
technology and improved the competitiveness of our auto industry. 
Eighty-five percent of efficiency improvements came from technologies 
such as more efficient engines and transmissions, and better 
aerodynamics.
    Research by both the Center for Auto Safety on cars, and by the 
Union of Concerned Scientists on SUVs, demonstrates that higher fuel 
economy standards can be achieved using existing technologies, while 
also reducing occupant deaths and injuries without altering the vehicle 
mix. Cost-effective technologies such as improved engines and 
transmissions and new materials are the keys to achieving higher fuel 
economy in both cars and light trucks. These technologies will also 
help the American automotive industry face an increasingly competitive 
future.
    Raising light truck CAFE standards, in fact, would help restore 
balance and compatibility to the overall vehicle fleet, resulting in 
reductions in traffic fatalities and pollution. Light trucks pose 
safety dangers to their owners and occupants. SUVs are four times more 
likely to roll over in an accident. Rollovers account for 62 percent of 
SUV deaths, but only 22 percent in cars. Yet automakers continue to 
fight new standards protecting occupants in rollover accidents. 
According to a study by the National Crash Analysis Center, an 
organization funded by both the government and the auto industry, 
occupants of an SUV are just as likely as occupants of a car to die 
once the vehicle is involved in an accident. One explanation is that 
SUVs have high rollover rates.
    Light trucks, particularly heavy SUVs and pickups, are 
fundamentally incompatible with cars on the road. According to the 
National Highway Traffic Safety Administration, collisions between cars 
and light trucks account for more than half of all fatalities in 
crashes between light duty vehicles. Nearly 60 percent of all 
fatalities in light vehicle side impacts occur when the striking 
vehicle is a light truck. SUVs are nearly three times as likely to kill 
drivers of other vehicles during collisions than are cars. Finally, 
these vehicles pose excessive risks to pedestrians because of their 
design, weight and weaker brakes. The same technologies that will help 
to improve light truck fuel economy can help to improve their safety.
Public Support for Raising CAFE Standards
    Polls consistently show that the American people support raising 
fuel economy standards. An August 1999 World Wildlife Fund poll of 
light truck owners showed that 73 percent believed light trucks should 
be cleaner, and two-thirds would pay significantly more for their next 
truck if it polluted less. Significantly, 70 percent believed 
automakers would not clean up their trucks if they are not required to 
do so. Another August 1999 poll, by Zogby International, of 
predominately Independent and Republican voters in New Hampshire 
revealed that 75 percent favor increasing fuel economy to address 
global warming, even at an extra cost of $300. In 1998, a Research/
Strategy/Management, Inc. poll conducted for the Sustainable Energy 
Coalition showed that 97 percent of Americans favored use of new 
technologies that would improve fuel economy. And the 1998 Scripps 
Howard Texas Poll revealed that Americans are very supportive of 
measures that will reduce our dependence on oil. Sixty-four percent of 
Texans agreed with the following statement: ``We should reduce our 
dependence on coal and oil energy sources in order to decrease the 
impacts of global warming even if that means we will pay more for 
cleaner, renewable energy sources.''
    The results of these polls are consistent with polls dating back to 
the early 1990s. A 1991 poll conducted for the Union of Concerned 
Scientists demonstrated overwhelming public support, exceeding 80 
percent, for requiring 40 to 45 miles per gallon fuel economy 
standards.
The CAFE Freeze Rider
    CAFE standards for both cars and light trucks have not changed in 
years because of a rider to the Transportation Appropriations bill that 
bars the Department of Transportation (DOT) from implementing the law. 
The rider has been in place since 1996. The fuel economy freeze rider 
has precluded the Department from using funds to ``prepare, propose, or 
promulgate'' CAFE standards. In effect, this blocks the department from 
considering technical feasibility of improving the standards, the 
economic practicality of doing so, the effect of other Federal motor 
vehicle standards on fuel economy, and the need of the Nation to 
conserve oil.
    The rider blocking the DOT from doing its work has frozen fuel 
economy standards for both cars and light trucks. Light truck fuel 
economy has been most affected because the freeze provision killed a 
light truck fuel economy rulemaking; it has allowed the large disparity 
between car and light truck fuel economy to persist. The CAFE rider 
has, in essence, substituted Congress's judgment on the ``technical 
feasibility'' of raising light truck standards as well as the effect of 
other Federal motor vehicle safety standards on fuel economy for that 
of the experts it charged with undertaking this analysis. And, by 
stealth, the rider even denies the American people the benefit of DOT's 
analysis that it would do in preparation for proposing new standards.
    In 1999, 42 Senators supported the ``Clean Car Resolution'' 
opposing the House-based anti-CAFE rider. In 2000, members of the 
Senate reached an agreement for FY 2001 which calls for the National 
Academy of Sciences, in conjunction with the DOT, to study CAFE 
standards. The Academy will consider the four factors in the original 
law as well as several other issues including safety. This victory over 
a complete freeze on even a study of CAFE still leaves the DOT unable 
to act on CAFE in the face of today's high oil prices.
Clean Energy and Energy Efficiency
    The United States has entered the 21st century relying on dirty, 
polluting 19th century fossil fuel technology. In contrast, our 
economic competitors, Japan and Europe, use only half the energy we do 
to achieve roughly the same standard of living.
    We need to clean up our electric power plants. Many electric 
utilities still use coal to produce electricity, spewing millions of 
tons of carbon dioxide and other pollution into the atmosphere every 
year. Converting these plants to burn cleaner natural gas could solve 
part of the problem. We could do much more to save energy in our homes 
and office buildings. More energy efficient lighting, appliances, 
heating and air-conditioning could keep millions of tons of carbon 
dioxide out of the air each year.
    Harnessing the clean, abundant energy of the sun and wind is 
critical to solving the global warming problem. Technological advances 
have brought the cost of electricity generated by the wind down by 85 
percent since 1981. Wind ``farms'' are now producing energy from coast 
to coast. Solar energy technology has made remarkable progress as new 
photovoltaic cells have been developed to convert ever greater amounts 
of sunlight directly into electricity. Today the costs of wind and 
solar power are approaching that of cheap, dirty coal plants.
    Midwestern states in particular hold enormous potential as sources 
of renewable energy. Renewable sources currently make up less than 1 
percent of the energy market in the U.S. However, states like Kansas, 
Nebraska, North Dakota, and South Dakota hold the potential to become 
the Saudi Arabia of wind power. We need to invest more in research, 
development and demonstration to put these clean domestic technologies 
over the top and enact standards that require an increasing percentage 
of our energy to come from these clean, renewable sources.
Conclusion: Taking Action
    Raising CAFE standards is a sensible and essential solution to the 
global warming pollution problem. New standards will ensure that new 
cars and light trucks utilize modern technology to achieve real oil 
savings and pollution reductions. If we are to curb global warming, we 
must also put better technology into power plants, offices, and homes, 
as well as invest in the next generation of energy saving technologies.
    There are high costs to inaction. If we fail to act to curb global 
warming we will impose on our children enormous impacts on health, 
coasts, agriculture, and infrastructure. These impacts carry a price 
tag in the hundreds of billions of dollars. And, what is the dollar 
value on lives lost to heat waves, infectious disease, and extreme 
weather?
    Experts have joined in emphasizing how global warming will affect 
us all. And they have emphasized that the steps to curb global warming 
pollution can be cost-effective.
    The time to act to curb global warming is now. The IPCC scientists 
tell us that our children and grandchildren are facing a very serious 
threat. They warn us that global warming threatens our health with 
disease and heat waves, our coasts with rising seas, our agriculture 
with drought and extreme weather, and our river communities with 
flooding. We can and must take action to protect our children's future.

    The Chairman. Thank you very much.
    Mr. Morgheim, welcome.

    STATEMENT OF JEFF MORGHEIM, CLIMATE CHANGE MANAGER, BP, 
                         HOUSTON, TEXAS

    Mr. Morgheim. Thank you. Mr. Chairman and members of the 
Committee: My name is Jeff Morgheim and I am the Climate Change 
Manager for BP. I am based in Houston, Texas, where I manage 
BP's emissions trading system.
    The BP system is the world's first global trading system 
for greenhouse gases and is the only trading system that has 
voluntary participation across a company's entire operations. 
The BP trading system is the product of a commitment to explore 
the use of trading systems to control emissions and is becoming 
a powerful tool that is helping BP meet its reduction target 
cost effectively.
    I would like to recount how we developed the system. In May 
1997, Sir John Browne, Chief Executive Officer of BP, announced 
that BP would reduce its emissions of greenhouse gases and that 
we would launch an internal pilot emissions trading system. In 
July 1997, BP teamed with Environmental Defense to develop that 
pilot trading system. Environmental Defense has played a very 
important part in our initiative and we would like to again 
express our thanks to Fred Krupp, the Executive Director, as 
well as Dan Dudek, the Senior Economist of Environmental 
Defense, for their contribution and their continued support.
    The goal of instituting our system has come to fruition. On 
January 14th of this year, the first trade was made with the 
sale of emissions to our refinery in Toledo, Ohio, and I am 
pleased to announce that BP has just traded its one millionth 
ton of greenhouse gases with the sale of permits from our 
western gas operations to a refinery in Salt Lake City.
    You will find more information on the mechanics and the 
functionality of our trading system in my written testimony. 
Now I would like to take you live to our Internet site to 
demonstrate the trading system for you.
    [Screen.]
    What you are seeing is the home page for the trading 
system, which contains key price data at the top of the screen, 
as well as the total volume that has been traded to date. As of 
right now, we have traded roughly 1.2 million tons of 
greenhouse permits, which are measured as carbon dioxide 
emission equivalents.
    What I would like to do for my demonstration today is 
actually put a bid on the system----
    The Chairman. We are going to join Senator Brownback and 
get a little closer.
    Senator Brownback. My eyes are not that good.
    Senator Kerry. Mr. Morgheim, why do you not explain exactly 
what the effect of a trade is, why it is beneficial, what it 
means.
    Mr. Morgheim. OK, I will answer that. The purpose of our 
trading system is that BP is committed to a reduction goal. We 
are going to cut our emissions by 10 percent from 1990 levels 
by the year 2010. The purpose of the trading system is to take 
our annual emission targets and then allocate that to each 
business unit, and we have over 150 around the world, 55 
percent of our assets based right here in the United States.
    What the trading allows us to do is to let those business 
units that have very low-cost reduction options make more 
investments in carbon dioxide reductions and then sell those 
permits to business units who may be growing so fast that, even 
if they deploy the latest technology for controlling their 
emissions, they are nonetheless going to rise above their 
emission targets.
    So what this allows us to do is make the right investment 
in the right place, so that we hit the target as a company and 
we do it cost effectively. That is the spirit behind the 
trading system.
    The Chairman. Proceed.
    Mr. Morgheim. Before I put a bid for the Gulf of Mexico 
deep water exploration, what I would like to do is find out how 
the market is behaving today.
    [Screen.]
    I apologize for the delay here. We are live, so we have to 
put up with things like modems and such.
    What you see here, the red dots are offers to sell permits. 
So these are business units who are emitting less permits than 
they were allocated, because they have taken reductions in 
their emissions through energy efficiency or other steps. The 
green triangles are bids to purchase.
    What we see here is a very active market. The screen would 
show along the X axis the price per ton and the end of the 
graph runs from $0 per ton to $20 per ton on the X axis. The Y 
axis runs for quantity of tons that are being traded. So you 
can see we have a very active market, and I am pleased to 
announce that having more green dots than red triangles means 
that more businesses than not are actually beating the 
reduction targets and so it looks like a buyers' market for 
permits because we are overdelivering on our reduction 
commitment.
    Now, I would like to get an idea of how the price has 
behaved recently before I set my bid. What this graph shows is 
a plot of all the traded prices for permits from the trades 
that have been executed, the one million tons that have been 
traded. What we see is that here in the past 1 or 2 weeks the 
price has really come down. I think what this is indicating is 
that business units are now getting comfortable that they, in 
fact, are going to beat the reduction targets, so there is now 
an oversupply of permits in the system. And like any market, it 
is driving that price down.
    So now, just to round this out I am going to go ahead and 
put a bid on the system. Just to refresh our memories of what 
the system looks like, we had the four offers out here ranging 
from $2 a ton to $5 a ton. For demonstration purposes only, 
because I think the business unit would be very upset if they 
found me buying permits on their behalf, I am just going to go 
ahead and put in a bid for 10,000 tons at $2 a ton. The trader 
can also select how long they want the bid or offer out on the 
system. We are going to leave it out there for a month, submit 
the bid, and we now see that the bid is registered in the 
system, and if I go back to the active bid sheet we now see my 
bid of 10,000 tons at $2 a ton.
    That ends my demonstration for this part of today's 
hearing. But I think, in conclusion, it is important to point 
out that trading alone does not deliver emissions reductions. 
The trading system, however, is providing our managers with the 
incentive to attack emissions with innovation.
    As I stated earlier, this year we not only launched the 
full trading system across our company, but we traded our one 
millionth ton. This comes just 2 years after launching our 
pilot trading system and our commitment to a company-wide 
system.
    We have learned many lessons along the way. The most 
important lessons are to keep things simple and to get started, 
to capture learnings and continuously improve the system. 
Practical experience we have found has been the key to 
developing a robust system.
    Mr. Chairman, I would like to end by saying that BP's 
experience is that trading can be a powerful tool in managing 
emissions in a cost effective way. We have not stopped learning 
and BP seeks to continuously improve our trading system, and we 
stand ready to share our experience with all interested 
parties.
    Thank you for the opportunity to share our system and our 
learnings with you today.
    [The prepared statement of Mr. Morgheim follows:]

   Prepared Statement of Jeff Morgheim, Climate Change Manager, BP, 
                             Houston, Texas
    Mr. Chairman and Members of the Committee, my name is Jeff Morgheim 
and I am the Climate Change Manager for BP. I'm based in Houston, 
Texas, where I manage BP's Emissions Trading System. I'm excited to 
present our system to you. The BP system is the world's first global 
trading system for greenhouse gases and is the only trading system that 
has voluntarily participation across a company's entire operations.
    The BP trading system is the product of a commitment to explore the 
use of trading systems to control emissions. The trading system is a 
powerful tool that is helping BP meet its reduction target cost 
effectively. I would like to recount how we developed the system.
    In May 1997, Sir John Browne, chief executive officer of BP, 
announced that BP would reduce its emissions of greenhouse gases and 
launch a pilot internal emissions trading system. In July of that same 
year, BP teamed with Environmental Defense to develop the pilot system. 
Environmental Defense has been an important partner and we want to 
again express our thanks to Fred Krupp and Dan Dudek of Environmental 
Defense for their contribution and continued support.
    In September 1998, the pilot system was launched. The pilot 
involved twelve business units from across the globe, representing 
approximately 25 percent of the company's emissions. In that same 
month, Sir John Browne announced that BP would reduce its greenhouse 
gas emissions by 10 percent from 1990 levels by the year 2010. He also 
announced that we would launch a company wide trading system by 2000. 
In November 1998, I had the privilege to sell the first emissions 
permit in the pilot system while working for the Forties Pipeline 
System in the United Kingdom.
    I would like to briefly describe how our system functions. On 
January 1 of this year, BP launched its company-wide emissions trading 
system. More than 150 business units in over 100 countries participate. 
These business units range from oil exploration to power generation. On 
January 14, the first trade was made with a sale to our refinery in 
Toledo, Ohio. I am pleased to announce that BP traded its millionth ton 
of greenhouse gas just over 2 weeks ago, with the sale of permits from 
our gas operations in the Western United States to our refinery in Salt 
Lake City, Utah.
    I would like to outline the mechanics of our global trading system. 
Every year, BP sets a target for greenhouse gas emissions stated in 
carbon dioxide equivalent terms. BP then allocates its target to every 
business unit in the form of permits. One permit is equal to one ton of 
carbon dioxide equivalent emissions. Each business unit is required to 
have enough permits to cover their annual emissions.
    Each business unit then decides if it more economical for them to 
live within their permit level, to invest in reductions below their 
permit level and sell the additional reductions to other business 
units, or to exceed their permit level, provided they have bought 
permits resulting from reductions at another business unit. In this 
way, BP achieves the company emissions target at the lowest possible 
cost.
    Trading alone does not deliver emissions reductions. The trading 
system, however, provides our managers with the incentive to attack 
emissions with innovation. For example, in the Western United States, 
we are changing 4,000 valves on our gas well sites to reduce emissions 
of methane equivalent to more than a million tons of carbon dioxide per 
year while also saving the company money.
    As stated earlier, this year we not only launched the full trading 
system across our company, but traded our one millionth ton of 
greenhouse gases. This milestone was reached only 2 years from the 
launch of our pilot system and our commitment to a company-wide system.
    We have learned many lessons along the way. The most important 
lessons are: to keep things simple, to get started, to capture the 
learning and to continuously improve the system. Practical experience 
is the key to developing a robust system.
    Mr. Chairman, I would like to conclude by saying that BP's 
experience is that trading is a powerful tool in the management of 
emissions in a cost-effective way. We haven't stopped learning and BP 
seeks to continuously improve its trading system. We stand ready to 
share our experience with all interested parties.
    Thank you for the opportunity to share our system and our lessons.

    The Chairman. Thank you, Mr. Morgheim. That was very 
interesting.
    Mr. Palmer, welcome.

  STATEMENT OF FREDRICK D. PALMER, GENERAL MANAGER AND CHIEF 
               EXECUTIVE OFFICER, WESTERN FUELS 
                ASSOCIATION, INC., ARLINGTON, VA

    Mr. Palmer. Thank you, Mr. Chairman.
    The Chairman. Would you pull the microphone closer.
    Mr. Palmer. Thank you, Senators.
    On a personal note, if I might, I grew up in Phoenix. I 
have spent 30 years here in Washington, but I also spent 7 
years at the University of Arizona undergraduate and law 
school, and I have followed your career with interest and 
pride.
    My grandfather, E. Payne Palmer, Senior, was the first 
surgeon in the Territory of Arizona and my grandmother, Bertha 
Louise Palmer, was instrumental in starting the Heard Museum 
and the Phoenix Symphony. So I am an Arizonan stuck in the 
East. I like it here, but I love going to Phoenix, particularly 
in the time of year that is coming at us.
    The Chairman. Thank you, Mr. Palmer, and thank you for the 
contributions of your family to our State.
    Mr. Palmer. Thank you, sir.
    I do appreciate being here today and let me open by saying 
what I can endorse and what I am for. Somehow, Senator, I find 
myself in the middle of a very large argument and----
    The Chairman. I think you need to move the microphone a 
little bit closer. There you go.
    Mr. Palmer. I have followed the developments in the Senate 
with interest. I would endorse the Murkowski-Hagel-Craig 
approach embodied in S. 882 and S. 1776, which would entail the 
Federal Government being involved in a major way in research 
and development for carbon sequestration from fossil fuel 
systems that we currently utilize today, and also Senator 
Brownback's approach with respect to changing ag practices and 
forestry practices for carbon sequestration I can heartily 
endorse as well.
    I think, Mr. Chairman, as we go forward in this very 
difficult issue we will find that our options are limited 
because of what is currently going on in energy markets, and I 
want to address that today.
    There are 2 billion people on Earth that do not have 
electricity and there are another 4 billion people scheduled to 
be on Earth in the next 30, 40, or 50 years. People every day, 
of course, in living their lives make carbon dioxide and when 
we use fossil fuels we make carbon dioxide.
    I notice this morning from the news that Vice President 
Gore is calling on releasing oil from the Strategic Petroleum 
Reserve and Secretary Richardson is on Capitol Hill today 
talking about oil. But our focus really should not be on oil in 
the United States. Our focus needs to be on electricity, 
because electricity is what has driven our economy for the last 
20 years, and specifically the coal plants that were built as a 
part of President Carter's Project Energy Independence. My 
organization arose out of that time and that is how I got 
involved in this business and in this debate.
    We have had these coal plants that we built in the interior 
part of our country providing cheap electricity to the U.S. 
economy for 2 decades and we have been living off of them. We 
invested over $125 billion. There are over 400 power plants 
that burn a billion tons of coal a year, or close to it.
    In California, where they have had a train wreck on 
electricity supply and prices, they have not built power plants 
in the last 10 years. They have been living off the coal-fired 
electricity in the Rocky Mountain West and the Four Corners 
region, in Arizona, Colorado, New Mexico, up into the Plains 
States. Those power plants have been used up. That surplus 
capacity is gone, and people in California are going to have to 
start building additional power plants.
    What is driving this, what is driving electricity demand in 
the United States, is the wonderful revolution that is 
represented by the Internet and by the broadband revolution. We 
did a study last year called ``The Internet Begins With Coal,'' 
by Mark Mills. It has had some impact and we are proud of that. 
But Mark identified that 8 percent of electricity demand in the 
U.S. goes to Internet-related consumption, and that number now 
is estimated to be 13 percent.
    It is undeniable when you go to cities in the West, to 
Phoenix, to Denver, when you look at this region--I live in 
Northern Virginia--at what is going on, that the technology 
revolution is driving electricity demand in a major way.
    Intel's vision is for an additional one billion people 
online within the next several years. That is the equivalent of 
burning another one billion tons of coal a year. Their 
estimates for broadband Internet access range up to a billion 
three hundred million people by 2004. That is the equivalent of 
another one billion tons of coal burned per year.
    All of this activity generates economic growth. You cannot 
go anywhere in the Rocky Mountain West and not see remote areas 
where economic growth is occurring today and fiber optics are 
being put in for Internet access. It is happening before us as 
we sit here today. It is undeniable.
    All of that is going to create more and more carbon dioxide 
emissions by people living their lives in normal ways, both 
here and abroad. Abroad it is just starting. In Western Europe 
it is just starting. Asia is going off the graph. These are 
undeniable realities, Mr. Chairman.
    There are reasonable people, people in good faith, that are 
very concerned about more CO2 in the air and I 
understand that and I accept that, and we need to deal with 
that and we need to create an insurance policy to meet 
potential climate change threats in the future. But the only 
way to do that, Mr. Chairman, is to utilize what we use today. 
Renewables are not going to do it for us. We are going to have 
to burn coal, oil, natural gas to make electricity.
    There are other ways to make electricity. New technologies 
are very promising. All of those things are true. But more 
people will mean more CO2, particularly in the high 
tech revolution we are in today with the wireless and broadband 
revolution of the Internet.
    So therefore, Mr. Chairman, I would embrace an approach 
with an activist Federal Government involved in this issue in a 
major way, continuing to do research and development with 
respect to renewables, continuing to do research and 
development with respect to climate, watchful waiting, at the 
same time developing carbon sequestration techniques from 
existing fossil fuel systems if those should prove to be 
necessary.
    With due respect, Mr. Chairman, I do not believe the 
science today says it is necessary. But we have a lot to do 
between this point and that in any event in developing the 
technologies. So it is not particularly useful to say today we 
have to do this, that, or the other in terms of changing the 
way we live, because it is not going to happen. People are 
going to continue to live the way they live. Electricity demand 
is going to continue to grow. Economic prosperity is going to 
continue because of the high tech revolution.
    All of that means more CO2 in the air, Mr. 
Chairman, and the role of the government should not be to tax, 
cap, and limit in terms of what we are doing and how we live 
our lives, but to develop technology solutions should that 
prove to be necessary as we go forward in the years to come.
    Thank you, sir.
    [The prepared statement of Mr. Palmer follows:]

  Prepared Statement of Fredrick D. Palmer, General Manager and Chief 
   Executive Officer, Western Fuels Association, Inc., Arlington, VA
    Mr. Chairman, thank you for the opportunity to appear before you 
today on the important subject of energy and the environment.
    The United States economy is a marvel and leads the world. In 
absolute terms, we represent one-third of total global output and 
approach $9 trillion in gross domestic product as compared to a 
worldwide economy of some $27 trillion.
    More important, the U.S. economy is leading the world in almost 
every important area. Most significantly it is U.S. firms that are 
wiring the world. But for the United States and private enterprise 
here, the Internet would not be what it is today. Worldwide, Internet 
use approaches 300 million people. Wireless usage, which in the future 
will mean Internet use as well, approaches 500 million people.
    Intel's vision has one billion people online in a few years. 
Projections of Internet access through wireless devices are even more 
staggering. With each passing day, there are media reports of new and 
amazing developments with respect to the penetration of the Internet 
and electronic commerce.
    Electricity supply in the United States has enabled the Internet. 
In the 1970s, the United States Government embarked on a bipartisan 
program to wean our dependence upon foreign oil. It was hoped we could 
rely on domestic energy resources for energy supply. President Jimmy 
Carter's program--called Project Energy Independence--has been a 
success, although we still import large amounts of oil.
    It was a success because the vast coal reserves of the United 
States were employed to fuel a new generation of coal-fired power 
plants located all over the country, but primarily in the interior. In 
the timeframe between 1975 and approximately 1985, $125 billion worth 
of power plants were constructed. Today, in the United States, over 400 
power plants burn close to one billion tons of coal per year. These 
power plants are capable of burning another 200 million to 300 million 
tons more if Federal policies accommodate this increased burn.
    Coal-fired electricity in the United States is one of our great 
success stories. It is a story not well understood by the American 
people. This is no one's fault but the coal industry's, of course. We 
have taken for granted peoples' understanding of the benefits that coal 
provides to the United States. In fact, most people don't understand 
that 53 percent of our electricity comes from burning coal and fewer 
yet understand the importance of low cost electricity to our national 
economy.
    Today, electric technologies--including computer-based 
technologies--are the primary source of economic growth. According to 
the Commerce Department, the majority of economic growth in the United 
States in the last 15 years has been the result of the high tech 
industry.
    The term ``high tech'' covers a lot of varied activity. But one 
thing is for certain, electricity enables high tech development in the 
United States.
    The New Economy is enabled by electricity. Internet use--whether 
for information gathering, e-commerce, or recreation--and the broadband 
telecommunications revolutions are pure electricity plays. A year ago, 
it was conservatively estimated that 8 percent of U.S. electricity 
demand originates from use of the Internet. That figure now stands at 
13 percent and is rising.
    The technology revolution impacts electricity generation. Today 
there are many promising new ways to distribute and generate 
electricity that will have profound and important benefits for our 
society as we go forward. Included in these developments are the 
renewable electric technologies that have great promise and do have 
present day application under specific, but limited, circumstances.
    Distributed generation and renewable electric technologies are 
important developments. We should encourage both. But while we do that, 
we need to understand that our society requires enormous quantities of 
electricity and will require more and more as we go forward. In that 
context, today's large, central generating stations are needed and must 
be operated at full rated capacity for as long as they can provide low-
cost electricity. In addition, we will require new central station 
generation burning coal and natural gas if we are to fulfill our 
destiny and wire the world.
    For example, power consumption in Silicon Valley is growing 3 times 
faster than it is in the rest of California. California pursued 
electricity policies in the last two decades that ignored the supply 
side. Instead, they focused on conservation and renewables. While 
California's electricity demand was increasing, their supply came from 
surplus generating capacity in adjacent states.
    Recently, the ``no growth'' electricity policies of the 
environmental community and the State of California hit a wall. 
Electricity is now scarce and expensive in California. It is a 
government-induced problem that confronts the people there.
    The surplus electricity generating capacity in adjoining states is 
gone. Because no power plants have been built in California during the 
last decade, their backs are against the wall. Growth in that economy 
will continue to occur, but it will be at a reduced pace. Instead, 
electric intensive industries--high tech industries--will relocate 
their incremental manufacturing facilities in other parts of the 
country where supply is available.
    California is an object lesson for the rest of the Nation. Mr. 
Chairman, we cannot wish electric supply into being and we cannot wish 
renewables into a competitive mode. The price of electricity matters 
and its availability matters more.
    What is true in the United States will hold true abroad. The 
technological breakthroughs that we see today are not reaching 
everybody on the globe. In fact, two billion live without electricity 
at all. Doesn't every human on earth have the right to live at the same 
standard of living that we enjoy? I believe they do. Is it not a proper 
goal of government to enable more people to live better? I believe it 
is.
    In this context, the world requires utilization of vast amounts of 
coal, oil, and natural gas to generate electricity. In the U.S. we have 
a legacy that impedes placement of new technologies. Because of this it 
could be argued that the rest of the world will turn to new 
technologies even faster than the U.S.
    As you've traveled around our great country, I am sure you have 
noticed as I do that there is no part of the Nation untouched by 
economic growth. In the Rocky Mountain West, an area where Western 
Fuels Association does business, places that 10 years ago were remote 
today are bustling. New people have moved in, new construction is 
underway and, yes, installation of fiber optics is underway so that 
such areas can become part of the World Wide Web. This same phenomenon 
will happen in parts of the globe where industrial activity has been 
light. Economic growth attendant with the technology revolution is 
robust and undeniable and it, too, requires vast quantities of 
electricity.
    As we view what is going on in the world today, it may be said that 
we live in truly the best of times. Economic growth is beginning to 
reach parts of the world it never has before. Certainly in the United 
States our level of economic activity is unprecedented. It amazes each 
of us in our everyday lives as we observe what goes on around us.
    But this growth depends on electricity in the same way we depend 
upon air to breathe, food to eat, and water to drink. Electricity is a 
necessity for our brave new world. It is necessary for people in their 
everyday lives.
    Yet, under the Framework Convention on Climate Change (otherwise 
known as the Rio Treaty) and the Kyoto Protocol, governments of the 
world are moving toward rationing this essential element of our 
existence. They do so under the misguided notion that we can somehow 
change weather by controlling climate.
    The leading culprit in their view, of course, is carbon dioxide. 
Carbon dioxide is a greenhouse gas that humans create everywhere, all 
the time, in simply living their lives. Burning fossil fuels is humans' 
greatest contribution of CO2. Well-meaning scientists 
dependent upon large research grants and sophisticated, but flawed, 
computer models tell us that by putting more CO2 into the 
air through our industrial activity we will change the world's climate 
in ways we will not like. This will lead to apocalyptic global warming.
    There is no greater proponent of this perspective than Vice 
President Albert Gore. He sets it forth in his book ``Earth in the 
Balance.'' He recently reissued the book and states that he would not 
change it in any significant way. Chapter Four, entitled ``Buddha's 
Breath,'' sets forth his views in detail.
    Vice President Gore sometimes has a hard time with facts and his 
misuse of facts gets him into trouble. Interestingly, as has been 
reported in the media, in his book he relies heavily on ice core data 
as a measurement of atmospheric CO2 correlated with 
temperature in eons past. He concludes that more CO2 in the 
air definitely means much higher temperature and a resulting 
apocalypse.
    The Vice President did not acknowledge when he reissued his book 
that his factual premise for his belief on global warming has been 
proven to be in error. A study sponsored by the Scripps Institution for 
Oceanography last year stated that it is the reverse: it temperature 
that causes atmospheric CO2 to increase and decrease, not 
vice versa. Yet, we are all proceeding down this road toward regulating 
greenhouse gases, and particularly CO2 based on what is, at 
best, a questionable premise.
    The urgency those on the side of the apocalypse feel is driven by 
computer models. While sophisticated and improved over time, these 
General Circulation Models are flawed and flux adjusted. They are 
flawed in that they can't hind cast. They are flux adjusted by their 
creators in order to reach predetermined outcomes. They are used to 
make important assumptions in areas of climate science where no real 
knowledge exists.
    I don't challenge the good faith of most of those on the side of 
the apocalypse, but I do challenge their notion that we should live our 
lives based on sophisticated speculation.
    We know from observations, such as weather balloons and satellites, 
that there is no current warming in the troposphere. According to 
greenhouse theory this has to occur before the apocalypse is upon us. 
We know from observations that more CO2 in the air has 
been--and is--good for plants, agriculture, and forests. Sylvan 
Wittwer, Professor Emeritus from Michigan State University and an 
expert who has served on every U.N. and governmental committee that 
studies such matters, is the dean of the school of thought that more 
CO2 in the air is a positive good and not bad. He has 
concluded that we now enjoy a 10 percent, universally free, food 
premium from increased agricultural productivity as a result of more 
CO2 in the air.
    Based on these observations and our long time involvement in the 
argument over Vice President Gore's vision of apocalypse, I say in good 
faith to you today that I am not troubled about putting more CO2 
in the air, although I realize that many in our society are. I would 
include you in that category, Mr. Chairman, because I have read your 
comments. I understand them and I respect them. But the agenda of those 
who want to ``do something now'' about CO2 is one that comes 
into conflict with the full utilization of our Nation's coal-fired 
electricity generating base and the installation of new clean coal 
technology that holds so much promise for our future.
    New clean coal technologies can create electricity with very little 
by way of emissions of sulfur dioxide and oxides of nitrogen. Under 
current regulations, airborne toxics remain. But much less is known in 
this arena than is portrayed. We know that we live longer and better 
notwithstanding minute emissions of mercury from burning of coal.
    None of the clean coal technologies on the drawing board today do 
anything about carbon dioxide. Even though efficiency levels are up and 
are rising, you have to remember that under greenhouse theory going to 
7 percent below 1990 levels as called for under the Kyoto Protocol does 
nothing. Rather, under greenhouse theory, we must go to 60 percent 
below 1990 levels to avoid the apocalypse predicted by the computer 
models. The Kyoto goal is not achievable in any event. If implemented, 
it will only represent a start.
    There is no doubt that the agenda of the environmental community 
and Vice President Gore conflicts with the growth of the world economy 
that is occurring. That growth is driven by the Internet and the 
broadband revolution. They are energized by electricity, and most 
electricity comes from fossil fuel combustion, the greatest source of 
humans' contribution of carbon dioxide to the atmosphere.
    Thus it seems to me, Mr. Chairman, that the prudent approach to 
take is that embodied in S.882 and S.1776, legislation proposed by 
Senators Murkowski, Hagel and Craig. It would provide an insurance 
policy in the highly unlikely event that we learn 10, 20, or 30 years 
from now that the vision of apocalyptic global warming has some basis 
in fact. That approach would be to have the Federal Government develop 
CO2 sequestration technologies so that we can continue to 
utilize fossil fuels, but at the same time scrub CO2 and 
sequester it that keep it out of the atmosphere.
    This would be a very, very expensive proposition. But in the face 
of a looming global apocalypse, it obviously is something we would do. 
I think it equally unlikely that having developed the technology we 
would ever deploy it because of its expense. Nevertheless, I do support 
the concept of Federal involvement in this important area.
    Let me say that I also support an activist Federal Government when 
it comes to energy. It is the United States that owns most of the coal 
west of the Mississippi River. This is the coal the Nation depends upon 
for its economic well-being. In the Powder River Basin between 
Gillette, Wyoming and the Big Horn Mountains sixty miles to the west, 
it is estimated that the United States owns up to a trillion tons of 
economically recoverable coal. So the Government must be involved in 
energy. But the Government should be involved in partnership with its 
people in the way it was in the 1970s and 1980s when we put in the coal 
plants, not as a punitive parent the way Vice President Gore approaches 
the question of Government.
    I'm an optimist by nature, Mr. Chairman. I know you are, too. I 
also know that it is optimists who get things done in the world, not 
pessimists. Those who would cap, tax, and limit our economic activity 
out of fear of catastrophic global warming are the ultimate pessimists. 
Those who would allow Americans and the people of the world to go about 
their lives as the world becomes ``wired,'' as economies become more 
robust, freedom becomes more entrenched, wealth creation rises, and 
more people live longer--they are the people who are the optimists and 
who will get things done.
    So, Mr. Chairman, in your new position of influence and power in 
Government and policy, I would urge you to lead the forces of optimism 
to allow a new generation of clean coal technologies to come into 
being, and to allow current coal-fired generation to be utilized at its 
full rated capacity for as long as those units continue to provide 
economic electricity for the American people.
    Thank you very much.
                                 ______
                                 
    References
    Daly, John L., The National Assessment Overview: Politics Disguised 
As Science, http://www.greeningearthsociety.org/Articles/2000/
national.htm September 2000
    Daly, John L., The National Assessment: Regional Pain With No Gain, 
http://www.greeningearthsociety.org/Articles/2000/regional1.htm
    Fischer, H., et al., ``Ice core records of atmospheric CO2 
around the last three glacial terminations.'' Science, 283, 1712-1714.
    The Greening of Planet Earth and The Greening of Planet Earth 
Continues, Greening Earth Society videotape presentations 1991 and 
1998.
    Huber, Peter & Mark Mills ``Got a Computer? More Power to You,'' 
The Wall Street Journal, September 7, 2000.
    Idso, Sherwood B., CO2 and the Biosphere: The Incredible 
Legacy of the Industrial Revolution, Kuehnast Lecture Series, 
Department of Soil, Water and Climate, University of Minnesota, St. 
Paul, Minnesota, October 12, 1995.
    Idso, Craig D., The Greening of Planet Earth: Its Progression from 
Hypothesis to Theory, Climatological Publications Scientific Paper #25, 
Office of Climatology, Arizona State University, Tempe, Arizona, 
January 1997.
    Kerr, Richard A., ``Greenhouse Forecasting Still Cloudy,'' Science 
276:1040-1042, May 16, 1997.
    Mills, Mark P., Coal: Cornerstone of America's Competitive 
Advantage in World Markets, Center for Energy & Economic Development, 
National Mining Association, Western Fuels Association, March 1997.
    Mills, Mark P., The Internet Begins With Coal: A Preliminary 
Exploration of the Impact of the Internet on Electricity Consumption, 
Greening Earth Society, May 1999.
    Mills, Mark P. & Michael E. Ramsey Does Price Matter? The 
Importance of Cheap Electricity for the Economy, Western Fuels 
Association, Inc., January 1995.
    Wittwer, Sylvan H., Food, Climate, and Carbon Dioxide: The Global 
Environment and World Food Production, [CRC Press: Boca Raton, FL], 
1995.
    Wojick, David E., The National Scare: Assessing ``The National 
Assessment of the Potential Impact of Climate Change'' http://
www.greeingearthsociety.org/Articles/2000/fatal1.htm
    Wojick, David E., The U.S. Is Still a Developing Nation: A 
Comparison of Electric Power Trends Among Nations, And Implications for 
the Kyoto Protocol, September 2000 http://www.greeningearthsociety.org/
Articles/2000/developing1.htm
    Electricity In Economic Growth. Committee on Electricity in 
Economic Growth, Energy Engineering Board, Commission on Engineering 
and Technical Systems, and National Research Council, National Academy 
of Sciences, 1986.

    The Chairman. Thank you, Mr. Palmer.
    Dr. Romm, welcome.

 STATEMENT OF DR. JOSEPH J. ROMM, DIRECTOR, CENTER FOR ENERGY 
              AND CLIMATE SOLUTIONS, ANNANDALE, VA

    Dr. Romm. Thank you, Mr. Chairman. It is actually ``ROME''.
    The Chairman. ``ROME''; I apologize.
    Dr. Romm. I really appreciate you holding this hearing 
today. I do agree with you that businesses are leading the way 
now on climate change. I think you heard the fine work that BP 
is doing. I appreciate the mention, Senator Kerry, of my work 
and my former boss Amory.
    I do want to talk about how businesses are leading the way 
toward cost effective greenhouse gas solutions. But I feel 
incumbent upon myself to take a couple of minutes to refute 
this bizarre myth that the Internet is an energy hog. Mr. 
Palmer speculates that the digital economy is making us use 
energy less efficiently and that the Internet makes it harder 
for the Nation to reduce greenhouse gas emissions. This 
speculation is the opposite of the facts.
    Let me just give you the key chart here. If you cannot see 
it, I do have it photocopied. You may want to raise that a 
little bit if you can. What this is, this is a set of bar 
charts which looks at really one of the most amazing set of 
facts to come across the U.S. economy in a very long time.
    The left-hand bars are the annual growth rate for 
electricity, energy, CO2, and GDP for the period 
1992 to 1996, which I would call the immediate pre-Internet 
era. The red bar chart is the same electricity, energy, 
CO2, and GDP annual growth rates for the 1996 to 
2000 period. What is amazing that has happened in the last 4 
years is that we have had higher GDP growth, which I think 
everybody knows and is delighted about. What is particularly 
amazing is that electricity growth has actually slowed. Energy 
demand has slowed. This is the growth.
    In the first 4-year period energy demand was growing about 
2.3 percent per year for 4 years. Now it is growing at 1 
percent per year for 4 years. CO2 growth has been 
almost cut in half and electricity demand growth is down.
    Senator Kerry. Energy growth, you are saying all energy 
growth?
    Dr. Romm. In the United States. I am sorry, this is United 
States. This is all United States data. What has happened in 
the last 4 years is the rate of growth of energy demand in this 
country has slowed by more than a factor of two since the 
advent of the Internet.
    Senator Kerry. But yesterday Secretary Richardson said fuel 
demand, oil demand, is up 14 percent.
    Dr. Romm. He probably was giving a statistic starting in 
the year 1990. Fuel demand is certainly not up 14 percent in 
the last couple of years.
    We can have a long discussion about exactly what is going 
on in the energy economy. These numbers come from the Energy 
Information Administration. What I think we see here--and I 
might urge you to have a separate hearing on this specific 
subject. I have actually labeled this new trend in a paper I 
did about a year ago, ``The New Energy Economy.''
    Clearly, if this is a trend it is a very big deal, because 
it suggests that one can have higher GDP growth and lower 
CO2 emissions growth, and that obviously would be a 
very big deal.
    I know this Committee has played a very important role in 
accelerating the use of the Internet and I do think it is a 
shame that Mr. Palmer and his colleagues Mark Mills, Peter 
Huber have been telling journalists, Members of Congress, and 
business people that the Internet is bad for the environment 
when the evidence shows that it is not.
    I think there are, by the way, two reasons why the Internet 
economy allows us to have higher GDP growth and lower 
greenhouse gas emissions growth. The first is that the 
information technology sector, which includes computer 
manufacturing and software, just is not very energy intensive. 
So you can have growth in this sector that does not use as much 
energy as growth in areas like steel manufacturing and 
chemicals.
    But the second--and I think this is a critical point that 
people are just starting to catch on to--the Internet economy 
makes the overall economy more efficient. As more companies put 
their supply chain on the Internet and reduce inventories, 
overproduction, unnecessary capital purchases, and mistaken 
orders, they achieve greater output with less energy 
consumption. I think the Internet is pulling out inefficiency 
from the macroeconomy of the United States.
    As Fed Chairman Alan Greenspan told Congress last year: 
``Newer technologies and foreshortened lead times have thus 
apparently made capital investment distinctly more profitable, 
enabling firms to substitute capital for labor and other 
inputs''--which from my point of view includes energy--``far 
more productively than they could have a decade or two ago.''
    I do think that the positive impact of the Internet is 
going to continue in the future, in part because--a very new 
trend--companies are starting to look at how they can manage 
their buildings remotely over the Internet. Companies like 
Enron are looking into this. You are probably also hearing 
about utilities doing experiments in remotely monitoring home 
energy management so that we can lower consumption when people 
are not there.
    I know that I was invited here to talk about what 
businesses are doing and I do want to comment on that. I think, 
Senator, that you are absolutely correct that businesses have 
really taken a leadership role. Let me just quote from the Wall 
Street Journal in October 1999: ``In major corners of corporate 
America, it is suddenly becoming cool to fight global warming. 
Some of the Nation's biggest companies are starting to count 
greenhouse gases and change business practices to achieve real 
cuts in emissions. Many of them are finding the exercise is 
green in more ways than one. Reducing global warming can lead 
to energy cost savings.''
    I myself wrote a book that came out last year that you may 
have seen, ``Cool Companies: How the Best Businesses Boost 
Profits and Productivity by Cutting Greenhouse Gas Emissions,'' 
which has about 100 case studies. In fact, the lead case study 
is Malden Mills. I am sure you have met Aaron Fierstein, a 
remarkable person. His mill burnt down and, instead of 
relocating, he kept the employees on the payroll and rebuilt 
it. That is the well-known story.
    What people do not realize is that when he rebuilt he put 
in onsite generation for combined electricity and heat, he put 
in very sophisticated day lighting and heat recovery, and he 
probably now has the greenest, most energy efficient textile 
mill in the world. I asked him why he did this when he was 
struggling to rebuild his company and he said: ``Over the long 
term, it is more profitable to do the right thing for the 
environment than to pollute it.''
    I would say, however, he has one advantage over many other 
companies: It is a privately held company, which allows him to 
think longer term than many other companies.
    My Center for Energy and Climate solutions is helping a 
number of Fortune 100 clients do the same thing. We partnered 
recently with World Wildlife Fund in a program called Climate 
Savers, and Johnson and Johnson and IBM have both pledged to 
make substantial greenhouse gas emissions cuts, really 
following the lead of John Browne and British Petroleum. 
Johnson and Johnson pledged to cut greenhouse gas emissions 7 
percent below 1990 levels by 2010 even as their business is 
very booming. IBM has already achieved an estimated 20 percent 
reduction in carbon dioxide emissions through energy 
conservation efforts and pledges to continue its remarkable 
efforts.
    Dupont, one of the largest energy users in the United 
States, pledged publicly to reduce greenhouse gas emissions 65 
percent compared to 1990 levels by 2010. Even as they grow 60 
percent, they are going to keep energy consumption flat over 
those two decades, and in 2010 they have committed to purchase 
10 percent of their power from renewable energy.
    So you see many of the best American businesses believe 
that reducing greenhouse gas emissions is fully consistent with 
good business practice. The world is changing. Try to guess 
which CEO recently called climate change ``without question the 
single greatest environmental challenge we face.'' He also 
said: ``We cannot proceed under the false reasoning that oil 
and gas will forever be the central energy resource of our 
planet.'' That was Peter Bijur, CEO of Texaco, in June of this 
year.
    He went on to say: ``We are moving from being a commodities 
company to being a company that provides energy solutions. This 
then is the emerging profile of our industry, one that will 
harness the profit motive in the service of the environment.''
    Businesses are taking action today in part because 
government made wise investments in the past decade in clean 
energy technology. Indeed, the fuel cells, microturbines, and 
photovoltaic companies whose sales are rising and whose stock 
prices are soaring all had their start in government programs. 
It is important that we keep this R and D pipeline going and 
encourage these technologies in the marketplace.
    I would say in the closing days of Congress I would urge 
you to support appropriations bills and tax incentives for 
clean energy technologies. Not only will the environment 
benefit, but so will the economy.
    I think, in conclusion, it is increasingly clear that 
reducing greenhouse gas emissions is much easier for businesses 
and the country than most people thought. The sooner the Nation 
as a whole acts, the lower the cost will be. Perhaps most 
importantly, since it is very clear that the nations of the 
world are committed to act on global warming and some of the 
leading businesses are, the country that leads the way in 
reducing greenhouse gas emissions and getting those 
technologies into the marketplace is going to capture the 
lion's share of what promises to be one of the biggest job-
creating markets of this century, which is clean energy 
technologies.
    There are going to be maybe $10 trillion in energy 
investments in the next two decades alone. Clearly, people want 
energy, as Mr. Palmer said. But what they most want is clean 
energy and they want to minimize greenhouse gases. So I think 
the United States is poised to be the leader in these 
technologies and improve the environment and, as Senator 
Feinstein said, many other benefits--reduce the trade deficit 
in oil, reduce urban air pollution. So this is really a win-win 
if we have a coherent, aggressive strategy.
    Thank you very much.
    [The prepared statement of Dr. Romm follows:]

 Prepared Statement of Dr. Joseph J. Romm, Director, Center for Energy 
                  and Climate Solutions, Annandale, VA
    Mr. Chairman, members of the Subcommittee, I am Dr. Joseph Romm, 
the founder and Executive Director of the non-profit Center for Energy 
& Climate Solutions, working with leading U.S. companies to develop 
strategies that reduce energy use and greenhouse emissions through 
investments that reduce pollution while increasing both profits and 
productivity.
    I am delighted to appear before you to discuss how solutions to the 
global warming problem, particularly how these solutions might impact 
our economy, or--more to the point--how the dramatic changes in our 
economy over the past 5 years may impact global warming solutions. I 
will describe how the Internet appears to be dramatically reducing the 
amount of energy America needs to propel its economy, and how U.S. 
companies are increasingly using the explosive growth in information 
and energy technology to slash both energy use and emissions of 
greenhouse gases and other pollutants, all while bolstering their 
bottom line.
    At the Center, and in my earlier role as Acting Assistant Secretary 
of Energy for Energy Efficiency and Renewable Energy at the U.S. 
Department of Energy, I have studied these questions closely. While I 
have long believed the U.S. can achieve greenhouse emissions cuts 
consistent with the targets set forth in the Kyoto accord without 
disrupting the economy, I am especially heartened by dramatic new 
data--data that gets stronger with each passing month--indicating that 
the fundamental relationship between energy use and economic growth in 
the United States has been changed permanently by the spread of New 
Economy technology to every corner of our lives. I have labeled this 
fundamental change a ``New Energy Economy.'' If it is a true and 
lasting change, then the challenge of limiting our greenhouse pollution 
will be even more manageable than before.
A Fundamental Change Unfolds: A New Energy Economy
    The story begins with a few simple, but truly amazing facts. Since 
1996--a period that corresponds with the tremendous growth of the 
Internet and e-commerce--the Nation experienced remarkable economic 
growth, on the order of 4 percent per year, driven to a significant 
extent by industries that produce information technology (IT). The 
overall productivity of the economy appears to have increased 
substantially, driven by the IT sector.
    What is startling is that the Nation's overall productivity gains 
have been accompanied by an equally impressive gain in energy 
productivity. From 1987 to 1996, U.S. energy intensity, measured in 
energy consumed per dollar of gross domestic product (GDP) declined 
(i.e., improved) by less than 1 percent per year. From 1996 through 
2000, it improved by over 3 percent per year--an unprecedented change.
    If we consider what might be called the immediate pre-Internet era 
(1992-1996), GDP growth averaged 3.2 percent a year, while energy 
demand grew 2.4 percent a year. In the Internet era (1996-2000), GDP 
growth is averaging over 4 percent a year, while energy demand is 
growing only 1 percent a year. This is a remarkable change--higher GDP 
growth and lower energy growth. From the point of view of greenhouse 
gases, the immediate pre-Internet era saw 2 percent annual rises in 
carbon dioxide emissions, while the Internet era has seen rises of 
slightly over 1 percent. In 1998, U.S. emissions of greenhouse gases 
grew just 0.2 percent, the smallest rise since 1991, when the economy 
was in the throes of recession.
    Hoping to better understand the reasons for the dramatic shift in 
U.S. energy intensity, the Center last year completed the most 
comprehensive analyses to date on the nature and scope of the 
Internet's effect on energy consumption and greenhouse gas emissions. 
That report ``The Internet Economy and Global Warming: A Scenario of 
the Impact of E-commerce on Energy and the Environment,'' is available 
online at www.cool-companies.org.
    Contrary to speculations by some that the Internet is increasing 
our dependence on fossil fuels--thereby making it harder and more 
costly to curb greenhouse emissions--we at the Center for Energy & 
Climate Solutions believe strongly that the Internet and Internet 
technology will be the keys that unlock unprecedented savings of energy 
and emissions. Indeed, the evidence suggests that this process has 
already begun, and that the long-standing relationship between fossil 
energy use and the economy has changed significantly.
    Analysis by EPA and the Argonne National Laboratory suggests one-
third to one half of the recent improvements in energy intensity are 
``structural''--that is to say, gains that occur when economic growth 
shifts to sectors of the economy that are not particularly energy 
intensive--such as the IT sector, including computer manufacturing and 
software--as opposed to more energy-intensive sectors, including 
chemicals, pulp and paper industry, and construction.
    More importantly, the remaining one-half to two-thirds of the 
improvement in our economy's use of energy comes from overall 
efficiency throughout the system as a whole, occurring when businesses 
change their activities in ways that reduce energy use relative to 
their output of goods and services. For example, a factory might use 
more efficient motors on its assembly line or better lighting in its 
buildings, or a chemical manufacturer might redesign a process for 
making a chemical to cut the energy used per pound of product.
    According to our findings, the Internet economy itself seems to be 
generating both structural and efficiency gains. If companies put their 
stores on the Internet, rather than constructing new retail buildings, 
which would represent an Internet structural, gain. If that same 
company used the Internet to more effectively manage its existing 
supply chain, it would be an efficiency gain.
Internet Technology Cuts Energy Use in New, Old Economy
    Clearly, both sorts of activities are taking place, with major 
energy implications. In business-to-consumer e-commerce, for instance, 
a warehouse holds far more product per square foot than a retail store, 
and uses far less energy per square foot. We calculated the ratio of 
building energy per book sold in traditional bookstores versus on-line 
retailer Amazon.com to be 16-to-1. Internet shopping uses less energy 
to get a package to your house: Shipping 10 pounds of packages by 
overnight air--the most energy-intensive delivery mode--still uses 40 
percent less fuel than driving roundtrip to the mall. Ground shipping 
by truck uses just one-tenth the energy of driving yourself.
    Business-to-business e-commerce, estimated at 5 to 10 times the 
size of business-to-consumer trade, may yield even bigger savings. As 
traditional manufacturing and commercial companies put their supply 
chain on the Internet, and reduce inventories, overproduction, 
unnecessary capital purchases, paper transactions, mistaken orders, and 
the like, they achieve greater output with less energy consumption.
    Analysts at Ernst & Young, for example, estimate that collaborative 
planning systems between manufacturers and suppliers could reduce 
inventories by $250 to $350 billion across the economy, roughly 25 to 
35 percent of finished goods stock. IBM says its e-commerce solutions 
are delivering inventory savings as high as 50 percent for some of 
their customers.
    This is more important than you might think, because the energy 
used to create and transport the raw materials that a company uses may 
vastly exceed energy they use directly. For instance, Interface 
Flooring Systems calculates this ``embodied energy'' in raw materials 
for its carpet tile outstrips the energy needed to manufacture it by a 
factor of twelve. That means a 4 percent cut in wasted product could 
save the equivalent of fully half the energy used in manufacturing.
    The resulting impact on energy use and global warming pollution 
would be dramatic. By 2007, business-to-consumer and business-to-
business e-commerce together could avoid the need for 1.5 billion 
square feet of retail space--about five percent of the total--and up to 
1 billion square feet of warehouses. Internet technology may also 
eliminate as much as 2 billion square feet of commercial office space, 
the equivalent of almost 450 Sears Towers, along with all the lighting, 
heating and cooling that goes with it.
    Energy savings from operations and maintenance alone for these 
``unbuildings'' total 53 billion kilowatt hours per year, about 13 
percent of total electricity growth projected under old, business-as-
usual scenarios. That equals the output of 21 average power plants, 
plus 67 billion cubic feet of natural gas. Expressed in terms of the 
global warming issue, this Internet ``unbuilding'' scenario would 
prevent the release of 35 million metric tons of greenhouse gases.
    Avoided construction of all those buildings saves the equivalent of 
10 more power plants worth of energy, and another 40 million metric 
tons of greenhouse pollution. By 2010, e-materialization of paper, 
construction, and other activities could reduce U.S. industrial energy 
and GHG emissions by more than 1.5 percent.
New Economy Means Rethinking Cost of Climate Protection
    At this point, the Committee should note that all of this good news 
does not in any way mean that the U.S. can sit back and let the global 
warming problem solve itself. We think the challenge will be much 
easier to meet than even some optimists believe, but it will not happen 
without concerted action.
    If, indeed, the Internet is already reducing energy intensity, then 
it is likely to have a very big impact in the years to come. The 
Internet economy is projected to grow more than ten-fold--from its 
current level of tens of billions of dollars today to more than $1 
trillion in a few years. Moreover, while the Internet economy remains a 
small share of the total U.S. economy, it represents a much higher 
fraction of the growth in the economy.
    We believe the combination of trends described above makes it 
likely that this decade, will not see the same low-level of energy 
intensity gains that the 1987 to 1996 period saw, which were under 1 
percent per year. We expect annual improvements in energy intensity of 
1.5 percent--and perhaps 2.0 percent or more.
    If this comes to pass, most major economic models used in the 
country will need to be modified. For instance, EIA uses a figure of 
1.0 percent for its projection of annual energy intensity improvements. 
If the actual number is closer to 1.5 percent to 2 percent, the related 
forecasts--such as the number of power plants the United States will 
need, or the cost to the nation of achieving greenhouse gas 
reductions--must change accordingly.
    The Environmental Protection Agency recently did a preliminary 
analysis of potential impact of structural economic changes driven by 
rapid growth in the IT-producing industries. The results suggest 
mainstream forecasts, such as those by EIA, may be overestimating U.S. 
energy use in the year 2010 by as much as five quadrillion BTUs, 
wrongly inflating carbon dioxide emissions by up to 300 million metric 
tons. This equals about 5 percent of the Nation's projected energy use 
and GHG emissions.
What About Energy Use By the Internet?
    As to the important question whether the Internet itself is 
consuming vast amounts of electricity, the facts simply--and 
irrefutably--fail to support such a conclusion. To begin with, the rate 
at which U.S. electricity demand is growing has slowed since the start 
of the Internet boom. The pre-internet era saw electricity demand rise 
2.9 percent per year. Since 1996, electricity demand has risen only 2.2 
percent per year. And this has all occurred in spite of higher GDP 
growth since 1995, hotter summers (1998 was the hottest summer in four 
decades in terms of cooling-degree days; 1999 was the second hottest 
summer), and less support by utilities for demand-side management, all 
of which would normally lead to higher growth in electricity demand. We 
suspect this has much to do with the trends already discussed here. 
Still, it is worth examining this question in more detail.
    In particular, the arguments presented by analysts Peter Huber and 
Mark Mills and repeated widely in both the news media and policy-making 
circles demand close scrutiny. Mills and Huber argue the Internet has 
become a major energy consumer because it supposedly requires a great 
deal of electricity to run the computers and other hardware powering 
the Internet economy.\1\ In fact, according to recent research, they 
appear to have significantly overestimated the energy consumption of 
most critical pieces of equipment.
---------------------------------------------------------------------------
    \1\ Peter Huber and Mark Mills, ``Dig More Coal--the PCs are 
Coming,'' Forbes, May 31, 1999, pp. 70-72.
---------------------------------------------------------------------------
    Scientists at Lawrence Berkeley National Laboratory (LBNL) examined 
in detail the numbers underlying a Mills and Huber analysis, and found 
that the estimates of the electricity used by the Internet were high by 
a factor of eight.\2\ Major overestimates were found in every category, 
including their calculations of energy used by major dot-com companies, 
by the Nation's web servers, by telephone central offices, by Internet 
routers and local networks, and by business and home PCs.
---------------------------------------------------------------------------
    \2\ Jonathan Koomey, Kaoru Kawamoto, Maryann Piette, Richard Brown, 
and Bruce Nordman. ``Initial comments on The Internet Begins with 
Coal,'' memo to Skip Laitner (EPA), Lawrence Berkeley National 
Laboratory, Berkeley, CA, December 1999, available at http://
enduse.lbl.gov/Projects/infotech.html. The underlying analysis is Mark 
Mills, The Internet Begins with Coal: A Preliminary Exploration of the 
Impact of the Internet on Electricity Consumption, The Greening Earth 
Society, Arlington, VA, May 1999.
---------------------------------------------------------------------------
    Mills and Huber assumed, for instance, that a ``typical computer 
and its peripherals require about 1,000 watts of power.'' In fact, the 
average PC and monitor use about 150 watts of power; this dips to 50 
watts or less in energy-saving mode. Laptop computers, a key growth 
segment, are particularly low energy users, with some using under 30 
watts. Moreover, computers are getting more energy-efficient every year 
because of steady improvements in technology driven in part by the 
growing market for portable equipment (and by the IT sector's desire to 
reduce its environmental impact).\3\ New flat screens typically use 
about a quarter of the energy of traditional video display terminals 
with cathode ray tubes.
---------------------------------------------------------------------------
    \3\ Typical home Internet users are online 5 to 10 hours a week 
(under 500 hours a year). So they consume under 100 kWh a year on the 
Internet, more than a factor of 10 less than the estimate of the 
Forbes' authors of 1000 kWh a year. And this does not even include any 
of the myriad potential offsets discussed in our study, such as a 
reduction in television watching, which would save a considerable 
amount of electricity. Long before the Internet was popular, PCs have 
been used at home for word processing, games, and the like. It is 
therefore methodologically flawed to ascribe all or even most of the 
electricity consumed for home PCs in general to the Internet (for a 
discussion of this ``boundary'' issue, see Koomey et al, ``Initial 
comments on The Internet Begins with Coal''). Internet telecommuters 
and home-based businesses use the Internet considerably more than the 
average home user, but, as discussed in our analysis, they are probably 
displacing far more electricity consumption by not working in an 
electricity-intensive office building.
---------------------------------------------------------------------------
    These basic mistakes are reflected in their conclusions. Mills and 
Huber claim that from 1996 to 1997, the increase in electricity 
consumed by all computers used for the Internet constituted more than 
1.5 percent of all U.S. electricity consumed that year. Yet total 
electricity consumption for all purposes grew slightly less than 1.4 
percent during that period, which would imply that electricity growth 
for everything else equaled zero--despite economic growth 4.5 percent. 
While we believe that the Internet reduces energy intensity, we don't 
believe it has quite that dramatic an effect.
    But mathematical and data errors are only part of the problem. 
Indeed, I believe Mills and Huber have the entire Internet energy story 
almost completely backwards. One of the reasons why energy intensity 
declined so slowly from 1987 through 1996 is likely that businesses in 
particular purchased a great many computers and other IT equipment that 
consume electricity, yet generated little accompanying productivity 
gains to offset that increased energy use. But Internet changed all 
that, unleashing a storm of new productivity in every sector of the 
economy. By then, of course, most desks already had computer. The added 
energy needed to shift PCs from traditional uses to the Internet is 
modest compared to its overall benefit.
A Few Unknowns About the Internet & Energy Use
    There are aspects of the Internet that will probably entail more 
energy use, such as greater small-package delivery by truck. These 
cases may not, however, result in a net increase in energy use; 
relatively efficient package delivery by truck may replace at least 
some relatively inefficient personal driving to malls, supermarkets, 
bookstores and the like--particularly if most of the packages are 
delivered by the Post Office, which already drives past virtually every 
home in the country daily.
    The great unknown question in this regard is whether or not a 
significant fraction of Americans will change their driving habits over 
the next few years once it is possible to make a critical mass of 
cyber-trips on the Internet. That is, will the Internet be the mall of 
the 21st Century? We suspect the Internet economy will be no worse than 
neutral in the transportation sector, but could well have a large 
positive impact. Already, in the last 2\1/2\ years, the growth rate in 
vehicles miles traveled (VMT) has slowed, and the VMT to GDP ratio has 
dropped dramatically.
    Computers and the Internet may well lead to more home electricity 
consumption. This is part of a long-standing trend, as homes have for 
some time been getting bigger and more stocked with electronic 
equipment. But the question is, if people spend more time on the 
Internet, what are they spending less time doing? Some will be watching 
television less; others reading newspapers less; some may be printing 
individual items of interest to them rather than receiving entire 
printed catalogs or directories in the mail; others will be working at 
home rather than in an office building; and, potentially, some may be 
not be driving to work or to malls as often as before. These are all 
activities that would normally consume a great deal of energy and their 
potential displacement by home Internet use is the subject of our 
recent analysis.
Changes in Energy Technology Meet Changes in Information Technology
    The application of New Economy information technologies to 
traditional energy-use technologies has resulted in quantum 
improvements even in two classical sectors that are responsible for 
most electricity consumption: lighting and electric motors. The result 
is more energy savings in parts of the economy not traditionally 
considered ``high-tech.''
    We have seen steady advances in solid-state electronic ballasts for 
running fluorescent lamps, which not only save considerable energy 
compared to magnetic ballasts, but also eliminate the annoying flicker 
and hum. Further, these ballasts can be run with highly sophisticated, 
low-cost controls that automatically dim the lights to offset daylight 
in the room. These lamps can also be controlled even at the desktop by 
remote controls or through a PC. Greater control over the workplace 
environment in general, and lighting in particular, has been linked to 
productivity increases.
    Similarly, computer-controlled adjustable speed drives for motors 
can simultaneously reduce energy consumption and improve process 
control, achieving significant direct cost savings as well as 
productivity gains. Even boilers and hot water heaters can cut energy 
consumption 25 percent or more through the installation of 
microprocessor-based controllers.
    Digital energy management control systems (EMCS) can continuously 
gather data about what is taking place in a building and how its 
equipment is operating, feeding it into a central computer used to 
control building systems and optimize energy performance. Energy 
experts at Texas A&M have shown in two dozen Texas buildings that using 
such an approach can cut energy use 25 percent with an 18-month payback 
in buildings that have already received on upgrade with the latest 
energy-saving equipment.\4\
---------------------------------------------------------------------------
    \4\ Joseph Romm, Cool Companies: How the Best Businesses Boost 
Profits and Productivity by Cutting Greenhouse Gas Emissions 
(Washington DC: Island Press, 1999), pp. 28-30, 57-63, 77-99, 140-156.
---------------------------------------------------------------------------
    Increasingly, such technologies will operate over the Internet 
itself. We know of one major energy service company pursuing the 
installation of digital EMCS's in the buildings they manage, so they 
can operate them over the Internet very efficiently and at low cost. A 
similar arrangement is already operating in Singapore.
    Many utilities have begun exploring Internet-based home energy 
management systems, which would give individual homeowners more control 
and feedback over their home energy use, or the ability to have an 
outside energy company or expert software system optimize their energy 
consumption. Early trials of remote controlled home energy management 
systems suggest the savings in energy bills could be as high as 10 
percent.
Spreading the Gospel: Rousing Corporate America to the Energy Challenge
    As Fortune magazine noted in 1998, ``only a third of U.S. 
manufacturers are seriously scrutinizing energy usage, where savings in 
5 areas can move billions to the bottom line.'' \5\ Thanks to low 
energy prices and the benefits of energy efficiency investments in the 
1970s, energy in mid-1980s became a much lower fraction of the cost of 
doing business. Naturally, companies reduced investments in energy-
saving technologies. During the downsizings of the early 1990s, 
corporate energy staffs were often sharply reduced or eliminated 
entirely.
---------------------------------------------------------------------------
    \5\ Fortune, May 11, 1998, p. 132C.
---------------------------------------------------------------------------
    As a result, most companies have lacked both the motivation and the 
management expertise to improve energy performance for most of this 
decade. Many companies, including some of our largest and most energy 
intensive, have been making investments in energy-savings technologies 
only if they paid for themselves within about a year.
    There are exceptions. Some companies, including IBM and Johnson & 
Johnson, have instituted corporate wide policies to adopt energy-saving 
technologies. They have been able to sustain steady improvements in 
their corporate energy intensity (energy per dollar of output) of 4 
percent per year and 3 percent per year respectively throughout the 
1990s. Though virtually every company could do what IBM and J&J have 
done, they are still the exceptions.
    Outsourcing--another New Energy Economy trend--is starting to 
change this. Soon it may revolutionize corporate energy efficiency 
investments. Because most companies typically consider energy issues as 
secondary to core business concerns, they typically pursue only 
simplest, most obvious solutions, which means investments in energy-
efficient equipment only with a payback of a year or so. To an outside 
contractor, energy is the core business. That means they have more 
expertise and longer investment horizons that allow them solid returns 
on energy investments with 5- to 7-year paybacks (or sometimes as high 
as 10 years).
    This means greater energy savings, and more time for companies to 
do what they do best. Some companies have turned over their entire 
power supply needs to outside contractors. In March 1999, Ocean Spray 
announced a $100 million deal with the energy services division of 
Enron, a major natural gas and utility company based in Houston. Enron 
will use its own capital to improve lighting, heating, cooling and 
motors and to invest in cogeneration (the simultaneous generation of 
electricity and steam onsite, which is highly efficient). Ocean Spray 
will save millions of dollars in energy costs, have more reliable power 
and cut pollution, without putting up any of its own capital. In 
September 1999, Owens Corning, the fiberglass insulation manufacturer, 
announced a similar $1 billion deal with Enron.
    Many other energy service companies are taking a similar approach. 
Some, like Sempra Energy Solutions, have even gone so far as to 
finance, build, own and manage the entire energy system of a customer. 
Substantial investments in such outsourcing deals are a relatively 
recent phenomena. But I believe these deals will grow very rapidly in 
the next few years, and are likely to ultimately achieve savings well 
beyond that achieved by utility demand-side management (DSM) programs, 
which have scaled back dramatically with the onset of utility 
restructuring.
    This is especially true for two reasons. First, traditional DSM 
often focused on retrofitting individual electricity-using components, 
whereas outsourcing encourages a whole systems approach to efficiency 
covering all fuels, an approach that can achieve deeper savings at 
lower cost. Second, traditional DSM did not in general encourage 
cogeneration, as the outsourcing deals do. And cogeneration combined 
with energy efficiency can cut the energy consumption of a building or 
factory by 40 percent or more in a period of just a few years.\6\
---------------------------------------------------------------------------
    \6\ See, for instance, Romm, Cool Companies, pp. 117-118 and 159-
162.
---------------------------------------------------------------------------
Climate Commitments Put Smart Companies Ahead of the Pack
    Finally, there is one other business trend that has significantly 
accelerated since industrialized countries signed the Kyoto Pact in 
December 1997 that will have lasting impact on the economics of global 
warming solutions. Increasingly, major corporations are making company-
wide commitments to reduce their greenhouse gas emissions.
    As the Wall Street Journal noted in an October 1999, article:

    LIn major corners of corporate America, it's suddenly becoming cool 
to fight global warming.

    LFacing significant shifts in the politics and science of global 
warming, some of the Nation's biggest companies are starting to count 
greenhouse gases and change business practices to achieve real cuts in 
emissions. Many of them are finding the exercise is green in more ways 
than one: Reducing global warming can lead to energy-cost savings.\7\
---------------------------------------------------------------------------
    \7\ Steve Liesman, ``Dropping the Fight On Science, Companies Are 
Scrambling to Look a Little Greener,'' Wall Street Journal, October 19, 
1999, p. B1.

    In 1999, Kodak announced that they would reduce their greenhouse 
gas emissions 20 percent by 2004. DuPont--one of the biggest energy 
users in the United States--pledged publicly to reduce greenhouse gas 
emissions 65 percent compared to 1990 levels by 2010. Two-thirds of 
those savings will come from reducing process-related greenhouse gases; 
the rest will come from energy. They pledged to keep energy consumption 
flat from 1999 to 2010 even as the company grows, and to purchase 10 
percent renewable energy in 2010.
    This year, Johnson & Johnson and IBM each joined the Climate Savers 
partnership with the World Wildlife Fund and Center for Energy a 
Climate Solutions, pledging to make substantial energy and greenhouse 
emissions cuts. Several other major companies are expected to join 
Climate Savers in coming months. For its Climate Savers commitment, 
Johnson & Johnson has pledged to reduce greenhouse gas emissions by 7 
percent below 1990 levels by the year 2010, with an interim goal of 4 
percent below 1990 levels by 2005. IBM, having already achieved an 
estimated 20 percent reduction in global CO2 emissions 
through energy conservation efforts from 1990 through 1997, is now 
pledging to achieve average annual CO2 emissions reductions 
equivalent to 4 percent of the emissions associated with the company's 
annual energy use through 2004 from a baseline of 1998. Even major oil 
companies including BP and Shell have committed to make major emissions 
cuts, at least some of which will come from efficiency investments in 
their own facilities.
    It may well be that two trends--energy outsourcing and corporate 
climate commitments--combine. The Center is working with a major energy 
service company to demonstrate that virtually any Fortune 500 company 
can make an outsourcing deal to reduce its energy bill, its energy 
intensity, and its greenhouse gas emissions, without putting up any of 
its own capital. Should concern over global warming continue to grow, 
this type of deal may become commonplace.
An Optimistic Prognosis
    In conclusion, we find great cause for optimism over the prospects 
for reducing greenhouse emissions while maintaining a strong and 
vibrant economy. Indeed, it is that very vibrancy that has improved 
this prognosis substantially in recent years. And we challenge those 
pessimists who consider the Internet a problem, rather than a solution, 
to rethink their interpretation. With or without them, the New Economy 
is changing the way America uses energy; in concert with sound climate 
policies, we can count on the Internet revolution to help us protect 
and preserve our environment as well.
    I thank the Committee for its time.

    The Chairman. Thank you very much, Dr. Romm.
    Dr. Rosenberg, welcome.
    Do you want to give him the microphone there, please.

        STATEMENT OF DR. NORMAN ROSENBERG, SENIOR STAFF 
  SCIENTIST, PACIFIC NORTHWEST NATIONAL LABORATORY, BATTELLE 
             WASHINGTON OPERATIONS, WASHINGTON, DC.

    Dr. Rosenberg. Thank you. Thank you, Mr. Chairman, 
Senators, for the invitation to participate in this hearing.
    Most of the rise in the atmospheric carbon dioxide 
concentration in the atmosphere in modern times has been due to 
the combustion of fossil fuels. It is less well recognized that 
a considerable portion of that carbon actually came from 
changes in land use management. Indeed, probably 55 billion 
tons of carbon that have accumulated in the atmosphere due to 
the transformation of forests and grasslands to agriculture.
    The IPCC, Intergovernmental Panel on Climate Change, 
concluded in its second report that it is possible to recapture 
perhaps two-thirds of that carbon through the initiation of 
improved agricultural practices such as minimum tillage, no-
till, and other conservation procedures. 40 to 80 billion tons 
can be taken out of the atmosphere over the course of the next 
century by those practices and restored to soils.
    [Screen.]
    Now, this picture shows one fancy technology for getting 
carbon out of the air and putting it in the soil. Plants 
capture carbon dioxide from the atmosphere and, through 
photosynthesis, convert it to sugars, starch cellulose and 
other organic materials. When the plant is harvested, the 
litter left on the soil can be incorporated into the soil, 
thereby sequestering carbon. 50 percent of soil organic matter 
is carbon. And the roots of the harvested plants also leave 
carbon in the soil.
    [Screen.]
    Currently the carbon is being added to the atmosphere at a 
rate of about 3.4 billion tons per annum. The graph shows that 
it is possible to put carbon back in the soil at rates as high 
as 2.5 tons per hectare by the introduction of biomass crops 
such as switchgrass. Conservation Reserve Program lands are 
adding carbon to the soil at a rate of about one ton per 
hectare per annum. Soil carbon sequestration can be done. This 
is not a pie-in-the-sky technology. In fact, farmers sequester 
carbon in soil when they can, because organic matter (50 
percent carbon) in soil improves tillage conditions, improves 
fertility, and improves productivity.
    [Screen.]
    This graphic shows the results of an economic model 
produced in our laboratory. The scale on the left is millions 
of tons of carbon emitted into the atmosphere annually. We are 
now emitting about 8 billion tons of carbon per annum. If 
business as usual prevails, by the end of the 21st century we 
will be emitting over 18 billion tons of carbon into the 
atmosphere every year.
    The concentration of carbon in the atmosphere cannot be 
allowed to rise in an unlimited way. We have concluded that it 
is possible to control the rise of atmospheric carbon dioxide 
concentration to 550 parts per million (ppm) (it is about 365 
ppm now). The bottom wedge in this graph shows the carbon 
emission pathway that will be required to achieve stabilization 
at 550 ppm. However, between business as usual and the bottom 
wedge you can see that by 2100 about 10 billion tons of carbon 
will need to be captured annually.
    Well, that will not be done by soil carbon sequestration 
alone. The red wedge is energy intensity. It represents 
improvments in the energy efficiency of automobiles, 
refrigerators, and everything else. The fuel mix wedge means 
going more to natural gas and away from coal. It includes other 
substitutes for fossil fuels such as solar power, biomass, and 
other technologies.
    But notice that brown wedge at the top of the graph. This 
is soil carbon sequestration of about 40 or 50 billion tons 
over the century. Note that this technology is particularly 
critical in the first two or three decades of the century 
because it allows time for existing technologies and 
infrastructure to live their design period. Such a strategy 
allows new technologies to be phased-in, lowering the costs of 
controlling carbon dioxide emissions.
    Thus, we have a strategic reason for emphasizing the role 
of agricultural soils and forests in capturing carbon. We know 
that soil carbon sequestration can be done, but there are many 
scientific questions yet to be answered. For one thing, we need 
to find ways to make carbon more stable in soils. As organic 
matter is broken down, carbon cycles through the soil. It can 
be returned to the atmosphere very quickly unless the soil 
binds it effectively.
    So research is needed to develop ways of keeping carbon in 
the soil: how to get more in, how to keep it for longer periods 
of time, how to literally sequester it, lock it away, perhaps 
for hundreds of years. Indeed, some of the carbon in soil 
resides there for hundreds of years, some perhaps for a 
thousand years.
    In addition, there is a great opportunity to improve the 
degraded and desertified lands of the world by applying carbon 
sequestration technologies. There are two billion hectares 
(five billion acres) of such lands around the world, 75 percent 
in the tropics. Soil carbon sequestration is a way in which the 
nations that are struggling with desertification address the 
problem and, at the same time, make a contribution to 
controlling climate change. A lot of research is needed to find 
ways to counter desertification and recover soil productivity. 
Soil carbon sequestration offers these nations a chance to come 
to the table on global climate change control.
    A serious problem in implementation of soil carbon 
sequestration programs is monitoring and verification. We are 
not talking about a hundred or a thousand power plants. We are 
talking about millions of farms that will have to participate 
in such programs. Trading mechanisms will be needed. In fact, 
trading is already beginning. I do not have time to go into 
that part of it, but the marketplace is beginning to show 
interest in this question. But when you make a deal--I am going 
to pay you to put a ton of carbon away for 30 years--there 
needs to be methods for verification, some kind of reliable 
techniques for monitoring.
    We have such techniques today, but they are tedious, they 
are expensive, they require soil sampling in the field, 
transport of samples to the laboratory, and so on. We need to 
find better ways to observe the changes and the compliance for 
contracts relating to carbon sequestration.
    There are many scientific questions yet to be solved, 
technological questions as well, and the government is aware of 
this. There has been some progress, some encouragement given. 
The Department of Energy has created a center for research on 
enhancing Carbon Sequestration In Terrestrial Ecosystems. The 
CSITE system, we call it, is managed jointly by Oak Ridge 
National Laboratory and my laboratory, the Pacific Northwest 
National Laboratory. We involve many universities and other 
organizations in the cooperative research we are doing.
    In addition, in FY 2001, the Department of Agriculture will 
provide funds to a consortium of land grant universities that 
will also address soil carbon research. We call the consortium 
CASMGS, which stands for Consortium for Agricultural Soils 
Mitigation of Greenhouse Gases. It is centered at Kansas State 
University and involves about ten land grant universities. Our 
laboratory is also associated with this activity. The research 
being done at CSITE under Department of Energy auspices and 
CASMGS will be coordinated. There will be many interactions.
    I urge that this Committee take note of what is happening, 
be aware of the fact that some research is beginning, that much 
more research needs to be done, and also that soil 
sequestration is not a panacea. This technology will not solve 
the problem, but it can play a strategic role over the next few 
decades and can be important throughout the century. And soil 
carbon sequestration is a win-win situation. When you store 
carbon in soils, you reduce the threat of greenhouse warming 
and you do good things for farmers. If, as well, farmers have 
an incentive, another, even if modest, cash crop called carbon, 
that is good for everybody.
    Thank you, Senators.
    [The prepared statement of Dr. Rosenberg follows:]

  Prepared Statement of Dr. Norman Rosenberg, Senior Staff Scientist, 
Pacific Northwest National Laboratory, Battelle Washington Operations, 
                            Washington, DC.
Storing Carbon in Agricultural Soils to Help Head-off a Global Warming
    We know for sure that addition of organic matter to soil increases 
water-holding capacity, imparts fertility with the addition of 
nutrients, increases soil aggregation and improves tilth. Depending on 
its type--humus, manure, stubble or litter--organic matter contains 
between 40 and 60 percent carbon. We also know that carbon (C, 
hereafter), in the form of carbon dioxide (CO2), is 
currently accumulating in the atmosphere as the result of fossil fuel 
combustion, land use change and tropical deforestation (Table 1). The 
atmospheric concentration of carbon dioxide has increased by 32 
percent, from about 280 ppmv (parts per million by volume) at the 
beginning of the industrial revolution (ca. 1850) to about 370 ppmv 
today.
    There is a strong consensus among atmospheric scientists that 
continued increase in the concentration of atmospheric CO2 
and other greenhouse gases such as methane (CH4) and nitrous 
oxide (N2O) will enhance the earth's natural greenhouse 
effect and lead to global warming (Intergovernmental Panel on Climate 
Change, IPCC, 1996). Some scientists argue from the fact that 1997 was 
the warmest and 1998 the second warmest years on record that the global 
climate change ``footprint'' is already detectable.
    CO2, the greenhouse gas of primary concern with regard 
to climate change, is also essential to photosynthesis. Elevated 
CO2 concentration [CO2] stimulates photosynthesis 
and growth in plants with C-3 metabolism (legumes, small grains, most 
trees) and reduces transpiration (water use) in both C-3 and C-4 plants 
(tropical grasses such as maize, sorghum, sugar cane). Together these 
phenomena are termed the ``CO2-fertilization effect.''
    Table 1 gives current estimates of global sources and sinks for C. 
Fossil fuel combustion, land use change and tropical deforestation are 
adding 9.1 Pg C y -1 (1 Pg is equal to 1 billion tonnes or 
10 15g) to the atmosphere. About 3.4 Pg C y -1 
remains in the atmosphere. Regrowth of forests in the temperate regions 
and the oceans each appear to be absorbing 2.0 Pg C y -1, 
leaving about 1.7 Pg C y -1 unaccounted for. Most of this 
``missing carbon'' is probably going into the terrestrial biosphere 
primarily in the Northern Hemisphere. The CO2-fertilization 
effect is, probably, also contributing to the increased capture of C in 
terrestrial ecosystems.
    In its Second Assessment Report the Intergovernmental Panel on 
Climate Change (IPCC, 1996) estimated that it may be possible over the 
course of the next 50 to 100 years to sequester 40 and 80 Pg of C in 
cropland soils (Cole et al., 1996; Paustian et al., 1998; Rosenberg et 
al., 1998). Reference to Table 1 shows that, if this is so, 
agricultural soils alone could capture enough C to offset any further 
increase in the atmospheric inventory for a period lasting between 12 
and 24 years. These calculations are still crude and cannot be taken as 
certain, but they do suggest a potential to offset significant amounts 
of CO2 emissions by sequestering C in the soils of lands 
currently in agricultural production. Of course, there is additional C 
sequestration potential in the soils of managed forests and grasslands 
(which we do not address here). And, as is discussed below, there is a 
very large potential for C storage in the soils of degraded and 
desertified lands. However, a caution needs to be raised here: unless 
alternatives to fossil fuels are found, the energy demands created by 
growing populations and rising standards of living could greatly 
increase CO2 emissions over the next century and the 
capacity of agricultural soils to sequester carbon could be exhausted 
to little long-term effect.
    The carbon content of the atmosphere can be stabilized either by 
decreasing the rate at which greenhouse gases are emitted to the 
atmosphere or by increasing the rate at which they are removed from it. 
It was well recognized that photosynthesis, by fixing C in standing and 
below ground portions of trees and other plants, provides a powerful 
means of removing CO2 from the atmosphere and sequestering 
it in the biosphere. The Kyoto Protocol establishes the concept of 
credits for C sinks (Article 3.3) but allows credits for only a limited 
list of activities including afforestation and reforestation (Article 
3.4). As of this writing, the Protocol does not allow credits for 
sequestration of C in soils except, perhaps (indeed, this is not yet 
clear), for carbon accumulating in the soils of afforested and 
reforested land. Although the capacity for doing so clearly exists, 
sequestration in agricultural soils is not now permitted to produce C 
sequestration credits under the Kyoto Protocol. This mitigation option 
was set aside in the Kyoto negotiations ostensibly because of the 
perceived difficulty and cost of verifying that C is actually being 
sequestered and maintained in soils. However, the soil carbon 
sequestration option is specifically mentioned in Article 3.4 for 
possible inclusion at a later time and will be discussed at COP VI in 
the Hague this fall.
    Another way of looking at the potential role of soil C 
sequestration is shown in Figure 1, produced with the integrated 
assessment model MiniCAM 98.3 (Edmonds et al, 1996a,b; Rosenberg et 
al., eds. 1999). The top line in the figure represents the anticipated 
increase in carbon emissions to the atmosphere from the year 2000 to 
the end of the 21st century under a MiniCAM ``business-as-usual'' 
scenario. It also shows a more desirable emissions trajectory that 
allows atmospheric [CO2] to rise from its current level and 
stabilize at a maximum of 550 ppmv by 2035 (Wigley et al., 1996). 
Annual C emissions are allowed to increase at first but then are 
lowered steadily to reach a level in 2100 between 6-7 Pg C y 
-1. For the upper emissions line to be brought down to the 
desired level will require great changes from our current energy 
systems. The caption of Figure 1 identifies some of the technologies 
that will create such change in the 21st century. Increased efficiency 
in the uses of fossil fuels, development of non-carbon emitting fuels, 
improvements in power generation, a greater role for biomass, solar, 
wind, and nuclear energy and other technological advances will 
ultimately be needed to mitigate climate change. Figure 1 shows that 
soil C sequestration can play a very strategic role but cannot, in and 
of itself, solve the problem. Soil C sequestration alone could make up 
the difference between expected emissions and the desired trajectory in 
the first 3-4 decades of the 21st century, buying time for development 
of the new technological advances identified above. The calculations 
shown in Figure 1 are based on the assumption that from 2000 to 2100 
agricultural soils sequester C at global annual rates ranging from 0.4 
to 0.8 Pg y -1, with rates twice as great in the initial 
years and half as great in the later years.\1\ It is further assumed 
that the full potential of soil C sequestration is realized without any 
additional net cost to the economy--not unreasonable in view of the 
known benefits of organic matter in soils. In addition, by allowing 
time for new technologies to be developed and for existing facilities 
to live out their design lifetimes, the costs of an avoided tonne of 
carbon emissions over the next century can be cut approximately in 
half.
---------------------------------------------------------------------------
    \1\ Estimates of soil sequesterable carbon in agricultural soils 
are more conservative in a Special Report of the IPCC Summary for 
Policymakers, 2000, entitled ``Land Use, Land-Use Change, and 
Forestry'', For example, assuming 30 percent of the global agricultural 
soils are managed with practices that increase C sequestration, the 
annual net change in C stocks in agricultural soils in 2010 would be 
125 Mt C per yr. However, improved management on only 10 percent of 
global grazing lands would sequester 240 Mt C per yr.
---------------------------------------------------------------------------
    How realistic are the estimates of potential soil C sequestration 
on which the economic modeling is based? The IPCC estimates for 
cropland assume the restitution of up to two-thirds of the soil C 
released since the mid-19th century by the conversion of grasslands, 
wetlands and forests to agriculture. The experimental record confirms 
that C can be returned to soils in such quantities. Some examples: 
carbon has been accumulating at rates exceeding 1 Mg ha -1 y 
-1 in former U.S. crop lands planted to perennial grasses 
under the Conservation Reserve Program (CRP) (Gebhart et al, 1994). 
Soil C increases ranging from 1.3 to 2.5 Mg ha -1 
y-1 have been estimated in experiments on formerly 
cultivated land planted to switchgrass (Panicum virgatum), a biomass 
crop (preliminary data, Oak Ridge National Laboratory). Further, there 
have been a substantial number of experiments over the last two or 
three decades with minimum tillage and no-till management of farm 
fields demonstrating that such practices lead to increases in soil C 
content (Lal et al., 1998a; Nyborg et al., 1995; Janzen et al., 1998).
    Despite these indications that needed quantities of C can be 
sequestered in agricultural soils there are still important questions 
to be answered. Among them 4 appear to be critical: (1) Can methods be 
developed to increase still further the quantities of C that accumulate 
in soils and, perhaps more importantly, the length of time during which 
the C resides in soils? (2) Can opportunities for soil C sequestration 
be extended beyond the currently farmed lands to the vast areas of 
degraded and desertified lands worldwide. (3) Can we develop quick, 
inexpensive and reliable methods to monitor and verify that carbon is 
actually being sequestered and maintained in soils? and (4) What are 
the policy and economic problems associated with implementation of soil 
carbon sequestration programs worldwide?
    A workshop to explore these questions was organized by the Pacific 
Northwest National Laboratory, the Oak Ridge National Laboratory and 
the Council for Agricultural Science and Technology and was held in 
December of 1998 in St. Michael's, MD. The workshop was attended by 
nearly 100 Canadian and U.S. scientists, practitioners and policy-
makers representing agricultural commodity groups and industries, 
Congress, government agencies, national laboratories, universities and 
the World Bank. Support for the workshop was provided by the 
Environmental Protection Agency, the U.S. Department of Agriculture, 
the Department of Energy, the Monsanto Company and NASA.
    Some general conclusions of the workshop are given here.

   New Science. The potential for carbon sequestration in all 
        managed soils is large and progress can be made using proven 
        crop, range and forest management practices. But this potential 
        might be made even greater if ways can be found to restore more 
        than the two-thirds of the carbon that has been lost from 
        conversion to agriculture and perhaps even to exceed original 
        carbon contents in some soils and regions. This would involve a 
        search for ways to effect greater, more rapid and longer-
        lasting sequestration. Promising lines of research are evolving 
        that could lead to an improved understanding of soil C dynamics 
        and the subsequent development of superior C sequestration 
        methods. These studies aim to: improve understanding of the 
        mechanisms of C stabilization and turnover in soil aggregates; 
        improve description of the various carbon pools and transfer 
        among them to better model the dynamics of soil organic matter; 
        improve understanding of landscape effects on C sequestration 
        and how it might be controlled through precision farming; apply 
        genetic engineering to enhance plant productivity and favor C 
        sequestration; and better understand the environmental effects 
        of soil C sequestration (e.g., erosion, nutrient leaching, 
        emissions of other greenhouse gases).

   The Soil Carbon Sequestration/Desertification Linkage: It is 
        estimated that there are some 2 billion hectares of desertified 
        and degraded lands worldwide, 75 percent of them in the 
        tropics, with degradation most severe in the dry tropics. The 
        potential for carbon sequestration on these lands is probably 
        even greater than on currently farmed lands. Improvements in 
        rangeland management, dryland farming and irrigation can add 
        carbon to soils in these regions and provide the impetus for 
        changes in land management practices that will begin the 
        essential process of stabilizing the soil against further 
        erosion and degradation with concomitant improvements in 
        fertility and productivity. Erosion control, agricultural 
        intensification, forest establishment in dry regions, and 
        biomass cultivation appear to offer the greatest potential for 
        increased sequestration on degraded lands. Soil carbon 
        sequestration offers a special opportunity to simultaneously 
        address objectives of two United Nations Conventions--the 
        Framework Convention on Climate Change and the Convention to 
        Combat Desertification.

   Monitoring and Verification: There is opposition to using 
        soil carbon sequestration in the Kyoto Protocol calculations. 
        One cause of the opposition is the perception that it will be 
        difficult, if not impossible, to verify claims that carbon is 
        actually being sequestered in the soils of fields around the 
        world that may eventually number in the millions. It is 
        currently possible to monitor changes in soil carbon content, 
        but current methods are time-consuming and expensive and are 
        not sensitive enough to distinguish year-to-year changes. If 
        there are to be international agreements allowing soil 
        sequestration to figure into a nation's carbon balance, agreed-
        upon means of verification will be required. Improved methods 
        for monitoring changes in soil organic carbon might involve 
        spatial integration based on process modeling and geographical 
        information systems, application of high-resolution remote 
        sensing, and continuous direct measurements of CO2 
        exchange between the atmosphere and terrestrial ecosystems. 
        There may very well be a market for new instruments that can 
        serve as ``carbon-probes''. These verification and monitoring 
        methods will have to be developed or tailored to operate at 
        different scales (e.g., the field, the region). Verification of 
        changes in soil C in individual fields will rely on laboratory 
        analyses of soil samples or, perhaps a few years from now, on 
        carbon probes. Estimates of soil C changes at the regional 
        scale will be made with the aid of simulation models. High 
        resolution remote sensing and GIS will be used to extrapolate C 
        sequestration data from field observations and modeling results 
        and aggregate them to still broader regions and to track trends 
        in C sequestration with time.

   Implementation Issues and Environmental Consequences: The 
        prospect that carbon may become a tradable commodity has not 
        gone unnoticed in the agricultural and forestry communities. 
        Beneficial land-management practices might be encouraged if 
        credit toward national emissions targets could be gained by 
        increasing the stores of carbon on agricultural lands. However, 
        uncertainty about the costs, benefits and risks of new 
        technologies to increase carbon sequestration could impede 
        their adoption. Financial incentives might be used to encourage 
        adoption of such practices as conservation tillage. Government 
        payments, tax credits, and/or emissions trading within the 
        private sector are also mechanisms that could be employed to 
        overcome farmer reluctance. Despite uncertainty of many kinds, 
        the process is beginning. We do not yet fully understand the 
        social, economic and environmental implications of incentives 
        that lead to a widespread adoption of soil carbon sequestration 
        programs. Most foreseeable outcomes appear benign--for example 
        an increased commitment of land to reduced tillage practices. 
        Another likely outcome would be increased effort aimed at 
        restoration of degraded lands and for retirement of 
        agricultural lands into permanent grass or forest cover. 
        Continuation and/or expansion of Conservation Reserve programs 
        might also be encouraged and lead to improved management of 
        residues in agricultural harvests. All of these actions have 
        the potential of reducing soil erosion and its negative 
        consequences for water quality and sedimentation. In addition, 
        since increases in soil organic matter content increase water-
        holding capacity, irrigation requirements could be reduced. 
        Conversion of agricultural lands to grasslands or forests would 
        expand to provide wildlife habitat. Reduced soil disturbance 
        and, possibly, more efficient use of fertilizers could alter 
        the volume and chemical content of runoff from agricultural 
        lands. This would in turn reduce water pollution and improve 
        water quality and the general ecology of streams, rivers, lakes 
        and aquifers in these regions for use by non-agricultural water 
        consumers.

    But negative effects are also possible. Programs designed to move 
agricultural lands into forestry could negatively affect the 
traditional forest sector, leading to either deforestation of 
traditional parcels or reduced levels of management and lessened C 
sequestration. Such actions might offset much of the benefit of 
sequestering C in agricultural soils. Expanded use of agricultural 
lands for C sequestration might compete with the use of agricultural 
lands for traditional food and fiber production. The result might well 
be decreased production, increased consumer prices for crops, meat and 
fiber and decreased export earnings from agriculture. Reduction in 
intensity of tillage often leaves more plant material on the soil 
surface. Conservation tillage has been found to require additional use 
of pesticides to control weeds, diseases and insects. Increased use of 
pesticides may have detrimental effects on ecological systems and water 
quality. Conversion of croplands to grasslands decreases emissions of 
N2O and increases oxidation of CH\4\, another strong 
greenhouse gas.
    Discussions at the workshop took place with recognition that there 
is no ``free lunch'', even in the case of such an apparently benign 
activity as soil carbon sequestration. The production, transport and 
application chemical fertilizers, manures and pesticides and the 
pumping and delivery of irrigation water needed to increase plant 
growth and encourage C sequestration all require expenditures of energy 
and, hence, the release of CO2 from fossil fuels. It is 
clearly necessary to determine to what extent the energy costs of the 
practices used to increase C sequestration actually reduce the net 
carbon-balance benefits. Professor Michael Schlesinger of Duke 
University brought this question to sharp focus in an invited critique 
of the ``New Science'' issue paper at the St. Michael's workshop and 
subsequently in a Forum article for Science (Schlesinger, 1999). Other 
analysts (e.g. Izaurralde et al., 2000) take issue with his assertions 
in that article that nitrogen fertilization, the application of manures 
and irrigation in semi-arid regions have associated carbon costs that 
effectively negate any net carbon sink resulting from these practices. 
Aside from their arguments with the details of Schlesinger's 
calculations, these analysts make the critical point that no-one 
seriously believes that agricultural soils will ever be managed for the 
primary purpose of C sequestration. Fertilizers, manures, chemicals and 
irrigation water will continue to be used primarily for the production 
of food, fiber and, increasingly in this new century, for the 
production of biomass as a substitute for fossil fuels.
References:
    Cole, C. V., C. Cerri, K. Minami, A. Mosier, N. Rosenberg, and D. 
Sauerbeck. 1996. Agricultural options for mitigation of greenhouse gas 
emissions. Chapter 23. Climate Change 1995: Impacts, Adaptations and 
Mitigation of Climate Change pp. 745-771. Report of IPCC Working Group 
II, Cambridge University Press, 880 pp.
    Edmonds, J. A., M. Wise, H., Pitcher, R. Richels, T. M. L. Wigley, 
and C. MacCracken. 1996a. An integrated assessment of climate change 
and the accelerated introduction of advanced energy technologies: An 
application of MiniCAM 1.0. Mitigation and Adaptation Strategies for 
Global Change. 1:311-339.
    Edmonds, J. A., M. Wise, R. Sands, R. Brown, and H. Kheshgi. 1996b. 
Agriculture, Land-Use, and Commercial Biomass Energy: A Preliminary 
Integrated Analysis of the Potential Role of Biomass Energy for 
Reducing Future Greenhouse Related Emissions. PNNL-11155. Pacific 
Northwest National Laboratory, Washington, DC.
    Gebhart, D. L., H. B. Johnson, H. S. Mayeux, and H. W. Pauley. 
1994. The CRP increases soil organic carbon. Journal of Soil and Water 
Conservation. 49:488-492.
    IPCC. 1996. Climate Change 1995: The Science of Climate Change. 
Report of Working Group I. Cambridge University Press, New York. P. 4.
    Izaurralde, R.C., W.B. McGill, and N.J. Rosenberg. 2000. Carbon 
cost of applying nitrogen fertilizer. Science 288:811-812.
    Janzen, H. H., C. A. Campbell, R. C. Izaurralde, B. H. Ellert, N. 
Juma, W. B. McGill, and R. P. Zentner. 1998. Management effects on soil 
C storage on the Canadian prairies. Soil Till. Res. 47:181-195.
    Lal, R., L. Kimble, R. Follett, and B. A. Stewart, eds. 1998a. 
Management of carbon sequestration in soil. Adv. Soil Sci., CRC Press, 
Boca Raton, Florida.
    Nyborg, M., M. Molina-Ayala, E. D. Solberg, R. C. Izaurralde, S. S. 
Malhi, and H. H. Janzen. 1998. Carbon storage in grassland soil and 
relation to application of fertilizer. Management of carbon 
sequestration in soil Adv. Soil Sci., CRC Press, Inc., Boca Raton, 
Florida. Pp. 421-432
    Paustian, K., C. V. Cole, D. Sauerbeck, and N. Sampson. 1998. 
Mitigation by agriculture: An overview. Climatic Change. 40:135-162.
    Rosenberg, N. J., C. V. Cole, and K. Paustian. 1998. Mitigation of 
greenhouse gas emissions by the agricultural sector: An introductory 
editorial. Climatic Change. 40:1-5.
    Rosenberg, N. J., R. C. Izaurralde, and E. L. Malone, eds. 1999. 
Carbon Sequestration in Soils: Science, Monitoring and Beyond. 
Proceedings of the St. Michael's Workshop, December 1998. Battelle 
Press, Columbus, Ohio. 199 pp.
    Schlesinger, W.H. 1999. Carbon sequestration in soils. Science 
284:2095.
    United Nations. 1992. United Nations Framework Convention on 
Climate Change. United Nations, New York.
    United Nations. 1997. Report of the Conference of the Parties on 
its Third Session. Held at Kyoto from December 1-11, 1997. Kyoto 
Protocol, FCCC/CP/1997/7/Add.1, United Nations, New York.
    Wigley, T. M. L., R. Richels and J. A. Edmonds. 1996. Economic and 
environmental choices in the stabilization of atmospheric CO2 
concentrations. Nature. 379:240-243.

                     Table 1. Global C flux budget.
------------------------------------------------------------------------
                          Carbon Flows                             Pg C
------------------------------------------------------------------------
Annual atmospheric increase of CO2.............................      3.4
Sources
    Fossil Fuels...............................................      6.4
    Land use change............................................      1.1
    Tropical deforestation.....................................      1.6
Sinks..........................................................
    Terrestrial in temperate regions...........................      2.0
    Oceans.....................................................      2.0
    ``Missing''................................................      1.7
Potential sinks in croplands alone (50-100y a) 40-80...........      2.0
------------------------------------------------------------------------
a IPCC, 1996




    Figure 1. Global Carbon Emissions Reductions: WRE 550 (Wigley et 
al., 1996, 550 ppmv atmospheric CO2 concentration). This 
figure shows a hypothetical path to carbon emissions reductions from 
MiniCAM's business as usual (BAU) emissions pathway to the WRE 550 
concentration pathway, under a scenario in which credit for soil carbon 
sequestration is allowed. Soil sequestration of carbon alone achieves 
the necessary net carbon emissions reduction in the early part of the 
century. From the middle of the century on, further emissions 
reductions must come from changes in the energy system (such as fuel 
switching and the reduction of total energy consumption).

    The Chairman. Thank you, Dr. Rosenberg.
    Ms. Mesnikoff, Dr. Romm in his written statement said: 
``The fundamental relationship between energy use and economic 
growth in the United States has been changed permanently by the 
spread of new economy technology to every corner of our 
lives.'' Do you agree with that statement?
    Ms. Mesnikoff. I think I would agree with that statement, 
and I think that, going back to the issue of the need to use 
more coal, I think we need to begin to look at the fact that 
most of the homes in this country still use incandescent 
lightbulbs, which are tremendously inefficient as compared to 
the compact fluorescent bulb, which would save about 400 pounds 
of coal over its lifetime.
    So I think we have a long way to go to improving energy 
efficiency before we start pointing the finger at the advanced 
technology, the Internet, as an energy hog.
    The Chairman. Mr. Palmer, do you agree with Dr. Romm's 
statement?
    Mr. Palmer. Yes, sir, I do.
    The Chairman. Mr. Morgheim, if you had it to do over again, 
what would you do differently from 2 years ago?
    Mr. Morgheim. I would probably have to say that we would 
have definitely taken the path of doing a pilot system first, 
starting small. At BP we try to do, learn, do, and repeat that 
cycle to improve the system.
    I think what is critical for us and probably something that 
we would have done slightly differently is that the key to any 
trading system is having monitoring and verification systems in 
place, which has been brought up today. I think we have gone 
through a process of learning and doing on our data that we are 
glad we did, but we probably would have spent a little more 
time on the actual measurement side of the emissions earlier.
    But we now have concluded an audit with external auditors 
who are now verifying our emissions and have now gotten us to 
where we have a robust and verifiable system.
    The Chairman. Dr. Romm, I do not disagree with your 
assessment there. In fact, I have an acquaintance who owns a 
big trucking company. He described to me how in this business 
no one uses high tech, but with the use of information 
technology their inventories have gone down, the tracking of 
their cargo goes up, and the maintenance of the trucks is 
dramatically more efficient.
    It is a remarkable story. A lot of Americans do not 
appreciate how information technology has been transferred to 
fundamental industries that provide goods and services which we 
once thought of in a traditional way.
    At the same time, the economy is booming and the energy 
demands are growing. Is that not a counterweight to the rather 
optimistic view of the reduction in the growth of energy 
requirements? The energy requirements, thanks to a booming 
economy, continue to grow, even though the rate of growth is 
slow. Isn't that so?
    Dr. Romm. I think there is no question that, if what you 
are asking is, is the Internet going to solve the problem, I 
think the answer is clearly not. I think that it is pretty 
clear that the rate of growth has slowed. I personally think it 
is likely to continue at this slow rate. But clearly, CO2 
emissions are still going up and CO2 emissions are 
the principal U.S. greenhouse gas. So I think there is no 
question that the Federal Government is going to need other 
policies if we are going to restrain greenhouse gas emissions.
    I just believe that the data suggest and the work that I 
have done suggests that it will be easier to reduce greenhouse 
gas emissions when we get serious about it because, frankly, 
the Internet is high quality, real-time information and more 
information clearly substitutes for energy and materials and 
allows people to do things more efficiently. Trucking companies 
auctioning off empty space on their trucks so they can be at 
greater capacity, like your friend was talking about.
    So I think that there is no question that the United States 
needs to have a set of policies focused on CO2, and 
we can certainly talk about what those would be. So I would say 
it is a good news-bad news story. But there is no question that 
the last 4 years have shown that you can have higher economic 
growth and lower emissions growth. The minute we get serious 
about CO2, I think that CO2 bar could 
shrink down to zero. I think there are a lot of very 
inexpensive----
    The Chairman. How do we get serious about it?
    Dr. Romm. Well, I think we need legislation to have a 
nationwide restructuring bill, utility restructuring bill, 
which would create, for instance, a renewable portfolio 
standard. Around the world, wind power is the fastest growing 
form of energy, 25 percent per year growth in the 1990s, 
followed closely by photovoltaics, 20 percent per year. In this 
country it tends to stagnate because we have a built-out 
electric grid, it is hard to compete.
    So I think what we need to do is have specific incentives 
for clean energy technologies. There are tax----
    The Chairman. We tried some of that in the 1970s and it did 
not work too well.
    Dr. Romm. Well, I think--yes, and I think the difference is 
twofold. First of all, most of those technologies in order to 
be competitive in the 1970s required oil prices to keep going 
up and up and up and up, which they did not. Right now 
photovoltaics and wind are basically very close to being 
competitive and I think they only need a very short window to 
really push them over the threshold.
    Wind power now, the next generation turbine that my old 
office when I was Acting Assistant Secretary of Energy was 
doing, is now down to about 3 cents per kilowatt hour. As you 
know, in Texas they are about to put on in the next 2 years 
about 800 megawatts of wind.
    So I think I am not saying that the Federal Government has 
to spend a lot of money. What I am just saying is that there is 
this window of opportunity to get some of these technologies 
into the marketplace. The same with hybrid vehicles. A tax cut 
over a few years to basically leapfrog over this period when 
new technologies cost more.
    I think we have to look very seriously at the grandfathered 
coal plants. We made a deal in the Clean Air Act a long time 
ago that we would grandfather these coal plants under the 
assumption, to give them, frankly, a window of opportunity to 
phaseout, as you know, so that we could then transition to 
cleaner technologies. Nobody knew that they would be kept on 
line, like some heart patient hooked up to some machine, for 
decades and decades and decades.
    The fact of the matter is that those grandfathered coal 
plants, which are exempt from the regulations that affect every 
other power plant in the country, generate most of the utility 
CO2 emissions, most of the utility particulates, 
most of the utility SOX and NOX.
    So I am not saying we have to stop coal electricity 
tomorrow. What we need is a grand bargain where we say, how do 
we get an intelligent transition in this country away from the 
dirty stuff toward the clean stuff, which by the way the rest 
of the world is going to be buying in droves and it would be 
better if we were selling it to them than buying it from them.
    The Chairman. Do you agree with that, Mr. Palmer?
    Mr. Palmer. Mr. Chairman, I want to take issue with one 
thing that was said here. With respect to the coal plants, when 
he talks about being grandfathered on carbon dioxide, there are 
no CO2 regulations in any Federal agency today under 
law. There is none in any State regulatory agency with respect 
to electric power plants.
    Carbon dioxide is not a pollutant. It is a benign gas 
required for life on Earth. When you talk about SO2 
and NOX, those are conceptually different 
propositions.
    With respect to this notion that we are going to phase out 
coal, I say here today that it is a non-starter, with all due 
respect to the doctor. These power plants are needed.
    The Chairman. Could I interrupt one second. We know there 
are two different types of coal. I think Dr. Romm and some of 
us are concerned about the so-called dirty coal as opposed to 
clean coal. Is your statement a blanket statement?
    Mr. Palmer. Well, what I would say is this, that, first of 
all, EPA is extremely active right now on regulatory fronts 
with respect to coal. That is an understatement. I fully expect 
that every power plant, every coal-fired power plant in the 
United States, at some point in the next decade is going to be 
regulated with respect to SO2 and NOX. I 
fully expect that. Also, there will be an effort made on air 
toxics. It is too early to say how that comes out.
    The Chairman. Would you support such a thing?
    Mr. Palmer. Do I support it? I think you need to look at 
these things on the merits in terms of the benefit that that 
power plant is providing versus the cost associated with 
regulation. But as a general proposition, I absolutely support 
air regulation. I always have, I always will.
    With respect to phasing these plants out, and I know the 
Vice President talks about that in his platform, his energy 
platform, that is not going to happen and should not happen. So 
long as a power plant that has been put in, fully paid for, can 
operate cleanly and provide cheap electricity to the American 
people, that power plant ought to be allowed to run in 
perpetuity. This notion that we should phase these coal plants 
out over time to me is a very, very bad idea.
    The Chairman. Ms. Mesnikoff, I am sure that you are in 
complete agreement with that statement.
    Ms. Mesnikoff. Not exactly. I really do think that Joe Romm 
made an important point about the fact that the deal made in 
the Clean Air Act was that these plants were not going to be in 
existence in the year 2000 and that we would have cleaner 
technology providing the electricity that we use. That is not 
the case, but I think we do need to look at switching to 
natural gas and boosting up the use of renewables in this 
country to produce a cleaner energy mix and not to continue to 
rely on dirty coal.
    I think that one can get into the arguments about clean 
coal, but I think the issue is to transition away from coal use 
and to do it in a way that is good for the economy.
    The Chairman. I would not disagree with you that in a 
perfect world we would like to transition away from coal 
entirely. But there is certainly, at least from my 
understanding, a dramatic difference in the effects of so-
called ``dirty coal'' and cleaner coal. Do you agree?
    Ms. Mesnikoff. Well, you can have cleaner, but the question 
is it as clean as other things that we can use, that we have 
the technology to do. Certainly, cleaner--a power plant that 
uses coal that is cleaner than a very dirty coal power plant is 
not as clean as a wind turbine. It cannot be. It is not as 
clean as a natural gas-fired power plant. There are a lot of 
things that it is not nearly as clean as, and I think that, as 
Joe said, it is not the issue of phasing out coal tomorrow. The 
issue is what direction are we taking the electricity 
production in this country, and I think there are a lot of 
cleaner ways we can do that.
    Mr. Palmer. Mr. Chairman, if I might with respect to that. 
In these debates we always look at the negative of these plants 
and never the positive. We always say: We can do this cleaner 
than that. Natural gas is very expensive. Wind power I have no 
problem with, but it is not a good baseload supply for the 
United States, the huge electricity needs that we have.
    These coal plants provide low-cost electricity to people to 
live their lives, people of low income, people on fixed income, 
to grow the economy. They have very real and tangible benefits. 
Benefits never ever get discussed in the context of saying we 
can do something cleaner. Of course, you can do something 
cleaner. You would have no automobile accidents if no one ever 
got in an automobile. But people are going to get in 
automobiles and drive them because they provide benefits. The 
coal plants provide benefits and that needs to be kept in front 
of us in this debate.
    The Chairman. Mr. Palmer, I reject that assertion. I think 
that if we were not concerned about those benefits we would 
advocate the abolition of all coal-fueled plants tomorrow.
    Mr. Palmer. I am sorry, Mr. Chairman. I was not referring 
to you.
    The Chairman. Well, I thank you for your point.
    Finally, Dr. Rosenberg--I understand that the Democrats 
have objected to us, so we are going to have to stop here 
within a half hour, I think.
    But finally, Dr. Rosenberg, how do you increase soil carbon 
sequestration? What do you need to do to incentivize this 
program if it is as important as you say? And I agree with you.
    Dr. Rosenberg. You have to have some kind of a trading 
mechanism where the emitters of carbon----
    The Chairman. Go ahead. I am sorry, doctor.
    Dr. Rosenberg.--where the emitters of carbon, such as 
energy generating plants, pay farmers--essentially, let 
contracts to farmers to sequester reasonable quantities of 
carbon in the soil. A good example is a group in western 
Canada, called GEMCO. A number of utilities got together 10 
years ago and decided that they would support research to see 
how much carbon could be sequestered in soils and they would 
begin to look at mechanisms for trading carbon credits.
    They indeed have been doing it in western Canada for some 
time and last year began a program with farmers in Iowa to 
sequester, I believe 1.5 million tons of carbon. Through an 
insurance company acting as a broker, contracts are being let. 
So there is a monetary incentive.
    In addition, there is a stewardship incentive because the 
practices that are good for sequestering carbon are good for 
the soil in many other ways and help to maintain productivity.
    The Chairman. Thank you.
    Senator Kerry.
    I thank the panel. It has been very interesting and very 
helpful to us, I believe.
    Senator Kerry. Mr. Chairman, thank you very much. It is 
interesting, an interesting line of questioning.
    I was struck, Mr. Palmer, by your conclusion, however. I 
found it intriguing that you evidently balance simply that a 
coal plant gives a benefit and that benefit is low-cost 
electricity, and that to you outweighs anything else.
    Mr. Palmer. I did not say that, Senator.
    Senator Kerry. [presiding]: Well, is there not a balance 
here? I mean, you can heat your home cheaply and you can kill 
yourself cheaply.
    Mr. Palmer. I would totally agree with you that there is a 
balance, and I reiterate that I support air regulation.
    Senator Kerry. Well, but it is not just a question of air 
regulation, is it? Is there not a larger balance here? I mean, 
you talked about the benign aspects of CO2. When you 
say ``benign'' I assume you mean it does not have the 
particulate or noxious impact of the NOX or 
SOX. But you cannot ignore, can you, that it is not 
benign in the sense it is a greenhouse gas and if it is allowed 
to simply add to the greenhouse gas effect that is not benign?
    Mr. Palmer. I used the term ``benign'' referring to carbon 
dioxide because it is essential for life on Earth. Without 
CO2 we would not be here. So it is undeniably a good 
thing, as air and water is.
    Senator Kerry. Well, the greenhouse effect is also a good 
thing because without it we would not be here.
    Mr. Palmer. Correct, and CO2 is, other than 
water vapor, is the next largest greenhouse gas.
    Senator Kerry. But the greenhouse effect allows the escape 
of a certain amount of the heat. But if you have too much 
CO2, you do not have sufficient heat escape.
    Mr. Palmer. Well, you can have too much water and that 
would be a flood. So I would agree that you could postulate 
circumstances where you could have too much carbon dioxide. 
However----
    Senator Kerry. Well, it is not a postulation.
    Mr. Palmer. Yes, sir, it is.
    Senator Kerry. I heard you say earlier, ``I do not believe 
what the science says.'' I just want to understand where we are 
coming from in the debate. You do not accept the science, is 
that the premise on which you are here today?
    Mr. Palmer. The context for my testimony today is that, 
with respect to the vision of apocalyptic global warming, that 
I do not believe the science supports that.
    Senator Kerry. Do you have any science that suggests 
otherwise? Do you have any study or report that absolutely 
contravenes what the IPCC or other world consensus scientists 
have come to?
    Mr. Palmer. Yes, sir, we do. We have extensive scientific--
--
    Senator Kerry. These are the oil studies, the studies that 
have been commissioned by and produced by the industry itself?
    Mr. Palmer. Actually, my organization has been actively 
involved in this and we have a group we call the Greening Earth 
Society. Our web page is GreeningEarthSociety.org, where you 
can get a full panoply of why we think the way we do on 
CO2 and its impact on the biosphere.
    I would add, too, that we have litigated this question on 
seven separate occasions in front of State electricity 
regulatory agencies in the 1990s when environmental 
externalities were the vogue in front of these agencies, and we 
never lost, except in a very small way in Minnesota. The issue 
in those cases was an effort to increase the cost of coal-fired 
electricity on climate change concerns. We sponsored expert 
testimony and studies, there was cross-examination, there were 
written hearing records, and we never lost.
    Senator Kerry. Well, I would have to go back and review. I 
am not familiar with the particulars of the issue litigated and 
as a lawyer and a former litigator it is meaningless to me when 
you say we never lost. I do not know what the particular issue 
was.
    Mr. Palmer. The issue was the apocalypse.
    Senator Kerry. Well, I do not think people are predicting 
``apocalypse.'' But they are predicting very serious 
consequences in terms of what happens climatologically. When a 
particular area of the world suddenly becomes hotter, certain 
things happen. They happen to crops, they happen to forests, 
they happen with disease spread. A whole lot of things happen.
    Mr. Palmer. Yes, sir. All those things, all those things 
were at issue.
    Senator Kerry. Well, I will certainly review it. It is in 
direct contravention of almost every major political leader's 
held tenets. It is extraordinary to me that you would look at 
the prime ministers of every European country, smart people 
like Tony Blair and a host of other, major scientific analyses, 
all of which contradict that, and disregard it.
    So I do not want to get into the debate here now in terms 
of that particular component, though I will review the basis of 
your claim so that I understand better what the analysis is. 
But it strikes me as so directly in contravention of every 
basic political decision being made across the world on the 
basis of scientific input and evidence.
    But let us go further than that. Let me suggest this. I 
assume you accept the science as to local pollution 
particulates, and the damage done environmentally of dirty coal 
burning?
    Mr. Palmer. I would agree as a general proposition that the 
less particulates you put in the air the better.
    Senator Kerry. What about efficiency? Today coal is used to 
generate about 55 percent of our electricity, 36 percent of the 
world's electricity. But a typical coal-burning power plant 
converts only 33 to 38 percent of the energy potential of coal 
into electricity. The rest is just wasted; it is heat waste.
    Mr. Palmer. Yes, sir, I would agree that we--and I believe 
the Federal Government should take a role in this, to provide 
research and development money for increased coal-burning 
efficiency.
    With respect to existing plants, however, I would point out 
and I would draw the analogy between living in a house that you 
have been in for 20 or 30 years and going out and buying a 
brand new, energy efficient house, that there are economic 
tradeoffs associated with utilizing a plant that has lower 
efficiency versus higher, and those judgments should be made 
based on fuel prices and things of that nature.
    I promise you this: There is plenty of coal to burn in 
inefficient power plants.
    Senator Kerry. Believe me, I understand there is plenty of 
dirty coal to burn, too, in inefficient power plants.
    Mr. Palmer. Yes, sir.
    Senator Kerry. And in many parts of the world that is 
exactly what they are burning.
    Mr. Palmer. That is true. We should take pride in our 
system in the U.S. because we do have clean coal-burning power 
plants versus other parts of the world.
    Senator Kerry. But nobody that I know in this debate is 
suggesting that we are going to stop burning coal within the 
next 10, 20 years. Clearly, whatever transitional process takes 
place envisions continued use of coal in a reasonable way, 
hopefully in a far more efficient, coal-burning, two-cycle 
rather than one-cycle burning, et cetera.
    Mr. Palmer. I would agree with that.
    Senator Kerry. So given that, I am not sure why the 
industry is as defensive as it is about the potential for our 
helping to bring online much cleaner alternatives.
    Mr. Palmer. I have no problem with that.
    Senator Kerry. I assume you believe that wind or natural 
gas are cleaner. Are they cleaner?
    Mr. Palmer. Let me put it this way. Well, first of all, 
there are environmental side effects associated with making 
electricity any way you want to look at it, and I would suggest 
that if you take a state-of-the-art power plant like the 
Laramie River Station that we are involved in in Wyoming, that 
has very, very low SO2 and NOX emissions, 
that there are no environmental problems associated with that 
power plant that need to be avoided by substituting something 
else just because it is burning coal.
    The coal-fired power plants on the ground in the U.S. today 
by and large are very efficient and are clean-burning.
    Senator Kerry. Well, let me ask you. If you could supply 
all the power of your community through wind versus coal-
burning, would you not choose wind?
    Mr. Palmer. No.
    Senator Kerry. Why?
    Mr. Palmer. Because the wind does not always blow.
    Senator Kerry. Well, let us say you have a solar storage 
capacity in addition to the wind, and you had hydrogen fuel 
cell alternative cut-in capacity, and all clean, completely 
clean. Would you not choose them?
    Mr. Palmer. I would have to look today at, first of all, 
the availability of that technology and second the cost.
    Senator Kerry. Well, let us assume it is available. 
Hospitals today are actually putting hydrogen cell in place as 
a backup use.
    Mr. Palmer. Actually, they are, but they are also putting 
in natural gas units. There is a new company called Capstone 
Turbine----
    Senator Kerry. And that is clean, that is emission-free.
    Mr. Palmer.--and it is backing up very large central 
station coal-fired power plants.
    Senator Kerry. But my point is, if you had the option of 
putting that in a grid that was completely clean, would you not 
take it?
    Mr. Palmer. I would if the cost were competitive with the 
alternative.
    Senator Kerry. Fine, and Mr. Romm tells us it is about to 
be or close to be, and clearly, if the government were to go 
back to where we were in the 1970s, where we were, in fact, 
encouraging photovoltaics and alternatives and renewables, we 
might be in a position to actually have them be competitive 
today.
    Mr. Palmer. Sir, I do not have a problem with the U.S. 
Government being involved with respect to R&D money for 
renewables, with respect to tax credits for renewables. That 
has never troubled me, does not trouble me. The coal plants 
came from there. I would be--it would be hypocritical to sit 
here and say I am troubled by that. I am not.
    The only thing that we say with respect to the coal plants 
is no caps, tax, and limits with respect to the operation of 
power plants that are providing low-cost electricity in a 
clean, efficient manner to the American people. I would refer 
you, sir, to our opposition to the Btu tax in early 1993 
because it was an energy tax. We opposed the Waxman amendments 
back in the early 1990s because they would have capped the 
operation of these units.
    Those are the kind of things that we are opposed to. We are 
not opposed to an activist government involved in trying to 
promote renewables through tax policy, tax credits, and things 
of that nature. But we believe we provide positive good to the 
American people through these power plants and it would be a 
mistake to take that away.
    Senator Kerry. Well, again, nobody is talking about taking 
coal away immediately--we all recognize that it is going to be 
a part of our energy supply structure for a period of time. The 
question is how serious can we get, how quickly, about trying 
to provide some alternatives.
    Mr. Palmer. With respect to greenhouse theory, you know, we 
argue over Kyoto, which is 7 percent below 1990 levels. But 
under true greenhouse theory, the apocalypse is upon us unless 
we go 60 percent below 1990 levels. So that is why I made the 
comments I made in my prepared remarks with respect to really 
the impossibility of reaching those goals under any mechanism 
that you choose to pursue, unless you go to some kind of a 
carbon sequestration, carbon-scrubbing technology, and I think 
the Federal Government ought to take the lead in developing 
that, and I believe that.
    Senator Kerry. But carbon sequestration has its own set of 
serious difficulties----
    Mr. Palmer. It could.
    Senator Kerry.--as Dr. Rosenberg has explained. One is how 
much you can contain, for how long, with what certainty. What 
happens if when it is stored in large amounts it is suddenly 
released into the air? Since it is heavier, it has a profound 
impact on the air we might or might not be breathing under 
those circumstances. And there are enforcement issues. There 
are enormous issues attendant to it.
    Mr. Palmer. I would agree, there are problems with that 
approach.
    Dr. Rosenberg. I do not think that is a danger from carbon 
sequestered in soils. It is the sort of thing that happens----
    Senator Kerry. No, but if you were to go to storage.
    Dr. Rosenberg. Yes, in the case of geologic storage 
mechanisms it may be possible. We do not know. And I would 
agree with the gentleman that more research on other means of 
sequestering carbon is warranted, not only the soils but the 
geological approaches to sequestration, is warranted.
    Senator Kerry. I would agree with that.
    Dr. Rosenberg. I certainly do not agree that carbon dioxide 
is totally benign. Actually, I am an agro-meteorologist and I 
have worked on the subject for many years and, yes, elevated 
carbon dioxide level to a certain degree is beneficial to 
plants. There is no doubt about that. But the climatic 
implications of unlimited carbon dioxide in the atmosphere are 
indeed quite threatening.
    The group that Mr. Palmer alluded to, the Greening Earth 
Society, has some very good scientists in it. I do not believe, 
however, that their work supports Mr. Palmer's statements on 
the climatic implications of CO2 emissions. The 
preponderance of scientific evidence, as you have said, 
Senator, is clearly in favor of the notion that too much carbon 
dioxide in the atmosphere is a threat.
    Senator Kerry. Look, I cannot sit here in good faith and 
tell you that the models are perfectly accurate. I am familiar 
with the modeling difficulties people have had in the last 
years, and it is getting more sophisticated and we are getting 
further down the road. And there are variations, we all 
understand that. Mount St. Helen's, Mount Pinatuba, all these 
things have taught us about the difficulty of really measuring 
what is short-term loss versus a long-term gain and whether you 
go cold before you go hot and all kinds of things such as cloud 
cover and increased moisture. I mean, all these things are very 
difficult. I understand that.
    But from a public policy point of view, the sort of 
cautionary principle, so to speak, which guides the judgments 
we have to make, based on the amount of scientific input we are 
getting, based on the realities of sea level rise, based on 
what we are seeing in the polar ice cap, polar melt, so forth, 
based on unknowns about what happens agriculturally and in 
terms of forest migration and other kinds of issues, it 
requires us to be thoughtful.
    Mr. Palmer. I understand that, Senator, and I am not 
suggesting otherwise. Our work has examined all of these 
questions in detail before it became the issue that it became 
here today. I have been doing this for 10 years. I say to you 
in good faith, I have looked at this thing backward and 
forwards and this is a model-driven concern and these models 
are not good today. They are better than they were, but they 
are not good today.
    The notion that we are going to label carbon dioxide as bad 
as such is wrong, scientifically wrong.
    Senator Kerry. What do you say to that, Dr. Romm, Ms. 
Mesnikoff?
    Dr. Romm. Well, it is clearly not a model-driven concern. 
As you said, we had the 11 hottest years. 1998 was the hottest 
year in the world. 1999 was the second hottest year. You look 
at what is happening in Texas, you look at the tornadoes where 
they do not belong, tropical diseases where they do not belong, 
rising sea levels, the coral reefs are bleaching. We are 
getting the thinnest ice that we have had in a very long time 
in the Arctic.
    People's concern about global warming is being driven by 
very substantial changes in the climate that affect ecosystems 
and people and crops. And I am sure you have more to comment.
    Senator Kerry. Ms. Mesnikoff.
    Ms. Mesnikoff. I would simply be very happy to give this 
copy of this map which Sierra Club produced with other 
environmental organizations, for him to take a look at. 
Unfortunately, I do not have it on a nice board that we could 
all take a look, but I believe that everybody does have copies 
and we have more than enough copies to send it to people that 
would like to take a look at it.
    But I think if you unfold this map you can really begin to 
see that, even in the United States and around the world, there 
is all kinds of evidence of global warming and events that we 
call harbingers, things that are consistent with the 
projections of global warming. I think that, as I said before, 
this is a pretty dramatic image to take a look at and I think 
it is one that is not model-driven, but one that is based on 
facts on the ground.
    Senator Kerry. Well, I am going to yield to my colleague, 
who I know is waiting patiently. I know we are going to have to 
terminate here soon, so I do not want to waste the time.
    Two things. It seems to me that when you look, you look at 
leaders all over the world whom I have heard, and met with and 
listened to governmental people wrestling with this issue. 
There is no country in the world that wants to waste money 
responding to something that is not real, and there is no 
leader in these other countries that I know of who wants to 
spontaneously require his people to take sacrifices in their 
emissions, in their fuel availability, et cetera. But they are 
all doing it. They are all doing it.
    Mr. Palmer. I understand that.
    Senator Kerry. It seems to me that when you look at some of 
the top CEO's in the country who have come to recognize this as 
a major issue with enormous implications to us, I would love to 
see the industry that you represent begin to become part of the 
solution rather than trying to suggest that it really is not a 
problem.
    We can join together to find competent solutions here. I 
wake up in the morning and hear these advertisements directed 
at us, with great money being spent, on the radio as we drive 
in to tell us that it is not a problem and so forth and so on. 
We would be far better advised to be helping Americans to deal 
with the realities of it.
    I might add in terms of the particulates, of 
CO2, and the emissions, the automobile emissions, 
where we are fighting it, passenger cars and light trucks, 
including SUVs, account for 18 percent of our emissions. With 
the average efficiencies declining for new vehicles and a 21 
percent increase in miles driven between 1990 and 1998, 
emissions are growing more rapidly in that sector than in any 
other.
    Mr. Palmer. Yes, sir, and they will continue to. Porsche is 
coming out with a 400 horsepower SUV.
    Senator Kerry. And that is why I just wanted to point out 
that since 1995 provisions in the appropriations acts have 
literally prohibited the Department of Transportation from even 
examining the need to raise the Corporate Average Fuel Economy 
standard. I think it is time for Congress to implement the law 
as intended, to change this. That is where we began this 
discussion.
    In my judgment--I think you all agree--that is the place, 
the single first priority where we have the greatest, most 
rapid efficiency gain and could make the strongest impact 
globally in sending a message that we are serious. And everyone 
in this country ought to stop and ask themselves how it is that 
a piece of legislation finds itself passing that prohibits an 
agency of our government from even examining an issue, and if 
that is not excessive industry influence and a statement about 
the impact of money in American politics and influence in 
Washington, I do not know what is.
    I yield to my colleague.
    Senator Brownback. [presiding]: Thank you.
    I thank the panelists for being here and the information 
you have put forward. I have got a few questions along the line 
of carbon sequestration, both internationally and domestically, 
and I would like to direct those generally to the panel.
    Dr. Rosenberg, as I was looking through your information 
that you have put forward, you have stated that calculations 
are that through improved management of agricultural lands 
alone we could remove anywhere from 40 to 80 billion metric 
tons of carbon from the atmosphere. Is that a correct number? 
That is quite large.
    Dr. Rosenberg. That is the number in the second IPCC report 
that came out in 1996. The third report is coming out shortly 
and it is essentially consistent with that number, perhaps a 
little bit more conservative in some ways, but overall I would 
say it is consistent.
    Senator Brownback. That is a huge number.
    Dr. Rosenberg. Oh, yes.
    Senator Brownback. I am curious, as you are studying this 
and looking at it, what all you think that we can do here in 
this country and what you think we can incentivize in other 
places. You mentioned particularly trying to recapture some of 
the lands that there has been desertification taking place. 
Would you support a series of policy objectives to try to do 
those sorts of issues as a way of incentivizing this carbon-
fixing in the soil?
    Dr. Rosenberg. Yes, absolutely. With respect to the 
domestic situation--and this may be the wrong hearing--
continuation of the Conservation Reserve Program I think is 
extremely important because a lot of carbon goes back in soils.
    Senator Brownback. Could I stop you there for just a 
second. I saw in your chart you were saying that the CRP was 
currently fixing a ton an acre or something like that on your 
charts.
    Dr. Rosenberg. A ton per hectare.
    Senator Brownback. Per hectare, OK. But that you were 
noting switchgrass could get you up to two-and-a-half.
    Dr. Rosenberg. Yes.
    Senator Brownback. Are you advocating or would you advocate 
different practices being put in the CRP?
    Dr. Rosenberg. Well, the practices that they have now, 
returning to grass or woodland, are certainly beneficial. I 
would urge that there be more biomass production, that we 
figure out ways to make better use of biomass, more efficient 
use, either as a direct fuel, power plant fuel, or for creation 
of liquid fuel substitutes.
    The biomass crops such as switchgrass, which has say a 10-
year rotation, can put away over the course of that 10 years 
probably 7 or 8 tons of carbon per hectare. If there were some 
conversion to a biomass economy, some portion of our energy 
needs were met by biomass, switchgrass--and I am sure there are 
other herbaceous and woody crops that will prove as good or 
even better--could make a very good contribution.
    Senator Brownback. You would raise the switchgrass and then 
use that biomass that it produced for energy production?
    Dr. Rosenberg. Right, and that substitutes, of course, for 
fossil fuel, and so you have one saving there. At the same 
time, it sequesters carbon in the soils.
    Senator Brownback. Is that being piloted anywhere? Is that 
being done?
    Dr. Rosenberg. Yes, there has been a lot of field research. 
Oak Ridge Laboratory has organized a number of field trials and 
NREL, the National Resource----
    Dr. Romm. National Renewable Energy Laboratory.
    Dr. Rosenberg.--Renewable Energy Laboratory, has done some 
economic studies of the merits of biomass, how it could be 
phased into our economy. So there is attention to it. There 
needs to be more attention, there need to be more field trials, 
and we need to think about the social implications of 
converting large areas of agricultural land to the production 
of energy crops.
    Senator Brownback. Ms. Mesnikoff, we appreciate your 
perspective and the things your organization has put forward. 
On the international carbon sequestration bill that I put 
forward, it got bipartisan support and it is also supported by 
the Nature Conservancy and the Environmental Defense Fund, 
along with American Electric Power. I am not sure if BP is on 
it. We have talked with them about it as well.
    Are you familiar with this proposal or these types of 
proposals?
    Ms. Mesnikoff. I am afraid I am not familiar with your 
particular bill at this point.
    Senator Brownback. Well, I hope you get there. Your 
organization would be one key one, and we have talked with a 
number of people in it about it. If I could just describe this 
approach, and then I would appreciate it if you have a 
perspective, and, Dr. Romm, your perspective on these types of 
approaches as well.
    It is basically to try to incentivize U.S. businesses 
through tax incentives to invest in setting aside or moving 
from a desertification in developing countries toward back to a 
production, particularly in trees, in tropical, subtropical 
areas. I think it is an important approach from the 
incentivizing of investment in these areas and to create more 
forests or to keep forests from being destroyed in many of 
those areas where you have a very intensive forest area, where 
you have situations a lot of times that, if we cut back supply 
production in agriculture in the U.S., there is an increase in 
supply production many times in tropical or subtropical areas 
where you destroy these forests to go into agricultural 
production.
    I would be curious if you do have a reaction to those types 
of proposals in dealing with CO2?
    Ms. Mesnikoff. I think Sierra Club does have very grave 
concerns about using sequestration in certain kinds of ways. 
For example, there is a big difference between carbon that 
stays in the ground in the form of oil or coal as opposed to 
fossil fuels that are burned and then you try to sequester them 
and balance it out that way. It is better to leave it in the 
ground unburned as fossil fuels than to try to recapture it in 
some kind of sequestration.
    But that does not mean that giving incentives to preserve 
forests, to grow forests, or to try to use agricultural lands 
in that way are not part of the policies that we can look at. 
We do have very serious concerns about using this kind of a 
sequestration system in a trading mechanism, you know, for 
example American Electric Power, not taking action in the 
United States but buying trees or growing trees in some other 
part of the world to offset emissions in that kind of a trading 
scheme.
    First of all, you have to look at the fact that when you 
burn fossil fuels in a power plant in the United States that 
there are other pollutants that come out of the smokestack in 
addition to carbon dioxide. You have the sulfur, you have the 
mercury, you have other pollutants that come out. So therefore, 
requiring that power plant to reduce its CO2 
emissions by becoming either more efficient or switching to a 
cleaner fuel will have benefits for air quality as well as 
taking responsibility for the emissions that we put out in this 
country and not looking for solutions in some other country 
that is not nearly putting out as much pollution as we are.
    I think that tax incentives and other policies like that 
for farmers to improve their farming techniques to sequester is 
one thing. Including that kind of system in a pollution trading 
scheme is quite another from the Sierra Club's perspective.
    Senator Brownback. In a trading scheme. Now, what I have 
put forward--and I really would appreciate it if you would look 
at the proposal we have put forward--is a series of tax credits 
if companies go with NGO's like the Nature Conservancy and go 
into another country and say, we are going to set this set of 
forests aside here, and we are trying to incentivize that with 
tax credits, not a trade that is in the system.
    I do not see the down side with doing that. I am not sure 
if you do, and, if you do, I am sure you will let me know.
    Ms. Mesnikoff. We will certainly take a look. I think, as 
Dr. Rosenberg mentioned, there are issues of permanence and the 
like which we are also concerned about. But we will definitely 
take a look and give a fuller response.
    Senator Brownback. I think a number of these companies have 
been quite entrepreneurial and have done a nice job of stepping 
forward without government regulation, but saying this is the 
right thing to do, which is Dr. Romm's study and looking at.
    Mr. Morgheim, do you have a comment to make on this series 
of questions?
    Mr. Morgheim. Senator, just a brief comment. I think things 
like carbon sequestration are an example of how when people 
focus on the problem you begin to develop innovative solutions 
that people perhaps were aware of or talked about, but they 
really come to the forefront.
    BP is a partner with Nature Conservancy at the Nolkemf-
Mercato National Park in Northeast Bolivia. For us, protecting 
and preserving that forest in partnership involves carbon 
sequestration, but it also allows firms to play a positive role 
in the local community and support sustainable development for 
those local communities, as well as support and protect 
biodiversity.
    Dr. Romm. Senator----
    Senator Brownback. Dr. Romm--let me say one other thing, if 
I could, to BP. I was in the Caspian Sea region where BP is 
doing some oil work and the quality of the drilling that you 
are doing there versus what was there during the Soviet era is 
just enormously different and better. Really, hats off to you. 
I know it is still an intrusive practice into the environment, 
but the quality that I saw there versus what was there in the 
Soviet era is substantially better for the environment, what 
you are putting forward. I want to thank you for that.
    Mr. Morgheim. Thank you for your comments.
    Senator Brownback. Dr. Romm.
    Dr. Romm. My old Office of Energy Efficiency and Renewable 
Energy did a lot of the funding for the biofuels and biomass 
energy program and demonstrations with taking switchgrass and 
turning it into ethanol and doing the same for crop waste and 
developing some fast-growing hybrid poplar trees.
    I know there has been a lot of concern about what action on 
climate change will mean for farmers, and I would urge you to 
consider really an aggressive strategy of more R&D and tax 
credits and innovative policies to really get a lot more 
biomass energy into the U.S. marketplace. Clearly there has 
been concern about MTBE, so more people are going to need 
ethanol, and the best kind of ethanol is the ethanol that comes 
from cellulose as opposed to starch.
    There really have been major breakthroughs from the 
National Renewable Energy Lab and others in converting any type 
of cellulose--switchgrass, the non-starchy part of corn, 
anything. We can now do the whole corn and turn it into 
ethanol. I think if we had an aggressive program to get 
cellulosic ethanol into the marketplace, it would be incredibly 
beneficial to the farmers and it would be incredibly beneficial 
to U.S. greenhouse gas emissions.
    The same for biomass crops. It would be very interesting to 
have an aggressive program to do cofiring with coal plants, 
because one can in fact burn pretty easily--in any coal plant, 
up to 5 percent could easily be biomass, and with some 
modifications that can go even higher.
    So I think that there is an opportunity for action on 
climate change to be a boon for the American farmer, if we act 
intelligently.
    Senator Brownback. I agree, because I think that those are 
the sort of solutions, and it is the ones that I am trying to 
put forward. We can get into some disputes here, as this panel 
has been in disputes that I have heard echo around these halls 
for some period of time, and we can fight about it and we will 
fight about it. But we can also find a number of these routes 
that I do not think there is much dispute that these are things 
that are positive. They may not be perfect, but they are 
positive and they are things that we can step forward on, and 
we can do so in a rapid fashion and also a fashion where most 
people would look at it and say: Well, that is a good thing; I 
am glad we are doing that. Now, I think we also ought to do 
this, but we can move and we can progress this, progress this 
on forward.
    Dr. Rosenberg, we will have to close this down shortly. 
There was a recent Wall Street Journal article that was 
commenting on carbon farming and carbon sequestration saying, 
yes, this is good, but, and then was looking at the issues of 
releases of other greenhouse gases from carbon farming saying, 
OK, we are going to have to be careful. You can pull CO2 
out of the air but you might release some other minor ones that 
actually have more problems that they create. They were talking 
about nitrous oxide.
    It was the first that I had seen that particular issue. I 
am curious if you could comment about that and what we need to 
research, what we need to be aware of.
    Dr. Rosenberg. Right. I have not seen that article, 
Senator, but I think I know what it is based on. There are two 
issues. One is the issue of, essentially, the carbon costs of 
inputs to farming. It takes energy to make fertilizer and to 
package it, transport it, and so on. It takes energy to move 
manure from one place to another. It takes energy to pump water 
for irrigation. So, one argument has been that the carbon costs 
of carbon sequestration balance or overcome the benefits.
    But it is a misleading argument, I think, because basically 
the practices that put carbon in the soil that are better for 
sequestration are no more likely to lead to the emission of 
nitrous oxides and methane than any other farming practices. In 
other words, we have got to grow crops, we have got to use the 
land. If we use conventional tillage practices, there are still 
emissions of nitrous oxide and methane. So at the very least, 
in the fields where it is practiced, carbon sequestration can 
counterbalance or offset some or all of the agriculture 
emissions of greenhouse gases.
    Senator Brownback. I appreciate you putting that forward. I 
am sorry to cut you off, but I have just been told that, due to 
the Democrats objecting to us continuing hearings for a period 
beyond 2 hours, that I have got to close the hearing down. So I 
apologize to you for that, but we are at the end of the 
legislative session and these sort of games get played.
    Thank you, all of you as panelists. I hope it has not been 
too uncomfortable for you. I think you can see from the line of 
questioning of the members here that we are very interested in 
what we can do in moving this forward. It is going to be an 
important topic for some period of time and we want to start 
making these steps to deal with it.
    Thank you very much for attending. The hearing is 
adjourned.
    [Whereupon, at 11:35 a.m., the Committee was adjourned.]
                                APPENDIX

  Response to Written Questions Submitted by Hon. John McCain to Ann 
                               Mesnikoff
    Question 1. Background: Congress established the initial standards 
for CAFE in 1975, and delegated responsibility for setting new 
standards to the Administration, specifically the Department of 
Transportation. Congress provided the Administration with four factors 
to consider in setting new standards: technical feasibility, economic 
practicability, the effect of other federal motor vehicle standards on 
fuel economy, and the need of the United States to conserve energy.
    a) You mentioned in your testimony that the biggest step we can 
take to curb global warming is raising CAFE standards to 45 miles per 
gallon for cars and 34 miles per gallon for light trucks. Over what 
timeframe would you propose this?
    Answer. A 45/34 mpg standard for cars and light trucks could be 
achieved over a 10 year period. The original law began phasing a 
doubling of car fuel economy (from 13.8 mpg to 27.5 mpg) in 1978. The 
law provided a stepped up increase until the 27.5 mpg standard was 
achieved in the late 1980s. The auto industry requested this system.
    The auto industry has indicated that it would prefer a two step 
increase--at 5 years and 10 years. Either this system or one that had a 
percentage increase each year would be an acceptable means to arrive at 
higher CAFE standards.
    Question 2. How would you rate your current proposal against the 
four factors that Congress provided to the Department of Transportation 
for raising CAFE standards? The four factors are: technical 
feasibility, economic practicability, the effect of other federal motor 
vehicle standards on fuel economy, and the need of the United States to 
conserve energy.
    Answer. The proposal of a 45/34 MPG standard for cars and light 
trucks meets each of the four factors set forth in the CAFE law.
    Technical Feasibility--Currently, auto manufacturers are sitting on 
technology that could vastly improve fuel economy. Some simple steps 
that could be added to, or changed in, today's vehicles to increase 
their fuel economy are: improved aerodynamics, low-rolling resistance 
tires, variable valve timing, and composite fenders and body panels 
made of high-strength and lightweight materials.
    In addition, consumers can now purchase gasoline-electric hybrid 
engine vehicles. A hybrid vehicle combines a small gasoline internal 
combustion engine with an electric motor. The gasoline engine recharges 
the batteries for the electric motor, which is the primary power source 
for the car. These vehicles do not need to be plugged in, like an 
electric vehicle. The car is so efficient because it mostly runs on an 
efficient electric motor and because the gas engine runs at a nearly 
constant speed (at its most efficient speed) and switches on and off as 
needed. An onboard computer determines when it is needed to recharge 
the advanced nickel-metal hydride battery or when it is needed to help 
accelerate the car e.g. when entering a highway. Honda offers a two 
seat 70-MPG version called the Insight and Toyota offers a 5-passenger 
sedan, the Prius.
    Economic Practicability--The aforementioned technology is extremely 
affordable and practical to install, manufacture and provide to 
consumers. The Union of Concerned Scientists found that auto makers 
have the ability to increase the fuel economy of America's most popular 
SUV, he Ford Explorer, from, 19 mpg to 34.1 mpg, for approximately 
$935. The initial investment of $935 would be returned to the customer 
in less than two years through savings at the pump. Over the lifetime 
of the vehicle, consumers would save $5500.
    In an earlier study, the Sierra Club (with the Center for Auto 
Safety) found that a dramatic improvement in fuel economy could be 
achieved for cars. By adding improved aerodynamics, low-rolling 
resistance tires, variable valve timing, and composite fenders and body 
panels made of high-strength and lightweight materials the Ford Taurus 
could achieve 42 MPG. The cost of these improvements would again be 
reclaimed by the consumer in less than two years through savings at the 
gas pump.
    Effect of other motor vehicle standards on fuel economy--The CAFE 
standards, if implemented in a similar manner as they were under the 
original law, would not have an adverse effect on other vehicle 
standards. Moreover, no other motor vehicle standards conflict with the 
need for increased mile per gallon standards. CAFE can safely and 
efficiently be implemented in conjunction with other motor vehicle 
safety standards.
    Importantly, CAFE standards do not require small cars. Vehicle 
safety and fuel economy are both driven by technology. Safety is a 
function of design (crumple zones) and safety technology, such as air 
bags. These safety factors do not conflict with fuel economy 
technologies. Cars today are an average of 250 pounds heavier than pre-
CAFE cars, but are much more fuel efficient. Automakers achieved over 
86 percent of the improvements with technology. For example, in the 
1970s Volkswagen replaced its old Beetle with the Rabbit, reducing its 
fatality rate 44 percent while improving its fuel economy 25 percent.
    Need to conserve oil--The U.S. currently imports 55 percent of its 
oil. The transportation sector is the leader in oil demand, with motor 
fuels accounting for 65 percent of oil consumption--mostly in the form 
of gasoline. In fact, cars and light trucks alone guzzle 40 percent of 
the oil consumed in the U.S. Oil imports account for $50 billion of our 
national trade deficit. In addition, there are enormous military costs 
of protecting oil from the Persian Gulf, including defending oil-
producing nations as we did in the 1990 Gulf War.
    Demand for gasoline has been steadily rising, in large part due to 
the boom in light truck sales, especially sport utility vehicles. 
Today, about half of all new vehicles sold in America are light trucks. 
Many of these are SUVs, which average 12-16 mpg. The average fuel 
economy of new vehicles sold in 1999 was at its lowest point since 
1980, meaning that fuel consumption is rising.
    The most noticed consequence of our oil dependence is the price of 
a gallon of gasoline at the pump. Prices at the gas pump in March were 
more than 50 percent higher than last year's prices--upwards of $1.50 
per gallon for regular unleaded gasoline due to a small cut-back in 
OPEC oil production.
    But the consequences of oil dependence go far beyond draining 
consumers pockets and our economy. Oil has extensive environmental 
impacts that begin with drilling and continue through to burning it in 
our cars and light trucks. Demand for oil creates a constant pressure 
to drill in our pristine wilderness areas, particularly the Arctic 
National Wildlife Refuge and also off the coasts of California, Florida 
and other states.
    The single biggest step that the U.S. can take to save oil and curb 
global warming is to make our cars and sport utilities go further on a 
gallon of gas by raising miles per gallon standards. In fact, improved 
standards will save more than we import from the Persian Gulf can 
expect to get from the Arctic and offshore California combined.
    There is no question that there is a need for the nation to 
conserve oil. The existing standards save more than 3 million of 
barrels of oil per day reducing U.S. dependence on imported oil. 
Without these savings, the U.S. would be importing at least 1.5 million 
barrels more every day than today's current levels. In its August 2000 
report entitled ``Automobile Fuel Economy: Potential Effects of 
Increasing the Corporate Average Fuel Economy Standards,'' the General 
Accounting Office concluded that raising CAFE standards can reduce oil 
consumption and thereby reduce global warming pollution. New standards 
could save another 3 million barrels of oil every day.
    Question 3. You mentioned that CAFE is an average standard and some 
carmakers may develop more efficient cars to offset the lesser 
efficient vehicles such as SUV's. Should there be a separate standards 
for cars and light trucks?
    Answer. The current system has two standards, one for cars and one 
for light trucks. In either case, the standards have not changed in 
years (14 years for cars and light trucks standards have stagnated for 
19). A single standard system could work if the standard is high enough 
and no longer contains loopholes that allow auto makers to game the 
system.
    As we have seen, since 1975 the auto industry has gamed the system 
and exploited loopholes. These practices have eroded the average fuel 
economy of new cars sold in 1999 to its lowest point in some 20 years. 
Automakers have used the lower standards for light trucks, once only 20 
percent of the vehicle market, to create and mass produce vehicles that 
pervade and erode made under the CAFE law. Auto makers are pushing more 
and more car-like vehicles into the light truck category simply to 
assist them in achieving the low 20.7 mpg standard.
    In addition, the current system also gives automakers credits for 
producing flexible fuel vehicles--vehicles that can run on ethanol, 
gasoline, or both. Since there so few ethanol pumps (as few as 40, 
mostly in the Midwest), these vehicles will never see a drop of 
alternative fuel, yet the automakers are receiving credits toward 
meeting today's standards.
    A two standard system, that closes the existing loopholes, will 
continue to be the most effective means of ensuring that both light 
truck and car fuel economy are improved. At the current levels, closing 
the light truck loophole would be a significant first step (both cars 
and light trucks would be achieving a 27.5 mpg standard, but still be 
considered separately). But, again, raising standards for both cars and 
light trucks is necessary. Sierra Club, however, would consider 
supporting a combined standard in the future.
    Question 4. In your statement you mentioned that passenger vehicles 
are responsible for 20 percent of U.S. greenhouse gas emissions. What 
would you consider to be the main sources for the other 80 percent? And 
what is the best possible solution for curbing that 80 percent?
    Answer. Power production accounts for more than a third of U.S. 
emissions. Many electric utilities still use coal to produce 
electricity, spewing millions of tons of carbon dioxide and other 
pollution into the atmosphere every year. Converting these plants to 
burn cleaner natural gas could solve part of the problem.
    Harnessing the clean, abundant energy of the sun and wind is 
critical to solving the global warming problem. Technological advances 
have brought the cost of electricity generated by the wind down by 85 
percent since 1981. Wind ``farms'' are now producing energy from coast 
to coast. Solar energy technology has made remarkable progress, as new 
photovoltaic cells have been developed to convert ever-greater amounts 
of sunlight directly into electricity. Today the costs of wind and 
solar power are approaching that of cheap, dirty coal plants.
    Midwestern states in particular hold enormous potential as sources 
of renewable energy. Renewable sources currently make up less than 1 
percent of the energy market in the U.S. However, states like Kansas, 
Nebraska, North Dakota, and South Dakota hold the potential to become 
the Saudi Arabia of wind power. In addition, we can develop biomass 
crops, such as switch grass, that can be used to generate electricity 
cleanly and that are grown in an environmentally sound system. We need 
to invest more in research; development and demonstration to put these 
clean domestic technologies over the top and enact standards that 
require an increasing percentage of our energy to come from these 
clean, renewable sources.
    We could do much more to save energy in our homes and office 
buildings. More energy efficient lighting, appliances, heating and air-
conditioning could keep millions of tons of carbon dioxide out of the 
air each year. For example, a compact fluorescent bulb used in a home 
can prevent 400 pounds of coal from being burned (as compared to a 
incandescent bulb).
    Industry and buildings account for another third of emissions, and 
again, efficiency improvements are the key to reductions.
    Question 5. Ford Motor Company has recently set an example for 
other automakers, by voluntarily raising the fuel efficiency on Ford 
SUVs. Could you comment on the improvements being made by SUV 
manufacturers? And the potential impacts of these improvements? Do you 
believe other auto makers will follow Ford's lead?
    Answer. Under the recent announcements, Ford and GM will increase 
fuel economy of SUVs, which make up approximately 1/5th of the fleet, 
by a rate of 5 percent a year. This is close to the 6 percent annual 
increase in fuel economy the Sierra Club has advocated for the last 
decade. It is important that they have committed to improving fuel 
economy through superior technology. Ford has said they will achieve 
this goal without relying on loopholes in the law. Sierra Club is 
concerned that automakers might turn to diesel engines for some of 
these improvements. Diesel exhaust has been identified as a possible 
carcinogen and also contributes to smog pollution.
    These pledges disprove the theory that Detroit cannot improve fuel 
economy--the claim they have been making for years. These types of 
commitments to cleaner vehicles are good for the environment and good 
for business.
    While Sierra Club welcomes these pledges, they do not obviate the 
need for setting new CAFE standards for the light truck fleet as a 
whole, which includes pickups and minivans. New standards will ensure 
that all automakers improve the fuel economy of light trucks.
    Question 6. Do you have any research which contrasts the 
effectiveness of an increase in CAFE standards to less popular 
solutions such as an increase fuel taxes, to curb the demand for oil 
and gas?
    Answer. A less popular solution such as an increase in gas taxes or 
alternative fuels would not be as effective as increasing CAFE 
standards. We know from experience that CAFE standards cut oil 
consumption and thereby reduce greenhouse gas emissions. It is a single 
policy that is extremely effective.
    This summer the equivalent of roughly a 50 percent tax (the average 
increase in gas prices) was felt around the country due to OPEC's 
reductions in supply. Despite the sharp jump in price, Americans did 
not change their driving behavior, carpool more, take public/mass 
transportation or buy less SUVs. An increase in gas or fuel taxes would 
have to be large enough to cause these things to happen. A similar 
situation to the 1970s tripling of oil prices would have to occur to 
see an impact demand for gas or fuel.
    Alternative fuels have their shortcomings too. We are a long way 
from having an infrastructure to bring the alternative fuels to 
consumers. Additionally, each of the proposed alternative fuels, such 
as ethanol, has problems.
    Question 7. Why do you believe that raising CAFE standards is the 
single most effective measure to improve energy efficiency?
    Answer. America's cars and light trucks spew out more CO2 
than the total emissions of all sources in all but three other 
countries (China, Russia and Japan). While there is no technology to 
scrub CO2 from our cars' exhausts, we can make them pollute 
less by making them more fuel-efficient. By using today's technology, 
carmakers could safely increase the fuel economy of cars and light 
trucks without significantly changing their size or performance. The 
biggest single step we can take to curb global warming is to make our 
cars and sport utilities go further on a gallon of gas by raising 
Corporate Average Fuel Economy (CAFE) standards to 45 mpg for cars and 
34 mpg for light trucks.
    The existing standards save more than 3 million of barrels of oil 
per day and reduce U.S. dependence on imported oil. Without these 
savings, the U.S. would be importing at least 1.5 million barrels more 
every day than today's current levels. Even with the oil savings from 
CAFE, cars and light trucks consume 40 percent of the oil used in the 
U.S. every day--almost as much as we import.
    A gallon of gas is essentially pure carbon and weighs about 7 lbs. 
When burned, the weight of the carbon is nearly tripled by the addition 
of the two oxygen atoms, forming CO2. Thus, every gallon of 
gas burned directly emits 19 lbs. of carbon dioxide from the tailpipe. 
Including upstream emissions from refining, transport, and refueling, 
each gallon of gasoline burned emits a total of 28 pounds of CO2 
into the atmosphere. Raising CAFE therefore dramatically reduces 
CO2 emissions.
    CAFE standards have additional benefits. CAFE standards help in the 
effort to clean the air. By reducing oil consumption, the standards 
keep 500,000 tons per year of carcinogenic hydrocarbon emissions, a key 
smog-forming pollutant, from upstream sources--refining and 
transporting of oil and refueling at the pump--and out of the air we 
breathe. The standards, therefore, improve air quality, helping 
polluted cities and states achieve Clean Air Act requirements.
    Because fuel economy for cars doubled between 1975 and the late 
1980s, a new car purchaser saves an average of $3,000 at the gas pump 
over the lifetime of the car. With today's high fuel prices, CAFE 
delivers more than $40 billion annually in consumer savings. Consumers 
can spend these dollars in their communities on food, housing, and 
clothing, instead of on imported oil.
    Question 8. What other viable and cost-effective options exist for 
improving energy efficiency?
    Answer. Investing in Renewable Energy: While many congressional 
leaders are now calling for immediate action to reduce gasoline prices, 
they have blocked efforts to increase energy efficiency and reduce oil 
consumption. In the last 2 years, Congress has significantly under-
funded the Administration's proposals.
    For example, funding for research for energy conservation, solar 
and renewable energy, was at 20 percent less than requested levels in 
FY 2000, or $273 million for FY 1999 and 2000.
    Efforts to provide tax incentives to spur the purchase of energy 
efficient vehicles and other products, the use of renewable energy, and 
clean renewable electricity production have also be stymied by 
congressional action--funding at by 98 percent less than requested in 
FY 2000, and by 100 percent less than in FY 1999, when Congress 
provided no funding. Those decreases represent $7.1 billion for the 2 
years.
    Last year, Sen. Jim Jeffords (R-VT) led efforts to add $62 million 
to solar and renewable energy programs, but it was defeated. In the 
last 2 years, Congress cut $7.4 billion from the Administration's 
efforts to reduce our consumption of energy. These programs would have 
saved business and consumers $70 on their energy bill for every $1 
invested in these programs, which might have mitigated the cost of 
rising gasoline prices.
     Weatherization: When the Northeast was hit with a cold snap in 
February, the high cost of home heating oil was a major issue. 
Congress, since 1995, has slashed funding for important programs that 
would help reduce oil consumption and improve energy efficiency. In 
Fiscal Year 1996, the energy efficiency budget was cut by 30 percent. 
Energy efficiency helps to reduce demand and save consumers money.
    In addition to cutting funding for energy efficiency programs in 
general, Congress has slashed funding for the Weatherization Assistance 
Program, a program that provides essential services to low-income 
families. The program provides up to $2,000 per household to weatherize 
homes--improving insulation, windows, furnaces, etc. Weatherization has 
been shown to improve a home's efficiency by 23 percent, which would 
decrease demand for oil and save money in the long term.
    Low-income families were the hardest hit by high oil prices in a 
cold snap. By slashing funding for the weatherization program Congress 
ensured that homes were less efficient and required more oil to provide 
much needed warmth. Congress must invest in programs like 
weatherization to insure that the most vulnerable members of society 
are not left in the cold in the future.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                           Fredrick D. Palmer
    Question 1. You stated that the ``no growth'' electricity policies 
of the environmental community and the State of California has hit a 
wall. Electricity is now scarce and expensive in California.
    a) LWhat do you propose that the State of California do today to 
reverse their electricity dilemma?
    b) LHow much would you say Silicon Valley has contributed to this?
    c) LAre you aware of any actions that Silicon Valley companies are 
taking in response to this situation and their need for an 
uninterruptible power source?
    Answer. California recently passed legislation expediting siting of 
new power plants. This is a commendable step. However, the legislation 
apparently allows expedited siting only for those plants that do not 
have major environmental impact. The standard is unfortunately vague. 
Expect the environmental community to challenge any fossil fuel-fired 
plant on environmental grounds, including climate change concerns. For 
example, natural gas-fired power plants are now in environmental favor, 
but natural gas is a carbon-based fuel (like coal) even though CO2 
emissions from a gas-fired unit on a percentage basis are lower than 
coal by about half. Nonetheless, if you could replace all coal-fired 
electricity generation in the United States today with natural gas--
which you cannot do--you nonetheless would do nothing to lower the 
threat of apocalyptic global warming according to greenhouse theory.
    Remember always in these discussions that the argument is not over 
stabilization of greenhouse gas emissions. Under greenhouse theory, you 
have to go 60 percent below 1990 levels of CO2 emissions by 
humans, otherwise the apocalypse is upon us no matter what we do.
    There is no doubt that the Silicon Valley technology boom 
contributed greatly to the increase in electricity demand in 
California. In Seattle, Washington, for example, a huge debate is going 
on now over whether additional generation should be secured by Seattle 
City Light to meet the needs of a number of proposed electricity-
consuming data centers for the telecom revolution--consumption in the 
range of hundreds of megawatts. The American Public Power Association's 
Public Power Weekly newsletter recently ran a story on this 
development. The text of that article is attached.
    Silicon Valley, of course, already has gone through its robust 
growth phase with respect to the technology companies that have located 
there and mushroomed in employment and activity. I don't have a precise 
number as to the contribution made by the companies located there, but 
I was in San Francisco this summer when electricity demand outstripped 
supply in the Bay Area and it was front-page news every day. Those 
complaining loudest were those using the most electricity, namely the 
technology companies in Silicon Valley.
    Silicon Valley companies are installing electric generating 
capacity onsite to provide themselves with uninterruptible power 24 
hours a day, 7 days a week. These generators use natural gas or diesel 
fuel, thus they emit CO2 when used. The generators come in 
the form of micro turbines and/or fuel cells (primarily micro turbines 
right now) or diesel generators.
    This development is explored in depth in the new Mark Mills/Peter 
Huber newsletter, Powercosm. The law of unintended consequences says if 
we restrict regulated utilities from generating using fossil fuels, 
unregulated entities will find a way to provide electricity for 
themselves and will turn to small generators, which tend to be 
expensive and inefficient, and use natural gas and/or diesel fuel in 
the process.
    Question 2. You stated in your written testimony that ``in the 
U.S., we have a legacy that impedes placement of new technologies.'' 
Would you please qualify that statement.
    Answer. The statement was made in reference to existing personal 
computers and long line telephone systems that are ubiquitous in the 
United States. In the brave, new, wireless world, developing countries 
will be able to leapfrog both longline telephone systems and PC's to 
have access to telephones and the Internet. For example, the well-known 
cellular phone company QUALCOMM has made a major investment in a 
satellite company called Globalstar. QUALCOMM's advanced cell phone 
technology coupled with the Globalstar satellite system allows on-the-
ground telephone systems of high quality anywhere in the world without 
installing long lines. As cell phones mature, their Internet access 
capability will become very real and will allow Internet access without 
regard to PC's, which exist in large numbers in the United States.
    As an aside, the study ``The Internet Begins With Coal'' was 
triggered by Intel's vision of one billion PCs on line within the next 
several years. In the November 2000 edition of The Industry Standard, 
there is a special report on the Internet economy focusing on wireless. 
In that edition, Intel is running a full-page color advertisement 
stating that, in their view, 1.3 billion people will have wireless 
Internet access by the year 2004. These are stupendous numbers and are 
going to create huge demand for electricity worldwide no matter what 
any us may think about the desirability of this development. It is in 
the nature of things. Government intervention in rationing electricity 
supply will only be disruptive and, in the long run, won't stop it in 
any event. People want to be ``wired,'' they're going to be wired, and 
they're going to be online.
    Question 3. You stated in your written testimony that none of the 
clean coal technologies on the drawing board do anything about carbon 
dioxide. Can you explain this statement and should the U.S. discontinue 
its investments in clean coal technologies?
    You also state that we should scrub carbon dioxide and sequester it 
to keep it out of the atmosphere. Any thoughts on what new technologies 
may allow us to do this better?
    Answer. Clean coal technology is very promising and we should 
accelerate R&D in this important area. But clean coal technology is not 
designed to limit CO2 emissions, although increased 
efficiency has the effect of reducing CO2 emissions. Clean 
coal technology has been developed to deal with pollutants. As I 
testified, CO2 is not a pollutant. It is a benign gas 
required for life on earth. It is a nutrient for plants in the 
photosynthetic process. When clean coal technology first was conceived 
and being developed, concern for CO2 emissions was in the 
literature. Some politicians were beginning to raise personal concerns 
about what more CO2 in the air might mean for our future. 
But scientists in the Federal establishment developing clean coal 
technology obviously did not have CO2 in mind when 
technology like fluidized bed boilers and the like were being 
developed.
    We're going to have to burn coal. We obviously want to burn it as 
efficiently as we can. This is an inherent part of the research and 
development process for clean coal technology. We should accelerate our 
efforts in this regard. But, in that context, we should also understand 
that there simply is not a lot we can do about CO2 
emissions. I say this with no disrespect to those concerned about 
CO2 emissions. I say it, however, in the context of 
understanding that under greenhouse theory you need to go 60 percent 
below 1990 levels before anything is done in averting the risk of 
catastrophic global warming, according to the environmental community.
    I am not an expert on CO2 sequestration technology. I do 
understand that technology exists that could scrub CO2 out 
of stack gases the way SO2 is scrubbed. I also have seen 
references to the cost of electricity and that the increased costs are 
not that dramatic. The latest number I saw was 30 percent over normal 
operation of a normal coal fired power plant. These are matters that 
should be looked into by the Federal Government in an R&D program for 
CO2 sequestration, which I endorse. In addition, CO2 
sequestration by virtue of changes in agricultural practices, as 
proposed by Senator Brownback also is something that I endorse.
    Question 4. Do you believe that the Federal Government is properly 
investing in renewable energies?
    Answer. Yes, I do. Renewable energy technologies are important and 
Federal R&D money for renewables has been available for some period of 
time. In connection with arguments over the budgeting process, there 
are those who believe more should be spent. I believe there are those 
who believe less should be spent. I don't believe there is anybody, 
however, who argues nothing should be spent. To the extent that people 
argue that, I believe they are wrong. I believe the Federal Government 
should invest in research and development for renewable energy 
technologies consistent with the overall financial picture of the 
government, available revenues, and the like.
    Question 5. What is your opinion about the current CAFE standards?
    Answer. At the hearing, both Senators Feinstein and Kerry expressed 
concern over the lack of CAFE standards for sports utility vehicles and 
argued for increased CAFE standards across the board. I understand the 
reasons why people believe in CAFE standards, but we have had such 
standards for a very long period of time and our oil consumption and 
transportation keeps going up. I, therefore, question the efficacy of 
stringent Federal CAFE standards.
    The market is bringing us more fuel efficient vehicles. For 
example, hybrid cars, which get 60 miles to the gallon and up, are on 
the road and are commercially available today. Dr. Pat Michaels of the 
University of Virginia, who we work with on climate change matters, 
actually drives one manufactured by Honda. Dr. Michaels states that he 
enjoys his vehicle very much, that it is fun to drive, and that it is 
attractive.
    He also points out, however, that while the car carries a sticker 
price of $20,000, it probably costs more like $60,000 to manufacture. 
This is so because the car is predominantly aluminum. Aluminum is 
lighter than steel while still being strong in providing safe occupancy 
for the automobile's passengers. Aluminum is more expensive than steel, 
so this is not surprising. Aluminum is also very electricity intensive 
in terms of the refining process. In the Pacific Northwest, where there 
are large-scale aluminum plants, electricity is now in short supply in 
certain times of the year. In fact, this year aluminum plants were cut 
off due to lack of supply during the power crises in the California.
    So if we are for higher CAFE standards, that means we are going to 
use more aluminum in our vehicles. If we use more aluminum in our 
vehicles, the cars are going to be more expensive unless we can get 
economies of scale by expanding aluminum production capacity. In this 
context, we will need much more electricity at a time when natural gas 
prices are very expensive and the long-term availability of natural gas 
in certain parts of the country is very much in question.
    All of this argues then for more coal-fired electricity generation. 
If you want better CAFE standards, you have to have lighter cars. If 
you want lighter cars, you're going to have to use more aluminum. If 
you use more aluminum, you're going to need more electricity. If you 
need more electricity, you have to put in coal-fired power plants.
    I appreciate very much the opportunity to provide testimony to the 
Committee.
                                 ______
                                 
    Appended Text of Article from the September 25, 2000, edition of 
Public Power Weekly
seattle mulls over a change in rates to deal with the dot-coms' demands
    Seattle City Light is condidering a change in its rate structure 
that would create a different rate class for Internet companies and 
other high-tech, power-hungry operations that require a load of 10 MW 
or more.
    Huge data centers that house Internet-serving computer equipment 
are popping up in Puget Sound as the region's demand for digital 
technology surges. The data centers, jammed from floor to ceiling with 
servers and routers, use a lot of energy because the must be kept air-
conditioned. One of these data centers, or server farms, can consume 
enough electricity to run a steel mill or a small town.
    ``These dot-com loads are just remarkably dense loads,'' said Bob 
Royer, Director of Communications and Public Affairs for Seattle City 
Light. A handful of companies are looking for 200-500 average MW in the 
next few years, or about a third of Seattle City Light's current daily 
operating load, Royer said. One project already in the works will have 
105-MW load--enough to power 85,000 homes, or a dozen 60-story office 
towers, he told Public Power Weekly.
    The City Council and City Light are trying to determine how to meet 
the power needs of high-tech companies without raising rates in the 
residential and commercial sectors. The City Council's Energy and 
Environmental Policy Committee postponed a vote on the matter after a 
public hearing Sept. 7 so it could gather more information before 
making a decision.
    ``We want to encourage and support economic development,'' said 
Councilwoman Heidi Wills, chairwoman of the energy committee. ``At the 
same time, we want to protect our residential and small-business 
customers from the added demand.''
    At the Sept. 7 hearing, business owners warned City officials that 
higher rates for large customers could steer companies away from the 
Puget Sound region. ``You have your hands around the neck of the golden 
goose of the new economy,'' said Jay Garthwaite, managing Director of 
InfoAge Services Group, a company based in Bellevue, Wash., that wants 
to build a number of high-tech facilities in the Puget Sound area. The 
projects each would require 20 average MW or more, according to Seattle 
Times.
    City Light wants to make sure its existing customers do not have to 
pay higher electric rates because of the dot-com loads, said Royer. The 
utility would like to be able to negotiate individually with these 
companies, he said.
    A basic question the utility needs to struggle with is how much it 
should do to accommodate the dot-coms, which typically are in a hurry 
to build their server farms, Royer said. These companies are buying a 
lot of land now to put up data centers and they will require huge 
amounts of electricity for a while. But for how long? ``What is their 
shelf life?'' he asked.
    ``As a public utility, we're carrying a lot more load than just the 
electricity we serve,'' Royer said. ``We're serving community goals, 
too.''
    ``We also want to protect the investment our existing customers 
have made in dams and other facilities,'' he said. City Light generates 
70 percent of its own electricity from hydro power plants built in the 
1930s, 1940s, 1950s and 1960s, that produce low-cost electricity, he 
said. ``We don't want to fritter that away.''
    The problem of how to deal with the dot-coms ``is a new issue,'' 
Royer said. ``It's an important issue for us to deal with well.''
    One of the questions about these new enterprises is what kind of 
investment they make in the efficient use of energy, Royer said. 
Seattle's conservation programs now save the utility 6 to 7 MW and City 
Light wants to raise that to 12 MW over the next 3 years. ``Those gains 
are wiped out in an instant'' with a dot-com load, he said. On the 
other hand, the loads are steady, ``and there's revenue there where 
there wasn't before,'' Royer said. The server farms don't require 
peaking power, since they back up their own loads with diesel 
generators, batteries and fuel cells, he noted.
    Other utilities around the country also will face questions about 
how to handle the dot-coms' demands.
    In a recent interview, Michael Dell, founder and CEO of Dell 
Computer, said the Internet is continuing to grow at a rapid rate. Five 
years from now, there will be 20 times more servers than today, he 
predicted.
    This month, AT&T announced a plan to build about two dozen Internet 
data centers. The company said it would double the size of its existing 
centers in New York, Sand Diego and San Francisco by the end of the 
year an add new centers in Atlanta, Chicago, Dallas, Los Angeles, 
Phoenix, Seattle, and the Washington, DC., area.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                          Dr. Norman Rosenberg
    Question 1. You mentioned that soil carbon sequestration could make 
the difference between expected and desired levels of carbon dioxide 
for the first three to four decades of the 21st Century which would 
allow time to develop new technologies. What has to be done to make 
this possible?
    Answer. The graphic shows a growing gap as the 21st century 
progresses between expected emissions of carbon to the atmosphere and 
the lesser amounts permissible if the atmospheric concentration of 
CO2 is to be maintained below 550 ppm. We calculate that 
soil carbon sequestration can bridge that gap until about 2030 and 
continue to help throughout the century, but to a relatively lesser 
degree after 2030. To make this possible will require widespread 
adoption, both in the United States and globally of farming, ranching 
and forestry practices that favor the accumulation of carbon in soils. 
While conventional tillage exposes soil organic matter to oxidation 
with consequent liberation of CO2 to the atmosphere, 
minimum-till and no-till management increase the amount of carbon that 
resides in soil in the form of organic matter. Conversion of 
agricultural lands to grass or forest vegetation also favors the 
increase of soil carbon. The major scientific problem facing us now is 
to discover ways of decreasing the proportion of soil carbon that is 
transient and increasing the long-lived or ``recalcitrant'' fractions. 
Soil microbiology, molecular science, genetic engineering and other 
disciplines must be directed to this goal.
    Question 2. How can scientists reduce the cost of carbon 
sequestration?
    Answer. Soil carbon sequestration is as nearly cost-less a practice 
as can be. Essentially, agricultural management practices that have 
been developed to conserve soil and energy (e.g. no-till) also increase 
the accumulation of carbon in the form of organic matter in soils. 
Nitrous oxide, another greenhouse gas, is emitted from agricultural 
fields. Better management of nitrogen fertilizers is needed in both 
conventional and reduced tillage systems. Good fertilizer management 
practices reduce both the cost of this input to farmers and the 
potential for negative environmental effects.
    Question 3. What is the single largest impediment to employing soil 
carbon sequestration throughout the nation's farmlands?
    Answer. Soil carbon sequestration can be a win-win situation for 
farmers and the environment. In our view, therefore, the most serious 
impediments to implementation are probably economic and social. Farmers 
will need to be assured that beyond the rewards of good stewardship, 
introduction of appropriate management practices will not lose them 
income. It takes a few years to convert fully from conventional to 
reduced tillage; some new equipment may be needed; guidance and 
expertise may be needed from extension and other specialists. The 
transition will be facilitated when a market for carbon sequestration 
becomes operational, opening the possibility that the farmer will be 
paid for carbon that he or she stores in soil.
    Question 4. Would you comment on the development status of 
verification technologies in support of soil carbon sequestration?
    Answer. Changes in soil carbon content arising from soil and 
vegetation management can be measured with accuracy and precision with 
current technologies. These include soil sampling at time intervals, 
determination of carbon concentration by dry combustion methods and 
special calculations to express concentration values as soil carbon 
mass. This methodology has been applied to detect soil carbon changes 
in many long-term experiments around the world.
    Procedures have been proposed for monitoring and verification of 
soil carbon changes applicable to large regions. These procedures 
generally include: stratified sampling by climate-soil-management 
combinations, monitoring of soil-management practices and production 
information, laboratory determinations of soil carbon concentration and 
other soil properties, scaling of soil carbon changes from field to 
regional levels using simulation models, GIS and remote sensing.
    Recent results from a field project in Canada demonstrated that it 
is possible to detect changes of one ton of soil carbon per hectare 
after 3 years of no-till management with a 95 percent level of 
confidence that the changes measured were due to the practice and not 
to chance.
    Much work remains to be done, however, toward developing fast and 
cost effective verification technologies that are applicable to a wide 
range of climate-soil-management combinations. The new DOE-supported 
CSiTE program and the new USDA-supported consortium, CASMGS will 
contribute to achievement of this objective.
    Question 5. Would you describe what your colleagues in other 
countries are doing in carbon sequestration to promote this application 
to mitigate global warming's effects? Would you also comment on the 
international acceptance of carbon sequestration as a means of 
addressing global warming?
    Answer. Canada is far ahead of the United States in working out 
market mechanisms to ``commodify'' carbon. GEMCo, a consortium of 
energy companies in western Canada with provincial and federal support 
has sponsored field research to document the impact of no-till 
practices on soil carbon sequestration. In addition, GEMCo is 
pioneering the development of market strategies whereby emitters of 
carbon pay farmers for verified storage of carbon in their soils. A few 
other examples: the World Bank is funding agricultural land improvement 
and conservation projects in Mexico in which soil carbon sequestration 
is included among the practices introduced. Kazakhstan, Senegal and 
Argentina are examples of three other countries where soil carbon 
sequestration projects could well develop in a near future.
    Soil carbon sequestration is not endorsed wholeheartedly in all 
countries. There is some resistance predicated on the notion that this 
strategy can distract the international community from the perceived 
need of reducing (or eliminating) the emissions of carbon from 
combustion of fossil fuels.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                            Dr. Joseph Romm
    Question 1. Mr. Palmer has commented on Silicon Valley's need for 
electricity in California. Would you consider this a local problem and 
not something we can expect to happen throughout the country?
    Answer. Interestingly, in spite of the continued growth in Silicon 
Valley, peak power demand in California in 2000 was lower than that of 
1999. So, yes, I believe that while there will be local electric grid 
problems, it is clear that nationwide, electricity demand growth rates 
are slower now than they were before the Internet.
    Question 2. You have cited several energy saving examples such as 
Internet technology eliminating as much as 2 billion square feet of 
commercial office space, the equivalent of 450 Sears Towers. As a 
result of lesser demand for office space, are we also experiencing an 
increase in energy demands elsewhere? For example, when more employees 
work from home, are their home energy costs driven up?
    Answer. When employees work from home, they use less energy than 
when they are at work. Fundamentally, offices are very electricity 
intensive: Lighting, for instance, consumes 40 percent of office 
electricity, whereas it consumes only about 10 percent of home 
electricity in part because homes are heavily daylit. Also, homes use 
considerable energy whether you are in them or not, so the incremental 
energy consumed by someone working at home is typically fairly low. The 
savings are particularly large if they spend most of their time outside 
of the office, either at home or on the road, and the company gives 
them shared office space (i.e. reduces the square footage of office 
space allocated to them).
    Question 3. You mentioned the differences between the Environmental 
Protection Agency and the Energy Information Agency analysis of 
potential impact of structural economic changes driven by rapid growth 
in the IT-producing industry industries. How do we resolve the 
differences between these two analyses?
    Answer. The Energy Information Administration (EIA) testified in 
February 2000 that electricity demand growth has slowed since the 
advent of the Internet. This conclusion comes from data collection and 
analysis, which EIA is pretty good at. Their forecasts in the future do 
not yet account for this trend, but then again, EIA is notoriously bad 
at forecasting, particularly when it involves a major new technology 
trend. The Environmental Protection Agency (EPA) agrees with me that 
there is an apparent structural shift in the U.S. economy due to IT-
producing industries, which is causing slower energy growth. So I am 
not certain there are major differences, merely that EIA is very bad at 
long-term forecasting.
    Question 4. Background: Outsourcing is the industry practice of one 
company hiring another perform a specific service and it encourages a 
whole systems approach to efficiency covering all fuels. It is believed 
that this approach will yield deeper savings at a lower cost.
    You mentioned that if the concern for global warming continues to 
grow, outsourcing deals may become commonplace. Can you elaborate on 
this point?
    Answer. Outsourcing typically results in much larger investments in 
energy efficiency than a company would make by itself. As concern for 
global warming grows, companies will increasingly want to reduce their 
greenhouse gas emissions, which will require larger investments in 
energy efficiency. A natural place for them to turn for the capital 
needed to make such investments is an energy outsourcer.
    Question 5. Could the decline in U.S. energy intensity in the ``New 
Energy Economy,'' which you mentioned, be explained by a production 
shift to the developing world? So while the U.S. has decreased, there 
is no net loss globally in energy intensity?
    Answer. The decline in U.S. energy intensity accelerated sharply 
since 1996, coinciding with the advent of the Internet economy. The 
trend toward shifting production to the developing world is a long-
standing trend dating back more than two decades, so it seems unlikely 
to be more than a small part of the recent drop in energy intensity.
    Question 6. You mentioned in your statement the structural and 
efficiency gains generated by the ``Internet economy.'' How does your 
study break down these gains? How much has been gained per year due to 
structural and efficiency improvements in the New Energy Economy?
    Answer. Work by EPA and Argonne National Laboratory suggest that 
between one-third and one-half of the intensity drop in recent years is 
due to structural change in the economy (i.e. more GDP growth being 
generated by software manufacturers and other elements of the New 
Economy that are not particularly energy intensive). Between one-half 
and two-thirds of the drop is due to efficiency gains created by the 
New Energy Economy.
                                 ______
                                 
  Prepared Statement of Glenn Kelly, Executive Director & CEO, Global 
                           Climate Coalition
    On behalf of the members of the Global Climate Coalition (GCC), 
which collectively represent more than six million large, medium, and 
small businesses, we thank Chairman McCain and the Committee on 
Commerce, Science, and Transportation for the opportunity to submit 
this statement for the record as the Committee explores the climate 
issue.
    The Global Climate Coalition believes that climate change is a 
long-term, global issue, and therefore policies to address climate 
concerns must also be designed for the long-term by all nations. The 
GCC believes that it is imperative that climate policies focus on 
responsible voluntary actions, including further research, innovation 
and deployment of current and potential future technologies in 
developed and developing nations to address concerns about the climate. 
Unrealistic targets and timetables, such as those called for under the 
Kyoto Protocol, are not achievable without severely harming the U.S. 
economy and all American families, workers, seniors and children. A new 
approach to climate policy is needed. We are pleased to submit for the 
Committee record our 21st Century Climate Action Agenda, an approach to 
climate policy we believe is responsible, forward-looking, economically 
sound and effective.
    Rather than pursuing a badly flawed and unworkable protocol 
approach, the GCC advocates reaffirming the goals of key provisions 
embodied in the U.N. Framework Convention on Climate Change (UNFCCC). 
Specifically, we support voluntary actions and the need for climate 
policies to be cost-effective to ensure global benefits at the lowest 
possible cost. Additionally, climate policies must be based on relevant 
scientific, technical and economic considerations that are continually 
reassessed and updated.
    The GCC continues to encourage an open and factual public dialogue 
on the climate issue in an effort to better understand the economic and 
societal implications of various policy options to respond to climate 
concerns. At the same time, we will continue pursuing a comprehensive 
strategy with Congress, the Administration, and the public to promote a 
bipartisan approach to climate policy that is practical and consistent 
with improvements in the state of scientific understanding.
    Among the initiatives that the GCC supports in international 
climate policy discussions are unrestricted inclusion of ``flexible 
mechanism'' concepts (such as emissions trading, clean development 
mechanism, joint implementation, and sinks) and participation by all 
nations, developed or developing. Furthermore, we believe U.S. citizens 
deserve a detailed accounting of domestic economic costs before the 
United States becomes party to any international climate treaty. These 
principles are consistent with S. Res. 98, passed by a vote of 95-to-0 
in the 105th Congress.
    Again, the Global Climate Coalition wishes to thank Chairman McCain 
and the Committee for this opportunity to convey our positions on this 
important issue. We look forward to working with the Committee in the 
months and years ahead.

                                
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