[Senate Hearing 109-188]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-188
 
                             CLIMATE CHANGE

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

                                HEARINGS

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   TO

    RECEIVE TESTIMONY REGARDING THE CURRENT STATE OF CLIMATE CHANGE 
 SCIENTIFIC RESEARCH AND THE ECONOMICS OF STRATEGIES TO MANAGE CLIMATE 
                                 CHANGE

                               __________

                             JULY 21, 2005

                           SEPTEMBER 20, 2005


                       Printed for the use of the
               Committee on Energy and Natural Resources


                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               JON S. CORZINE, New Jersey
GORDON SMITH, Oregon                 KEN SALAZAR, Colorado
JIM BUNNING, Kentucky

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
                  Bob Simon, Democratic Staff Director
                  Sam Fowler, Democratic Chief Counsel
                John Peschke, Professional Staff Member
                  Jonathan Epstein, Legislative Fellow


                            C O N T E N T S

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                                                                   Page

Hearings:
    July 21, 2005................................................     1
    September 20, 2005...........................................    67

                               STATEMENTS

                             July 21, 2005

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     8
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     4
Bunning, Hon. Jim, U.S. Senator from Kentucky....................     3
Cantwell, Hon. Maria, U.S. Senator from Washington...............     8
Cicerone, Ralph J., Ph.D., President, National Academy of 
  Science, and Chairman, National Research Council...............    12
Corzine, Hon. Jon, U.S. Senator from New Jersey..................     2
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Feinstein, Hon. Dianne, U.S. Senator from California.............     3
Houghton, Sir John, Co-Chairman, Scientific Assessment Working 
  Group, Intergovernmental Panel on Climate Change, London, 
  England........................................................    21
Hurrell, James W., Ph.D., Director, Climate and Global Dynamics 
  Division, National Center for Atmospheric Research, Boulder, CO    35
Martinez, Hon. Mel, U.S. Senator from Florida....................     5
Molina, Dr. Mario, Professor, University of California, San Diego    30
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     6
Salazar, Hon. Ken, U.S. Senator from Colorado....................    10
Talent, Hon. James M., U.S. Senator from Missouri................    11

                           September 20, 2005

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................    68
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................    70
Corzine, Hon. Jon, U.S. Senator from New Jersey..................    69
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............    67
Feinstein, Hon. Dianne, U.S. Senator from California.............    71
Gruenspecht, Howard, Ph.D., Deputy Administrator, Energy 
  Information Administration, Department of Energy...............    72
Grumet, Jason S., Executive Director, National Commission on 
  Energy Policy..................................................    94
Morgenstern, Richard D., Ph.D., Economic and Senior Fellow, 
  Resources for the Future.......................................   101
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................    71
Smith, Anne E., Ph.D., Vice President, CRA International.........    78
Thomas, Hon. Craig, U.S. Senator from Wyoming....................    70

                               APPENDIXES
                               Appendix I

Responses to additional questions................................   125

                              Appendix II

Additional material submitted for the record.....................   219


                             CLIMATE CHANGE

                              ----------                              


                        THURSDAY, JULY 21, 2005

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:06 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

          OPENING STATEMENT OF HON. PETE V. DOMENICI, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. The hearing will please come to order. First, 
let me thank everyone who is here today. I am sure you know 
that this is a very significant hearing and a lot of people in 
the audience have strong feelings about it. But we are not here 
for any show of strength by anybody in the audience. We know 
you are here, but we do not need any audience participation. 
And so I hope you will accommodate us in that regard.
    I circulated a short list reflecting the fact that we are 
going to consider today, if we can--if we get twelve people, I 
am going to say it now, so if that happens, Senator Bingaman, 
if it is noted at any time, then we are going to proceed with 
the five pending nominees. I think you are all aware of them, 
but in case you are not, I would ask the staff to circulate to 
you their names.
    If any Senators want any discussion on them, I would 
appreciate it if you would indicate that to me quickly, because 
as soon as we have requisite Senators, I am going to ask 
Senator Bingaman to move with reference to them. For the 
witnesses, that is just our own regular business.
    I want to first thank the witnesses for taking time off 
their busy schedules to come here to provide us with their 
views. I commented to Senator Bingaman, when the energy bill 
was being considered on the floor, to have this hearing. It 
will not be the last hearing on this subject, but certainly for 
our committee, it is the first and it is very important.
    At the time we discussed this, Senator Bingaman and I were 
engaged in serious discussions about what we might agree should 
be done about the issue of climate change. I have come to 
accept that something is happening with the earth's climate. I 
am aware that many in the scientific community are warning us 
that something needs to be done.
    I am also aware that there are other qualified members of 
the scientific community who do not share those views, and 
probably even more who are concerned that anything we do will 
significantly affect our economy and even our way of life, and 
also suggest that maybe whatever we do will not have any 
impact. So as I said, we are going to have additional hearings, 
and hear from those witnesses who have different views from 
what we are going to hear today.
    I believe that prudence warns that we consider this issue, 
that we hear from scientists, and we hear from economists about 
exactly what the role of humans is in all of this, and what the 
impact will be if we decide to address it. And what it might be 
if we decide to do nothing. So what, how, who, and when seem, 
to me, to be questions that have to be answered in my mind. 
These are the questions that this hearing and subsequent 
hearings will help me answer. That is what, how, who, and when.
    With that, we are going to begin the search for answers. 
Many already think the answers are there, and that we should 
have already drawn conclusions and acted. I think, however, 
everyone knows this is a very, very important scientific issue, 
and that the results are very important and solutions are very 
important.
    I hope this committee understands that we intend to move 
ahead with a series of activities that will put us into the 
middle of this issue, and then we will see how it comes out.
    With that, I yield to my friend and colleague from New 
Mexico, Senator Bingaman, who has an opening statement.
    [The prepared statements of Senators Corzine, Bunning and 
Feinstein follow:]

Prepared Statement of Hon. Jon S. Corzine, U.S. Senator From New Jersey

    Mr. Chairman, I would first like to thank you for holding this 
hearing on one of the most pressing issues facing our planet--climate 
change. And Senator Bingaman, you have been a major proponent of 
effective climate change policy and I want to thank you for your 
leadership in this area.
    The world's leading scientists have linked the burning of fossil 
fuels to global warming that threatens our environment, our health, and 
our future. The threat of global warming is real and needs to be 
addressed. I am pleased that a resolution put forth by Senator Bingaman 
expressing the sense of the Senate that the Senate must take action to 
address climate change recently passed on a bipartisan basis. While 
this is a step in the right direction, it is absolutely imperative that 
Congress take bigger leaps forward to implement a comprehensive, 
thoughtful policy that effectively addresses global warming
    Massive amounts of evidence show that average global temperatures 
are rising. Part of this increase is natural. Temperatures do vary over 
short and long terms. Many opponents of climate change legislation 
argue incorrectly that the changes in global temperature are due to 
these naturally occurring fluctuations. In an attempt to bolster their 
claim they cite a ``medieval heat wave.'' They fail to mention, 
however, that scientific documentation distinguishes between natural 
climate variability and human induced climate change. Scientists have 
conducted a number of studies that indicate the climate change observed 
over the 20th century is due to a combination of factors--including 
changes in solar radiation, volcanic activity, land-use change, and 
increases in atmospheric greenhouse gases. Of these, the increase in 
greenhouse gases has been the dominant driver of climate change over 
the past few decades. And we have the technology to change that. If we 
have the will, we can lower the amount of greenhouse gasses released 
into our environment.
    I have long been a proponent of legislation that would counter this 
problem and encourage reductions of greenhouse gas emissions. My 
advocacy on behalf of climate change legislation is not limited to the 
current Congress. Senator Brownback and I led the way to passing a 
greenhouse gas registry and reporting amendment to the Energy Bills in 
the 107th and 108th Congresses. M. Chairman, the current voluntary 
programs encourage reductions from only a small group of industry 
leaders, and have little to no effect on most of the economy. Despite 
these well-intended programs, greenhouse gas emissions have risen on 
average one percent per year for the last several years. We can do 
better. I am disappointed that the bill passed by the House this 
Congress included absolutely no language concerning climate change and 
the Senate bill did not include enough. The lack of effective climate 
change policy is big part of why I voted against the Senate Energy 
Bill.
    The potential effects of global warming are dire for my state. If 
we do not control climate change, New Jersey could face a receding 
coastline along the shore, loss of habitat in our beautiful beach towns 
like Cape May, and more extreme weather events such as storms and 
flooding. This will also impact New Jersey's economy. If our beaches 
are threatened, and our coastline damaged, New Jersey will see an 
economic impact of catastrophic proportions. Our second largest 
industry, tourism, will be devastated.
    This is an issue for New Jersey and the rest of the United States, 
but it is also an issue for the world. In fact, the United States lags 
far behind all of the G8 countries in addressing climate change. 
Thankfully, British Prime Minister Tony Blair made this issue central 
in the meeting of the Group of 8. The science is increasingly clear 
that greenhouse gas emissions produced by humans are changing the 
earth's climate. It is also eminently clear the rest of the 
industrialized world understands the danger of this problem. Unless 
Congress acts, the effects of global warming may be devastating to the 
worldwide economy and environment. Recognition by the Senate that 
global warming is indeed a problem is a meaningful and important first 
step. However, we can not stop here. Congress needs to act boldly and 
pass additional legislation that counters this problem. History will 
surely judge this body harshly if we fail to do so.
    Again, I thank the Chairman and Ranking Member for allowing this 
Committee the chance to hear from these witnesses before us about this 
crucial topic and I look forward to their testimonies.
                                 ______
                                 
   Prepared Statement of Hon. Jim Bunning, U.S. Senator From Kentucky

    Mr. Chairman, thank you. I look forward to the hearing today to 
discuss the science behind the changes in our planet's climate. We have 
all heard from many scientists about disputes over the scientific 
evidence. We could all debate the science of climate change all day and 
still not agree on how nature has worked to warm the earth and what 
role humans play, if any, in that warming.
    We need to be careful of moving too quickly in addressing climate 
change. Some groups have proposed mandatory caps; I do not believe they 
are the answer. But I think it is clear from the comments of the 
witnesses before the committee today that the scientific consensus--at 
least in this room--is that the most important action that can be taken 
is to immediately move to low emission technology and improve energy 
efficiency.
    This is precisely what we have done in the Senate. We have been 
addressing the climate issue with a variety of immediate-impact 
policies. I have authored bills and fought for provisions in the energy 
bill to expand Clean Coal Technology. Over half of our nation's 
electricity comes from coal power plants and adopting new and cleaner 
technology would lead to significant emissions reductions. In fact, the 
United States is expected to reduce its greenhouse gas emissions by 14% 
by 2012 without any new regulations on emissions.
    We have seen good results in improving energy efficiency in the 
last decade. Since 1990, U.S. industry has improved its energy 
efficiency by 20%. Our automobiles are becoming more efficient also, 
running at a higher fuel efficiency today than they did just a few 
years ago.
    I thank the witnesses for appearing before the committee today and 
appreciate their comments. I look forward to continuing the 
conversation on this issue and discussing the entire scope of climate 
science.
                                 ______
                                 
    Prepared Statement of Hon. Dianne Feinstein, U.S. Senator From 
                               California

    Mr. Chairman, I would like to begin by thanking you and Senator 
Bingaman for holding this hearing. I am extremely pleased that Senator 
Domenici, in particular, has recognized that climate change is 
happening and that it is time we do something about it.
    I hope that this hearing provides the answers that some of my 
colleagues are looking for in order to pass a bill that will establish 
a mandatory cap on greenhouse gas emissions.
    As many of my colleagues know, I was extremely disappointed that 
the McCain/Lieberman amendment to the energy bill failed. I believe 
that this country must act aggressively today to reduce the impacts of 
global warming.
    And I think the McCain/Lieberman proposal provides the legislative 
framework we need to address climate change.
    And the reason I believe that is because it is the only policy out 
there that has a real, mandatory cap on greenhouse gas emissions.
    The scientists here today will describe what ``business as usual'' 
will mean in terms of global warming. But I would like to talk about 
the impacts of inaction and the huge costs of inaction on my state of 
California.
    Since 1900, California has warmed by 2 degrees Fahrenheit. Annual 
precipitation has decreased over much of the state--by 10 percent to 25 
percent in many areas. The Environmental Protection Agency estimates 
that the temperature in California could rise by as much as 5 degrees 
by the end of this century if the current global warming trends 
continue.
    Increased temperatures will impact the State's water supplies. The 
Sierra Nevada snowpack provides the largest source of water for 
California. The snowpack equals about half the storage capacity of all 
of California's man-made reservoirs. It is estimated that the shrinking 
of the snowpack could eliminate the water source for 16 million 
people--equal to all of those in the Los Angeles Basin.
    We have already begun to see a decrease in the Sierra Nevada 
snowpack due to warmer winter storms that bring more rain than snow and 
also cause premature melting of the snowpack.
    If just a third of the snow pack is lost, it would mean losing 
enough water to serve 8 million households. So this is really a major 
problem.
    Even if we take strong action now to reduce our greenhouse gas 
emissions, it is estimated that 27 percent snowpack will remain in the 
Sierras at the end of the century.
    However, if we do nothing to reduce our greenhouse gas emissions, 
there will only be 11 percent of the snowpack left in the Sierras at 
the end of the century. This will be catastrophic not only to 
California's water supply, but also to the State's agricultural 
industry.
    That is why I believe we must take strong action today to curb our 
greenhouse gas emissions. I hope that this hearing will convince my 
colleagues of that as well.
    Thank you, Mr. Chairman.

         STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    Senator Bingaman. Thank you very much, Mr. Chairman, for 
having the hearing. This is something which you and I 
discussed, and I particularly appreciate you doing it at this 
point, when we are right in the midst of trying to deal with 
this comprehensive energy bill that we are in a conference with 
the House about.
    I do think this climate change issue, greenhouse gas 
emissions and climate change, are as significant an issue as we 
will deal with in the Congress, and I hope very much that this 
hearing, as you say, will be the beginning of a deliberative 
process that will lead to a responsible action by us.
    I also want to thank the witnesses. We have a very 
distinguished group of witnesses that have come, some of them 
from a long way to be here. We very much appreciate their going 
to the extra trouble of being here. We look forward very much 
to their testimony. And as you say, I think the purpose, as I 
see this, is to educate all of us on what is possible, what is 
needed, what the facts are.
    I think this is an issue, like many in our political 
process, where there is a tendency for us to jump to 
conclusions and preconceived opinions without really adequately 
understanding the facts, and hopefully this hearing will help 
us avoid that in this case. Thank you.
    The Chairman. Thank you very much. Now Senators, we have 
now quite a number of you here. I would ask you how you think 
we should proceed. I want you to know that both Senator 
Bingaman and I have a great number of things to do today, but 
we can spend most of the morning here. Senator Bingaman cannot.
    Senator Bingaman. No. I can be here all morning. I just 
thought that the sooner we get to the witnesses, the better.
    The Chairman. In light of the fact that we cannot go on 
beyond noon, I would not like to do that, because we cannot be 
here, I wonder what your pleasure--would you like to make 
opening statements, any Senators on our side?
    Senator Martinez. I would like to put my opening statement 
on the record.
    [The prepared statement of Senator Martinez follows:]

   Prepared Statement of Hon. Mel Martinez, U.S. Senator From Florida

    Chairman Domenici, I want to thank you for your willingness to hold 
this important hearing today to discuss the economic impacts of climate 
change strategies and the current state of scientific research in this 
area. Few issues have a greater impact, or enlist the same type of 
fervor and passion, as the study of human effects on our global 
atmosphere. Climate change was a focal point of debate as the Senate 
debated the Energy Bill and we were presented a host of solutions that 
many of my colleagues passionately championed to mitigate the impact of 
releasing greenhouse gases into the air. Today we will hear testimony 
from a cross-section of our national scientific community. According to 
the National Academy of Sciences, the mean global surface temperatures 
have increased by 0.7 degrees since the early 1970s. There is a growing 
consensus that the Earth is in fact warming.
    Serious questions, however, still remain on exactly what course of 
action we should take. And perhaps more importantly, what are the 
ramifications of our decisions? What percentage of this global warming 
trend comes from human activity and from naturally occurring climactic 
changes? Considering that most energy experts predict phenomenal growth 
in the use of fossil fuels from India and China, what type of reduction 
can the U.S. make on emissions of CO2 that will 
significantly affect global temperatures? And finally, what will it 
cost our economy in jobs and lost income to meet global climate 
objectives? Unfortunately, we do not have finite answers to these 
critical questions.
    There have been some in the science community that have tried to 
link this warming trend with natural disasters like hurricanes, where 
four major disasters have battered Florida in the last 10 months. This 
notion was especially strong after the 2004 hurricane season, when 
Bonnie, Charley, Frances, and Ivan left a devastating mark on my state 
that thousands of people are still struggling to recover from their 
ravages. In a recent issue of the Bulletin of the American 
Meteorological Society, several respected climatologists, researchers, 
and policymakers from the National Hurricane Center, NOAA's Hurricane 
Research Division, MIT's Earth, Atmospheric, and Planetary Sciences, 
and many others found that ``no connection has been found between 
greenhouse gas emissions and the observed behavior of hurricanes.'' 
Another respected climatologist from Florida State University, Dr. 
James O'Brien, has stated that the periodic, oceanic phenomenon of the 
Atlantic Ocean Conveyor is the real link between hurricane frequency 
and intensity. He went on to say in an article published in the Orlando 
Sentinel that ``while it is tempting to blame the frequency or 
intensity of hurricanes on man, we all must remember how variable 
nature is--and specifically in this case, the effect of natural 
variations on hurricanes' intensity and frequency is extremely higher 
than the possibility of man's interference.''
    Despite the misguided attempts made by some scientists and 
researchers, we cannot overlook the legitimate, peer-reviewed work of 
climatologists that are rightly concerned about sea levels, the 
shrinkage of the polar ice cap, and the impact climate change will have 
on habitat and threatened animal species. I come from a very 
environmentally conscious state, where a large majority of my 
constituents live in coastal areas and are concerned that man-made 
climate change could potentially threaten the beaches and estuaries 
that make Florida such a unique and beautiful place.
    There is no doubt that we cannot ignore this issue and that is why 
our President has aggressively pursued record levels of research and 
development funding to advance our knowledge on the science of climate 
change. The Bush Administration has committed $6 billion in funding, 
more than any other nation combined, and has committed to an 18 percent 
reduction in greenhouse gas intensity from 2002 through 2012; meeting 
this commitment will prevent the release of 500 million metric tons 
carbon-equivalent emissions into the air. Most recently, Senators Hagel 
and Pryor successfully offered an amendment to the Energy Bill that 
would authorize $2 billion in direct loans, loan guarantees and other 
incentives for the adoption of technologies that reduce greenhouse gas 
intensity while directing a federal effort to implement a national 
climate change strategy. The President and the Senate are acting, but 
we must continue to push forward.
    Again, Mr. Chairman I want to thank you for holding this important 
hearing today. It is critical that we closely examine the evidence our 
scientific community is providing us on the status of our atmosphere 
that help us guide our future actions.

    The Chairman. Any other Senators besides Senator Martinez?
    Yes, Senator.
    Senator Murkowski. Mr. Chairman, I just want to make sure 
that my opening statement is included as part of the record. As 
you know, the State of Alaska is kind of the barometer, the 
bellwether, as we are looking at what is happening right now on 
the ground as it relates to climate change. I think it is 
significant, and I would like to make sure that my full 
comments are included as part of the record.
    The Chairman. Senator, I understand your very grave concern 
about this matter, and it will be made a part of the record, 
you are assured.
    [The prepared statement of Senator Murkowski follows:]

  Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska

    I've tried to be brief in the past in my opening statements. I hope 
that will buy me some leeway today.
    Coming from Alaska, which may be the state most affected in the 
U.S. by future climate change, I have a great deal of interest in this 
issue.
    I start by saying that I have a firm belief that something is going 
on out there. There is considerable anecdotal and scientific evidence 
from Alaska that we have been in a prolonged warming cycle for the past 
three decades.
    Last year was the warmest in Alaska in recorded history, with 
temperatures averaging 5 degrees above normal.
    We've seen a general shrinking in glaciers in Alaska, admittedly 
not in itself proof of global warming.
    We've seen the extent of the Arctic ice pack fall by at least a 
million square kilometers from 1970 to 2000, according to at least five 
studies. And we've seen the thickness of the pack ice thin.
    We've seen permafrost, the frozen soil mixture that underlies much 
of northern Alaska, warm threatening the foundation of roads, buildings 
and even pipelines.
    Earlier this summer scientists at the University of Alaska found 
that lakes in Siberia, and more importantly to me near the Tanana Flats 
and on the Kenai Peninsula in Alaska and in the Yukon Territory, are 
dropping in size and number because thawing permafrost apparently is 
allowing water to seep out.
    These changes have resulted in a host of biological impacts:

   Perhaps a decline in Alaskan king crab stocks that like cold 
        water;
   An increase in spruce bark beetle infestations that have 
        claimed more than 6 million acres of Alaska spruce since the 
        beetles survive better in warmer winters;
   We've seen birds move to more northern nesting zones;
   And we've had reports from Native North Slope villagers that 
        subsistence harvests are becoming more difficult for everything 
        from polar bears and walrus to whales, because of the shrinking 
        pack ice.

    The warming temperatures and receding of the pack ice is 
intensifying the effects of winter storms, increasing coastal erosion. 
On the North Slope of Alaska in the National Petroleum Reserve there is 
a wonderful area for waterfowl nesting north of Teshekpuk Lake. Some 
worry the area may be harmed by future oil development. But the far 
bigger concern is that coastal erosion will devastate and inundate this 
prized breeding, nesting and molting area for waterfowl.
    The Intergovernmental Panel on Climate Change last year projected 
that average global surface temperatures will continue to rise by 
between 1.4 and 5.8 degrees centigrade above 1990 levels by the end of 
this century. Some models indicate that could translate into a far 
higher temperature hike in the high Arctic, especially in winter.
    But then we hear from University of Alaska researchers that Arctic/
Beaufort Sea temperatures actually fell last summer for the first time 
in 29 years.
    The science on why the climate has been warming is far from 
conclusive.
    How much is simply cyclic?
    How much is man-induced?
    Is it largely driven by the increase in greenhouse gases?
    How much of that rise can we realistically arrest given a growing 
global population?
    1) Clearly we have seen similar or higher increases in temperatures 
in the Arctic, and across the planet, at least on four other occasions 
during the past 400,000 years--and none of the previous temperature 
changes were caused by man.
    2) Climate trends certainly look very different, depending upon the 
time scale that is being considered. So much of the fear over climate 
is based on data from just the past 100 years--a period when admittedly 
carbon dioxide levels have risen, from 280 parts per million before the 
industrial revolution to more than 375 ppm today. But what is the 
evidence, compared to supposition and theory, that that rise is truly 
what is fueling current climate conditions?
    3) While the Arctic Climate Impact Assessment, sponsored by the 
Arctic Council, last year suggested that greenhouse gases are 
triggering climate change, there is credible evidence that, as George 
Taylor, a climatologist at Oregon State University says, a cyclic 
increase in solar radiation and/or the changes in the North Atlantic or 
Pacific Decadal Oscillations that affect currents and thus sea surface 
air temperatures and ice thicknesses, may really be what's at work.
    I am certainly willing to start this debate by acknowledging 
climate change, but I still need have not seen the conclusive evidence 
that carbon emissions are the sole cause of climate change.
    However I am willing to take steps NOW to reduce greenhouse gas 
releases, as a prudent measure--recognizing that we don't want to 
devastate our economy, harming our ability to pay for environmental 
protection.
    That is why in the Senate energy bill I co-sponsored an effort by 
Senator Hagel to spend up to $4 billion to develop technology to 
sequester carbon and reduce its discharge into the atmosphere.
    That is one reason why I've been pushing in the energy bill for tax 
breaks for pumping CO2 underground to enhance oil recovery. 
We keep the carbon out of the atmosphere and increase the production of 
our domestic oil by enhanced oil recovery--a true ``win-win'' situation 
for the nation, especially if we can capture up to another 42 billion 
barrels of oil in the process.
    For all these reasons I truly am interested in understanding the 
impacts of Sen. Bingaman's proposal, patterned after the National 
Commission on Energy Policy.
    Last month there wasn't enough time to fully understand the huge 
implications of the concept, how it would affect the economy, foreign 
output of CO2, the competitiveness of not just our energy 
sector but of all industries in America. How the initial credits can be 
equitably distributed, how the price for future emission credits may 
affect the economy, whether the safety value price--$7 per ton--is so 
low compared to European costs that the system really is meaningless, 
or whether it will become so high that it will have the negative 
impacts that many in industry have complained about.
    In a perfect world I might want to give the President's February 
2002 voluntary initiative to reduce greenhouse gas intensity more time 
to work. (He proposed that we cut greenhouse gas intensity by 18 
percent by 2012. A level that would emit 500 million metric tons less 
carbon to the atmosphere--a responsible goal.)
    But I am open to evidence, that prudence directs us to do more now 
to reduce greenhouse gas emissions. I have much more I could say about 
the cap and trade concept, but for this hearing I'll simply listen and 
learn and perhaps speak directly to the proposal during a second round 
of questions or at a future hearing.
    Thank you Mr. Chairman for your indulgence.

    Senator Akaka. Mr. Chairman?
    The Chairman. Yes, Senator.
    Senator Akaka. Mr. Chairman, thank you for holding this 
hearing. I appreciate the consistent attention that this 
committee has given the issue of climate science and adaptation 
to global climate change. In the interest of time, Mr. 
Chairman, I will submit my full statement for the record.
    The Chairman. Thank you very much.
    [The prepared statement of Senator Akaka follows:]
  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii
    Thank you, Mr. Chairman, for scheduling this hearing on climate 
change and the economics of carbon dioxide controls. I appreciate the 
consistent attention that this committee has given to the issue of 
climate science and adaptation to global climate change. Since I joined 
the committee over 10 years ago, we have held a hearing nearly every 
year on the general topic.
    There is no denying that carbon dioxide in the atmosphere has 
reached higher levels than at any time in the history of the earth. We 
are implicated--as human beings and as a nation--for our role in 
contributing to the buildup. The burning of fossil fuels has 
accelerated the situation for the last hundred years and the U.S. 
contributes more carbon dioxide to the atmosphere than any other 
nation.
    I am particularly concerned for islands in the Pacific. There are 
changes in our islands in Hawaii that can only be explained by global 
phenomena such as the buildup of carbon dioxide. Globally, sea level 
has increased 6 to 14 inches in the last century and it is likely to 
rise another 17 to 25 inches by 2100. This would be a one- to two-foot 
rise. You can imagine what this might mean to port operators, shoreline 
property owners, tourists and residents who use Hawaii's beautiful 
beaches, and to island nations and territories in the Pacific whose 
highest elevation is between 3 and 100 meters above sea level. A 
typhoon or hurricane would be devastating to communities on these 
islands, not to mention the low-lying coastal wetlands of the 
continental United States.
    There is an important, but usually overlooked, issue of 
environmental injustice to climate change and sea level rise. In 
particular, small island states in the Caribbean, such as Nevis, the 
Cayman Islands, and Bonaire; in the Pacific, islands of Vanuatu and the 
Marshall Islands; or in the Indian Ocean, the Maldives, will bear the 
brunt of climate change in the future, even though they account for 
less than one percent of the greenhouse gas emissions that are driving 
climate changes.
    I have talked about my concerns regarding climate change on the 
floor and in this committee. I have urged the U.S. to be a leader in 
addressing climate change and carbon emissions. We seem to be mired in 
inaction--even though the Senate adopted a resolution affirming the 
reality of climate change in the Senate's energy bill, H.R. 6. I have 
said in the past that we must not get stuck in estimating the costs of 
implementing carbon controls. Inaction may not mean much if you are 
high and dry in the nation's Capitol, 90 miles from the Atlantic Ocean. 
But if you are surrounded by water, the risk of inaction is very real, 
and very frightening.
    We need a different plan of action instead of focusing on the 
relative costs of carbon containment strategies. I propose that we 
embrace the just-passed Senate resolution--meaning that we embrace the 
reality of carbon dioxide accumulation--and also embrace the 
opportunity to use mandatory controls as a way to grow our economy.
    There is no doubt that the engineering communities, think tanks, 
universities, Wall Street and the commodity traders, and industry can 
pull together to made this an opportunity rather than a bleak picture 
of increased regulation and job loss. This can be a national 
enterprise, a mobilization to contain carbon growth. I would like to 
see a national Commission that would focus on the job growth and 
technology investment needed to limit or reduce greenhouse gases, and 
the steps needed for a strategy to get there. If we embrace this issue 
as a nation, I am convinced that our human resources, technological and 
scientific expertise, and ``national will'' can beat it and the U.S. 
can act as a leader for the rest of the world in reducing carbon 
emissions.
    Mr. Chairman, I look forward to hearing the testimony of the 
distinguished witnesses today, and I have some questions for them.

    The Chairman. Yes, Senator Cantwell?
    Senator Cantwell. Mr. Chairman, I also submit my statement 
for the record.
    [The prepared statement of Senator Cantwell follows:]
Prepared Statement of Hon. Maria Cantwell, U.S. Senator From Washington
    Mr. Chairman, thank you for holding this incredibly important 
hearing.
    I apologize for not being to be here earlier, I had to attend a 
concurrent Commerce Committee markup.
    First I would like to commend Senator Bingaman for his leadership 
on this issue, and his ongoing efforts to develop a bipartisan 
legislative solution to finally begin addressing the enormous challenge 
global warming poses our nation and our planet. And I want to thank the 
Chairman again for agreeing to undertake this hearings process.
    Like many of my colleagues, and most Americans, I have grown 
increasingly frustrated that, despite overwhelming scientific consensus 
that climate change is real and its consequences will be incredibly 
harmful to our economy, Congress and the President have failed to 
seriously tackle this issue.
    I was disappointed that we passed a thousand page energy bill out 
of the Senate, but took a pass on dealing directly with one of the 
central energy challenges of our time, the threat of global warming.
    But today is essentially a new beginning to this debate--in part, 
thanks to the fact that the Senate did unanimously adopt a resolution 
committing us to develop a mandatory, national, market-based program to 
limit greenhouse gas accumulations. While this is a complex challenge, 
we have many of our brightest minds considering how to best structure 
such a program. Some of those individuals are testifying before us 
today, and I thank them for their work.
    We can also learn from the example of our international allies, 
many of which have enacted comprehensive programs to begin addressing 
this worldwide threat. In addition, 28 states and many cities have 
developed detailed climate change action plans and other initiatives to 
lower future greenhouse gas emissions.
    I am proud that Washington state is one of those states taking the 
lead. And we have good reason to do so. As a number of my colleagues on 
this Committee are aware, the Pacific Northwest is a region totally 
unique in the way our energy system is structured. Our river--the great 
Columbia River and its tributaries--is the lifeblood of our economy. It 
produces 80 percent of Washington state's electricity. But it is also 
the engine of our fishing and farming industries, home to our region's 
salmon runs, and impacts almost every sector of our economy including 
navigation and recreation.
    Given the low emissions-intensity of our energy system, it is a 
bitter irony that one of the primary impacts of global warming in the 
Pacific Northwest may be to change our rainfall patterns in a way that 
could shift the dynamics of our great river and power system. The 
Columbia is fed by snowpack, and as a testament to the international 
aspects of this debate, its headwaters are located north of our border, 
in British Columbia's Selkirk Mountains. Some scientists, like those at 
the University of Washington's Climate Impacts Group, believe that 
global warming may dramatically impact Northwest snowpack by as much as 
35 percent in the next 50 years--compared to the historical averages 
for 1950 to 1999.
    The Columbia is a river of multiple uses, and as our region has 
grown the balancing act has become more difficult. Nevertheless, it is 
a balance that can be achieved. I am very concerned, however, about the 
threat posed to our system by climate change. A significant and 
prolonged shift in our region's precipitation patterns would not only 
harm electricity generation, it would also impact billions of dollars 
of economic infrastructure associated with irrigation systems, 
municipal water supplies, even ski resorts that depend on our historic 
snowfall patterns.
    I know the Chairman said at the outset that there would be 
additional hearings on this matter, and I do hope that climate 
adaptation issues--particularly in the Northwest--might be an 
additional focus. As we attempt to weigh the right legislative approach 
to global warming and the costs of tackling the challenge, we must also 
take a holistic view of those costs. The global warming trend, left 
unmitigated, could severely damage the economy of a region like mine, 
where the health of our river--not to mention the health of our marine 
ecosystems--are completely intertwined with the fate of many of our 
most important industries.
    Again, my state's dynamic highlights the fact that it doesn't 
matter where the heat-trapping gases originate, they have an impact all 
over the world.
    This point was made clear to me when I visited a global atmosphere 
monitoring station on the very southern tip of the African continent. 
Overlooking the vast ocean toward Antarctica, this little station on a 
cliff is able to detect the greenhouse gas emissions generated from all 
over the Northern Hemisphere and provide data to help calculate the 
warming they are causing.
    Mr. Chairman, our nation is responsible for a full quarter of the 
burden climate change will cause our world. We are potentially talking 
about billions, if not trillions, of dollars in cumulative economic 
dislocation, and risking millions of lives in the developing world due 
to increased extreme weather events, shifts in disease patterns, and 
failure of subsistence farming.
    That's why I believe we must act and put in place a comprehensive 
program to begin reversing this threat as soon as possible.
    We are a problem-solving nation. When we are faced with a grave 
threat, we roll up our sleeves, put our heads together, and fix our 
problems; we don't push them off on our children and future 
generations.
    Again, thank you for holding this important hearing.

    Senator Cantwell. And if I could inquire if it's your 
intention to then vote on the action of the hearing at the time 
that we receive a quorum?
    The Chairman. The five nominees?
    Senator Cantwell. Yes.
    The Chairman. Absolutely. But they have to be present all 
at one time. So if people leave, that is not going to count. We 
have to have 12 present. And then they are already before the 
Senate. I have just made them part of the Senate. We have had 
hearings. The hearings are closed. We have noted no objection 
heretofore, so that is how we will proceed, Senator.
    Senator Cantwell. Okay.
    The Chairman. Senator Salazar.
    Senator Salazar. Mr. Chairman, thank you, and thanks, 
Senator Bingaman, for this important hearing. And I, too, will 
have a statement for the record. Thank you.
    The Chairman. All right.
    [The prepared statement of Senator Salazar follows:]

   Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado

    Thank you, Mr. Chairman. I'd like to thank you and Senator Bingaman 
for your desire to work together in the search for effective climate 
change legislation--legislation that will move America in the right 
direction by reducing our greenhouse gas emissions.
    The issue at hand is an important one. We need to address the 
problem of climate change and greenhouse gas emissions, and the problem 
is growing more urgent every year. We need to find a solution that, as 
stated in the Sense of the Senate Resolution passed earlier this year, 
``will not significantly harm the United States Economy.'' I am certain 
that an economically modest strategy is possible.
    The Senate version of the energy bill, currently in conference, 
makes some steps forward, by slowly but significantly increasing our 
production of renewable fuels and renewable energy. As the Chairman as 
already indicated, the Senate Energy bill also includes some important 
incentives designed to reduce greenhouse gas emissions by encouraging 
the development of new, clean energy technologies. I sincerely hope 
these excellent provisions will remain in the energy bill. These 
provisions will serve America well, reducing our greenhouse gas 
emissions while strengthening our energy security.
    But these provisions will not be enough, and that is why meaningful 
climate change legislation is needed. I am looking forward to a 
rational, and factual, discussion of the problem at hand. In 
particular, the economic panel will address concerns regarding the cost 
of climate change legislation and its potential effect on various 
industries. There are naysayers, who loudly state that any type of 
climate change legislation would be devastating on our economy, but 
those individuals are misinformed. I believe industries important to 
Colorado and to America--such as coal--will continue to thrive under 
good climate change legislation, and I look forward to examining that 
further in our discussion here today.

    The Chairman. We are ready. Then any other Senators that 
arrive--Senator Talent, the issue is: Do you want to make a 
statement or put one in the record?
    Senator Talent. In the record would be fine, Mr. Chairman.
    The Chairman. All right. We will do that, Senator.
    [The prepared statement of Senator Talent follows:]

 Prepared Statement of Hon. James M. Talent, U.S. Senator From Missouri

    I thank the Chairman and Ranking Member for tackling this very 
difficult issue.
    Like so many of the issues we seem to be facing recently, climate 
change is one where the stakes are high on both sides, a lot of money 
and forecasting is involved, and there is considerable disagreement 
over the degree of the problem and the likely outcome after all of the 
money is spent.
    I know a lot of bright minds have spent considerable amounts of 
time and effort studying climate change and, while we've been at this a 
while, the science is relatively new and still has a ways to go to 
produce the kinds of answers we'd all like to have.
    Nevertheless, I expect that what we'll hear today is that there's a 
broad-based consensus that,

          1. over the last 100 or so years, the temperature of the 
        Earth has risen;
          2. over that same period, the concentration of greenhouse 
        gases such as carbon dioxide has also risen;
          3. because of this correlation, there is evidence that at 
        least some of the temperature rise is attributable to the 
        burning of fossil fuels; and
          4. man, therefore, has some level of ability to mitigate the 
        warming of the Earth through controlling greenhouse gas 
        emissions.

    I don't necessarily disagree with these conclusions, though what 
troubles me is the uncertainty that remains with respect to several key 
factors underlying any conclusions on climate change, namely

          1. to what degree is the current warming due to the numerous 
        natural, cyclical changes, some of which are measured over 
        hundreds or thousands of years;
          2. to what degree is the current warming due to the burning 
        of fossil fuels;
          3. how sensitive is the climate to changes in greenhouse gas 
        concentration; and
          4. how accurate are the models and the data inputs.

    I am curious as to whether, as the science advances, we find that 
predictions of excessive temperature increases are in fact overstated.
    In either case, the presence of a fair bit of uncertainty as to 
what will in fact happen 50, 75, or 100 years from now, coupled with 
the global nature of this issue and its economic ramifications, makes 
it much more difficult to heed calls for immediate action on climate 
change. This is particularly true since it is apparent to most that the 
technology needed to make an appreciable dent in global emissions is 
not yet available.
    What worries me the most are calls for partial solutions to 
problems that are not fully defined. For example, one outcome of this 
debate could be that the United States invests billions of dollars to 
reduce emissions; this cost drives industry and jobs overseas, harming 
our economy while not making any improvement in greenhouse gas 
concentrations, as developing countries like China and India replace 
the manufacturing formerly done in the U.S. without, of course, any 
effort to cut emissions.
    If this scenario plays out, we end up losing three times--energy 
costs go up, jobs disappear, and global emissions are not reduced at 
all. This would be particularly painful if we push for this kind of 
change prior to the technology being in place to make it possible 
without draconian cuts in fossil fuel use, particularly coal.
    In all of this, I am not yet convinced whether we will see any 
tangible benefits for the large sums of money that are at stake here. I 
understand that there is a time when you must make a decision based on 
the best available information. But usually you have some degree of 
certainty that the chosen option will work, or at least that you know 
its true cost. In this case, I am concerned that there is a great deal 
of uncertainty with respect to both the likelihood of success and the 
cost to achieve it.
    Some view the Kyoto Protocol, which is much more demanding than the 
Bingaman proposal, as just the beginning, meaning even greater 
emissions cuts must be made. I wonder if anyone has done the math on 
the cost for going the whole nine yards and cutting emissions to the 
level some say we must get to. I think people are afraid of putting 
that number in print.
    Nevertheless, our energy bill contains a number of incentives for 
voluntarily adopting technology to control emissions both here and 
abroad. I'm in favor of this approach because it's working already.
    In addition, it's the only way we can bring developing countries 
like China and India on board.
    The electric industry has taken a number of steps to meet the 
Administration's target. Edison Electric Institute's members have 
committed to voluntarily reduce GHG emissions intensity by 3-5 percent 
in the next decade. Other sectors of the economy made similar 
commitments in order to help meet the President's goal of 18 percent. 
Specifically, in the last 10 years, they have reduced, avoided, or 
sequestered 7 million tons of carbon dioxide system wide and are 
committed to doing more. Plus, several utilities, including utilities 
in my state, are planning to build new coal fired generators using the 
latest proven clean coal technology.
    I hope as we go forward we will be able to find solutions that 
recognize that economic growth and prosperity are the best means of 
achieving environmental protection.

    The Chairman. Can we have panel number one come to the 
table? Dr. Ralph Cicerone, Dr. Mario Molina, Dr. Jim Hurrell, 
Sir John Houghton. Could you tell me your name again, Doctor? 
Say it for me.
    Sir Houghton. Houghton.
    The Chairman. Houghton.
    Sir Houghton. Correct.
    The Chairman. I will never get it right, but pretty close. 
Now I do not have to tell everybody who you are. I would not 
have to. But I think it is important that we just quickly state 
it.
    Dr. Ralph Cicerone is president of the National Academy of 
Sciences and chairman of the National Research Council. Dr. 
Mario Molina is a professor of Earth, Atmospheric and Planetary 
Sciences at the Massachusetts Institute of Technology. Dr. 
Hurrell is a scientist with Science Climate and Global 
Dynamics. And then our friend from England, Sir Houghton, is 
co-chairman of the Scientific Assessment Workshop, 
Intergovernmental Panel on Climate Change.
    Now we are going to proceed in the order which I called 
your names, if you will. We are very interested in what you 
have to say. On the other hand, we want everybody on this panel 
to have an opportunity to inquire. So with that, would you keep 
your statements as brief as possible.
    Right now, we will inform each of you that whatever 
statement you have brought to us will be made a part of the 
record. Having said that, if you can abbreviate, fine. If you 
cannot, we expect to let you tell us exactly what you want. And 
how you want to say it is up to you. Please proceed. We will go 
with you first, Doctor.
    Dr. Cicerone. Oh. Okay.
    The Chairman. In the order that I called the names.

  STATEMENT OF RALPH J. CICERONE, PH.D., PRESIDENT, NATIONAL 
                      ACADEMY OF SCIENCES

    Dr. Cicerone. Thank you, Senator Domenici. My name is Ralph 
Cicerone. I am president of the National Academy of Sciences, 
as of about 3 weeks ago. I certainly appreciate the opportunity 
to be here. There is no question that energy, energy 
technology, energy usage patterns are very central to 
implications of climate change. So your attention is certainly 
necessary and highly desirable from everybody's point of view.
    This morning I would like to summarize briefly the current 
state of scientific understanding on climate change, based 
largely on findings and recommendations in recent National 
Academies reports. These reports are the products of study 
processes that bring together leading scientists, engineers, 
public health officials, and other experts to provide consensus 
readings and advice to the Nation on specific scientific and 
technical questions.
    The earth is warming. Weather station records and ship-
based observations for about the last 130, 140 years indicate 
that global mean surface air temperature increased, just since 
the 1970's, about \7/10\ of a degree Fahrenheit. In my written 
testimony, which you were kind enough to include, I have a 
figure of such data, a graph.
    The magnitude of the warming does vary locally and from 
region to region. However, the warming trend is spatially 
widespread, planetary, and it is consistent with an array of 
other evidence, including melting glaciers and ice caps, sea-
level rise, extended growing seasons, and changes in 
geographical distributions of plant and animal species.
    The ocean, which represents, because of the heat capacity 
of water, the largest reservoir of heat in the climate system, 
has itself warmed by about .12 degrees Fahrenheit, average down 
to 750 feet depth just in the last 12 years. And recent studies 
have shown that the observed heat storage in the ocean is 
consistent with the expected impacts of the human-enhanced 
greenhouse effect.
    The observed warming, however, has not proceeded at a 
uniform rate. For example, there was a bit of a cooling, 
especially in the northern hemisphere from 1940 to 1975, 
warming until 1940, and then a much more rapid warming since 
the late 1970's.
    Laboratory measurements of gases that have been extracted 
from dated ice cores have shown that for the last hundreds of 
thousands of years changes in temperature have closely tracked 
atmospheric carbon dioxide amounts, and that carbon dioxide in 
the atmosphere is now at its highest level in 400,000 years, as 
it continues to rise.
    Nearly all climate scientists today believe that much of 
the earth's current warming has been caused by increases in 
these greenhouse gases in the atmosphere, mostly from the 
burning of fossil fuels. And the degree of confidence in this 
conclusion is higher today than it was 10 years ago or even 5 
years ago, and yet, uncertainties do remain.
    As stated in our 2001 National Academy of Sciences report, 
the changes observed over the last several decades are likely 
mostly due to human activities, but we cannot rule out that 
some significant part of these changes also reflects natural 
variability.
    An example of an area of debate of a natural cause of this 
warming has involved a question of whether or not the sun 
itself has brightened. Fortunately, in the last 25 years or so, 
humans have measured the output of the sun carefully enough, 
with enough precision, to shed some light on the question. And 
although there are still uncertainties due to stringing 
together records from different instruments and different 
satellites, the most empirical reading of the record, I 
believe, shows that the sun's output has not changed. There has 
been no trend, aside from the 11-year cycles which were 
previously known. And, therefore, it is much more difficult to 
say today that the sun's brightening has been the cause of the 
warming. It does not command much credence.
    As you know, carbon dioxide can remain in the atmosphere 
for many decades, and some part of the climate system respond 
slowly to these changes, so that we can predict confidently 
that this warming will continue even though other forces are at 
play. And the emissions to be--for the concentrations in the 
atmosphere to be stabilized would require a long-term attack on 
emissions.
    The simulations of future climate change, which I hope that 
other witnesses speak about more, are that global surface 
temperatures will continue to rise, and that in the coming 
century, the present century, the rises could be from 2\1/2\ to 
about 10 degrees Fahrenheit above 1990 temperatures.
    This range reflects not only uncertainties as to details of 
the climate system, but also uncertainties in future human 
behavior. How many people will there be? What will our energy 
consumption patterns be? And what will our sources of energy 
be?
    We have discussed in many of our reports remaining 
scientific uncertainties, what kinds of research are needed. 
One of the most telling is having to do with regional and local 
climate changes, where prediction is much more difficult, and 
yet it is where people want to know what will happen very 
clearly.
    The possible changes and the frequency of severe events 
like droughts and temperature extremes and water needs and 
electrical needs that flow from those extreme events represent 
some of the most difficult to predict phenomena.
    In my written testimony I go on and summarize more of the 
current state of scientific understanding, and give a lot of 
references. With your permission I will stop here and be 
available to answer any questions that I may. Thank you, 
Senator Domenici.
    The Chairman. Thank you very much.
    [The prepared statement of Dr. Cicerone follows:]

      Prepared Statement of Ralph J. Cicerone, Ph.D., President, 
                      National Academy of Sciences

    Good morning, Mr. Chairman and members of the Committee. My name is 
Ralph Cicerone, and I am President of the National Academy of Sciences. 
Prior to this position, I served as Chancellor of the University of 
California at Irvine, where I also held the Daniel G. Aldrich Chair in 
Earth System Science. In addition, in 2001 I chaired the National 
Academies committee that wrote the report, Climate Change Science: An 
Analysis of Some Key Questions, at the request of the White House.
    This morning I will summarize briefly the current state of 
scientific understanding on climate change, based largely on the 
findings and recommendations in recent National Academies' reports. 
These reports are the products of a study process that brings together 
leading scientists, engineers, public health officials and other 
experts to provide consensus advice to the nation on specific 
scientific and technical questions.
    The Earth is warming. Weather station records and ship-based 
observations indicate that global mean surface air temperature 
increased about 0.7 F (0.4 C) since the early 1970's (See Figure*). 
Although the magnitude of warming varies locally, the warming trend is 
spatially widespread and is consistent with an array of other evidence 
(including melting glaciers and ice caps, sea level rise, extended 
growing seasons, and changes in the geographical distributions of plant 
and animal species). The ocean, which represents the largest reservoir 
of heat in the climate system, has warmed by about 0.12 F (0.06 C) 
averaged over the layer extending from the surface down to 750 feet, 
since 1993. Recent studies have shown that the observed heat storage in 
the oceans is consistent with expected impacts of a human-enhanced 
greenhouse effect.
---------------------------------------------------------------------------
    * The figure has been retained in committee files.
---------------------------------------------------------------------------
    The observed warming has not proceeded at a uniform rate. Virtually 
all the 20th century warming in global surface air temperature occurred 
between the early 1900s and the 1940s and from the 1970s until today, 
with a slight cooling of the Northern Hemisphere during the interim 
decades. The causes of these irregularities and the disparities in the 
timing are not completely understood, but the warming trend in global-
average surface temperature observations during the past 30 years is 
undoubtedly real and is substantially greater than the average rate of 
warming during the 20th century.
    Laboratory measurements of gases trapped in dated ice cores have 
shown that for hundreds of thousands of years, changes in temperature 
have closely tracked atmospheric carbon dioxide concentrations. Burning 
fossil fuel for energy, industrial processes, and transportation 
releases carbon dioxide to the atmosphere. Carbon dioxide in the 
atmosphere is now at its highest level in 400,000 years and continues 
to rise.
    Nearly all climate scientists today believe that much of Earth's 
current warming has been caused by increases in the amount of 
greenhouse gases in the atmosphere, mostly from the burning of fossil 
fuels. The degree of confidence in this conclusion is higher today than 
it was 10, or even 5 years ago, but uncertainties remain. As stated in 
the Academies 2001 report, ``the changes observed over the last several 
decades are likely mostly due to human activities, but we cannot rule 
out that some significant part of these changes is also a reflection of 
natural variability.''
    One area of debate has been the extent to which variations in the 
Sun might contribute to recent observed warming trends. The Sun's total 
brightness has been measured by a series of satellite-based instruments 
for more than two complete 11-year solar cycles. Recent analyses of 
these measurements argue against any detectable long-term trend in the 
observed brightness to date. Thus, it is difficult to conclude that the 
Sun has been responsible for the warming observed over the past 25 
years.
    Carbon dioxide can remain in the atmosphere for many decades and 
major parts of the climate system respond slowly to changes in 
greenhouse gas concentrations. The slow response of the climate system 
to increasing greenhouse gases also means that changes and impacts will 
continue during the 21st century and beyond, even if emissions were to 
be stabilized or reduced in the near future.
    Simulations of future climate change project that, by 2100, global 
surface temperatures will be from 2.5 to 10.4 F (1.4 to 5.8 C) above 
1990 levels. Similar projections of temperature increases, based on 
rough calculations and nascent theory, were made in the Academies first 
report on climate change published in the late 1970s. Since then, 
significant advances in our knowledge of the climate system and our 
ability to model and observe it have yielded consistent estimates. 
Pinpointing the magnitude of future warming is hindered both by 
remaining gaps in understanding the science and by the fact that it is 
difficult to predict society's future actions, particularly in the 
areas of population growth, economic growth, and energy use practices.
    Other scientific uncertainties about future climate change relate 
to the regional effects of climate change and how climate change will 
affect the frequency and severity of weather events. Although 
scientists are starting to forecast regional weather impacts, the level 
of confidence is less than it is for global climate projections. In 
general, temperature is easier to predict than changes such as 
rainfall, storm patterns, and ecosystem impacts.
    It is important to recognize however, that while future climate 
change and its impacts are inherently uncertain, they are far from 
unknown. The combined effects of ice melting and sea water expansion 
from ocean warming will likely cause the global average sea-level to 
rise by between 0.1 and 0.9 meters between 1990 and 2100. In colder 
climates, such warming could bring longer growing seasons and less 
severe winters. Those in coastal communities, many in developing 
nations, will experience increased flooding due to sea level rise and 
are likely to experience more severe storms and surges. In the Arctic 
regions, where temperatures have risen more than the global average, 
the landscape and ecosystems are being altered rapidly.
    The task of mitigating and preparing for the impacts of climate 
change will require worldwide collaborative inputs from a wide range of 
experts, including natural scientists, engineers, social scientists, 
medical scientists, those in government at all levels, business leaders 
and economists. Although the scientific understanding of climate change 
has advanced significantly in the last several decades, there are still 
many unanswered questions. Society faces increasing pressure to decide 
how best to respond to climate change and associated global changes, 
and applied research in direct support of decision making is needed.
    My written testimony describes the current state of scientific 
understanding of climate change in more detail, based largely on 
important findings and recommendations from a number of recent National 
Academies' reports.

                          THE EARTH IS WARMING

    The most striking evidence of a global warming trend are closely 
scrutinized data that show a relatively rapid increase in temperature, 
particularly over the past 30 years. Weather station records and ship-
based observations indicate that global mean surface air temperature 
increased about 0.7 F (0.4 C) since the early 1970's. Although the 
magnitude of warming varies locally, the warming trend is spatially 
widespread and is consistent with an array of other evidence (e.g., 
melting glaciers and ice caps, sea level rise, extended growing 
seasons, and changes in the geographical distributions of plant and 
animal species).
    The ocean, which represents the largest reservoir of heat in the 
climate system, has warmed by about 0.12 F (0.06 C) averaged over the 
layer extending from the surface down to 750 feet, since 1993. Recent 
studies have shown that the observed heat storage in the oceans is what 
would be expected by a human-enhanced greenhouse effect. Indeed, 
increased ocean heat content accounts for most of the planetary energy 
imbalance (i.e., when the Earth absorbs more energy from the Sun than 
it emits back to space) simulated by climate models with mid-range 
climate sensitivity.
    The observed warming has not proceeded at a uniform rate. Virtually 
all the 20th century warming in global surface air temperature occurred 
between the early 1900s and the 1940s and since the 1970s, with a 
slight cooling of the Northern Hemisphere during the interim decades. 
The troposphere warmed much more during the 1970s than during the two 
subsequent decades, whereas Earth's surface warmed more during the past 
two decades than during the 1970s. The causes of these irregularities 
and the disparities in the timing are not completely understood.
    A National Academies report released in 2000, Reconciling 
Observations of Global Temperature Change, examined different types of 
temperature measurements collected from 1979 to 1999 and concluded that 
the warming trend in global-average surface temperature observations 
during the previous 20 years is undoubtedly real and is substantially 
greater than the average rate of warming during the 20th century. The 
report concludes that the lower atmosphere actually may have warmed 
much less rapidly than the surface from 1979 into the late 1990s, due 
both to natural causes (e.g., the sequence of volcanic eruptions that 
occurred within this particular 20-year period) and human activities 
(e.g., the cooling of the upper part of the troposphere resulting from 
ozone depletion in the stratosphere). The report spurred many research 
groups to do similar analyses. Satellite observations of middle 
troposphere temperatures, after several revisions of the data, now 
compare reasonably with observations from surface stations and 
radiosondes, although some uncertainties remain.

                  HUMANS HAVE HAD AN IMPACT ON CLIMATE

    Laboratory measurements of gases trapped in dated ice cores have 
shown that for hundreds of thousands of years, changes in temperature 
have closely tracked with atmospheric carbon dioxide concentrations. 
Burning fossil fuel for energy, industrial processes, and 
transportation releases carbon dioxide to the atmosphere. Carbon 
dioxide in the atmosphere is now at its highest level in 400,000 years 
and continues to rise. Nearly all climate scientists today believe that 
much of Earth's current warming has been caused by increases in the 
amount of greenhouse gases in the atmosphere. The degree of confidence 
in this conclusion is higher today than it was 10, or even 5 years ago, 
but uncertainties remain. As stated in the Academies 2001 report, ``the 
changes observed over the last several decades are likely mostly due to 
human activities, but we cannot rule out that some significant part of 
these changes is also a reflection of natural variability.''
    Carbon dioxide can remain in the atmosphere for many decades and 
major parts of the climate system respond slowly to changes in 
greenhouse gas concentrations. The slow response of the climate system 
to increasing greenhouse gases also means that changes and impacts will 
continue during the 21st century and beyond, even if emissions were to 
be stabilized or reduced in the near future.
    In order to compare the contributions of the various agents that 
affect surface temperature, scientists have devised the concept of 
``radiative forcing.'' Radiative forcing is the change in the balance 
between radiation (i.e., heat and energy) entering the atmosphere and 
radiation going back out. Positive radiative forcings (e.g., due to 
excess greenhouse gases) tend on average to warm the Earth, and 
negative radiative forcings (e.g., due to volcanic eruptions and many 
human-produced aerosols) on average tend to cool the Earth. The 
Academies' recent report, Radiative Forcing of Climate Change: 
Expanding the Concept and Addressing Uncertainties (2005), takes a 
close look at how climate has been changed by a range of forcings. A 
key message from the report is that it is important to quantify how 
human and natural processes cause changes in climate variables other 
than temperature. For example, climate-driven changes in precipitation 
in certain regions could have significant impacts on water availability 
for agriculture, residential and industrial use, and recreation. Such 
regional impacts will be much more noticeable than projected changes in 
global average temperature of a degree or more.
    One area of debate has been the extent to which variations in the 
Sun might contribute to recent observed warming trends. Radiative 
Forcing of Climate Change: Expanding the Concept and Addressing 
Uncertainties (2005) also summarizes current understanding about this 
issue. The Sun's brightness--its total irradiance--has been measured 
continuously by a series of satellite-based instruments for more than 
two complete 11-year solar cycles. These multiple solar irradiance 
datasets have been combined into a composite time series of daily total 
solar irradiance from 1979 to the present. Different assumptions about 
radiometer performance lead to different reconstructions for the past 
two decades. Recent analyses of these measurements, taking into account 
instrument calibration offsets and drifts, argue against any detectable 
long-term trend in the observed irradiance to date. Likewise, models of 
total solar irradiance variability that account for the influences of 
solar activity features--dark sunspots and bright faculae--do not 
predict a secular change in the past two decades. Thus, it is difficult 
to conclude from either measurements or models that the Sun has been 
responsible for the warming observed over the past 25 years.
    Knowledge of solar irradiance variations is rudimentary prior to 
the commencement of continuous space-based irradiance observations in 
1979. Models of sunspot and facular influences developed from the 
contemporary database have been used to extrapolate daily variations 
during the 11-year cycle back to about 1950 using contemporary sunspot 
and facular proxies, and with less certainty annually to 1610. 
Circumstantial evidence from cosmogenic isotope proxies of solar 
activity (14C and 10Be) and plausible variations 
in Sun-like stars motivated an assumption of long-term secular 
irradiance trends, but recent work questions the evidence from both. 
Very recent studies of the long term evolution and transport of 
activity features using solar models suggest that secular solar 
irradiance variations may be limited in amplitude to about half the 
amplitude of the 11-year cycle.

    WARMING WILL CONTINUE, BUT ITS IMPACTS ARE DIFFICULT TO PROJECT

    The Intergovernmental Panel on Climate Change (IPCC), which 
involves hundreds of scientists in assessing the state of climate 
change science, has estimated that, by 2100, global surface 
temperatures will be from 2.5 to 10.4 F (1.4 to 5.8 C) above 1990 
levels. Similar projections of temperature increases, based on rough 
calculations and nascent theory, were made in the Academies first 
report on climate change published in the late 1970s. Since then, 
significant advances in our knowledge of the climate system and our 
ability to model and observe it have yielded consistent estimates. 
Pinpointing the magnitude of future warming is hindered both by 
remaining gaps in understanding the science and by the fact that it is 
difficult to predict society's future actions, particularly in the 
areas of population growth, economic growth, and energy use practices.
    One of the major scientific uncertainties is how climate could be 
affected by what are known as ``climate feedbacks.'' Feedbacks can 
either amplify or dampen the climate response to an initial radiative 
forcing. During a feedback process, a change in one variable, such as 
carbon dioxide concentration, causes a change in temperature, which 
then causes a change in a third variable, such as water vapor, which in 
turn causes a further change in temperature. Understanding Climate 
Change Feedbacks (2003) looks at what is known and not known about 
climate change feedbacks and identifies important research avenues for 
improving our understanding.
    Other scientific uncertainties relate to the regional effects of 
climate change and how climate change will affect the frequency and 
severity of weather events. Although scientists are starting to 
forecast regional weather impacts, the level of confidence is less than 
it is for global climate projections. In general, temperature is easier 
to predict than changes such as rainfall, storm patterns, and ecosystem 
impacts. It is very likely that increasing global temperatures will 
lead to higher maximum temperatures and fewer cold days over most land 
areas. Some scientists believe that heat waves such as those 
experienced in Chicago and central Europe in recent years will continue 
and possibly worsen. The larger and faster the changes in climate, the 
more difficult it will be for human and natural systems to adapt 
without adverse effects.
    There is evidence that the climate has sometimes changed abruptly 
in the past--within a decade--and could do so again. Abrupt changes, 
for example the Dust Bowl drought of the 1930's displaced hundreds of 
thousands of people in the American Great Plains, take place so rapidly 
that humans and ecosystems have difficulty adapting to it. Abrupt 
Climate Change: Inevitable Surprises (2002) outlines some of the 
evidence for and theories of abrupt change. One theory is that melting 
ice caps could ``freshen'' the water in the North Atlantic, shutting 
down the natural ocean circulation that brings warmer Gulf Stream 
waters to the north and cooler waters south again. This shutdown could 
make it much cooler in Northern Europe and warmer near the equator.
    It is important to recognize that while future climate change and 
its impacts are inherently uncertain, they are far from unknown. The 
combined effects of ice melting and sea water expansion from ocean 
warming will likely cause the global average sea-level to rise by 
between 0.1 and 0.9 meters between 1990 and 2100. In colder climates, 
such warming could bring longer growing seasons and less severe 
winters. Those in coastal communities, many in developing nations, will 
experience increased flooding due to sea level rise and are likely to 
experience more severe storms and surges. In the Arctic regions, where 
temperatures have risen almost twice as much as the global average, the 
landscape and ecosystems are being altered rapidly.

   OBSERVATIONS AND DATA ARE THE FOUNDATION OF CLIMATE CHANGE SCIENCE

    There is nothing more valuable to scientists than the measurements 
and observations required to confirm or contradict hypotheses. In 
climate sciences, there is a peculiar relation between the scientist 
and the data. Whereas other scientific disciplines can run multiple, 
controlled experiments, climate scientists must rely on the one 
realization that nature provides. Climate change research requires 
observations of numerous characteristics of the Earth system over long 
periods of time on a global basis. Climate scientists must rely on data 
collected by a whole suite of observing systems--from satellites to 
surface stations to ocean buoys--operated by various government 
agencies and countries as well as climate records from ice cores, tree 
rings, corals, and sediments that help reconstruct past change.

       COLLECTING AND ARCHIVING DATA TO MEET THE UNIQUE NEEDS OF 
                         CLIMATE CHANGE SCIENCE

    Most of the instrumentation and observing systems used to monitor 
climate today were established to provide data for other purposes, such 
as predicting daily weather; advising farmers; warning of hurricanes, 
tornadoes and floods; managing water resources; aiding ocean and air 
transportation; and understanding the ocean. However, collecting 
climate data is unique because higher precision is often needed in 
order to detect climate trends, the observing programs need to be 
sustained indefinitely and accommodate changes in observing technology, 
and observations are needed at both global scales and at local scales 
to serve a range of climate information users.
    Every report on climate change produced by the National Academies 
in recent years has recommended improvements to climate observing 
capabilities. A central theme of the report Adequacy of Climate 
Observing Systems (1999) is the need to dramatically upgrade our 
climate observing capabilities. The report presents ten climate 
monitoring principles that continue to be the basis for designing 
climate observing systems, including management of network change, 
careful calibration, continuity of data collection, and documentation 
to ensure that meaningful trends can be derived.
    Another key concept for climate change science is the ability to 
generate, analyze, and archive long-term climate data records (CDRs) 
for assessing the state of the environment in perpetuity. In Climate 
Data Records from Environmental Satellites (2004), a climate data 
record is defined as a time series of measurements of sufficient 
length, consistency, and continuity to determine climate variability 
and change. The report identifies several elements of successful 
climate data record generation programs, ranging from effective, expert 
leadership to long-term commitment to sustaining the observations and 
archives.

    INTEGRATING KNOWLEDGE AND DATA ON CLIMATE CHANGE THROUGH MODELS

    An important concept that emerged from early climate science in the 
1980s was that Earth's climate is not just a collection of long-term 
weather statistics, but rather the complex interactions or 
``couplings'' of the atmosphere, the ocean, the land, and plant and 
animal life. Climate models are built using our best scientific 
knowledge, first modeling each process component separately and then 
linking them together to simulate these couplings.
    Climate models are important tools for understanding how the 
climate operates today, how it may have functioned differently in the 
past, and how it may evolve in the future in response to forcings from 
both natural processes and human activities. Climate scientists can 
deal with uncertainty about future climate by running models with 
different assumptions of future population growth, economic 
development, energy use, and policy choices, such as those that affect 
air quality or influence how nations share technology. Models then 
offer a range of outcomes based on these different assumptions.

                    MODELING CAPABILITY AND ACCURACY

    Since the first climate models were pioneered in the 1970s, the 
accuracy of models has improved as the number and quality of 
observations and data have increased, as computational abilities have 
multiplied, and as our theoretical understanding of the climate system 
has improved. Whereas early attempts at modeling used relatively crude 
representations of the climate, today's models have very sophisticated 
and carefully tested treatment of hundreds of climate processes.
    The National Academies' report Improving Effectiveness of U.S. 
Climate Modeling (2001) offers several recommendations for 
strengthening climate modeling capabilities, some of which have already 
been adopted in the United States. At the time the report was 
published, U.S. modeling capabilities were lagging behind some other 
countries. The report identified a shortfall in computing facilities 
and highly skilled technical workers devoted to climate modeling. 
Federal agencies have begun to centralize their support for climate 
modeling efforts at the National Center for Atmospheric Research and 
the Geophysical Fluid Dynamics Laboratory. However, the U.S. could 
still improve the amount of resources it puts toward climate modeling 
as recommended in Planning Climate and Global Change Research (2003).

                 CLIMATE CHANGE IMPACTS WILL BE UNEVEN

    There will be winners and losers from the impacts of climate 
change, even within a single region, but globally the losses are 
expected to outweigh the benefits. The regions that will be most 
severely affected are often the regions that are the least able to 
adapt. For example, Bangladesh, one of the poorest nations in the 
world, is projected to lose 17.5% of its land if sea level rises about 
40 inches (1 m), displacing tens of thousands of people. Several 
islands throughout the South Pacific and Indian Oceans will beat 
similar risk of increased flooding and vulnerability to storm surges. 
Coastal flooding likely will threaten animals, plants, and fresh water 
supplies. Tourism and local agriculture could be severely challenged.
    Wetland and coastal areas of many developed nations including 
United States are also threatened. For example, parts of New Orleans 
are as much as eight feet below sea level today. However, wealthy 
countries are much more able to adapt to sea level rise and threats to 
agriculture. Solutions could include building, limiting or changing 
construction codes in coastal zones, and developing new agricultural 
technologies.
    The Arctic has warmed at a faster rate than the Northern Hemisphere 
over the past century. A Vision for the International Polar Year 2007-
2008 (2004) reports that this warming is associated with a number of 
impacts including: melting of sea ice, which has important impacts on 
biological systems such as polar bears, ice-dependent seals, and local 
people for whom these animals are a source of food; increased snow and 
rainfall, leading to changes in river discharge and tundra vegetation; 
and degradation of the permafrost.

                      PREPARING FOR CLIMATE CHANGE

    One way to begin preparing for climate change is to make the wealth 
of climate data and information already collected more accessible to a 
range of users who could apply it to inform their decisions. Such 
efforts, often called ``climate services,'' are analogous to the 
efforts of the National Weather Service to provide useful weather 
information. Climate is becoming increasingly important to public and 
private decision making in various fields such as emergency management 
planning, water quality, insurance premiums, irrigation and power 
production decisions, and construction schedules. A Climate Services 
Vision (2001) outlines principles for improving climate services that 
include making climate data as user-friendly as weather services are 
today, and active and well-defined connections among the government 
agencies, businesses, and universities involved in climate change data 
collection and research.
    Another avenue would be to develop practical strategies that could 
be used to reduce economic and ecological systems' vulnerabilities to 
change. Such ``no-regrets'' strategies, recommended in Abrupt Climate 
Change: Inevitable Surprises (2002), provide benefits whether a 
significant climate change ultimately occurs or not, potentially 
reducing vulnerability at little or no net cost. No-regrets measures 
could include low-cost steps to: improve climate forecasting; slow 
biodiversity loss; improve water, land, and air quality; and make 
institutions--such as the health care enterprise, financial markets, 
and transportation systems--more resilient to major disruptions.

                 REDUCING THE CAUSES OF CLIMATE CHANGE

    The climate change statement issued in June 2005 by 11 science 
academies, including the National Academy of Sciences, stated that 
despite remaining unanswered questions, the scientific understanding of 
climate change is now sufficiently clear to justify nations taking 
cost-effective steps that will contribute to substantial and long-term 
reduction in net global greenhouse gas emissions. Because carbon 
dioxide and some other greenhouse gases can remain in the atmosphere 
for many decades and major parts of the climate system respond slowly 
to changes in greenhouse gas concentrations, climate change impacts 
will likely continue throughout the 21st century and beyond. Failure to 
implement significant reductions in net greenhouse gas emissions now 
will make the job much harder in the future--both in terms of 
stabilizing their atmospheric abundances and in terms of experiencing 
more significant impacts.
    At the present time there is no single solution that can eliminate 
future warming. As early as 1992, Policy Implications of Greenhouse 
Warming found that there are many potentially cost-effective 
technological options that could contribute to stabilizing greenhouse 
gas concentrations.

  MEETING ENERGY NEEDS IS A MAJOR CHALLENGE TO SLOWING CLIMATE CHANGE

    Energy--either in the form of fuels used directly (i.e., gasoline) 
or as electricity produced using various fuels (fossil fuels as well as 
nuclear, solar, wind, and others)--is essential for all sectors of the 
economy, including industry, commerce, homes, and transportation. 
Energy use worldwide continues to grow with economic and population 
growth. Developing countries, China and India in particular, are 
rapidly increasing their use of energy, primarily from fossil fuels, 
and consequently their emissions of CO2. Carbon emissions 
from energy can be reduced by using it more efficiently or by switching 
to alternative fuels. It also may be possible to capture carbon 
emissions from electric generating plants and then sequester them.
    Energy efficiency in all sectors of the U.S. economy could be 
improved. The 2002 National Academies' report, Effectiveness and Impact 
of Corporate Average Fuel Economy (CAFE) Standards, evaluates car and 
light truck fuel use and analyzes how fuel economy could be improved. 
Steps range from improved engine lubrication to hybrid vehicles. The 
2001 Academies report, Energy Research at DOE, Was It Worth It? 
addresses the benefits of increasing the energy efficiency of lighting, 
refrigerators and other appliances. Many of these improvements (e.g., 
high-efficiency refrigerators) are cost-effective means to 
significantly reducing energy use, but are being held back by market 
constraints such as consumer awareness, higher initial costs, or by the 
lack of effective policy.
    Electricity can be produced without significant carbon emissions 
using nuclear power and renewable energy technologies (e.g., solar, 
wind, and biomass). In the United States, these technologies are too 
expensive or have environmental or other concerns that limit broad 
application, but that could change with technology development or if 
the costs of fossil fuels increase. Replacing coal-fired electric power 
plants with more efficient, modern natural-gas-fired turbines would 
reduce carbon emissions per unit of electricity produced.
    Several technologies are being explored that would collect CO2 
that would otherwise be emitted to the atmosphere from fossil-fuel-
fired power plants, and then sequester it in the ground or the ocean. 
Successful, cost-effective sequestration technologies would weaken the 
link between fossil fuels and greenhouse gas emissions. The 2003 
National Academies' report, Novel Approaches to Carbon Management: 
Separation, Capture, Sequestration, and Conversion to Useful Products, 
discusses the development of this technology.
    Capturing CO2 emissions from the tailpipes of vehicles 
is essentially impossible, which is one factor that has led to 
considerable interest in hydrogen as a fuel. As with electricity, 
hydrogen must be manufactured from primary energy sources. 
Significantly reducing carbon emissions when producing hydrogen from 
fossil fuels (currently the least expensive method) would require 
carbon capture and sequestration. Substantial technological and 
economic barriers in all phases of the hydrogen fuel cycle must first 
be addressed through research and development. The 2004 National 
Academies' report, The Hydrogen Economy: Opportunities, Costs, Barriers 
and R&D Needs, presents a strategy that could lead eventually to 
production of hydrogen from a variety of domestic sources--such as coal 
(with carbon sequestration), nuclear power, wind, or photo-biological 
processes--and efficient use in fuel cell vehicles.

       CONTINUED SCIENTIFIC EFFORTS TO ADDRESS A CHANGING CLIMATE

    The task of mitigating and preparing for the impacts of climate 
change will require worldwide collaborative inputs from a wide range of 
experts, including natural scientists, engineers, social scientists, 
medical scientists, those in government at all levels, business 
leaders, and economists. Although the scientific understanding of 
climate change has advanced significantly in the last several decades, 
there are still many unanswered questions. Society faces increasing 
pressure to decide how best to respond to climate change and associated 
global changes, and applied research in direct support of decision 
making is needed.

    The Chairman. We are going to take Sir John Houghton next, 
even though I stated otherwise. Please proceed, sir.

         STATEMENT OF SIR JOHN HOUGHTON, CO-CHAIRMAN, 
SCIENTIFIC ASSESSMENT WORKING GROUP, INTERGOVERNMENTAL PANEL ON 
                CLIMATE CHANGE, LONDON, ENGLAND

    Sir Houghton. Thank you very much, indeed. I consider it a 
privilege to be asked to testify to your committee this 
morning. Thank you for inviting me.
    On my last visit to the United States in March I was 
briefing the National Association of Evangelicals, though a 
different body, and was most pleased to find that large and 
influential body engaging with this issue of global climate 
change, which is the most serious environmental issue which is 
facing the world today.
    Regarding the science of human-induced climate change as 
currently understood, it is actually summarized succinctly in 
last month's resolution in the Senate, which states that the 
major impacts will come through sea level rise and through 
increases in the frequency and the intensity of extreme events, 
such as droughts and floods. Those are the most damaging 
disasters the world knows.
    An example of an extreme for which we can say with some 
certainty that the growth of greenhouse gases was largely 
responsible is the European heat wave in the summer of 2003 
that lead to the deaths of over 20,000 people.
    I said more about the science in my written evidence. Here, 
I would like to say a little more about the Intergovernmental 
Panel on Climate Change, which is the source of much of the 
scientific information that we have, and about which a lot of 
misinformation has been propagated.
    I had the privilege of being chairman or co-chairman of the 
Panel of Scientific Assessments from its formation in 1988 to 
2002. The IPCC's latest report in 2001, it is in four volumes, 
each of 1,000 pages each, contains many thousands of references 
to the scientific literature. And many hundreds of scientists 
were involved in the writing and review processes.
    The report went through two major reviews, first by 
scientists. And any scientist, who wished, could take part. And 
second, by governments. No assessments on any other scientific 
topic has been so thoroughly researched and reviewed.
    IPCC reports are being produced in a very open process 
under the discipline of science, where honesty and balance are 
hallmarks of that discipline. Influence from personal or 
political agendas were ruled out, and I made absolutely sure of 
that in my role as chairman. We had many days of lively debate, 
and scientists, of course, are their own best critics.
    I remember, after a very hectic meeting, at the end of one 
of our reports, two scientists from the aviation industry who 
were joined as lead authors for that report, came to me and 
expressed their delight with the IPCC experience. They said 
never had they before been involved in a report for which the 
conclusions were not known before it was written.
    Very strong endorsement has been given to the IPCC from the 
world's scientific community. Last month, in a completely 
unprecedented action, a statement was issued by the science 
academies of all the G8 countries, together with the academies 
of Brazil, China, and India, endorsing the IPCC's work and 
conclusions. With that strong statement from the world's 
leading scientists, there can be no doubt about the reality and 
seriousness of human-induced climate change.
    One of the main tasks of the IPCC has to be distinguished 
between what is well known and understood from those areas with 
large uncertainty. In 1992, in the Framework Convention on 
Climate Change, agreed by all countries, and signed for the 
United States by President George H.W. Bush, it was already 
stated that enough was known for action to be taken. Since 
then, the science has become substantially more certain. IPCC 
reports have consistently proved to be too conservative.
    Many suggest why do we not just wait and see before taking 
action. There are strong reasons for urgent action. The first 
is scientific. Because the oceans take time to warm, there is a 
lag in the response of climate to increasing gases. So far we 
have only experienced a small part of the climate response to 
the emissions that have already occurred.
    If emissions were halted tomorrow, over the next 30 years 
or more we would experience a growing level of impacts at least 
two or three times those we have seen already. Further 
emissions just added to that commitment.
    The second reason for the urgent action is economic. Energy 
infrastructure, for instance, in power stations also lasts 
typically for 30 to 50 years.
    The third reason is political. Countries like China and 
India are industrializing very rapidly. I heard a senior energy 
advisor to the Chinese government speak recently. He said that 
China by itself would not be making big moves to non-fossil 
fuel sources. When the developing nations of the West take 
action, they will take action. They will follow, not lead.
    To move the world forward, we have to be seen ourselves to 
be moving. I hope, Mr. Chairman, you will allow me just to say 
a little about the need for leadership if I may, in conclusion.
    People often say to me I am wasting my time talking about 
global warming. The world, they say, will never agree to take 
the necessary action. I reply I am optimistic for three 
reasons. First, I have experienced the commitment of the 
world's scientific community. Second, I believe the necessary 
technology is available for achieving satisfactory solutions. 
Third, I believe as a Christian that God is committed to his 
creation, and that we have a God-given task of being good 
stewards of creation, a task that we do not have to accomplish 
on our own, because God is there to help us with it.
    And then a final paragraph, if I may. In my work with the 
IPCC, I have been privileged to work with many climate 
scientists in the United States who are world leaders in their 
field. The United States is also a world leader in the 
technologies required. The overall challenge is to move close 
to a zero carbon economy within a generation. The means to do 
that are available. The challenge and the opportunities to our 
scientists and our industries are very large. But science and 
technology are only part of what is needed. The challenge is 
global and requires a global solution.
    Mr. Chairman, the moves recently made by the Senate to 
develop a strategy for addressing the issue of human-induced 
climate change are of tremendous importance. Is it too much to 
hope that they are the start of a bid for leadership by the 
United States in the wide world, as all countries, both 
developed and developing, set out to meet this challenge 
together? The world is watching what the United States and, 
indeed, what this committee will do. Thank you very much.
    The Chairman. Well, thank you very much.
    [The prepared statement of Sir Houghton follows:]

   Prepared Statement of Sir John Houghton, Co-Chairman, Scientific 
 Assessment Working Group, Intergovernmental Panel on Climate Change, 
                            London, England

    I consider it a privilege to be asked to testify to your committee 
this morning. Thank you for inviting me. On my last visit to the United 
States in March I was briefing the National Association of Evangelicals 
and was most pleased to find that large and influential body engaging 
with this issue of global climate change--the most serious 
environmental issue facing the world today.

                  THE BASIC SCIENCE OF GLOBAL WARMING

    Let me start with a quick summary of the basic science of Global 
Warming. By absorbing infra-red or `heat' radiation from the earth's 
surface, `greenhouse gases' present in the atmosphere, such as water 
vapour and carbon dioxide, act as blankets over the earth's surface, 
keeping it warmer than it would otherwise be. The existence of this 
natural `greenhouse effect' has been known for nearly two hundred 
years; it is essential to the provision of our current climate to which 
ecosystems and we humans have adapted.
    Since the beginning of the industrial revolution around 1750, one 
of these greenhouse gases, carbon dioxide has increased by over 30% and 
is now at a higher concentration in the atmosphere than it has been for 
many hundreds of thousands of years (Fig 1).* Chemical analysis 
demonstrates that this increase is due largely to the burning of fossil 
fuels--coal, oil and gas. If no action is taken to curb these 
emissions, the carbon dioxide concentration will rise during the 21st 
century to two or three times its preindustrial level.
---------------------------------------------------------------------------
    * Figures 1-6d have been retained in committee files.

    Fig 1. Concentration of carbon dioxide in the atmosphere from 1000 
AD and projected to 2100 under typical IPCC scenarios.\1\
---------------------------------------------------------------------------
    \1\ From IPCC 2001 Synthesis Report published by Cambridge 
University Press 2001.
---------------------------------------------------------------------------
    Fig 2. Variations of the average near surface air temperature: 
1000-1861, N Hemisphere from proxy data; 1861-2000, global 
instrumental; 2000-2100, under a range of IPCC projections with further 
shading to indicate scientific uncertainty.\2\
---------------------------------------------------------------------------
    \2\ From IPCC 2001 Synthesis Report published by Cambridge 
University Press 2001.

    The climate record over the last 1000 years (Fig 2) shows a lot of 
natural variability--including, for instance, the `medieval warm 
period' and the `little ice age'.\3\ The rise in global average 
temperature (and its rate of rise) during the 20th century is well 
outside the range of known natural variability. The year 1998 is the 
warmest year in the instrumental record. A more striking statistic is 
that each of the first 8 months of 1998 was the warmest on record for 
that month. There is strong evidence that most of the warming over the 
last 50 years is due to the increase of greenhouse gases, especially 
carbon dioxide. Confirmation of this is also provided by observations 
of the warming of the oceans.\4\ The period of `global dimming' from 
about 1950 to 1970 is most likely due to the increase in atmospheric 
particles (especially sulphates) from industrial sources. These 
particles reflect sunlight, hence tending to cool the surface and mask 
some of the warming effect of greenhouse gases. Global climate 
models\5\ that include human induced effects (greenhouse gas increases 
and particles) and known natural forcings (e.g. variations in solar 
radiation and the effects of volcanoes) can provide good simulations of 
the 20th century profile of global average temperature change.
---------------------------------------------------------------------------
    \3\ Since the IPCC 2001 report there has been a debate in the 
scientific literature regarding the statistical procedures for 
reconstruction of the proxy part of the record that might affect its 
overall shape especially over the 14th to the 19th centuries (the 
little ice age period)--see for instance von Storch et al. 2004, 
Science 306 621-2. This `hockey-stick' debate, however, does not 
significantly influence the main IPCC conclusions regarding the 
temperature of the 20th century.
    \4\ See recent paper by J. Hansen et al. in Sciencexpress for 28 
April 2005/10.1126/science.1110252
    \5\ Global climate models run on large computers include all 
components of the climate system (atmosphere, land, oceans, ice and 
biosphere) with global coverage, include algorithmic descriptions of 
all physical processes and integrate the dynamical equations to provide 
simulations of current climate or projections of future climate. They 
are powerful tools that add together the effects of all the non linear 
processes involved.
---------------------------------------------------------------------------
    Over the 21st century the global average temperature is projected 
to rise by between 2 and 6 C (3.5 to 11 F) from its preindustrial 
level; the range represents different assumptions about emissions of 
greenhouse gases and the sensitivity of the climate model used in 
making the estimate (Fig 2). For global average temperature, a rise of 
this amount is large. The difference between the middle of an ice age 
and the warm periods in between is only about 5 or 6 C (9 to 11 F). 
So, associated with likely warming in the 21st century will be a rate 
of change of climate equivalent to say, half an ice age in less than 
100 years--a larger rate of change than for at least 10,000 years. 
Adapting to this will be difficult for both humans and many ecosystems.

              THE IMPACTS OF HUMAN INDUCED CLIMATE CHANGE

    Talking in terms of changes of global average temperature, however, 
tells us rather little about the impacts of global warming on human 
communities. Some of the most obvious impacts will be due to the rise 
in sea level that occurs because ocean water expands as it is heated. 
The projected rise is of the order of half a metre (20 inches) a 
century and will continue for many centuries--to warm the deep oceans 
as well as the surface waters takes a long time. This will cause large 
problems for human communities living in low lying regions, for 
instance in the Everglades region of Florida. Many areas, for instance 
in Bangladesh (where about 10 million live within the one metre 
contour--Fig 3), southern China, islands in the Indian and Pacific 
oceans and similar places elsewhere in the world, will be impossible to 
protect and many millions will be displaced.

    Fig 3. Land affected in Bangladesh by various amounts of sea level 
rise

    There will also be impacts from extreme events. The extremely 
unusual high temperatures in central Europe during the summer of 2003 
led to the deaths of over 20,000 people. Careful analysis shows that it 
is very likely that a large part of the cause of this event is due to 
increases in greenhouse gases and projects that such summers are likely 
to be the norm by the middle of the 21st century and cool by the year 
2100.
    Water is becoming an increasingly important resource. A warmer 
world will lead to more evaporation of water from the surface, more 
water vapour in the atmosphere and more precipitation on average. Of 
greater importance is the fact that the increased condensation of water 
vapour in cloud formation leads to increased latent heat of 
condensation being released. Since this latent heat release is the 
largest source of energy driving the atmosphere's circulation, the 
hydrological cycle will become more intense. This means a tendency to 
more intense rainfall events and also less rainfall in some semi-arid 
areas. Since, on average, floods and droughts are the most damaging of 
the world's disasters (see box), their greater frequency and intensity 
is bad news for most human communities and especially for those regions 
such as south east Asia and sub-Saharan Africa where such events 
already occur only too frequently.

                       MAJOR FLOODS IN THE 1990S

   1991, 1994-5, 1998--China; average disaster cost 1989-96, 4% 
        of GDP
   Mississipi & Missouri, U.S.A.; flooded area equal to one of 
        great lakes
   1997--Europe; 162,000 evacuated and > 5bn $ loss
   1998--Hurricane Mitch in central America; 9000 deaths, 
        economic loss in Honduras & Nicaragua 70% & 45% of GDP
   1999--Venezuela; flooding led to landslide, 30,000 deaths
   2000-1--Mozambique; two floods leave more than half a 
        million homeless

    Regarding extreme events and disasters, it is often pointed out 
that climate possesses large natural variability and such events have 
been common occurrences over the centuries. It is not possible, for 
instance, when a disaster occurs to attribute that particular event to 
increasing greenhouse gases (except perhaps for the 2003 heat wave 
mentioned above). So, what is the evidence that they will increase in a 
globally warmed world? First, there is our understanding of the basic 
science of climate change that I have briefly outlined. Secondly, 
increasing evidence is provided from observations. Significant 
increases have been observed in the number of intense rainfall events 
especially over areas like the U.S.A. where there is good data 
coverage. Data from insurance companies show an increase in economic 
losses in weather related disasters of a factor of 10 in real terms 
between the 1950s and the 1990s. Some of this can be attributed to an 
increase in vulnerability to such disasters. However, a significant 
part of the trend has also arisen from increased storminess especially 
in the 1980s and 1990s.
    Thirdly, increased risk of heat waves, floods and droughts are some 
of the most robust projections of climate models that take into account 
in a comprehensive way all the physical and dynamical processes 
involved in climate change. For instance, a study for the area of 
central Europe, with doubled atmospheric carbon dioxide concentration 
(likely to occur during the second half of the 21st century), indicates 
an decrease in the return period of flooding events by about a factor 
of five (e.g. from 50 years to 10 years).\6\
---------------------------------------------------------------------------
    \6\ Palmer, T.N., and Raisanen, J., 2002, Nature, 415, 512-14.
---------------------------------------------------------------------------
    Tropical cyclones are particular damaging storms that occur in the 
sub tropics. They require special mention because no evidence exists 
for an increase in their number as the earth warms although an increase 
is considered likely in peak wind and precipitation intensities in such 
systems. Sea level rise, changes in water availability and extreme 
events will cause the most damaging impacts of human induced climate 
change.\7\ They will lead to increasing pressure from many millions of 
environmental refugees.
---------------------------------------------------------------------------
    \7\ Many of the studies addressing the cost of global warming 
impacts fail to take account of the cost of extremes as is explained in 
Houghton, Global Warming: the Complete Briefing, CUP 2004, chapter 7.
---------------------------------------------------------------------------
    In addition to the main impacts summarised above are changes about 
which there is less certainty, but if they occurred would be highly 
damaging and possibly irreversible. For instance, large changes are 
being observed in polar regions. If the temperature rises more than 
about 3 C (approximately 5 F) in the area of Greenland, it is 
estimated that melt down of the ice cap would begin. Complete melt down 
is likely to take 1000 years or more but it would add 7 metres (23 
feet) to the sea level.
    A further concern is regarding the Thermo-Haline Circulation 
(THC)--a circulation in the deep oceans, partially sourced from water 
that has moved in the Gulf Stream from the tropics to the region 
between Greenland and Scandinavia. Because of evaporation on the way, 
the water is not only cold but salty, hence of higher density than the 
surrounding water. It therefore tends to sink and provides the source 
for a slow circulation at low levels that connects all the oceans 
together. This sinking assists in maintaining the Gulf Stream itself. 
In a globally warmed world, increased precipitation together with fresh 
water from melting ice will decrease the water's salinity making it 
less likely to sink. The circulation will therefore weaken and possibly 
even cut off, leading to large regional changes of climate. All climate 
models indicate the occurrence of this weakening. Evidence from 
paleoclimate history shows that such cut-off has occurred at times in 
the past. It is such an event that is behind the highly speculative 
happenings in the film, The day after tomorrow.
    I have spoken so far about adverse impacts. However, there are some 
positive impacts. For instance, in Siberia and other areas at high 
northern latitudes, winters will be less cold and growing seasons will 
be longer. Also, increased concentrations of carbon dioxide have a 
fertilising effect on some plants and crops which, providing there are 
adequate supplies of water and nutrients, will lead to increased crop 
yields in some places, probably most notably in northern mid latitudes. 
However, careful studies demonstrate that adverse impacts will far 
outweigh positive effects, the more so as temperatures rise more than 1 
or 2 C (2 to 3.5 F) above preindustrial.
    Many people ask how sure we are about the scientific story I have 
just presented. Let me explain that it is based very largely on the 
extremely thorough work of the Intergovernmental Panel on Climate 
Change (IPCC) and its last major report published in 2001. The 
scientific literature on climate change has increased enormously over 
the last decade. The basic science of anthropogenic climate change has 
been confirmed. The main uncertainties lie in our knowledge of 
feedbacks in the climate system especially those associated with the 
effects of clouds. Recent research has tended to indicate increased 
likelihood of the more damaging impacts.

          THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE (IPCC)

    Let me explain more about the work of the IPCC. It was formed in 
1988 jointly by the World Meteorological Organisation and the United 
Nations Environment Programme. I had the privilege of being chairman or 
co-chairman of the Panel's scientific assessment from 1988 to 2002. 
Hundreds of scientists drawn from many countries were involved as 
contributors and reviewers in these assessments. The IPCC has produced 
three assessments--in 1990, 1995 and 2001--covering science, impacts 
and analyses of policy options. The IPCC 2001 report is in four volumes 
each of about 1000 pages and containing many thousands of references to 
the scientific literature.\8\ Each chapter of the Report went through 
two major reviews, first by hundreds of scientists in the scientific 
community (any scientist who wished could take part in this) and 
secondly, by governments. No assessment on any other scientific topic 
has been so thoroughly researched and reviewed.
---------------------------------------------------------------------------
    \8\ Climate Change 2001 in four volumes, published for the IPCC by 
Cambridge University Press, 2001. Also available on the IPCC web site 
www.ipcc.ch. My book, John Houghton, Global Warming: the complete 
briefing, 3`d edition, Cambridge University Press, 2004 is strongly 
based on the IPCC reports. Further a review I have recently written 
(John Houghton, Global Warming, Reports Progress in Physics, 68 (2005) 
1343-1403) provides a concise summary of the science and associated 
impacts.
---------------------------------------------------------------------------
    Because the IPCC is an intergovernmental body, the reports' 
Summaries for Policymakers were agreed sentence by sentence by meetings 
in which governmental delegates from about 100 countries (including all 
the world's major countries) work with around 40 leading scientists 
representing the scientific community. It is sometimes supposed that 
the presence of governments implies political interference with the 
process. That has not been the case. In any event, governments taking 
part come from the complete spectrum of political agendas. These are 
scientific meetings in which all proposals for changes in the text must 
be based either on scientific arguments or on a desire for clearer 
presentation. In every case, the process has resulted in documents with 
overall improved scientific clarity and balance.
    The work of the IPCC is backed by the worldwide scientific 
community. A joint statement of support was issued in May 2001 by the 
national science academies of Australia, Belgium, Brazil, Canada, the 
Caribbean, China, France, Germany, India, Indonesia, Ireland, Italy, 
Malaysia, New Zealand, Sweden and the U.K. It stated `We recognize the 
IPCC as the world's most reliable source of information on climate 
change and its causes, and we endorse its method of achieving 
consensus.' In 2001, a report of the United States National Academy of 
Sciences commissioned by the President George W. Bush administration, 
supported the IPCC's conclusions.\9\ A joint statement issued in June 
2005 by the science academies of all the G8 countries together with the 
academies of Brazil, China and India also endorsed the work and 
conclusions of the IPCC.\10\
---------------------------------------------------------------------------
    \9\ http://books.nap.edu/html/climatechange/
    \10\ http://nationalacademies.org/morenews/
---------------------------------------------------------------------------
    Let me comment further on the issues of uncertainty and balance as 
expressed in the work of the IPCC. There are very large amounts of data 
available to the scientist looking for evidence of climate change. 
Examples abound of those who approach the data with preconceived 
agendas and who have selected data to fit those agendas--for instance 
purporting to prove either that there is little or no evidence for 
human induced change or that the world is heading for a future that 
could mean the end of the human race. The task of the IPCC has been to 
review all the evidence in a balanced manner and honestly and 
objectively to distinguish what is reasonably well known and understood 
from those areas with large uncertainty. The reports have 
differentiated between degrees of uncertainty, where possible providing 
numerical estimates of uncertainty. A large part of the IPCC process, 
taking many days of scientists' time, has been taken up with discussion 
and correspondence about how best to present uncertainty.
    Let me mention a further point on the uncertainty issue. In the 
IPCC reports, because they are scientific documents, uncertainty tends 
to be mentioned frequently giving the impression to the casual reader 
that the uncertainty in the conclusions is larger than it is in many 
other areas of our experience with which comparison could be made. What 
is important to realise is that there is a high degree of certainty 
that significant human induced climate change is occurring and will 
continue to occur. A forecast of little or no such climate change is 
almost certainly wrong.

               THE FRAMEWORK CONVENTION ON CLIMATE CHANGE

    Because of the work of the IPCC and its first report in 1990, the 
Earth Summit at Rio de Janeiro in 1992 could address the climate change 
issue and the action that needed to be taken. The Framework Convention 
on Climate Change (FCCC)--agreed by over 160 countries, signed by 
President George Bush Sr. for the U.S.A. and subsequently ratified 
unanimously by the U.S. Senate--agreed that Parties to the Convention 
should take ``precautionary measures to anticipate, prevent or minimise 
the causes of climate change and mitigate its adverse effects. Where 
there are threats of irreversible damage, lack of full scientific 
certainty should not be used as a reason for postponing such 
measures.''
    More particularly the Objective of the FCCC in its Article 2 is 
``to stabilise greenhouse gas concentrations in the atmosphere at a 
level that does not cause dangerous interference with the climate 
system'' and that is consistent with sustainable development. Such 
stabilisation would also eventually stop further climate change. 
However, because of the long time that carbon dioxide resides in the 
atmosphere, the lag in the response of the climate to changes in 
greenhouse gases (largely because of the time taken for the ocean to 
warm), and the time taken for appropriate human action to be agreed, 
the achievement of such stabilisation will take at least the best part 
of a century.

                    STABILIZATION OF CARBON DIOXIDE

    Global emissions of carbon dioxide to the atmosphere from fossil 
fuel burning are currently approaching 7 billion tonnes of carbon per 
annum and rising rapidly (Fig 4). Unless strong measures are taken they 
will reach two or three times their present levels during the 21st 
century and stabilisation of greenhouse gas concentrations or of 
climate will be nowhere in sight. To stabilise carbon dioxide 
concentrations in accordance with the FCCC Objective, emissions during 
the 21st century must reduce to a fraction of their present levels 
before the century's end.
    The reductions in emissions must be made globally; all nations must 
take part. However, there are very large differences between greenhouse 
gas emissions in different countries. Expressed in tonnes of carbon per 
capita per annum, they vary from about 5.5 for the U.S.A., 2.2 for 
Europe, 0.7 for China and 0.2 for India (Fig 5). Ways need to be found 
to achieve reductions that are both realistic and equitable.

    Fig 4. Global emissions of carbon dioxide from fossil fuel burning 
(in billions of tonnes of carbon) up to 1990 and as projected to 2100 
under World Energy Council scenarios,\11\ A's and B's with various 
`business as usual assumptions' and C for `ecologically driven 
scenario' that would lead to stabilisation of carbon dioxide 
concentration at about 450 ppm.
---------------------------------------------------------------------------
    \11\ From Energy for Tomorrow's World: the realities, the real 
options and the agenda for achievement. World Energy Council Report 
1993.
---------------------------------------------------------------------------
    Fig 5. Carbon dioxide emissions in 2000 per capita for different 
countries and groups of countries.\12\
---------------------------------------------------------------------------
    \12\ After M. Grubb 2003, World Economics 3, p. 145.

    The Kyoto Protocol set up by the FCCC represents a beginning for 
the process of reduction, averaging about 5% below 1990 levels by 2012 
by those developed countries who have ratified the protocol. It is an 
important start demonstrating the achievement of a useful measure of 
international agreement on such a complex issue. It also introduces for 
the first time international trading of greenhouse gas emissions so 
that reductions can be achieved in the most cost effective ways.
    Serious discussion is now beginning about international agreements 
for emissions reductions post Kyoto. These must include all major 
emitters in both developed and developing countries. On what eventual 
level of stabilisation, of carbon dioxide for instance, should these 
negotiations focus? To stop damaging climate change the level needs to 
be as low as possible. In the light of the FCCC Objective it must also 
allow for sustainable development. Let me give two examples of 
stabilisation proposals. In 1996 the European Commission proposed a 
limit for the rise in global average temperature from its preindustrial 
value of 2 C--that implies a stabilisation level for carbon dioxide of 
about 430 ppm (allowing for the effect of other greenhouse gases at 
their 1990 levels). The second example comes from Lord John Browne, 
Chief Executive Officer of British Petroleum, one of the world's 
largest oil companies, who in a recent speech proposed `stabilisation 
in the range 500-550 ppm' that `with care could be achieved without 
disrupting economic growth.'
    Let us consider carbon dioxide stabilisation at 500 ppm. If the 
effect of other greenhouse gases at their 1990 levels is added, it is 
about equivalent to doubled carbon dioxide at its preindustrial level 
and a rise in global averaged temperature of about 2.5 C. Although 
climate change would eventually largely be halted--although not for 
well over a hundred years--the climate change impacts at such a level 
would be large. A steady rise in sea level will continue for many 
centuries, heat waves such as in Europe in 2003 would be commonplace, 
devastating floods and droughts would be much more common in many 
places and Greenland would most likely start to melt down. The aim 
should be therefore to stabilise at a lower level. But is that 
possible?
    The International Energy Agency (TEA) in 2004 published a World 
Energy Outlook that in their words `paints a sobering picture of how 
the global energy system is likely to evolve from now to 2030'. With 
present governments' policies, the world's energy needs will be almost 
60% higher in 2030 that they are now. Fossil fuels will dominate, 
meeting most of the increase in overall energy use. Energy-related 
emissions of carbon dioxide will grow marginally faster than energy use 
and will be more than 60% higher in 2030 than now (Fig 6, reference 
scenario). Over two-thirds of the projected increase in emissions will 
come from developing countries.

    Fig 6. Carbon dioxide emissions from fossil fuel burning and 
profile leading to stabilisation at 500 ppm (a, b and c) and 450 ppm 
(d). Emissions data from International Energy Agency scenarios;\13\ 
reference (a), alternative (b) for developed countries (red) and 
developing (blue). For (c) and (d) see text.
---------------------------------------------------------------------------
    \13\ From World Energy Outlook, LEA 2004.

    The Outlook also presents an Alternative Scenario that analyses the 
global impact of environmental and energy-security policies that 
countries around the world are already considering as well as the 
effects of faster deployment of energy-efficient technologies. However, 
even in this scenario, global emissions in 2030 are substantially 
greater than they are today (Fig 6). Neither scenario comes close to 
creating the turn around in the global profile required.
    The U.K. government has taken a lead on this issue and has agreed a 
target for the reduction of greenhouse gas emissions of 60% by 2050--
predicated on a stabilisation target of doubled carbon dioxide 
concentrations together with a recognition that developed countries 
will need to make greater reductions to allow some headroom for 
developing countries. Economists in the U.K. government Treasury 
Department have estimated the cost to the U.K. economy of achieving 
this target. On the assumption of an average growth in the U.K. economy 
of 2.25% p.a., they estimated a cost of no more than the equivalent of 
6 months' growth over the 50 year period. Similar costs for achieving 
stabilisation have been estimated by the IPCC.
    The effect of a reduction of 60% on average by developed countries 
is shown in Fig 6(c) together with a scenario for developing countries 
that increases by 1% p.a. until 2030 followed by level emissions to 
2050. For this the 500 ppm curve is approximately followed but for 
developing countries to be satisfied with such a modest growth presents 
a very large challenge. Even more challenging for both developed and 
developing countries would be the measures required to stabilise at 450 
ppm (Fig 6(d)). Governor Schwarzenegger of California has begun to 
address this challenge by proposing an even more demanding reduction 
target of 80% by 2050.

                          CAN WE WAIT AND SEE?

    In order to achieve reductions on the scale that is required to 
stabilize carbon dioxide concentrations, large changes will have to 
occur in way we use energy (through energy efficiency improvements) and 
generate it (through moves to energy sources with zero or low carbon 
emissions). But how urgent are the changes required. It is sometimes 
suggested that we can `wait and see' before serious action is needed. 
This is an area where policy needs to be informed by the perspective 
from science.
    There is a strong scientific reason for urgent action. Because the 
oceans take time to warm, there is a lag in the response of climate to 
increasing greenhouse gases. So far we have only experienced a small 
part of the climate response to the greenhouse gas emissions that have 
already occurred. If greenhouse gas emissions were halted tomorrow, 
climate impacts much greater than we have so far experienced but to 
which we are already committed will be realized over the next 30 years 
and more into the future.\14\ Further emissions from now on just add to 
that commitment. It is for this reason that the June 2005 statement 
from the world's major science academies urges all nations,\15\ `to 
take prompt action to reduce the causes of climate change and adapt to 
its impacts' and to `identify cost-effective steps that can be taken 
now to contribute to substantial and long-term reduction in net global 
greenhouse gas emissions, recognizing that delayed action will increase 
the risk of adverse environmental effects and will likely incur a 
greater cost.'
---------------------------------------------------------------------------
    \14\ See recent paper by J. Hansen et al. in Sciencexpress for 28 
April 2005/10.1126/science.1110252
    \15\ http://nationalacademies.org/morenews/
---------------------------------------------------------------------------
    Two further reasons can be identified for urgent action. One is 
economic. Energy infrastructure, for instance in power stations also 
lasts typically for 30 to 50 years. As was stated by the leaders of the 
G8 countries meeting at Gleneagles in the U.K. earlier this month,\16\ 
We face a moment of opportunity. Over the next 25 years, an estimated 
$16 trillion will need to be invested in the world's energy systems. 
According to the IEA, there are significant opportunities to invest 
this capital cost-effectively in cleaner energy technologies and energy 
efficiency. Because decisions being taken today could lock in 
investment and increase emissions for decades to come, it is important 
to act wisely now.
---------------------------------------------------------------------------
    \16\ http://www.g8.gov.uk
---------------------------------------------------------------------------
    A third reason is political. Countries like China and India are 
industrialising very rapidly. I heard a senior energy adviser to the 
Chinese government speak recently. He said that China by itself would 
not be making big moves to non fossil fuel sources. When the developed 
nations of the west take action, they will take action--they will 
follow not lead. China is building new electricity generating capacity 
of about 1 GW power station per week. To move the world forward we have 
to be seen ourselves to be moving.

                      THE U.K. AND CLIMATE CHANGE

    I would like to add a few remarks about the U.K. and climate 
change. It was Prime Minister Margaret Thatcher who in 1988, speaking 
as a scientist as well as a political leader, was one of the first to 
bring the potential threat of global warming to world attention. 
Subsequent U.K. governments have continued to play a leading 
international role in this issue. This year, Prime Minister Tony Blair 
has put climate change at the top of his agenda for his presidency of 
the G8 and the EU.
    This international activity has brought the realisation within the 
U.K. government that a big environmental issue such as climate change 
needs to be brought much closer to the centre of the government 
machine. For instance, Gordon Brown, U.K.'s Chancellor of the Exchequer 
has clearly stated the importance of addressing the economy and 
environment together. In a recent speech he said,\17\ `Environmental 
issues--including climate change--have traditionally been placed in a 
category separate from the economy and from economic policy. But this 
is no longer tenable. Across a range of environmental issues--from soil 
erosion to the depletion of marine stocks, from water scarcity to air 
pollution--it is clear now not just that economic activity is their 
cause, but that these problems in themselves threaten future economic 
activity and growth.'
---------------------------------------------------------------------------
    \17\ Address to the Energy and Environment Ministerial Roundtable, 
15 March 2005; http://www.hm-treasury.gov.uk/newsroom_and_speeches/
press/2005/press_29_05.cfm
---------------------------------------------------------------------------
                        THE NEED FOR LEADERSHIP

    We, in the developed countries have already benefited over many 
generations from abundant and cheap fossil fuel energy--although 
without realising the potential damage to the climate and especially 
the disproportionate adverse impacts falling on the poorer nations. The 
Framework Convention on Climate Change (FCCC) recognized the particular 
responsibilities this placed on developed countries to be the first to 
take action and to provide assistance (e.g. through appropriate finance 
and technology transfer) to developing countries for them to cope with 
the impacts and to develop cost effective sources of energy free of 
carbon emissions. The moral imperative created by these 
responsibilities is reflected in the statement on climate change made 
by the leaders of the G8 countries meeting at Gleneagles in the 
following paragraph,\18\ `It is in our global interests to work 
together, and in partnership with major emerging economies, to find 
ways to achieve substantial reductions in greenhouse gas emissions and 
our other key objectives, including the promotion of low-emitting 
energy systems. The world's developed economies have a responsibility 
to act.'
---------------------------------------------------------------------------
    \18\ http://www.g8.gov.uk
---------------------------------------------------------------------------
    People often say to me that I am wasting my time talking about 
Global Warming. `The world' they say `will never agree to take the 
necessary action'. I reply that I am optimistic for three reasons. 
First, I have experienced the commitment of the world scientific 
community (including scientists from many different nations, 
backgrounds and cultures) in painstakingly and honestly working 
together to understand the problems and assessing what needs to be 
done. Secondly, I believe the necessary technology is available for 
achieving satisfactory solutions. My third reason is that, as a 
Christian, I believe God is committed to his creation and that we have 
a God-given task of being good stewards of creation--a task that we do 
not have to accomplish on our own because God is there to help us with 
it. As a recent statement on climate change by scientific and religious 
leaders in the U.S. says:\19\ `What is most required at this moment . . 
. is moral vision and leadership. Resources of human character and 
spirit--love of life, far-sightedness, solidarity--are needed to awaken 
a sufficient sense of urgency and resolve.'
---------------------------------------------------------------------------
    \19\ From Earth's Climate Embraces Us All: A Plea From Religion and 
Science for Action on Global Climate Change, July 2004; available form 
the National Religious partnership for the Environment at http://
www.nrpe.org/climate_letter.pdf
---------------------------------------------------------------------------
    In my work with the IPCC I have been privileged to work with many 
climate scientists from the U.S.A. who are world leaders in their 
field. The U.S.A. is also a world leader in the technologies aimed at 
reducing greenhouse gas emissions. But science and technology are only 
part of what is required. Mr. Chairman, the moves recently made by the 
Senate to develop a strategy for addressing the issue of human induced 
climate change are of great importance. Is it too much to hope that 
they are the start of a bid for leadership by the U.S. in the wider 
world as all countries--both developed and developing--set out to meet 
this challenge together?

    The Chairman. Now we will proceed in the order that we 
started.
    Dr. Molina.

           STATEMENT OF DR. MARIO MOLINA, PROFESSOR, 
              UNIVERSITY OF CALIFORNIA, SAN DIEGO

    Dr. Molina. I am very pleased to be here to discuss the 
science of climate change and to reflect on the very real 
challenge of making sound policy choices in the face of 
uncertainty. Climate change is, perhaps, the most worrisome 
global environmental problem confronting human society today. 
It involves a complex interplay of scientific, economic, and 
political issues. The impacts of climate change are potentially 
very large, and will occur over a time scale of decades to 
centuries.
    The actions needed to respond to this challenge require 
substantial long-term commitments to change traditional 
economic development paths throughout the world. The ultimate 
solution to the challenge will require a fundamental 
transformation in the production and consumption of energy in 
the United States, but also by developed and developing 
nations.
    I want to address the bulk of my remarks to the threshold 
question. Do we know enough about climate change to act now and 
to start doing something serious to address this problem? Let 
me first comment on what I think the role of scientists should 
be in answering this question.
    Ultimately, policy decisions about climate change have to 
be made by society at large, and more specifically by 
policymakers like yourselves. Scientists do not have any 
special privilege to make such decisions, but science does play 
a fundamental role on this issue.
    The climate system is very complicated, and science does 
not have all the answers. There are uncertainties in predicting 
when and to what extent will the climate change as a 
consequence of a given course of human activities. However, 
scientists can estimate the probability that the earth's 
climate will respond in certain ways.
    For simplicity, the climate response is often represented 
as the increasing average global surface temperature of the 
planet, say, by the end of the century. This information can be 
used by policymakers to assess the risks imposed by climate 
change and to devise adequate responses to address the 
challenge.
    Let me simply summarize what we know about climate change, 
although we just heard the other witnesses, Dr. Cicerone and 
Sir John Houghton already summarizing these. But I firmly 
embrace the view expressed in the recent sense of the Senate 
resolution, namely that there is a growing scientific consensus 
that human activity is a substantial cause of greenhouse gas 
accumulation in the atmosphere, ``and that these accumulating 
gases are causing average temperatures to rise at the rate 
outside of natural variability.''
    Simply stated, the world is warming. It is due to our 
emissions. More warming is inevitable, but the amount of future 
warming is in our hands. Because carbon dioxide accumulates and 
remains in the atmosphere, each generation inherits the 
emissions of all those who have gone before. Many future 
generations of human beings will wrestle with this issue.
    Modest amounts of warming will have both positive and 
negative impacts. But above a certain threshold, the impacts 
turn strongly negative for most nations, people, and for 
biological systems.
    While there is a growing scientific consensus around the 
science of climate change, there is, of course, much that we do 
not fully understand about the timing, geographic distribution, 
and the severity of the changes in climate, and the economic, 
environmental and social impacts of these changes that will 
result if greenhouse gases continue to increase. However, not 
knowing with certainty how the climate system would respond 
should not be an excuse for inaction.
    Policymakers frequently, in the position of making 
decisions, they do that in the face of uncertainties. Usually, 
the presence of uncertainty means that we build extra insurance 
to protect against the risk that the consequences may be worse 
than expected. It would be better, of course, if we knew 
exactly where the perfect balance between costs, risks and 
benefits lies, but the fact is that we never have that luxury.
    Nevertheless, policymakers and the individuals both must 
manage public and personal risks all the time. And we do. Most 
people buy car insurance even though they do not know with any 
degree of certainty what their individual risk of being in a 
car accident might be, just as most doctors would advise an 
individual with a history of heart trouble to choose low-fat 
foods and exercise despite the many complex and usually 
unknowable factors that go into determining any individual 
person's risk of having a heart attack.
    If we apply the same logic in setting goals for limiting 
the risks associated with future climate change, it becomes 
very clear that our current course now places us far outside 
the kinds of risk thresholds we typically apply in other areas 
of public policy.
    Put another way, there is now an overwhelming consensus 
that failure to limit greenhouse gas emissions would produce a 
risk of significant adverse consequences that is far higher 
than we find acceptable in other arenas. When facing a 
substantial chance of potentially catastrophic consequences and 
the near certainty of lesser negative effects, the only prudent 
course of action is to mitigate these risks.
    And let us be clear, when we speak of potentially 
catastrophic consequences in this context, we are talking about 
the devastating impacts on ecosystems and biodiversity, severe 
flood damage to urban centers and island nations as sea level 
rises, significantly more destructive and frequent extreme 
weather events, such as droughts and floods, seriously affected 
agricultural productivity in many countries, exacerbation of 
certain diseases, population dislocations and so, on and on.
    A reasonable target, in my view, is to attempt to limit the 
global temperature increase to less than, say, four degrees 
Fahrenheit. Recent estimates indicate that stabilizing the 
amount of greenhouse gases in the atmosphere at the equivalent 
of twice the pre-industrial value of 280 parts per million of 
carbon dioxide, this provides only a 10 to 20 percent chance of 
limiting global average temperature rise to four degrees 
Fahrenheit.
    Put another way, this means that the odds that average 
global temperature will rise above four degrees is 80 to 90 
percent. Unless society starts taking some aggressive actions 
now, we are well on our way to reaching perhaps even a tripling 
of pre-industrial carbon dioxide levels with far greater 
adverse economic and environmental consequences.
    The Chairman. Doctor, I hate to tell you this, but you 
better----
    Dr. Molina. Okay.
    The Chairman. Maybe two more minutes.
    Dr. Molina. Two more--I will. I applaud the committee for 
its commitment to explore proposals consistent with the sense 
of the Senate resolution. And moreover, I commend you for 
beginning this exploration with a discussion of climate change. 
As you know, I am one of sixteen members of the National 
Commission on Energy Policy, and you will hear more about the 
Commission from Jason Grumet, our executive director. But one 
of my main contributions to the Commission's deliberations was 
helping the group understand the challenge of forging sound 
climate change in the face of evolving scientific knowledge.
    This national commission agreed on some statements, which I 
will end my testimony just summarizing this consensus from this 
group, which you will hear more about. I quote, ``We understand 
that the scientific consensus has emerged that global 
temperatures have been increasing at the rate that is outside 
the range of natural variability. Continuation of the 
greenhouse gas emission trends along business-as-usual lines 
could produce changes in climatic patterns in this century that 
will produce significant adverse impacts on human societies.''
    The second point. ``There are many uncertainties in the 
details of the timing and severity of the changes in climates; 
economic, environmental, and social impacts of these changes as 
well that will result if business as usual prevails. There are 
also uncertainties about the availability and costs of energy 
supply and energy-induced technologies that might be brought to 
bear to achieve much lower greenhouse emissions than those 
expected with business as usual.''
    ``But these uncertainties for further research and 
development to try to reduce them, they are not proper cause 
for taking no other action to reduce the risks from human-
caused climate change. What is already known about this risk is 
sufficient reason to accelerate, starting now, the search for a 
mix of affordable technical and policy measures that will be 
able to reduce greenhouse emissions substantially, furthermore 
to adapt to the degree of climate change that cannot be avoided 
without incurring unreasonable costs. This is not only a major 
challenge in fashioning a sensible energy policy for the United 
States, but it is a challenge that no sensible energy policy 
can ignore.''
    I thank you for your attention and look forward to working 
with the committee in the weeks and months ahead.
    The Chairman. Thank you very much.
    [The prepared statement of Dr. Molina follows:]

Prepared Statement of Professor Mario Molina, University of California, 
                               San Diego

    Good Morning. I am very pleased to be here to discuss the science 
of climate change and to reflect on the very real challenge of making 
sound policy choices in the face of uncertainty. Climate change is 
perhaps the most worrisome global environmental problem confronting 
human society today. It involves a complex interplay of scientific, 
economic, and political issues. The impacts of climate change are 
potentially very large and will occur over a time scale of decades to 
centuries. The actions needed to respond to this challenge require 
substantial long-term commitments to change traditional economic 
development paths throughout the world. The ultimate solution to the 
challenge will require a fundamental transformation in the production 
and consumption of energy here in the United States and by developed 
and developing nations alike.
    I want to address the bulk of my remarks to the threshold question: 
Do we know enough about climate change to act now and to start doing 
something serious to address this problem? Let me first comment on what 
I think the role of scientists should be in answering this question. 
Ultimately policy decisions about climate change have to be made by 
society at large, and more specifically by policymakers. Scientists do 
not have any special privilege to make such decisions, but science does 
play a fundamental role on this issue. The climate system is very 
complicated and science does not have all the answers: there are 
uncertainties in predicting when and to what extent will the climate 
change as a consequence of a given course of human activities. However, 
scientists can estimate the probability that the earth's climate will 
respond in certain ways. For simplicity the climate response is often 
represented as the increase in average global surface temperature of 
the planet say, by the end of the century. This information can be used 
by policymakers to assess the risks imposed by climate change and to 
device adequate responses to address the challenge.
    Let me begin by simply summarizing what we know about climate 
change. I firmly embrace the view expressed in the recent Sense of the 
Senate Resolution that ``there is a growing scientific consensus that 
human activity is a substantial cause of greenhouse gas accumulation in 
the atmosphere, and that these accumulating gasses are causing average 
temperatures to rise at a rate outside of natural variability.''
    Simply stated, the world is warming.

   It is due to our emissions.
   More warming is inevitable--but the amount of future warming 
        is in our hands.
   Because CO2 accumulates and remains in the 
        atmosphere, each generation inherits the emissions of all those 
        who have gone before. Many future generations of human beings 
        will wrestle with this issue.
   Modest amounts of warming will have both positive and 
        negative impacts. But above a certain threshold, the impacts 
        turn strongly negative for most nations, people, and biological 
        systems.

    While there is a growing scientific consensus around the science of 
climate change, there is of course much that we do not fully understand 
about the timing, geographic distribution, and severity of the changes 
in climate--and the economic, environmental, and social impacts of 
these changes--that will result if heat-forcing emissions continue to 
increase. However, not knowing with certainty how the climate system 
will respond should not be an excuse for inaction. Policymakers are 
frequently, indeed usually, in the position of making decisions in the 
face of uncertainties. Usually, the presence of uncertainty means that 
we build in extra insurance to protect against the risk that 
consequences may be worse than we expect. It would be better, of 
course, if we knew exactly where the perfect balance between cost, 
risk, and benefit lies. But the fact is that we never have that luxury. 
Nevertheless, policy makers and individuals both must manage public and 
personal risks all the time and we do. Most people buy car insurance 
even though they don't know with any degree of certainty what their 
individual risk of being in a car accident might be, just as most 
doctors would advise an individual with a history of heart trouble to 
choose low-fat foods and exercise despite the many complex and usually 
unknowable factors that go into determining any individual person's 
risk of having a heart attack.
    If we apply the same logic in setting goals for limiting the risks 
associated with future climate change, it becomes very clear that our 
current course now places us far outside the kinds of risk thresholds 
we typically apply in other areas of public policy. Put another way, 
there is now an overwhelming consensus that failure to limit greenhouse 
gas emissions will produce a risk of significant adverse consequences 
that is far higher than we find acceptable in other arenas. When facing 
a substantial chance of potentially catastrophic consequences and the 
near certainty of lesser negative effects, the only prudent course of 
action is to mitigate these risks. And let us be clear--when we speak 
of potentially catastrophic consequences in this context we are talking 
about devastating impacts on ecosystems and biodiversity; severe flood 
damage to urban centers and island nations as sea level rises; 
significantly more destructive and frequent extreme weather events such 
as droughts and floods; seriously affected agricultural productivity in 
many countries; the exacerbation of certain diseases; population 
dislocations; etc.
    A reasonable target, in my view, is to attempt to limit the global 
temperature increase to less than about 4 degrees Fahrenheit. Recent 
estimates indicate that stabilizing the amount of greenhouse gases in 
the atmosphere at the equivalent of twice the pre-industrial value of 
280 ppm carbon dioxide provides only a 10-20 per cent chance of 
limiting global average temperature rise to 4 degrees Fahrenheit. Put 
another way, this means that the odds that average global temperatures 
will rise above 4 degrees is 80 to 90 percent. Unless society starts 
taking some aggressive actions now, we are well on our way to reaching 
perhaps even a tripling of pre-industrial carbon dioxide levels with 
far greater adverse economic and environmental consequences.
    The risks to human society and ecosystems grow significantly if the 
average global surface temperature increases 5 degrees Fahrenheit or 
more. Such a large temperature increase might entail, for example, 
substantial agricultural losses, widespread adverse health impacts and 
greatly increased risks of water shortages. Furthermore, a very high 
proportion of the world's coral reefs would be imperiled and many 
terrestrial ecosystems could suffer irreversible damage. The risk of 
runaway or abrupt climate change also increases rapidly if the average 
temperature increases above about 5 degrees Fahrenheit. It is possible, 
for example, that the West Antarctic and Greenland ice sheets will 
melt, raising sea levels more than ten meters over the period of a few 
centuries. It is also possible that the ocean circulation will change 
abruptly, perhaps shutting down the Gulf Stream.
    I applaud the Committee for its commitment to explore legislative 
proposals consistent with the Sense of the Senate Resolution and 
moreover commend you for beginning this exploration with a discussion 
of climate science. As you may know, I am one of sixteen members of the 
National Commission for Energy Policy (NCEP). You will hear more about 
the Commission from Jason Grumet, our Executive Director, shortly. One 
of my main contributions to the Commission's deliberations was helping 
the group understand the challenge of forging sound climate policy in 
the face of evolving scientific knowledge. Early on in our 
deliberations we agreed upon the following brief statement to guide our 
policy exploration. I offer it here for the Committee's deliberations:

          ``(1) We understand that a scientific consensus has emerged 
        that (a) global temperatures have been increasing at a rate 
        that is outside the range of natural variability, (b) human 
        emissions of CO2 and other greenhouse gases have 
        been responsible for a part of this increase, and (c) 
        continuation of these emission trends along ``business as 
        usual'' lines could produce changes in climatic patterns in 
        this century that will produce significant adverse impacts on 
        human societies.
          (2) There are many uncertainties in the details of the 
        timing, geographic distribution, and severity of the changes in 
        climate--and the economic, environmental, and social impacts of 
        these changes--that will result if ``business as usual'' 
        prevails. There are, likewise, significant uncertainties about 
        the availability and costs of energy-supply and energy-end-use 
        technologies that might be brought to bear to achieve much 
        lower greenhouse-gas emissions than those expected on the 
        ``business as usual'' trajectory.
          (3) These uncertainties are cause for further research and 
        development to try to reduce them, but they are not proper 
        cause for taking no other action to reduce the risks from 
        human-caused climate change. What is already known about these 
        risks is sufficient reason to accelerate, starting now, the 
        search for a mix of affordable technical and policy measures 
        that will be able (a) to reduce greenhouse-gas emissions 
        substantially from the ``business as usual'' trajectory in the 
        aggregate over a relevant time frame, and (b) to adapt to the 
        degree of climate change that cannot be avoided without 
        incurring unreasonable costs. This is not the only major 
        challenge in fashioning a sensible energy policy for the United 
        States, but it is a challenge that no sensible energy policy 
        can ignore.''

    I thank you for your attention and look forward to working with the 
Committee in the weeks and months ahead.

    The Chairman. You may proceed, Doctor.

        STATEMENT OF JAMES W. HURRELL, PH.D., DIRECTOR, 
   CLIMATE AND GLOBAL DYNAMICS DIVISION, NATIONAL CENTER FOR 
               ATMOSPHERIC RESEARCH, BOULDER, CO

    Dr. Hurrell. I thank Chairman Domenici, Ranking Member 
Bingaman, and the other members of the committee for the 
opportunity to speak with you today on the science of global 
climate change. It is a privilege to be here. My name is Jim 
Hurrell, and I am director of the Climate and Global Dynamics 
Division at the National Center for Atmospheric Research in 
Boulder, Colorado.
    There will always be uncertainty in understanding the 
causes and the processes of climate variability and climate 
change, simply because the climate system is an extremely 
complex, non-linear system. However, significant advances in 
the scientific understanding of climate change now make it 
clear that there has been a change in climate that goes beyond 
the range of natural variability.
    The globe is warming at a dramatic rate, and any claims to 
the contrary are not credible. Global surface temperatures 
today are more than one degree Fahrenheit warmer than at the 
beginning of the 20th century. And the rates of temperature 
rise are greatest in recent decades.
    Nine of the last 10 years are among the warmest 10 years in 
the instrumental record, which dates back to about 1860. Based 
on reconstructions of temperature from proxy data like tree 
rings and ice cores, several studies have concluded that 
northern hemisphere surface temperatures are warmer now than at 
any other time in at least the last 1,000 years.
    The surface warming is consistent with a body of other 
observations that gives a consistent picture of a warming 
world. For example, there has been a widespread reduction in 
the number of frost days in middle latitude regions. And there 
has been an increase in the number of warm extremes. Ocean 
temperatures have warmed, and global sea levels have risen 15 
to 20 centimeters over the 20th century, as a result. Snow 
cover has decreased in many regions and sea-ice extents have 
decreased in the Arctic. There has been a nearly worldwide 
reduction in mountain glacier mass and extent.
    Because today's best climate models are now able to 
reproduce the climate of the past century, they are very useful 
tools for understanding and determining the changes in forcing 
that have driven this observed warming. Forcings imposed on the 
climate system can be natural in origin, such as changes in 
solar luminosity or volcanic eruptions, or they can be human 
induced, such as the buildup of greenhouse gas concentrations 
in the atmosphere.
    Greenhouse gas concentrations in the atmosphere are now 
higher than at any time in at least the last 750,000 years. In 
the absence of controls, future projections are that the rate 
of increase in carbon dioxide may accelerate and concentrations 
could double from pre-industrial values within the next 50 to 
100 years.
    Climate model simulations that account for such changes in 
climate forcings have now reliably shown that global surface 
warming of recent decades is a response to the increased 
concentrations of greenhouse gases. Moreover, this attribution 
of the recent climate change has direct implications for the 
future. Because of the very long lifetime of carbon dioxide in 
the atmosphere, there is a substantial future commitment to 
further global change, even in the absence of further increases 
and emissions.
    In summary, the scientific understanding of climate change 
is now sufficiently clear to show that climate change from 
global warming is already upon us. Uncertainties remain, 
especially regarding how climate will change at regional and 
local scales. But the climate is changing, and the rate of 
change, as projected, exceeds anything seen in nature in the 
past 10,000 years.
    Mitigation actions taken now to decrease concentrations of 
greenhouse gases in the atmosphere mainly have benefits 50 
years from now and beyond. There is no quick fix. While some 
changes might be benign or even beneficial in some geographical 
areas, global warming will be disruptive in many ways.
    Hence, it is vital to plan to cope with the changes, such 
as enhanced drought, heat waves, wildland fires, and flooding. 
The science of global climate change is certainly sophisticated 
enough at this point to help policymakers make real decisions 
now that will benefit the planet in the future.
    Again, I sincerely thank you for the opportunity to address 
this committee.
    The Chairman. Thank you very much.
    [The prepared statement of Dr. Hurrell follows:]

 Prepared Statement of James W. Hurrell, Ph.D., Director, Climate and 
   Global Dynamics Division National Center for Atmospheric Research

                              INTRODUCTION

    I thank Chairman Domenici, Ranking Member Bingaman, and the other 
Members of the Committee for the opportunity to speak with you today on 
the science of global climate change. My name is James W. Hurrell, 
Director of the Climate and Global Dynamics Division (CGD) at the 
National Center for Atmospheric Research (NCAR) in Boulder, Colorado. 
My personal research has centered on empirical and modeling studies and 
diagnostic analyses to better understand climate, climate variability 
and climate change. I have authored or co-authored more than 60 peer-
reviewed scientific journal articles and book chapters, as well as 
dozens of other planning documents and workshop papers. I have given 
more than 65 invited talks worldwide, as well as many contributed 
presentations at national and international conferences on climate. I 
have also convened over one dozen national and international workshops, 
and I have served on several national and international science-
planning efforts. Currently, I am extensively involved in the World 
Climate Research Programme (WCRP) on Climate Variability and 
Predictability (CLIVAR), and I serve as co-chair of Scientific Steering 
Committee of U.S. CLIVAR. I have also been involved in the assessment 
activities of the Intergovernmental Panel on Climate Change (IPCC) as a 
contributing author to chapters in both the third and fourth (in 
progress) assessment reports, and I have served on several National 
Research Council (NRC) panels. I am also a lead author on the U.S. 
Climate Change Science Program's (CCSP) Synthesis and Assessment 
Product on Temperature Trends in the Lower Atmosphere.
    Throughout this testimony I will refer to both the IPCC and the 
CCSP. Briefly, the IPCC is a body of scientists from around the world 
convened by the United Nations jointly under the United Nations 
Environment Programme (UNEP) and the World Meteorological Organization 
(WMO). Its mandate is to provide policy makers with an objective 
assessment of the scientific and technical information available about 
climate change, its environmental and socio-economic impacts, and 
possible response options. The IPCC reports on the science of global 
climate change and the effects of human activities on climate in 
particular. The fourth major assessment is underway (the previous 
assessments were published in 1990, 1995 and 2001) and is due to be 
published in 2007. Each new IPCC report reviews all the published 
literature over the previous 5 years or so, and assesses the state of 
knowledge, while trying to reconcile disparate claims, resolve 
discrepancies and document uncertainties. For the 2001 Third Assessment 
Report (TAR), Working Group I (which deals with how the climate has 
changed and the possible causes) consisted of 123 lead authors, 516 
contributors, 21 review editors, and over 700 reviewers. It is a very 
open process. The TAR concluded that climate is changing in ways that 
cannot be accounted for by natural variability and that ``global 
warming'' is happening.
    The U.S. CCSP was established in 2002 to coordinate climate and 
global change research conducted in the United States. Building on and 
incorporating the U.S. Global Change Research Program of the previous 
decade, the program integrates federal research on climate and global 
change, as sponsored by 13 federal agencies and overseen by the Office 
of Science and Technology Policy, the Council on Environmental Quality, 
the National Economic Council and the Office of Management and Budget. 
A primary objective of the CCSP is to provide the best possible 
scientific information to support public discussion and government and 
private sector decision-making on key climate-related issues. To help 
meet this objective, the CCSP is producing a series of synthesis and 
assessment products that address its highest priority research, 
observation, and decision-support needs. Each of these products will be 
written by a team of authors selected on the basis of their past record 
of interest and accomplishment in the given topic. The Product on 
Temperature Trends in the Lower Atmosphere focuses on both 
understanding reported differences between independently produced data 
sets of temperature trends for the surface through the lower 
stratosphere and comparing these data sets to model simulations.

                        OBSERVED CLIMATE CHANGE

a. Surface Temperature
    Improvements have been made to both land surface air temperature 
and sea surface temperature (SST) data during the five years since the 
TAR was published. The improvements relate to improved coverage, 
particularly over the Southern Hemisphere (SH) in the late 19th 
century, and daily temperature data for an increasing number of land 
stations have also become available, allowing more detailed assessment 
of extremes, as well as potential urban influences on both large-scale 
temperature averages and microclimate.
    The globe is warming. Claims to the contrary are not credible. 
Three different analyses of observations of surface temperature 
averaged across the globe show a linear warming trend of 0.6 C 0.2 C 
since the beginning of the 20th century. Rates of temperature rise are 
greater in recent decades: since 1979, global surface temperatures have 
increased more than 0.4 C. Land regions have warmed the most (0.7 C 
since 1979), with the greatest warming in the boreal winter and spring 
months over the Northern Hemisphere (NH) continents. A number of recent 
studies indicate that effects of urbanization and land-use change on 
the land-based temperature record are negligible as far as continental-
and hemispheric-space averages are concerned, because the very real but 
local effects are accounted for. Recent warming is strongly evident at 
all latitudes over each of the ocean basins and, averaged over the 
globe, the SSTs have warmed 0.35 C since 1979. The trends over the 
past 25 years have been fairly linear; however the global temperature 
changes over the entire instrumental record are best described by 
relatively steady temperatures from 1861-1920, a warming of about 0.3 
C to 1950, a cooling of about 0.1 C until the mid-1970s, and a warming 
of about 0.55 C since then. Thus, global surface temperatures today 
are about 0.75 C warmer than at the beginning of the 20th century.
    The warmest year in the 145-year global instrumental record remains 
1998, since the major 1997-98 El Nino enhanced it. The years 2002-2004 
are the 2nd, 3rd and 4th warmest years in the series since 1861 and 
nine of the last 10 years (1995 to 2004)--the exception being 1996--are 
among the ten warmest years in the instrumental record. Based on 
reconstructions of temperature from proxy data, like tree rings and ice 
cores, several studies have also concluded that NH surface temperatures 
are warmer now than at any time in at least the last 1,000 years.
b. Consistency with other observed changes
    The warming described above is consistent with a body of other 
observations that gives a consistent picture of a warming world. For 
example, there has been a widespread reduction in the number of frost 
days in middle latitude regions, principally due to an earlier last day 
of frost in spring rather than a later start to the frost season in 
autumn. There has been an increase in the number of warm extremes and a 
reduction in the number of daily cold extremes, especially at night. 
The amount of water vapor in the atmosphere has increased over the 
global oceans by 1.2 0.3% from 1988 to 2004, consistent in patterns 
and amount with changes in SST and a fairly constant relative humidity. 
Widespread increases in surface water vapor are also found. Ocean 
temperatures have warmed at depth as well, and global sea levels have 
risen 15-20 centimeters over the 20th century: as the oceans warm, 
seawater expands and sea level rises.
    There has been a nearly worldwide reduction in mountain glacier 
mass and extent. Snow cover has decreased in many NH regions, 
particularly in the spring season and this is consistent with greater 
increases in spring than autumn surface temperatures in middle latitude 
regions. Sea-ice extents have decreased in the Arctic, particularly in 
the spring and summer seasons, and patterns of the changes are 
consistent with regions showing a temperature increase. The Arctic 
(north of 65N) average annual temperature has increased since the 
1960s and is now warmer (at the decade timescale) than conditions 
experienced during the 1920-1945 period (where much of the earlier 
global warming was centered). In the Antarctic, there are regional 
patterns of warming and cooling related to changes in the atmospheric 
circulation. The warming of the Peninsula region since the early 1950s 
is one the largest and the most consistent warming signals observed 
anywhere in the world. Large reductions in sea-ice have occurred to the 
west in the Bellingshausen Sea, and on the eastern side of Peninsula, 
large reductions in the size of Larsen Ice shelf have occurred.
c. Temperature of the Upper Air
    Radiosonde releases provide the longest record of upper-air 
measurements, and these data show similar warming rates to the surface 
temperature record since 1958. Unfortunately, however, vast regions of 
the oceans and portions of the landmasses (especially in the Tropics) 
are not monitored so that there is always a component of the global or 
hemispheric mean temperature that is missing. Moreover, like all 
measurement systems, radiosonde records of temperature have inherent 
uncertainties associated with the instruments employed and with changes 
in instrumentation and observing practices, among other factors.
    Fundamentally, these uncertainties arise because the primary 
purpose of radiosondes is to help forecast the weather, not monitor 
climate variability and change. Therefore, all climate data sets 
require careful examination for instrument biases and reliability 
(quality control) and to remove changes that might have arisen for non-
climatic reasons (a process called ``homogenization'') It is difficult 
to remove all non-climatic effects, and ideally multiple data sets 
should be produced independently to see how sensitive results are to 
homogenization choices. This has been the case for the surface record, 
but unfortunately much less so for the radiosonde record (although 
efforts are increasing.)
    For this reason, much attention has been paid to satellite 
estimates of upper-air temperatures, in particular because they provide 
true global coverage. Of special interest have been estimates of 
tropospheric and stratospheric temperatures over thick atmospheric 
layers obtained from microwave sounding units (MSU) onboard NOAA polar-
orbiting satellites since 1979. Initial analyses of the MSU data by 
scientists at the University of Alabama, Huntsville (UAH) indicated 
that temperatures in the troposphere showed little or no warming, in 
stark contrast with surface air measurements. Climate change skeptics 
have used this result to raise questions about both the reliability of 
the surface record and the cause of the surface warming, since human 
influences thought to be important are expected to increase 
temperatures both at the surface and in the troposphere. They also have 
used the satellite record to caste doubt on the utility of climate 
models, which simulate both surface and tropospheric warming in over 
recent decades.
    In an attempt to resolve these issues, the NRC in 2000 studied the 
problem and concluded that ``the warming trend in global-mean surface 
temperature observations during the past 20 years is undoubtedly real 
and is substantially greater than the average rate of warming during 
the 20th century. The disparity between surface and upper air trends in 
no way invalidates the conclusion that surface temperature has been 
rising.'' The NRC further found that corrections in the MSU processing 
algorithms brought the satellite data record into slightly closer 
alignment with surface temperature trends, but substantial 
discrepancies remained. As further noted by the TAR, some, but not all, 
of these remaining discrepancies could be attributed to the fact that 
the surface and the troposphere respond differently to climate 
forcings, so that trends over a decade or two should not necessarily be 
expected to agree.
    Since the IPCC and NRC assessments, new data sets and modeling 
simulations have become available which are helping to resolve this 
apparent dilemma. The CCSP Assessment Product on Temperature Trends in 
the Lower Atmosphere is assessing these new data, and the preliminary 
report (which has been reviewed by the NRC) finds that the surface and 
upper-air records of temperature change can now, in fact, be 
reconciled. Moreover, the overall pattern of observed temperature 
change in the vertical is consistent with that simulated by today's 
climate models.
    Several developments since the TAR are especially notable:

   A second, independent record of MSU temperatures has become 
        available from scientists at the Remote Sensing Systems (RSS) 
        Laboratory. Although both the UAH and RSS groups start from the 
        same raw radiance data, they apply different construction 
        methods of merging the MSU data from one satellite to the next. 
        The result is that, while both data sets indicate the middle 
        troposphere has warmed since 1979, the RSS estimate is 
        approximately 0.1 C decade-1 warmer than the UAH 
        estimate. Moreover, the RSS trend is not statistically 
        different from the observed surface warming since 1979. The 
        difference in tropospheric temperature trends between these two 
        products highlights the issue of temporal homogeneity in the 
        satellite data.
   Both UAH and RSS MSU products support the conclusion that 
        the stratosphere has undergone strong cooling since 1979, due 
        to observed stratospheric ozone depletion.
   Because about 15% of the MSU signal for middle tropospheric 
        temperature actually comes from the lower stratosphere, the 
        real warming of the middle troposphere is greater than that 
        indicated by the MSU data sets. This has been confirmed by new 
        analyses that explicitly remove the stratospheric influence, 
        which is about -0.08 C decade-1 on middle 
        tropospheric MSU temperature trends since 1979.
   By differencing MSU measurements made at different slant 
        angles, both the UAH and the RSS groups have produced updated 
        data records weighted more toward the lower troposphere. The 
        RSS product exhibits a warming trend that is 0.2 C 
        decade-1 larger than that from UAH. In part, this 
        discrepancy is because adjustments for diurnal cycle 
        corrections required from satellite drift had the wrong sign in 
        the UAH record. As a result, a new UAH record is being 
        prepared, and the current version is regarded as obsolete.

    The various new data sets of upper-air temperature are very 
important because their differences highlight differences in 
construction methodologies. It therefore becomes possible to estimate 
the uncertainty in satellite-derived temperature trends that arises 
from different methods.
d. Extremes
    For any change in mean climate, there is likely to be an amplified 
change in extremes. The wide range of natural variability associated 
with day-to-day weather means that we are unlikely to notice most small 
climate changes except for changes in the occurrence of extremes. 
Extreme events, such as heat waves, floods and droughts, are 
exceedingly important to both natural systems and human systems and 
infrastructure. We are adapted to a range of natural weather 
variations, but it is the extremes of weather and climate that exceed 
tolerances.
    In several regions of the world indications of a change in various 
types of extreme weather and climate events have been found. So far, 
the most prominent indication of a change in extremes is the evidence 
of increases in moderate to heavy precipitation events over the middle 
latitudes in the last 50 years, even for regions where annual 
precipitation totals are decreasing. Further indications of a robust 
change include the observed trend to fewer frost days associated with 
the average warming in most middle latitude regions. Results for 
temperature-related daily extremes are also relatively coherent for 
some measures. Many regions show increased numbers of warm days/nights 
(and lengthening of heat waves) and even more reductions in the number 
of cold days/nights, but changes are not ubiquitous.
    Trends in tropical storm frequency and intensity are masked by 
large natural variability on multiple timescales. Increases may be 
occurring in recent years, but apart from the North Atlantic basin, 
most measures only begin in the 1950s or 1960s and have likely missed 
some events in the early decades. Numbers of hurricanes in the North 
Atlantic have been above normal in 8 of the last 10 years, but levels 
were about as high in the 1950s and 1960s. This pattern continues this 
summer, with a very active hurricane season already evident and SSTs at 
record high levels.

               MODELING AND ATTRIBUTION OF CLIMATE CHANGE

a. Improved simulations of past climate
    The best climate models encapsulate the current understanding of 
the physical processes involved in the climate system, the 
interactions, and the performance of the system as a whole. They have 
been extensively tested and evaluated using observations. They are 
exceedingly useful tools for carrying out numerical climate 
experiments, but they are not perfect, and some models are better than 
others. Uncertainties arise from shortcomings in our understanding of 
climate processes operating in the atmosphere, ocean, land and 
cryosphere, and how to best represent those processes in models. Yet, 
in spite of these uncertainties, today's best climate models are now 
able to reproduce the climate of the past century, and simulations of 
the evolution of global surface temperature over the past millennium 
are consistent with paleoclimate reconstructions.
    As a result, climate modelers are able to test the role of various 
forcings in producing the observed changes in global temperature 
temperatures. Forcings imposed on the climate system can be natural in 
origin, such as changes in solar luminosity or volcanic eruptions, the 
latter adding considerable amounts of aerosol to the upper atmosphere 
for up to two years. Human activities also increase aerosol 
concentrations in the atmosphere, mainly through the injection of 
sulfur dioxide from power stations and through biomass burning. A 
direct effect of sulfate aerosols is the reflection of a fraction of 
solar radiation back to space, which tends to cool the Earth's surface. 
Other aerosols (like soot) directly absorb solar radiation leading to 
local heating of the atmosphere, and some absorb and emit infrared 
radiation. A further influence of aerosols is that many act as nuclei 
on which cloud droplets condense, affecting the number and size of 
droplets in a cloud and hence altering the reflection and the 
absorption of solar radiation by the cloud. The precise nature of 
aerosol/cloud interactions and how they interact with the water cycle 
remains a major uncertainty in our understanding of climate processes. 
Because man-made aerosols are mostly introduced near the Earth's 
surface, they can be washed out of the atmosphere by rain. They 
therefore typically remain in the atmosphere for only a few days, and 
they tend to be concentrated near their sources such as industrial 
regions. Therefore, they affect climate with a very strong regional 
pattern and usually produce cooling.
    In contrast, greenhouse gases such as carbon dioxide and methane 
are not washed out, so they have lifetimes of decades or longer. As a 
result, they build up in amounts over time, as has been observed. 
Greenhouse gas concentrations in the atmosphere are now higher than at 
any time in at least the last 750,000 years. It took at least 10,000 
years from the end of the last ice age for levels of carbon dioxide to 
increase 100 parts per million by volume (ppmv) to 280 ppmv, but that 
same increase has occurred over only the past 150 years to current 
values of over 370 ppmv. About half of that increase has occurred over 
the last 35 years, owing mainly to combustion of fossil fuels and 
deforestation. In the absence of controls, future projections are that 
the rate of increase in carbon dioxide amount may accelerate, and 
concentrations could double from pre-industrial values within the next 
50 to 100 years.
    Climate model simulations that account for such changes in forcings 
have now reliably shown that global surface warming of recent decades 
is a response to the increased concentrations of greenhouse gases and 
sulfate aerosols in the atmosphere. When the models are run without 
these forcing changes, they fail to capture the almost linear increase 
in global surface temperatures since the mid-1970s. But when the 
anthropogenic forcings are included, the models simulate the observed 
temperature record with impressive fidelity. These same model 
experiments also reveal that changes in solar luminosity account for 
much of the warming in the first half of the 20th century. Such results 
increase our confidence in the observational record and our 
understanding of how temperature has changed. They also mean that the 
time histories of the important forcings are reasonably known, and that 
the processes being simulated models are adequate enough to make the 
models very valuable tools.
b. Commitment to further climate change
    The ability of climate models to simulate the past climate record 
gives us increased confidence in their ability to simulate the future. 
Moreover, the attribution of the recent climate change to increased 
concentrations of greenhouse gases in the atmosphere has direct 
implications for the future. Because of the long lifetime of carbon 
dioxide and the slow equilibration of the oceans, there is a 
substantial future commitment to further global climate change even in 
the absence of further emissions of greenhouse gases into the 
atmosphere. Several modeling groups have performed ``commitment'' runs 
in order to examine the climate response even if the concentrations of 
greenhouse gases in the atmosphere had been stabilized in the year 
2000. The exact results depend upon the model, but they all show a 
further global warming of about another 0.5 C, and additional and 
significant sea level rises caused by thermal expansion of the oceans 
by the end of the 21st century. Further glacial melt is also likely.
    The climate modeling groups contributing to the Fourth IPCC 
Assessment Report have produced the most extensive internationally 
coordinated climate change experiment ever performed (21 global coupled 
models from 14 countries). This has allowed better quantification of 
multi-model responses to three scenarios of 21st century climate 
corresponding to low (550 ppmv), medium (690 ppmv) and high (820 ppmv) 
increases of carbon dioxide concentrations by the year 2100. In spite 
of differences among models and the uncertainties that exist, the 
models produce some consistent results:

   Over the next decade or two, all models produce similar 
        warming trends in global surface temperatures, regardless of 
        the scenario.
   Nearly half of the early 21st century climate change arises 
        from warming we are already committed to. By mid-century, the 
        choice of scenario becomes more important for the magnitude of 
        warming, and by the end of the 21st century there are clear 
        consequences for which scenario is followed.
   The pattern of warming in the atmosphere, with a maximum in 
        the upper tropical troposphere and cooling in the stratosphere, 
        becomes established early in this century.
   Geographical patterns of warming show greatest temperature 
        increases at high northern latitudes and over land, with less 
        warming over the southern oceans and North Atlantic. In spite 
        of a slowdown of the meridional overturning circulation and 
        changes in the Gulf Stream in the ocean across models, there is 
        still warming over the North Atlantic and Europe due to the 
        overwhelming effects of the increased concentrations of 
        greenhouse gases.
   Precipitation generally increases in the summer monsoons and 
        over the tropical Pacific in particular, with general decreases 
        in the subtropics and some middle latitude areas, and increases 
        at high latitudes.

c. Increasing complexity of models
    As our knowledge of the different components of the climate system 
and their interactions increases, so does the complexity of climate 
models. Historical changes in land use and changes in the distribution 
of continental water due to dams and irrigation, for instance, need to 
be considered. Future projected land cover changes due to human land 
uses are also likely to significantly affect climate, and these effects 
are only now being included in climate models.
    One of the major advances in climate modeling in recent years has 
been the introduction of coupled climate-carbon models. Climate change 
is expected to influence the capacities of the land and oceans to act 
as repositories for anthropogenic carbon dioxide, and hence provide a 
feedback to climate change. These models now allow us to assess the 
nature of this feedback. Results show that carbon sink strengths are 
inversely related to the rate of fossil fuel emissions, so that carbon 
storage capacities of the land and oceans decrease and climate warming 
accelerates with faster carbon dioxide emissions. Furthermore, there is 
a positive feedback between the carbon and climate systems, so that 
further warming acts to increase the airborne fraction of anthropogenic 
carbon dioxide and amplify the climate change itself.

                          POLICY IMPLICATIONS

    In summary, the scientific understanding of climate change is now 
sufficiently clear to show that climate change from global warming is 
already upon us. Uncertainties remain, especially regarding how climate 
will change at regional and local scales. But the climate is changing 
and the uncertainties make the need for action all the more imperative. 
At the same time, it should be recognized that mitigation actions taken 
now mainly have benefits 50 years and beyond now. This also means that 
we will have to adapt to climate change by planning for it and making 
better predictions of likely outcomes on several time horizons. My 
personal view it that it is vital that all nations identify cost-
effective steps that they can take now, to contribute to substantial 
and long-term reductions in net global greenhouse gas emissions. Action 
taken now to reduce significantly the build-up of greenhouse gases in 
the atmosphere will lessen the magnitude and rate of climate change. 
While some changes arising from global warming are benign or even 
beneficial, the rate of change as projected exceeds anything seen in 
nature in the past 10,000 years. It is apt to be disruptive in many 
ways. Hence it is also vital to plan to cope with the changes, such as 
enhanced droughts, heat waves and wild fires, and stronger downpours 
and risk of flooding. Managing water resources will be major challenge 
in the future.
    Again, I appreciate the opportunity to address the Committee 
concerning the science of global climate change--a topic that is of the 
utmost importance for the future of our planet.

    The Chairman. And thanks to all of you. Now let us see if 
we have enough Senators. Do we?
    [Whereupon, a business meeting was held from 10:47 a.m. to 
10:49 a.m.]
    The Chairman. Now we are going to proceed. We have one set 
of panels--or one panel after this. We want to get them up 
before noon. But we really do want every Senator that wants to 
to ask questions.
    I am going to start with you, Senator Bingaman, then with 
you, Senator Craig, and go right down the line.
    Senator Bingaman.
    Senator Bingaman. Well, thank you very much, Mr. Chairman. 
One of the issues that I think several of you alluded to that I 
think is important to focus on here is the length of time that 
gases that we emit today remain in the atmosphere, and the fact 
that by continuing to add to the greenhouse gases, we buildup a 
store that takes decades and even centuries to settle back out. 
I guess that is what eventually happens to the greenhouse gases 
in the atmosphere, although I am not sure of that.
    Maybe Dr. Hurrell, you could address that, and anybody else 
who had a comment as to what the science tells us about the 
length of time that these gases are going to remain there and 
continue to cause increasing temperatures.
    Dr. Hurrell. You are correct, Senator Bingaman. The 
lifetime of greenhouse gases in the atmosphere is on the time 
scale of decades to centuries. And so the buildup of greenhouse 
gases in the atmosphere continues to accumulate over time. And 
so some of the experiments, in terms of the impacts that we do 
with climate models, some new types of experiments, are what we 
call commitment runs.
    For instance, if emissions were capped at today's levels, 
what would happen in the future because of the continued 
buildup of greenhouse gas concentrations in the atmosphere? And 
those climate model simulations do indicate that there will be 
a continued increase in global surface temperatures that we are 
already committed to. Something on the order of approaching 
another degree Fahrenheit over the next 50 years. And sea 
levels will continue to rise as well.
    Senator Bingaman. All right. Dr. Cicerone, did you have any 
comment on that?
    Dr. Cicerone. Yes, Senator Bingaman. Carbon dioxide is 
clearly the most important human-caused greenhouse gas, and I 
agree completely with what Dr. Hurrell said. The other 
greenhouse gas is methane, which has a residence time of 10 or 
12 years. So that it is much more susceptible to short-term 
changes and to our increasing the emissions or decreasing the 
emissions. We should see changes in methane more quickly.
    Nitrous oxide, 150 years. There are some exotic chemicals, 
which although present in much smaller amounts, survive for 
tens of thousands of years. Sulfurhexaflouride and some pro-
fluorinated hydrocarbons, which were produced inadvertently by 
the aluminum industry, which I think has been somewhat 
successful in eliminating those emissions. So there is a 
spectrum.
    One of the greenhouse gases is much shorter lived. It is 
ozone produced in ground-level air pollution. Chemistry 
reactions may survive only a couple hundred days. But the 
principal one is exactly as Dr. Hurrell said.
    Senator Bingaman. Let me ask one other question. All the 
discussion so far this morning that I have been listening to 
relates to incremental changes in climate that we can 
anticipate if we continue to emit the level of greenhouse gases 
we are currently emitting, or the amounts we are expected to 
emit in the future.
    What could you tell us about the issue of abrupt climate 
change? This is something that I hear about and how does this 
relate to what the testimony that you have given on this other 
issue?
    Sir Houghton. Maybe I should have a go at that. Climate is 
a very non-linear system, so that you may go along without too 
much change, then all of a sudden something happens, because a 
threshold or something has been reached. We do not know of any 
very tight thresholds, but we do know that certain things are 
happening which could lead to very large effects. And one of 
those is the meltdown of Greenland, for instance, a certain 
threshold. Greenland is in balance at the moment, roughly 
speaking, between a glacier on the outside, and accumulation in 
the middle.
    Now if that starts to change rapidly, then Greenland will 
begin to melt down. It will maybe take a thousand years or 
more, but there is seven meters of sea level which lies within 
Greenland.
    Furthermore, which, of course, has been well publicized in 
that film, ``The Day After Tomorrow''--you need not believe all 
of it, by any means. You need not believe the speculative 
events which occurred afterwards. But the signs on which it is 
predicated is the weakening of the Gulf Stream. And all the 
climate models, the coupled ocean atmosphere climate models 
that couple the two circulations together, show this effect.
    As you freshen the water in the higher latitudes, because 
of increased precipitation or because of melting ice, then this 
stops the water in the ocean becoming so salty. It becomes less 
dense, and therefore, it does not sink to the bottom and start 
to form the deep ocean circulation, which circulates between 
all the oceans. And what happens is that that then weakens the 
whole of the Gulf Stream circulation and will have profound 
impacts on the weather, particularly of Western Europe, but not 
as severe, on the whole globe.
    As I say, all climate models show that weakening, while a 
few of them show it cutting it off after a few hundred years or 
so. There is still a lot of debate about the timing of that. 
But the fact that that could occur is really very, very well 
understood now, and probably will occur in the future.
    There is also the breakdown of the West Antarctic ice 
sheet, which is another possible threshold. There are other 
things, like release of methane from sources in the deep oceans 
or in the ice. That is the further one which we are concerned 
about, but the evidence of that is not too strong. But all 
these things are there in the wings, or in the possibilities, 
which we shall be aware of even if we are concentrating on the 
things we are more sure about.
    Dr. Molina. Can I add something to that? I just want to 
point out that the risks to human society of these abrupt 
changes increase rapidly as the amount of greenhouse gases in 
the atmosphere increases. It is very non-linear. But, to put it 
in simple terms, if we double the amount of greenhouse gases in 
the atmosphere, the risk does not double. Perhaps it quadruples 
or perhaps it increases even a factor of ten. So we have a very 
non-linear response. We get into a very dangerous situation as 
we increase the amount of these gases.
    Senator Bingaman. Thank you, Mr. Chairman.
    Senator Craig. Let me thank all of you for being here. I 
have read many of your works and a lot of the publications over 
the last decade and have been fully engaged in this issue, both 
as an observer and sometimes a critic. But I have grown to 
believe, as many of my colleagues have, that there is a 
substantial human effect on the environment. And you have 
outlined that in a variety of ways this morning.
    My responsibility is best I can, is to question the 
science, but at the same time, as the science seems to confirm 
human activity as a major contributor. Climate variability is 
something that I think we are all very willing to look at and 
see as a part of it. So it is very important for us, as 
policymakers, to insist that you all get it right as best 
science can.
    Having said that, let me revert back to where I think I and 
others on this committee play the role, and that is in the 
policy formed and how we get there. Many of you have said that 
no matter what we do, this very big world of ours is a ship 
that turns with great slowness. And I am extremely concerned, 
in a positive/negative way, about the growth of emerging 
economies and their contribution, and what we can do not only 
for ourselves, but with them and for them.
    Abrupt changes in our approach toward adjusting create 
consequences. And, therefore, technologies are extremely 
important, I think. Clean technologies, in not only moving us 
in the right direction, but moving the world in the right 
direction, because this great Nation of ours makes almost 
everything that we produce available to the rest of the world. 
And we have that tremendous capacity. We just produced 
legislation that I think is of substantially greater 
significance to climate change than anything we have done to 
date.
    I have traveled the world. I have been to most of the 
climate change conferences. I know the world is now recognizing 
that without new technologies it cannot get to where it wants 
to get in relation to certain international protocols.
    Do you believe and are you all advocates of moving 
electrical generation in this country and around the world 
toward a non-emitting source? And I, of course, must emphasize 
baseload. And do you support new nuclear-generating 
technologies to accomplish that? Any of you wish to respond to 
that?
    Dr. Molina. Perhaps I can make one comment there, which is 
along the lines of the report of the National Commission on 
Energy Policy where these things are documented to much more 
extent.
    What I believe personally is that it is very important for 
society to leave all options open. And that certainly includes 
nuclear energy as well. And given the current circumstances, 
the way society deals with nuclear energy, particularly in this 
country, including others, unless there is some government 
intervention to maintain this option, to make it safer, and to 
have it as a possibility for the future, it will not happen, 
because there is no incentive for industry to continue doing 
that.
    So I do believe it is very important, particularly along 
those lines that you mentioned, of having new technologies to 
move in that direction, to have this option, and for it to be 
safe. I will not repeat here the problems that we have had, 
since you are probably very familiar with them, but it does 
require resources to ensure that this happens. Thank you.
    Sir Houghton. May I answer that? I think it is very clear 
there is no one solution to the problem of getting to a 
situation within a generation of carbon-free energy. There are 
many possibilities. And you have mentioned the nuclear one, and 
that is clearly one of the options that needs considering.
    My personal view on that is I am concerned about 
proliferation of nuclear material. The world really--of course, 
we are not just looking at the United States, or the United 
Kingdom, or Europe.
    Senator Craig. No, we are looking at the world.
    Sir Houghton. We are looking at the whole world, which 
needs these energies. And the proliferation of nuclear material 
is something we have to be very careful about. And as a long-
term solution, I would worry about that. Nevertheless, I do 
think it has to come into the debate.
    The other point I would make is that India and China have a 
great deal of coal. China is building a gigawatt power station 
every 5 days at the moment. And so some way, somehow we have to 
very rapidly move to clean zero carbon coal technology. And 
that can be done with sequestration.
    I know the European Union is going to talk to China later 
this year about the possibility of helping China with that. I 
am sure the United States could help China with that also, but 
it needs to be done rather soon, because they are moving ahead 
so fast with their greenhouse gas emissions.
    Senator Craig. Thank you all.
    The Chairman. Okay. We are going to go now, I think it is 
back to the regular order. Senator Akaka, I think you are next.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Dr. Cicerone, in your testimony--and I am following up on 
Senator Bingaman's question. In your testimony you talked about 
abrupt climate change; what is abrupt climate change? And can 
you identify any critical thresholds that might be crossed if 
we do not take strong action to control carbon dioxide 
emissions?
    For example, I have heard that at certain temperature 
degree increases, large sheets of ice in the Arctic could melt 
and collapse, leading to huge increases in sea level. Can you 
comment on that and other potential threshold events?
    Dr. Cicerone. I will try, Senator Akaka. About 2\1/2\ years 
ago or so the Academy did a study and created a report called 
``Abrupt Climate Change and the Potential for Surprises,'' 
largely in response to findings over the last 15 or 20 years 
that previously the earth's climate was thought to change 
slowly and gradually. But I would say in the last 20 years or 
so that scientists, by reading the record of isotopes in 
minerals and fossils of living organisms, and water pattern 
flows and so forth, we found evidence of previous climate 
change on earth. There have been many, many examples of rapid 
change.
    Changes in ocean circulation, for example, that have 
occurred in periods so short that we are not even sure we are 
measuring how short they are. Ten to 50 to 100 years instead of 
thousands of years. So as more of these examples arose in the 
scientific literature, people began to take more seriously the 
fact that the earth can change abruptly.
    When we try to figure out what those thresholds are, people 
have had difficulty, and have not yet been able to explain what 
kind of event could trigger a hemispheric or global change that 
could occur in 10 to 50 years. I do not think we understand the 
mechanisms very well yet, but we have powerful evidence that 
there are mechanisms built into this complicated system that 
have thresholds connected with them.
    So the kinds of examples that Dr. Houghton and Dr. Hurrell 
gave early are on our minds. We cannot prove it yet. The most 
recent academy report on abrupt climate change with that title 
was 2 or 3 years ago. And I can try to extract some more 
examples to send.
    The Antarctic ozone hole that developed over Antarctica, 
fortunate in some respect that it happened over relatively 
unpopulated areas, although our colleagues in New Zealand and 
Australia and southern Chile do not agree with that statement, 
happened for unknown reasons at the time.
    Dr. Molina and his research group, and one of the reasons 
he was awarded the Nobel Prize in 1995, was helping to come up 
with the mechanisms that were previously not understood. 
Thresholds which could cause ozone depletion to occur very 
rapidly in one place of the world, which were not understood 
originally.
    There must be mechanisms like that in the climate system, 
too, which are not fully understood yet. We have ideas, 
plausible ideas, but not proof of where these thresholds lie, 
in my opinion.
    Senator Akaka. Dr. Cicerone, how would you suggest that 
island nations and states deal with potential abrupt climate 
changes? In other words, how likely are they to occur and is 
there anything we can do now to prevent or prepare for them, as 
island nations and states?
    Dr. Cicerone. I think they generally see the risks much 
more ominously than we do, with such a large continent and 
Hawaii and Alaska, as part of the United States. The island 
nations feel more risk. But generally, the precautions that we 
can take, by moving our water treatment plants further up the 
river, further up from sea level, to protect them from 
saltwater intrusion. Borders that we can put up by moving 
installations now to prepare for slower changes.
    We have so much technology. We have capital. We have 
scientific ability to foresee that many of the island nations 
do not have all those ingredients. So they are feeling more 
threatened. I have not thought from the point of view of island 
nations, but I know that they take these issues more seriously 
than we do.
    We have been planning over an entire generation of 
installations to make moves now, which can be done on a cost 
neutral or beneficial basis, which will not be available if the 
changes turn out to be sudden, and island nations start to 
become submerged.
    Senator Akaka. Thank you for your responses, Dr. Cicerone.
    Thank you, Mr. Chairman. My time has expired.
    The Chairman. Thank you, Senator.
    Let me say to the witnesses, if you wonder what is 
happening, there is a vote going on, and we are trying to 
accommodate the voters and you, and not close up shop. So we 
are going to continue to try to do that.
    On our side, Senator Alexander should be next, but he 
indicated he was going to vote and then come back. Senator 
Murkowski went. She will be back. Senator Salazar. Then Talent, 
Thomas. How would we like to proceed? Senator Salazar is not 
here.
    Senator Thomas, did you come here before Senator Talent?
    Senator Thomas. I do not know. Mr. Chairman, I am waiting 
for some material anyway.
    The Chairman. All right.
    Senator Thomas. So I am happy to yield to my friend.
    The Chairman. We are going to go to Senator Thomas.
    Senator Thomas. All right. Fine. Thank you. We need some 
scientific effort on how we----
    The Chairman. We need a Nobel Prize.
    [Laughter.]
    Senator Thomas. I appreciate you being here. Certainly, all 
of us understand the importance of this issue. It is a 
difficult issue. I have been to Milan, to Buenos Aires, to the 
Kyoto agreements, and our Kyoto conversations, and that lack of 
agreement, I might say. But it is interesting. And we need to 
work at it. We are committed to that. I guess the question is: 
What do we do?
    Sir Houghton, you mentioned your studies. Your third IPCC 
assessment was largely based on the Mann so-called hockey stick 
graph, which shows neither warming nor ice age. Do you endorse 
that study, or do you believe that there is still some work to 
be done?
    Sir Houghton. If I could just comment on that. The hockey 
stick debate is only a very small discussion within the IPCC 
process. The hockey stick debate addresses the issue of global 
temperature from the year 1000 to the start of the instrumental 
record, which began about 1860. Regarding the records since 
1860, there is no question of that being correct, because that 
is a very good record.
    Trying to reconstruct the data for the previous period 
involves proxy data. This is data from tree rings, from pollen 
sources, from a whole range of indicators of temperature. And 
those need calibrating against the instrumental record. That 
calibration process and the way this is done----
    Senator Thomas. I think my point is that there is a 
difference. As you go to these meetings--and what you have said 
scientifically is not agreed to by everyone. And so I guess I 
am saying do we have----
    Sir Houghton. Okay. Let me now explain it----
    Senator Thomas. We do not have time to do all the details.
    Sir Houghton. No. Well, let me just explain in detail, but 
let me just say that the point of issue is just the 
reconstruction of that temperature from 1000 to 1860. Now there 
are various reconstructions within the literature that is 
debated within the reconstruction, about those reconstructions. 
There is nothing within any of those constructions which are 
being properly published that puts any jeopardy whatever to the 
main statements of the IPCC regarding the temperature of the 
20th century, the increase in that temperature, and all the 
statements you have heard already.
    So there is some debate about it, and I do not dispute that 
debate. But there is debate about many issues in science, and 
the whole science of various parts of the IPCC. And that is not 
a big issue. It is not an issue that affects our main 
conclusions at all.
    Senator Thomas. Well, it affects the conclusions that we 
have to make, and you said, as a matter of fact, that we need 
to be taking some action. Well, the fact is that we are taking 
action. And the question, if you go to Kyoto, why it is a 
matter of setting limits, and then some countries trading off 
and selling their credits to others. It has to do with economy. 
Nothing to do with the environment.
    We are spending more than the rest of the world all put 
together in doing research--$6 billion a year. I kind of get 
the impression that we have not made any decisions and we are 
not moving forward. But what more do you think we can do?
    Sir Houghton. What more you could do is to address this 
issue. And I cannot give you----
    Senator Thomas. Well, we spend $6 billion a year addressing 
this issue.
    Sir Houghton. But that is--it is a big issue. And you have 
to look at--I am not an economist, and I am not a politician.
    Senator Thomas. No.
    Sir Houghton. I am a scientist who comes to this and tells 
you there is a real problem. The world is facing a real 
problem. Many countries of the world are taking action to meet 
that problem. And we just would like the United States to begin 
to show some leadership in this area so that they are part of 
the solution as well as not part of the problem.
    Senator Thomas. I am trying to tell you that we are 
spending more than the rest of the world put together----
    Sir Houghton. But then you are emitting more than the 
world----
    Senator Thomas [continuing]. In seeking to do something----
    Sir Houghton. You are emitting a very large--you know, you 
are emitting----
    Senator Thomas. We have an economy here that is larger than 
anyone else's.
    Sir Houghton. Okay.
    Senator Thomas. I mean it is not easy. It is a different 
thing to sit there on the scientific end and talk about all 
these things. It is quite different to say, ``All right. What 
are we going to do about it?'' Now I understand that is not 
your role. It is our role. But we need to talk a little about 
both sides of the issue. I have used up my time.
    Sir Houghton. But Senator, could I just say, we are not 
just scientists doing it for the sake of the science. Although 
science is very exciting and very interesting. We believe that 
there are very severe problems with humankind, severe damages 
to your country as a result of this.
    Senator Thomas. How about solutions?
    Sir Houghton. Severe damages to other countries, too, 
because----
    Senator Thomas. How about solutions?
    Sir Houghton. And the solutions are to move the way we get 
our energy from being a----
    Senator Thomas. And we are doing more of that anybody else 
in the world.
    Dr. Molina. If I can add to that, there are several 
options. There are many ways to actually address the problem. 
And the example I gave from the National Commission on Energy 
Policy is one example I think Senator Bingaman is discussing 
and considering for action.
    It is not enough to do the science. It is not enough to 
invest, which is terribly important. And the point is, much can 
be done. It does not have to be Kyoto, but definitely much can 
be done to start limiting the nations without adverse economic 
impacts.
    You will hear more perhaps from the second panel on the 
details. We, as scientists, simply expose what the enormous 
risks might be if we do not do it.
    Senator Thomas. Yes. I understand.
    Dr. Molina. But we also, as individuals, can, of course, 
have strong statements that much can be done that is not being 
done. And that is a point without affecting the economy in a 
negative way. For example, going beyond voluntary measures to 
limit the nations. That can certainly be done.
    Senator Thomas. We also have to balance that. I do not want 
to argue with you, but the economy--we go through this Kyoto, 
and we go through it all the time. It is not a new issue. And 
we are trying to find a way to deal with the problem without 
putting great limits on the economy. And frankly, you can sit 
in your scientific seat, if you want to, and not worry about 
the economy, but you cannot do that when you are making the 
decisions.
    Dr. Molina. That is why I gave the example of--the specific 
example of the National----
    Senator Thomas. And you talked about nuclear. France is 
using nuclear almost entirely. You said maybe we could do it. 
Illinois, 40 percent of their electricity is already generated 
by nuclear. It is not a brand new idea. Yes, sir. I am taking 
too much time.
    Dr. Cicerone. I think we all sympathize with the enormous 
responsibility that you feel. One of the statements that the 
science academies of the G8 nations and the other three just 
made was that it is vital that all nations identify cost-
effective steps that they can take now to contribute to 
substantial and long-term reduction in that global greenhouse 
gas emissions. That statement did not try to make political 
choices, recognize the need.
    I just jotted down seven quick thoughts on the values of 
energy efficiency that I think we would all agree with. From 
the United States' point of view, our manufacturing sector uses 
50 or 60 percent more energy to produce a widget than, let us 
say, our competitors in Japan and Germany do. And when the 
energy costs get as high as they are now, that is a significant 
fraction of the product cost.
    Now if we could help to find ways to manufacture more 
efficiently, there would be a win-win there. We have a 
strategic reliance on foreign oil that I do not think any 
American is comfortable with. If we could increase our energy 
efficiency and decrease that strategic reliance on foreign oil. 
You have thought about this a lot.
    We have local and regional air pollution issues that, 
again, arise from the more inefficient burning of fuels for 
energy. If we could increase the efficiency, we could decrease 
that problem.
    We have a balance of trade issue. I just sketched this out. 
I could be wrong, but our current usage of foreign oil is 
contributing maybe $200 billion a year to our trade deficit. We 
could reduce the trade deficit by increasing our energy 
efficiency.
    We have the climate change issue, where we all want to slow 
down the emissions of carbon dioxide. If we could increase our 
energy efficiency with all that means from our business and 
commercial sector.
    We worry about the illicit usages of the money that we are 
spending on foreign oil. Where is that money going? You 
probably know the answer better than we do. And I am not sure 
you have it all either.
    And then finally, there is a world market for energy-
efficient devices. If we could somehow create incentives for 
our companies to create those energy--so there are seven win-
win-win propositions here.
    Senator Craig. And those are very good. As you well know, 
we are right now in the middle of our energy policy development 
between the House and the Senate, and many of these things are 
there. And so we are moving in that direction.
    Dr. Cicerone. The win-win ones.
    Senator Craig [presiding]. I hope so. Thank you. I 
appreciate your specifics.
    Senator.
    Senator Corzine. Thank you. And thank the panel. This is an 
extraordinary presentation that I think should capture the 
imagination of not just the U.S. public's eye, but globally.
    I want to piggyback on Senator Craig. I will probably be--
might come at it from a different angle, but I would like each 
of you to speak to the one or two initiatives that you think, 
whether it is through conservations or efficiencies, as Dr. 
Cicerone said, or is it through alternative production elements 
that you think would fit into the portfolio that we should be 
investing in to address this issue on a long-term basis. And 
having been someone who is involved in business, it may not be 
profitable in the short run, each of those things, but in the 
long run, may have huge return profiles.
    So I would like you, within the best of your judgment, to 
identify those things that have the highest return profile over 
some period of time. So it is relatively open ended, but I 
would like to know what that portfolio of actions are that 
address what you have so ably described as a real problem for 
mankind.
    Start with Dr. Molina.
    Dr. Molina. It is a tough question, because my conclusion 
is that we do need to leave open a whole variety of options. 
The way I would put it is that what is very important to do is 
to--there has to be some government intervention that goes 
beyond voluntary measures to have a strong market signal, so 
that the market itself chooses what are the best options to 
limit the emission of greenhouse gases.
    Clearly, as Dr. Cicerone pointed out, increasing energy 
efficiency is a very obvious one. Using the energy sources that 
do not consume fossil fuels, renewable energy sources----
    Senator Corzine. The fact is, though, that energy 
efficiencies might not be in the short run 1 year, 2 years, 5 
years market viable----
    Dr. Molina. That is right.
    Senator Corzine [continuing]. Relative to long-term return 
profiles.
    Dr. Molina. Yes.
    Senator Corzine. So are the efficiencies that were spoken 
about, do they have return profiles over a period of time, and 
where should we be focusing our exploration if we are trying to 
have the greatest impact on these issues as we go forward?
    Dr. Molina. Well, just to make the point again, that is why 
it is very difficult to point any one or two solutions, and you 
have to let society choose the best. Energy efficiency alone 
will not solve the problem.
    Another very important aspect for the long term, which I 
consider absolutely essential, is to continue investing in 
developing new technologies, and in particular, to work with 
the developing world along these lines.
    Senator Corzine. Such as?
    Dr. Molina. Well, first of all, there are issues with 
fossil fuel usage, such as carbon capture. That is in the 
works. It will, of course, cost more, but society can certainly 
afford it if it is done properly. So proper use of coal and 
other fossil fuels without affecting the environment. But then 
we mentioned----
    Senator Corzine. Mileage standards are efficiency issues 
that cost more. There is no question. Most of these things cost 
more.
    Dr. Molina. If the cost increase is sufficiently slow, 
society can certainly adapt. I mean in the long run it will be 
cheaper for society if you consider the costs of not taking 
these actions.
    Senator Corzine. Okay.
    Dr. Molina. But I could mention a whole list. There are a 
series of important papers which have a list of 20, 30 things 
we could do now and things that you have to do later with new 
technologies.
    Senator Corzine. Okay. Sir, what are your favorite----
    Dr. Hurrell. I am going to give--I am not going to waste 
your time by trying to guess at that. My hands are full doing 
the science. My expertise is in the science. I can just make 
the general statement, as I do in my written testimony, that I 
feel that there are a large number of technology options, and I 
think all nations need to work to identify the most cost-
effective steps that they can take to help contribute to this 
problem. I am simply not an expert in this area.
    Senator Corzine. Thank you.
    Dr. Cicerone. The reason that I am happy with the answer 
that we need all of these ideas that you just recommended is we 
will end up with a more stable solution. During the first oil 
crisis of 1974 and then in 1979, I was disappointed to find out 
that there was no magic bullet, no new energy source, or 
current one that could be exploited that would be cheap, and 
efficient, and self-reliant.
    Now I am much more convinced that what we face is a few 
percent here and there. By picking up a couple or a few percent 
here and there, we can make enormous progress. There are 
markets for all of the new technologies and efficiencies, and 
we will end up with a more stable, sustainable situation. So 
you pick up a few percent from the adoption of solar 
photovoltaic energy for electricity, a few percent from wind, a 
couple of percent from biomass usage, get started on clean coal 
technology, and carbon sequestration. But anybody who thinks we 
are going to find a way to sock away 25 million tons of carbon 
dioxide per day has not looked at the size of the problem.
    Clean coal and carbon sequestration can make a dent, but it 
is not going to be the total solution.
    Senator Corzine. Nuclear power would fit in----
    Dr. Cicerone. Nuclear power. I know of a concept that is 
being explored now for a nuclear fusion technique which is 
being supported totally by private investors. Mostly by private 
investors. A couple of small government grants supporting these 
people, because the payoff would be so large even though it may 
not be a total solution.
    So a combination of new technologies and improving old 
ones, inefficiencies, will lead to a dramatic and yet stable 
solution. But there is not a single magic bullet.
    Senator Corzine. When you say efficiencies, I want to just 
make sure, is mileage standards one of those that you--on 
automobiles?
    Dr. Cicerone. There is a lot of potential there.
    Sir Houghton. I think there is a great deal, except--just 
to give maybe a view from outside your country, I mean we 
believe very much in market mechanisms. Capping and trading is 
a very powerful thing. We have high hopes of Kyoto, as far as 
that is concerned.
    There is efficiency, of course, in buildings, efficiency in 
transport. Much, much more efficient transportation. Motorcars 
and the like. And those are all possible, that in a way, they 
are there. They just have to be built and done.
    And the same with buildings. We can cut our--IPCC has said 
we can cut by 50 percent or so in buildings without too much 
difficulty. And we should get on with doing that. It needs 
incentives to do----
    Senator Corzine. I am going to have to get on and vote. I 
apologize. I would like to----
    Sir Houghton. It needs incentives to do that, and we have 
to--and then we have to work closely and generously with the 
developing countries, particularly China and India, and other 
such countries to make sure that we really help them to buildup 
their economies in ways which are friendly to this whole 
problem of climate change.
    And I know the Chinese are very concerned about it, and the 
impact on their country of climate change. So are the Indians. 
They have some very good climate scientists that are well aware 
of this. They desperately need us to work with them on that. As 
I say, in Europe, and the European Union is going to work as 
closely as it can with these countries to try to help them, 
again, in a generous way, to do things, to buildup their 
industrial machinery in a way which is, as far as possible, 
carbon free. Thank you.
    Senator Alexander [presiding]. I will ask a question and 
then Senator Murkowski will.
    Let me pursue this line a little bit that was begun by 
Senator Corzine, but first let me ask, most of our new power 
plants in the United States are natural gas plants. Natural gas 
produces methane, is that correct?
    Sir Houghton. It is methane.
    Senator Alexander. So is making electricity from natural 
gas contributing to global warming and something we ought to 
limit or stop?
    Dr. Cicerone. Yes. In two ways. But it is also more 
efficient. The electrical production compared to the amount of 
carbon used in methane is efficient. We get more efficiency. 
The typical coal-powered--coal-fired power plant of the past 
generation had like a 30 percent efficiency. We can do much 
better than that now, with mixed cycle gas turbines and 
capturing waste heat, especially with natural gas.
    But if the methane, which is the natural gas, is lost 
before being burned, it is a direct greenhouse emission. And, 
of course, carbon dioxide is produced in the burning of the 
natural gas. So it is not a total solution, but the efficiency 
gain is substantial and can be made even better.
    Senator Alexander. Well, let me then go back to the 
unanimity of your recommendations about why there is--that 
there is global warming, and that it is caused in significant 
part by human activity, and that it is urgent we do something 
about it within a generation. That is a pretty clear message 
coming from you.
    I would argue that the Senate Energy Bill that Senator 
Domenici, and Senator Bingaman, and the rest of us worked on, 
without imposing mandates, goes a long way in taking steps to 
produce low carbon or carbon-free electricity, focusing on, 
first, conservation and efficiency, second, on advanced nuclear 
power, third on coal gasification and carbon sequestration, and 
fourth, on new supplies of natural gas, which you have just 
said is less harmful, because it is more efficient. And then 
there is also support for renewable.
    But what is surprising and disconcerting to me from the 
scientific community is how the scientific community with a 
single voice can say this is a terrifically urgent problem, it 
is being caused by human activity to a significant extent and 
we need to deal with it in a generation.
    Yet, when we then say, ``Okay. So then what do we do about 
it,'' you are all over the map and say, ``Well, we need a 
little here, a little there, a little here, a little there.'' I 
do not see it, looking at it that way.
    I mean the United States of America uses 25 percent of all 
the energy in the world. Now we are not going to put a few 
solar panels on or build some windmills and solve the problem 
in the United States in a generation. And you have mentioned 
carbon sequestration as the most politically attractive 
solution. It would be large-scale coal gasification, with 
carbon sequestration. That solves 15 problems at once. United 
States, and China, and India. It solves the environmental 
problems. It is an elegant solution in a scientific term, but 
it has--but we are several years away from there.
    If we were to begin to--we might produce coal gasification 
very quickly, but carbon sequestration is a massive 
undertaking. And we do not quite yet know how to do it.
    So I am working backward, and if we are talking about the 
next generation, I do not see any way in the world for a 
country as large as the United States to reduce the effects of 
global warming unless we are aggressive on conservation and 
efficiency, first, and aggressive on nuclear power, second. I 
do not see any way in the world that scientifically there is a 
way to limit global warming in the United States unless we do 
what France is doing.
    Now if that is true, why does not the scientific community 
say that? Because what I always see is let us do a little of 
this, a little of this, let us build windmills, and put on 
solar panels. That might be good for a desert island, but it 
will not solve global warming in the United States of America.
    And I believe you would be more persuasive in persuading 
the Senate and the country that global warming is an urgent 
issue if you would also say, as Senator McCain did and Senator 
Lieberman did when they amended their legislation this year and 
said we want to put mandates on global warming, and we want to 
incent nuclear power, because in this generation, it already 
produces 70 percent of all the carbon-free electricity in the 
United States today. And in this generation, other than 
conservation and efficiency, it is the only way to do it. Who 
would comment on that?
    Dr. Cicerone. I do not think you would find much 
disagreement with that, Senator Alexander. I think Dr. Houghton 
mentioned earlier his personal concerns about spent fuels and 
potential----
    Senator Alexander. Of course.
    Dr. Cicerone [continuing]. There are those concerns. There 
is the----
    Senator Alexander. Proliferation and spent fuel are the two 
worries.
    Dr. Cicerone. And we all worry that in the last 20 or 30 
years we and other countries have not had an aggressive set of 
activities to make nuclear power more dependable and more safe. 
We wish we had. But the numbers are pretty much what you said. 
The United States gets almost 20 percent of its electricity 
already from nuclear energy. It has enormous potential. People 
just want to see it done safely.
    Senator Alexander. And yesterday I met for a few minutes 
with the head of our naval nuclear operation. I mean he runs 
103 reactors.
    Dr. Cicerone. Tremendous record of safety.
    Senator Alexander. I think he has an unblemished record of 
safety since the 1950's in terms of the reactors. And I 
jokingly once suggested to him that what we ought to do in the 
United States is build 20 stripped down aircraft carriers with 
two 500-watt nuclear reactors and just park them around the 
coast and plug them into the grid. Because that would be 20 
more nuclear reactors than we have built since the 1970's.
    At the same time, France is 80 percent nuclear. Japan, who 
suffered nuclear tragedies, has gone ahead with it. And we are 
loaning $5 billion through the EXIM Bank to help China build 
24. And the President is working with India to help them do 
that. And I think we should want them to do that, because that 
will reduce the demand for energy, reducing prices, and it will 
clean the air, and it will help global warming.
    So why does not the scientific community say, ``We see the 
problems with nuclear power,'' but if you want to deal with 
global warming in one generation, other than conservation 
efficiency, nuclear power--it is not a little here and a little 
there. Nuclear power is the only way----
    Dr. Cicerone. The big one.
    Senator Alexander [continuing]. To do most of it.
    Sir Houghton. Can I just balance that? I mean I do not 
disagree with the statement you made, but there are two sorts 
of energy we have not mentioned that much about this morning, 
which I think in your country can be very important.
    One is biomass----
    Senator Alexander. But, sir, what percent of our total 
energy will biomass--today it is about 1 percent of our total 
energy production. And you are the one who said that in a 
generation we must deal with this. And what do you think 
biomass is going to produce?
    Sir Houghton. I have seen the program in your country 
called 25 by 25, which is for 25 percent of your total energy 
to come from biomass by 2025.
    Senator Alexander. Well, sir, if you believe that, then I 
do not believe what you said earlier about global warming.
    Sir Houghton. Well, I do not necessarily--I am just telling 
you----
    Senator Alexander. You undercut your entire credibility 
when you suggest that 25 percent of our energy will be biomass 
by 2025.
    Sir Houghton. I am posing to you a proposal which has been 
made, which is probably too ambitious. And I understand that. 
But I also understand that biomass is important for China, and 
India, and other countries. And that is the important part of 
the whole portfolio.
    We need a portfolio of possibilities, which includes 
nuclear, which includes other things, which includes solar as 
well. Because you have other places where you could----
    Senator Alexander. What percent do you think solar will be, 
sir?
    Sir Houghton. Pardon?
    Senator Alexander. What percent of the United States do you 
think solar will be in a generation? You are the one who said 
it is urgent to deal with this in a generation. And today, 
solar is less than 1 percent, even though we spent billions of 
dollars on it.
    The Chairman [presiding]. All right. Senator, this is your 
last question, please.
    Senator Alexander. Well, I have--I am trying to interject 
some----
    The Chairman. I understand, but, you know----
    Senator Alexander [continuing]. Realism----
    The Chairman. You were gracious to take over.
    [Laughter.]
    Sir Houghton. I am aware of proposals which are being made 
elsewhere in the world for solar to have a very big part in it. 
And I also know the potential in your country for, if you 
really want to do something, doing it fast, doing it well, and 
doing it efficiently. I am not in the position to say exactly 
what you can do. But I do urge you to address a portfolio of 
possibilities, to weigh them all together and what you can do, 
and come up with a plan for doing it.
    And that is what I urge my own government to do in the 
U.K., what I urge the European Union to do. And I just wish 
this would be done in a more responsible and a more genuine 
strategic manner.
    The Chairman. Thank you both.
    Senator, thank you. I do not mean to cut you off, but I 
think even though you are generous to take over when we are not 
here, you should not assume that the time consumed by you does 
not count.
    [Laughter.]
    Senator Alexander. I had an opportunity, Mr. Chairman, and 
I took it.
    [Laughter.]
    The Chairman. You are practical in all respects.
    Senator Alexander. Well done.
    [Laughter.]
    The Chairman. Now we are going to ask the Senator from 
Alaska.
    Senator Murkowski. Thank you, Mr. Chairman. I kind of 
enjoyed that little engagement there.
    I have said repeatedly, I do not need to be converted on 
whether or not we have climate change under way in this 
country. As I said in my very brief statement this morning, I 
see it in my home State. I see it with what is happening with 
the erosion. I see it with what is happening in our vegetation 
that is migrating northward, with the insects that are coming 
on, with the temperatures. So I know that something is 
happening just from a non-scientific person who lives there 
point of view.
    So I have been trying to find what are the answers. Help me 
with the science. And I have been spending the time that I 
think a reasonable person in my State would be doing on this 
issue. I want to know the answers, but I want to know with a 
certain level of certainty what it is that is causing this. So 
I listened with great interest this morning to the conclusion 
that all four of you have reached that it is man's emissions 
that are causing the changes that I am seeing in my State and 
the changes that you have referred to throughout the world.
    The scientific modeling out there is amazing. And I have 
had an opportunity to see some of it, talk to the scientists 
about how it works, and what more we need to do. Why can we not 
understand and differentiate then what effect the human 
variables, whether it is the solar changes, or the current 
changes? What portion can we extract out of this equation and 
say this is manmade versus this is what Mother Nature is doing?
    And if we cannot, why can't we? And will we ever be able to 
make that distinction, that differentiation? Now I am not going 
to sit here and tell you from a policy perspective, if you come 
back and tell me that 5 percent is man-induced and the other 
ninety-five percent is human variable, that we are going to 
direct our policy that way.
    But are we to the point of understanding from the 
scientific perspective how we can isolate this?
    Dr. Hurrell?
    Dr. Hurrell. I will attempt to answer this question 
probably in two parts. The first speaking to where the 
technology stands and our ability to differentiate between the 
human versus more natural origins of the climate change and 
climate variability.
    And, of course, one of the main tools that we have for 
doing this are the state-of-the-art models of the coupled 
climate system. And in recent years, I think very credible 
arguments can be made that these models have become very useful 
in tackling that specific issue.
    If you look at the models now, they are able to replicate, 
for instance, the most important characteristics of the 
observed changes in global temperature over the last 100 years. 
Since they can do that, we can then begin to break down which 
forces have contributed to the climate change in terms of the 
increases in temperature that we have observed. If you do those 
experiments, you find that natural variations and particular 
changes in solar luminosity played a key role in contributing 
to the warming during the early part of the 20th century.
    But the temperature changes that we have seen in the last 
several decades, those same simulations with only the so-called 
natural forces and climate prescribed, do not produce any 
significant change in temperature over the last several 
decades.
    When you then give the models the information about the 
observed buildup of greenhouse gases in the atmosphere, they 
now produce the increase in temperature that has been observed. 
So this is very strong evidence, I think, from these very 
credible, although not perfect, but very credible models that 
much of the climate change over the last several decades is 
being driven by the buildup of greenhouse gases, and sulfate 
aerosols and the like in the atmosphere.
    Senator Murkowski. Can you define ``that much''?
    Dr. Hurrell. I would say based on the climate model 
simulations that are contributing to the next assessment of the 
IPCC that nearly all of the warming is attributable to that in 
recent decades.
    Senator Murkowski. How do you respond then to those--you 
have scientists all over the board, like economists, like 
lawyers, like politicians. You ask them all, they are all going 
to have their own theory.
    I had an opportunity to speak with a climatologist out of 
Oregon, who is indicating that in his opinion it is the cyclic 
increase in the solar radiation and/or the changes in the North 
Atlantic or the Pacific Decadal Oscillations that affect the 
currents.
    Dr. Hurrell. Yes.
    Senator Murkowski. So you are saying all of it and he is 
saying----
    Dr. Hurrell. No.
    Senator Murkowski [continuing]. Hey, it is all--it is the 
natural variables.
    Dr. Hurrell. Thank you for the opportunity to expand. That 
gets to the second point of my question. The first point was 
really addressing the very large-scale temperature changes. On 
a regional level and a local level you will often hear 
scientists say that there is more uncertainty in that. And that 
is because one of the outstanding scientific questions is how 
will the so-called natural modes of the climate system--you 
mentioned the Pacific Decadal Oscillation, or El Nino, the ENSO 
events in the tropical Pacific, which have a worldwide impact 
on climate and weather.
    How will those natural phenomena be affected as a result of 
human activities? And there is much less certainty on that 
topic. There are very open scientific issues. So when you look 
at your State of Alaska, for instance, you have seen warming 
there that is very significant.
    You have noted that you can observe the changes with your 
own eye. And, in fact, a very key player in Alaskan climate is 
the so-called Pacific Decadal Oscillation. So there are natural 
variations in climate that are occurring, that have always 
occurred in the past. But imposed upon that then is the human 
influence.
    But it becomes much more difficult to attribute at a 
regional or a local level. For instance, the warming in the 
Arctic in recent decades. Just how much of that is due 
specifically in a specific region to the buildup of greenhouse 
gases. Because a fundamental scientific question is, how do we 
expect the so-called modes of variability of the climate system 
to be affected?
    Now it is a complicated issue, because in--if I can go on 
just one more moment. Sir John was speaking about the Atlantic 
climate. And one of the--the key driver of Atlantic climate, 
for instance, is something called the North Atlantic 
Oscillation. It is in some ways analogous to the impact that 
the PDO has on climate in Alaska.
    And scientists have known for a long time that this is a 
so-called natural mode of climate variability. It is 
significant year to year, and maybe even decade to decade 
variations. But there is research that indicates that the 
amplitude and the phase of this phenomena, which has been 
behaving differently in recent decades, can be related to the 
warming of the tropical oceans.
    When you look at the warming of the tropical oceans, in 
particular, for instance, the Indian Ocean, there is very 
strong scientific evidence to suggest that a big component of 
that warming of the oceans is, indeed, anthropogenically driven 
by the buildup of greenhouse gases in the atmosphere.
    So you have the warming of the tropical oceans, which are 
being driven, in part, by the increased greenhouse gas 
concentrations in the atmosphere that are affecting the 
behavior of this mode of variability in the system thousands of 
miles away in the North Atlantic, and are contributing to some 
of the unusual behavior of this North Atlantic oscillation.
    Senator Murkowski. Just so that I am clear that I 
understand your position, you believe that much, if not all, of 
what we are seeing that is contributing to climate change, 
global warming, is caused by man-induced emissions. We may be 
seeing some regional impact that is perhaps not quite in sync 
with what we are seeing globally, that is being impacted by the 
overall global changes.
    Dr. Hurrell. Regional climate, if you will, is affected by 
the weather patterns, the jet streams, and the like. And they 
are sort of organized in some coherent fashion in the climate 
system by these large-scale modes of variability. You mentioned 
the Pacific Decadal Oscillation.
    The mechanisms for that can be related to natural couplings 
in the atmosphere ocean system. Exactly how those couplings are 
affected by global warming is still a major research issue. So 
that is what I am trying to separate out, that we know that on 
a global scale, and we can begin to quantify, I believe, with 
global climate models, what the human-induced contribution to 
that overall global warming is. On a local and a regional 
scale, it is much more difficult to attribute any specific 
change to the buildup of greenhouse gases in the atmosphere.
    Senator Murkowski. I think if you could show this panel 
here and other policymakers that, in fact, with the statistical 
modeling, almost entirely we are seeing global climate change 
as it relates to or caused from manmade emissions, I think it 
might be easier for us to make a determination in terms of 
where we go with policy. But when we get statements like we 
believe that much of it is caused by, that makes it tougher. I 
think we are looking for a little more certainty.
    The one thing that I concluded, sitting down with a group 
of scientists that were involved with the Arctic climate impact 
assessment report, was that they all agreed something was 
happening, but they could not determine exactly where it was 
coming from. So your assistance on that would help us.
    Mr. Chairman, I could go on all morning, but I know we have 
another panel. Thank you.
    The Chairman. Thank you very much. Did you feel compelled 
to say something?
    Dr. Hurrell. I was simply going to add that I would be more 
than happy to provide the committee with some of the evidence 
from the climate model simulations that I am referring to, to 
show that in a global mean sense, nearly all of the warming in 
recent decades can be attributed to the buildup of greenhouse 
gases.
    Sir Houghton. May I just add briefly, that is on the global 
scale we have this confidence that Dr. Hurrell has been talking 
about, but the regional scale, there is a lot of natural 
variability. But that natural variability is all being affected 
by the global scale, by all the global scale changes due to 
human activity.
    But because of the degree of that variability, any given 
event, we cannot say that event is caused by human-induced 
climate change, because we have had lots of the variabilities 
so large. There is one event which I mentioned, which is the 
heat wave in Europe, which is so far outside. It is five 
standard deviations away. So far away from natural variability, 
it could not conceivably have come from natural variability.
    But it is most other single events--but it is when we see 
the way in which the number of events and their average 
intensity, we can see the trends. And those trends are now 
occurring. We are seeing more floods, and more droughts, and 
more storms in general this end of the century that we had in 
the middle of the century. And the models can actually predict 
reasonably well or project quite well what will happen by the 
year 2050, for instance, is what these good models show, that 
suggest in Europe we are going to have a risk of flooding which 
is five times greater in 2050 than it is now. So the 50-year 
flood will become the 10-year flood, and so on.
    So we can project into the future, but actually identifying 
anything now, because of this great natural variability of 
climate, which is part of the climate characteristic, is made 
very difficult.
    The Chairman. Thank you very much. Now I guess you noticed 
that I have not participated, and that is very unusual. But I 
thought it best to do it the way I did it. I am not sure what 
is going to happen for the rest of the day to these wonderful 
following witnesses, but I am going to try to put you on and 
see what happens. We both have something scheduled, but let us 
see what happens.
    First, let me start, Dr. Cicerone, you indicated that we 
have evidence over a 400,000-year period that carbon dioxide in 
the atmosphere had various high and low levels, and you found 
that out in a typical way that is now determined to be 
accurate.
    Just so we will know, where did the pollutant that 
contributed then come from? Certainly, it was not what we are 
doing now. That was not even a civilization. So where did it 
come from?
    Dr. Cicerone. In that range that I spoke of, the last 
couple of glacial cycles, 400,000 years, the carbon dioxide 
amounts went between about 180 and 280 parts per million, and 
today we are about 380.
    The Chairman. Okay.
    Dr. Cicerone. So well outside the natural range. But 
nonetheless, those were big changes, as you say.
    The Chairman. Yes.
    Dr. Cicerone. The decomposition of organic material in the 
soils was going on over geological time scales, and the 
exchange of carbon dioxide with the oceans. No one can 
completely tell why the carbon dioxide amounts changed. It 
looks as if the carbon dioxide changed partly in response to 
changing climate and partly leading the change in climate over 
the past two ice ages.
    The data are about as firm as we are going to get. They are 
real measurements from dated ice cores. So it is exchange of 
carbon with the organic matter in soils and exchange of carbon 
dioxide with the oceans, the stuff moving back and forth, up 
and down.
    The Chairman. But the fact that it existed then and we did 
not have a source of pollutants that we are now trying to 
control is not a reason to draw any inferences that the 
information about the current pollutants is not right.
    Dr. Cicerone. Correct. First of all, we are way outside the 
range of natural variability, the 180 to 280. And second, we 
have isotopic data that tell us that the carbon dioxide buildup 
in today's atmosphere is mostly due to fossil fuel consumption. 
Maybe 80 percent.
    The Chairman. My second point. It has been stated by one of 
you, I think it was you, Sir John, that while China is now and 
will become, unless some big changes occur, a more major 
contributor to the CO2 that we are worried about, 
and something was said that they are looking for us to do 
something, it is very interesting, and you should know that we 
are in the same boat and we have people tell us, we are not 
going to proceed until they do something.
    Now you have answered that by saying you are the leaders. 
If you lead, they will follow. I want to suggest to you that 
that is not an easy nut to sell up here. Okay? So I would 
suggest that we be focusing on how are we doing something that 
they should recognize that we are doing.
    And so I want to tell you something about the energy bill 
that we produced. We produced an energy bill that essentially, 
for our new policy, could have been called a clean energy bill, 
instead of just an energy policy. Because everywhere in the 
bill the emphasis is on producing energy that is clean. And not 
only clean, but we have literally used the words, greenhouse 
gas clean. The whole section on incentives, which is one that 
Senator Bingaman and I take most pride in, which is going to 
permit the Secretary of Energy to finance, and we hope we will 
get it in--the House has not said yes yet. But we are saying we 
do not get a bill unless it is in there--actually permits the 
funding in the next few years of facilities that are aimed at 
reducing greenhouse gases.
    And it is going to cost a lot of money, but the way we have 
done it, it is not going to cost our treasury so much, because 
it is guaranteed loans where the applicant pays the risk. The 
risk insurance is paid by them. It may be 10 percent. It may be 
5. And that whole section is designed to employ innovative 
clean energy, and it is actually said that avoid, or reduce, or 
sequester air pollutants or other emissions of greenhouse 
gases.
    Now if we do that, we pass that law, and we get started on 
it, is that not evidence that we are doing something? Or is 
that not the kind of evidence that China or anybody else would 
be waiting for? Now I just state that--I just throw you that 
out. I do not need an answer. It seems to me we are going to do 
something.
    Now my last observation, or third observation is this. You 
heard almost everyone here say with varying degrees that there 
is a problem. But I think you also gather that the question 
what do we do about it, and how, remains a very live subject. 
And while you are not the experts on that, it does appear that 
you have to be involved in that, and what do we do about it. 
And I submit that the distinguished Senator from Tennessee, Sir 
John, was on the right track in talking about practical things. 
Real things. Not only achievable things. Achievable things that 
do not amount to anything I do not put in the class of being 
very relevant.
    So when people say we can do this, and we can do that, we 
have to ask the question, just what will that amount to. And I 
submit to you that the United States will make a giant stride 
in nuclear power, and you will see it. I mean it will happen. 
There will be a nuclear power plant started in the United 
States within the next 3 years, in my opinion. Sounds crazy, 
does it not? But I think it will happen. And that is because of 
this bill and because of what is already happening.
    Now having said that, I just make the point that we need to 
come up with a plan that gives us a period of time to pursue 
those technologies with vigor, so that we are moving toward 
achievement and that at some point, if we do not, we do 
something.
    Now the reason Senator Bingaman and I have been drawn to 
the National Commission on Energy Policy, that they say would 
end the energy stalemate. It recommends sort of what I am 
saying, that for X number of years we pursue the voluntary 
approach, and we want to extend that a little bit to be more 
consistent with the President's goals, and then we would 
trigger some things. And then I want to urge that you study 
that with us, look at it. And I will ask you about it.
    The last point is, I do not think the issue is whether we 
have a major international problem. I think the question is how 
do we solve it. And I think we have too many people talking as 
if it is simple. Oh, just cut emissions 10 percent, and come up 
with a bill that says we should do that.
    Well, I hope you understand that I have heard nothing like 
that from your mouths today. And I thank you very much for your 
calm expertise here today. And we need more of that, because 
this country lives on energy. Whether anybody wants to think we 
are hogs or whatever, we live on energy. And we are successful 
because of the use of energy. And we cannot put ourselves back 
in an era when we say we are not using energy without 
devastating something, right? That is pretty simple.
    In fact, I was going to say, Dr. Molina, you do not have to 
be a Nobel winner to know that, right?
    Dr. Molina. Right.
    The Chairman. You know a lot more than that. That is very 
simple. So I am just going to leave it to you for a couple of 
observations from each of you about what I have said. I am 
looking for a solution, but I am not going to join the crowd 
that thinks it is simple. I am not going to join the crowd that 
thinks Kyoto was a solution. I hate to tell you, it is not a 
solution. It would not be achieved.
    And America, some people think we are being--the President 
is being stubborn, but I remind you that the U.S. Senate did 
not have one affirmative vote to support Kyoto when we voted on 
it. And they keep blaming the President.
    Nobody voted to give the President the authority to sign 
that treaty. So we have to talk about something else. Everybody 
keeps saying what about it. Well, we have to come up with 
something else that we can talk about.
    Having said that, I am out of time, but usually that means 
you can use up some time, because mine does not count against 
you. So would any of you like to comment in any respect.
    Dr. Molina?
    Dr. Molina. Yes. Senator Domenici, as you know I am a 
member of the National Commission of Energy Policy, so I very 
much endorse what you just have stated. And I repeat once more, 
we as scientists, of course, can state what the severity of the 
problem is, but we do not have the solution. We have to work 
with the rest of society to do that. And that is why it makes 
sense to have government intervention, to have a strong signal 
that something is to be done. It will not happen spontaneously.
    We do need enough resources for technology, including clean 
nuclear energy. So I think you are very much on the right 
track. We do work with our economist colleagues. And I think 
there are very sensible solutions. I agree with you, different 
than Kyoto, but the National Commission on Energy Policy 
recommendations repeated one very good example that I 
understand you are looking at very carefully, which is how to 
go about it without having a negative economic influence on the 
United States.
    Dr. Hurrell. I do not have too much to add. I would 
reinforce the comments that Dr. Molina made, and I agree with 
what you are saying, Senator Domenici. I am very heartened to 
hear from this committee that they feel as though it is not a 
question of whether or not this is a problem, but rather how to 
go about addressing it. That is not my area of expertise.
    But I have been biting my tongue a bit, because my father-
in-law is a nuclear engineer, and I would simply say that I do 
think that nuclear energy is a very, very real and viable way 
to make a major contribution to this problem.
    Dr. Cicerone. Senator Domenici, as you know, the National 
Academies of Sciences and Engineering are at your disposal. We 
exist to help the Government in performing evaluations and 
recommendations. And in this challenge, we will be at your 
service.
    The Chairman. Sir John.
    Sir Houghton. Just to mention, Kyoto finishes in 2012. 
Kyoto is not a long-term solution. Kyoto was never meant to be 
a long-term solution. Kyoto is a beginning. And Kyoto is a 
beginning that brings nations together to do things. It is also 
based on market-based techniques and measures. And I notice--
and we hope those will work. And they will have some effect.
    But we have to look now, we have to begin to look now at 
the longer term. Beyond Kyoto. Whatever happens there, in order 
to come up with what you say in your sense of the Senate's 
resolution, which you passed, you should enact a comprehensive 
and effective national program of mandated market-based limits 
and incentives on emissions of greenhouse gases that slow, 
stop, and reverse the growth of such emissions at a rate and in 
a manner, and so on.
    I mean that is a marvelous statement. That is exactly what 
we believe should happen. It means that governments, and 
industries, and local governments, and everybody should get 
together to work out a program, a timed program of how you can 
proceed with this. But it is also--it has to encourage 
comparable action by other nations, for major trading partners, 
and so on, and key contributors to global issues.
    And so there is an international part to it, very important 
international part to it. And if I might again repeat what I 
said at the start, coming as I do from outside your country, 
and listening, as I do, to what the rest of the world says, to 
a large degree the rest of the world is looking at you in the 
United States and saying, ``Please, United States, you are a 
big contributor to, of course, the problem of global warming 
because of your emissions. You have this enormous industrial 
capacity. You have this enormous desire to lead in the world. 
And please exercise that leadership, which will enable the rest 
of the world to come along with you to help to solve this 
problem.''
    The Chairman. Well, for myself, I would just say thank you 
for the compliment. I wish you would follow in some other 
areas, too, but it seems to be that we have difficulty getting 
follow-ship in some other areas of endeavors that are important 
to us. I am just kidding. Just kidding.
    Let us take a look at--do you have anything further, 
Senator Bingaman, of these witnesses?
    Senator Bingaman. No, Mr. Chairman.
    The Chairman. Would you join me in thanking them?
    Senator Bingaman. I think the testimony has been excellent, 
and I very much appreciate the witnesses and particularly, Sir 
John, thank you for coming all this distance.
    Sir Houghton. Thank you.
    The Chairman. We appreciate it. Thank you all. Thanks for 
much. You are excused.
    Would the other witnesses join with me and let me talk to 
them a minute? You can sit where you are or come up and let us 
just chat a bit. Do I understand correctly that each of you, 
let us say, Dr. Montgomery, do I understand that you are from 
around here, Doctor?
    Dr. Montgomery. Yes.
    The Chairman. The region. How convenient would it be if we 
set you up again?
    Dr. Montgomery. We are all open, sir.
    The Chairman. Would that be all right, Mr. Grumet?
    Mr. Grumet. Around the corner, sir. Can be here any time.
    The Chairman. Okay. Dr. Morgenstern?
    Dr. Morgenstern. Local.
    The Chairman. Guy Caruso? Local? Okay, with the Energy 
Information Agency. You have been doing great work, let me say. 
We greatly and very much appreciate it.
    Here is what we are going to do. Rather than try to package 
this in and shove it into a small time, we are going to 
reschedule it when we have more time. And you will be first up, 
the next panel we have. Is that satisfactory? Maybe in the 
meantime, you have heard a little from us. You might----
    Panelist: Improve the quality of our testimony.
    The Chairman. Yes.
    [Laughter.]
    The Chairman. Well, answer some--you know what we are 
thinking about. Yes. Thank you very much. Let me announce that. 
Thank you.
    All right. What we have decided to do, since these four 
witnesses are from the immediate area, they have expressed a 
willingness to come back on reasonably short notice, and we 
will attempt to set up another hearing where they will be 
first. There will be another panel with them that will address 
the issues that you have from another vantage point. And with 
that, I thank everybody, including the members of the press. We 
stand in adjournment.
    [Whereupon, at 12:03 p.m., the hearing was adjourned, to be 
reconvened on September 20, 2005.]


                             CLIMATE CHANGE

                              ----------                              


                      TUESDAY, SEPTEMBER 20, 2005

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:10 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

          OPENING STATEMENT OF HON. PETE V. DOMENICI, 
                  U.S. SENATOR FROM NEW MEXICO

    The Chairman. Hello, everybody. Good morning, witnesses. 
Senators, good to be with all of you.
    I want to thank all of you for coming here from your busy 
schedules. As everybody knows, this is a continuation of the 
hearings that the committee held on July 21. Due to the length 
of the questions and the answers, and the press of the Senate 
business, the committee was unable to hear from you. We heard 
only the first panel. For that, we apologize. Glad we were able 
to set it up again today.
    Today we will hear from four witnesses on the topic of 
mandatory carbon controls and the impact of such. Now, there 
could be a lot of other questions asked of you, but I think--
and we cannot hold Senators to anything, nor you to your 
answers, but that is what we would like to focus on, because 
the previous discussion covered the other subject that was 
important. So the impact of these controls that we are speaking 
of, what that might be on the economy and how effective the 
controls might be in reducing carbon emissions that are 
generated in the United States.
    I should note that the Deputy EIA Administrator, Howard 
Gruenspecht, is appearing instead of Administrator Caruso and 
Dr. Anne Smith is appearing in place of David Montgomery. That 
is just a coincidence of scheduling and we greatly appreciate 
your stepping in and we know your testimony will be the 
equivalent of whom you replace.
    I am pleased that the committee is continuing the 
discussion of this serious issue. It is clear that something is 
happening with the Earth's climate and I am aware that many in 
the scientific community are warning us that something needs to 
be done. I am also aware that there are equally-qualified 
members of the scientific community who do not share those 
views. Nevertheless, I believe that it is prudent to heed the 
warnings that we are hearing and begin to find ways of 
alleviating the human contribution to this problem that is 
being presented to us.
    As I said in the July 21 portion of the hearing, what, who, 
how and when are the questions that the hearing and subsequent 
hearings will help us answer. With this hearing we are 
continuing to search for answers on meaningful economically 
feasible activities that will produce real reductions in 
greenhouse gas emissions.
    It is clear to me that developing a system of mandatory 
controls on carbon emissions could be a daunting task. In fact, 
it is. Controls must be effective. They must produce positive 
reductions. The cost should have the least possible negative 
effect and any burdens must be as equal as possible, spread out 
among those affected.
    Now, some say that does not matter, and they have said, 
when we were arguing on the floor, at least someone did, that 
we were too concerned about fairness. But, actually, fairness 
is important in itself, it is also important from the 
standpoint of Senators and voters and people willing to do 
things. Many, including the NCEP, suggest that the answer lies 
in a system assigning greenhouse gas emitters emission 
allowances that could be sold or traded. The NCEP has also 
suggested that a monetary value of the allowances be capped at 
$7 a ton of carbon, rising slowly over 10 years. If needed, 
emitters could purchase allowances from the government. 
Proceeds can be used to finance research and development on new 
or low-carbon energy technologies. I hope I have not misstated 
the position. I think that is correct.
    These are interesting ideas, but designing an effective and 
equitable allowance mechanism is likely to be very difficult, 
and I think you yourselves, your group, is acknowledging that. 
I believe such allocation mechanisms might be constructed, but 
I do not think we are there yet. I would be glad to hear from 
you on that score. I guess, not to be trite, but I think the 
devil is in the details in that regard.
    So let us proceed. I yield now to Senator Bingaman. Thank 
you so much, Senator Bingaman, for helping me move this along 
and for your interest.
    [The prepared statements of Senators Akaka and Corzine 
follow:]

  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii

    Mr. Chairman, thank you for holding this hearing on the economics 
of global climate change. First of all, I want to thank ranking member 
Jeff Bingaman, and you, Mr. Chairman, for your leadership in the 
Senate's passing the first resolution in support of mandatory control 
of carbon dioxide during debate on the Senate's energy bill. Included 
in that resolution was the idea that it should be done in a way that 
does not hurt the economy. I am very interested in how to do that and I 
have some questions for the witnesses.
    Mr. Chairman, this hearing is extremely timely. In the aftermath of 
the devastation wrought by Hurricane Katrina, we must consider the 
economics of NOT acting with respect to global climate change.
    This is something I have said many times before, but now we have a 
tragic case. Estimates to rejuvenate the Gulf Coast and to repair New 
Orleans are in the hundreds of billions of dollars, and climbing. The 
cost to human life and well-being can never be rectified.
    It was known that New Orleans was vulnerable, that it is below sea 
level, and that levees could potentially breach. It is also widely 
accepted that global warming will bring stronger storms, if not more 
frequent.
    The recent article in Science, by Dr. Peter Webster, links greater 
hurricane intensity with warmer sea surface temperatures. This is like 
fueling hurricanes with warmer sea temperatures. This is a devastating 
thought for all people in low-lying areas such as the Gulf of Mexico. 
Areas around the Mississippi delta in Louisiana are already sinking, 
even as world-wide sea levels are on the rise. That makes it a triple 
whammy for Louisiana.
    My view, with Hawaii's vulnerability in mind, is that our 
investment in curtailing the causes of global warming, and our nation's 
leadership in convincing other nations such as China to reduce carbon 
emission, are critically important for the future. When we discuss 
economics of carbon control, I have long said that we must weigh the 
costs of inaction as well as the costs of action. Hurricane Katrina is 
just the first of these wake-up calls.
    Thank you, Mr. Chairman, I look forward to the testimony of the 
witnesses.
                                 ______
                                 
Prepared Statement of Hon. Jon S. Corzine, U.S. Senator From New Jersey

    Mr. Chairman, I would first like to thank you for holding this 
hearing on the important issue of climate change. Senator Bingaman, 
thank you, also, for your leadership and advocacy of smart, effective 
climate change policies.
    The consensus among the worldwide scientific community is that the 
burning of fossil fuels is linked to global warming, and global warming 
threatens our environment, our health, and our future. It may even be 
linked to the recent increase in hurricane intensity, and the 
accompanying dangers.
    I strongly supported Senator Bingaman's amendment to the Energy 
bill proclaiming that the U.S. Senate should take mandatory action on 
climate change, and confirming the Senate's objective to seriously 
consider climate change proposals. While this amendment passed the 
Senate on a bipartisan basis on June 22 of this year, it is a small 
step on a much larger journey that requires a much greater sense of 
urgency. Hearings like this one continue to raise awareness of the 
dangers of global climate change. It is my hope that the words spoken 
today will translate into comprehensive policies that effectively 
address global warming, and that we will see action soon.
    The overwhelming scientific consensus is that average global 
temperatures are rising. Though there are natural fluctuations in 
average global temperatures from year to year and even decade to 
decade, scientists believe that the rise in temperature we have seen in 
the later part of the 20th century is due to human factors. Dr. Ralph 
Cicerone, who was recently hired to head the National Academy of 
Sciences, asserts that global warming is caused primarily by humans, 
stating that, ``nearly all climate scientists agree,'' with this 
viewpoint. The NAS was specifically chartered by Congress to advise the 
government on scientific matters. It would be foolish to ignore their 
findings.
    Many scientists believe we are already witnessing the effects of 
global climate change in the form of the recent increase in the 
intensity and frequency of hurricanes. Dr. Kerry Emanuel, an 
atmospheric expert and MIT professor, believes the higher the 
temperature of the sea surface, the more intense and greater the 
duration of hurricanes. In short, scientists believe that global 
climate change creates meteorological factors conducive to the creation 
and durability of strong storms. With the aftermath of Hurricane 
Katrina still fresh in our minds, this consensus should take on an 
especially strong meaning. If indeed we can create a unified climate 
change policy that would effectively eliminate or mitigate the effects 
of rising sea temperatures, we should unhesitatingly do so.
    My state of New Jersey, though not as susceptible to hurricanes as 
the Gulf coast, still sees its fair share of storms during hurricane 
season. When storms approach New Jersey, we pile sandbags, put plywood 
up on the windows, and stock up on supplies, much like those in New 
Orleans did. Such preparations go a long way in attempting to lessen 
the effects of strong storms. If we can do the same in Congress by 
passing adequate and meaningful legislation that helps buffer severe 
weather, don't we owe it to our constituents to do so?
    Global warming threatens our environment, our communities and our 
way of life. It can have a severe economic impact on communities and 
individuals. We have already seen the devastating economic cost of 
Katrina. Not only has a billion dollar tourism industry been decimated, 
but rebuilding an entire metropolis will cost tens of billions of 
dollars in federal spending. My state, along with all others on the 
Atlantic coast, is also susceptible to catastrophic damage caused by 
seasonal storms. If our beaches are threatened, and our coastline 
damaged, New Jersey will see an economic impact of terrible 
proportions. Our second largest industry, tourism, simply will 
disappear without the draw of the Jersey shore. As Katrina has shown 
all too tragically, every coastal area that we hold dear is at risk of 
losing a huge part of their states' economies.
    I have long been a proponent of legislation that would counter this 
problem and encourage reductions of greenhouse gas emissions. In the 
last two Congresses, I secured language in the Senate energy bills 
creating a greenhouse gas registry. The greenhouse gas registry would 
have been an important first step in confronting climate changes, and I 
am committed to continuing to fight for this approach.
    And of course, I have been clear about my support for stricter CAFE 
standards, which I hope, in the wake of Hurricane Katrina, my 
colleagues will see as just the start of a comprehensive, thoughtful 
policy to effectively address climate change.
    Again, I thank the Chairman and Ranking Member for allowing this 
Committee the chance to hear from these witnesses before us about this 
crucial topic. I look forward to their testimonies.

         STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    Senator Bingaman. Well, thank you very much, Mr. Chairman, 
for reconvening this hearing on climate change and global 
warming issues. Clearly there are a tremendous number of 
important issues competing for attention here in the Congress 
at this time in our Nation's history, and I think it is a 
tribute to you that you are willing to commit some committee 
time to continue to look at this issue and see if there is a 
path forward that we can agree upon.
    I would just make three very brief points. First, I am 
persuaded that there is a broad scientific consensus that links 
climate change to manmade emissions. There are clearly 
uncertainties about how the climate is going to change, about 
what impacts it will have, and various other aspects of the 
issue. But I believe it makes sense to begin now to hedge 
against the negative risks involved with climate change and I 
hope we are able to do that.
    Second, I just make the point that in looking at what the 
effect of any kind of a system of emissions controls might have 
on the economy, we also need to recognize the effect of 
inaction on the economy. I do not think that we can ignore the 
fact that changes are expected, adverse changes in our economy, 
if we pursue a path of inaction. I think that that is an 
important issue to have discussed.
    The third and final issue is that out of this hearing and 
others that you may choose to schedule, I hope we can get some 
consensus on a way forward. Obviously, this is an extremely 
interesting issue and one that has had an enormous amount of 
study. Our contribution, if we are able to make a contribution 
to the debate, is going to be in actually getting agreement on 
a course of action, and that is what I hope very much this 
hearing will help us achieve.
    Thank you very much.
    The Chairman. Thank you.
    Does any Senator feel like they should speak at this point? 
We are going to have plenty of time. Why do we not do this? Any 
Senator who would like to can speak for up to 5 minutes.
    Senator.

         STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR 
                          FROM WYOMING

    Senator Thomas. I am frankly looking forward to your 
testimony, and thank you for having this. I just note we know 
that we are facing several items here at the same time. We are 
looking at energy, how we are going to supply energy. So I hope 
that you will kind of orient toward policy directions. We can 
get wrapped up in numbers, but how are we going to balance the 
things that we need to have energy and to do it in an 
environmentally sound way?
    So we look forward to hearing from you.
    The Chairman. Thank you.
    Senator Feinstein.

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

    Senator Feinstein. I really want to thank you, Mr. 
Chairman, for having an open mind on this. I think it is really 
important. I think the situation is changing rather 
dramatically.
    I would like to put in the record a release from the 
Georgia Institute of Technology and read one quote.* They have 
just done a study on hurricanes and, quote: ``What we found was 
rather astonishing. In the 1970's there was an average of ten 
category 4 and 5 hurricanes per year globally. Since 1990 the 
number of category 4 and 5 hurricanes has almost doubled, 
averaging 18 per year globally.''
---------------------------------------------------------------------------
    * The release can be found in the appendix.
---------------------------------------------------------------------------
    So the bottom line is, although there are not more 
hurricanes, they are much more intense. I spent a day at the 
Scripps Institute of Oceanography a while back and what they 
said global warming would do is bring on essentially more 
erratic weather patterns, that when it rains the drops would 
get bigger and we would be subject to much more forceful 
weather conditions. It looks to me as if this is beginning to 
happen. So I think the ability of this committee, if it is not 
our SUV loophole closer, if it is not McCain-Lieberman, I think 
we really do have to come up with some system that will make a 
difference in reducing global warming gases in the atmosphere.
    So thank you very much.
    The Chairman. Anybody else on this side?

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Mr. Chairman, the only thing I will say, 
you reminded us at the last hearing. You said it is not really 
so much the question of whether or not there is a serious 
problem, but what do we do about it. That is why we are here 
today, to listen to some of those who do have some specifics. I 
would agree with Senator Thomas. I would hope we would be able 
to get into a discussion as to how we actually could make 
something work. So I appreciate you calling this today.
    The Chairman. Well, I am compelled, Senator Feinstein, to 
respond to your statement. I was very reluctant, in light of 
Katrina, to call this meeting because I do not think--I thought 
somebody would come up with the idea that could be quoted all 
over the world that Katrina was in some way related to global 
warming. I have heard one of the best experts in the world on 
television saying that that is nuts, and I think it is enough 
for the English to be blaming us and saying we deserve Katrina 
because we did not sign the Kyoto Agreement, which is also 
absurd, than to get that spread across here.
    So I have great respect for you and I thank you for what 
you said about my calling the meeting, but I do not think--if 
we are going to get off on that, we will call a couple of 
witnesses in the next few days on hurricanes and I think we 
will find that certainly that is not the consensus opinion.
    Senator Feinstein. All I did was quote from a study, Mr. 
Chairman.
    The Chairman. I understand. Well, I could have had a study, 
I could have two of them, saying--in fact, I might dig them up 
and make sure the press gets them.
    Having said that, let us proceed. We will take the Federal 
witness first.

        STATEMENT OF HOWARD GRUENSPECHT, PH.D., DEPUTY 
ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION, DEPARTMENT OF 
                             ENERGY

    Dr. Gruenspecht. Thank you, Mr. Chairman, Senator Bingaman, 
and members of the committee. I guess with all the discussion 
of baseball at last week's hearings I would like to start, as 
you have indicated, by noting that I am pinch-hitting here for 
Guy Caruso, who was in the on-deck circle in July when the 
hearing was postponed, but is traveling out of town today. I 
know he would have wanted to be here.
    I appreciate the opportunity to appear before you today to 
discuss the Energy Information Administration's recent analysis 
of policies to reduce greenhouse gas emissions and energy use. 
EIA is the independent statistical and analytical agency in the 
Department of Energy. We provide data and analysis to assist 
policymakers and inform energy markets, but we do not promote, 
formulate, or take positions on policy issues.
    At the request of Senator Bingaman, EIA recently analyzed 
the impacts on energy markets and the economy that would result 
from recommendations contained in the December 2004 report 
issued by the National Commission on Energy Policy; they are 
represented here and you will hear from them. That analysis and 
my testimony today focus on a case that includes all of the 
recommendations made by the Commission that EIA was able to 
analyze in its modeling system. But we also looked at several 
of the recommendations separately, including the proposed cap-
and-trade program, and I will discuss that as well.
    We found that three policies--the cap-and-trade program, 
which is linked to a target for reducing greenhouse gas 
emissions intensity beginning in 2010; tighter fuel economy 
standards for cars and light trucks; and new building and 
appliance efficiency standards--were projected to have the most 
significant impact on energy use and emissions of the 
recommendations made by the Commission.
    Overall, the policies we modeled were projected to reduce 
total energy consumption in 2025 by 5 percent and fossil energy 
use in 2025 by 7 percent, both relative to the reference case 
in our Annual Energy Outlook 2005. However, even with those 
reductions, U.S. consumption of oil, natural gas and coal all 
grow from today's levels by 2025.
    Turning briefly to the individual fuels, the policies in 
the NCEP package are projected to reduce oil demand by 7 
percent in 2025, with a slight decrease in import dependence. 
As shown in figure 1 of the written testimony, almost all of 
the reduction in oil demand results from more stringent fuel 
economy standards. The cap-and-trade program alone has only a 
small impact.
    Second, even though the cap-and-trade program itself would 
tend to increase the use of natural gas, the NCEP policies 
taken together are projected to reduce natural gas use slightly 
by 2025. That is because the NCEP proposals for building 
standards and some of the technology programs--incentives in 
the programs--lower natural gas use for space heating and 
electric generation, and the other programs provide incentives 
for renewable, nuclear, coal-fired, and integrated 
gasification-combined cycle generation, which tend to shift 
generation away from natural gas. Projected coal demand is 
reduced from its reference case level by about 10 percent in 
2025.
    Figure 4 in the written testimony shows that the NCEP 
policies are projected to significantly change the mix of 
investment in the electric power sector. Again, I mention the 
integrated gasification-combined cycle capacity additions, 
which more than double compared to the reference case. 
Renewable capacity additions increase by nearly 150 percent and 
total renewable generation is up by 25 percent over the 
reference case. At the same time, additions of conventional 
coal-fired generation capacity are less than 25 percent of the 
reference case level.
    The NCEP policies also affect energy prices. Lower demand 
for energy tends to lower the wellhead or minemouth price of 
energy, but the cost of emissions permits required under the 
cap-and-trade proposal adds to the delivered price of energy. 
So the net impact on the delivered price of energy reflects 
both of these effects.
    So to briefly summarize, the average price of petroleum 
products to all users is higher by a little bit more, 1.4 
percent in 2025, with the NCEP proposals compared to the 
reference case. In the same year, average natural gas and coal 
delivered prices are 8 percent and 56 percent higher, 
respectively. Electricity prices in 2025 are 6 percent higher, 
reflecting the higher cost of fuels.
    By 2025, the NCEP policies reduce energy-related carbon 
dioxide emissions by 8 percent due to lower energy demand and 
the change in the fuel mix. Covered greenhouse gas emissions, 
including gases inside and outside the energy sector, are 
reduced by 11 percent in 2025.
    Figure 5 in the testimony shows the key role of emissions 
reductions outside the energy sector, which account for more 
than 50 percent of the total reductions in 2015 and 35 percent 
of the total reductions in 2025 in the case with all of the 
NCEP policies, and an even larger share of total reductions 
from the cap-and-trade policy considered alone. The absolute 
level of emissions continues to grow in both cases, but at a 
slower rate than in the reference case.
    Economic impacts are clearly another important indicator. 
By 2025 real gross domestic product in the NCEP case is reduced 
by .4 percent or $79 billion. That is in real 2000 dollars. As 
shown in figure 6, the NCEP cap-and-trade program alone is 
shown to have a smaller impact on the economy.
    To conclude, I would like to briefly discuss the 
relationship of this latest work to earlier analyses that EIA 
has done. We have looked at the Climate Stewardship Act, the 
McCain-Lieberman bill, which would have capped greenhouse gas 
emissions at the 2000 level by 2010 and the 1990 level by 2016. 
A subsequent version of that, S. 2028, which we also looked at, 
removed the provision to tighten the cap beginning in 2016.
    Like the NCEP proposal, the two versions of McCain-
Lieberman have cap-and-trade systems that start in 2010. But 
the NCEP cap-and-trade proposal is less stringent because it 
targets a reduction in emissions intensity that allows some 
growth in the absolute level of emissions and it includes a 
safety valve on the price of emission permits. Either version 
of the Climate Stewardship Act is projected to result in larger 
energy system changes and larger reductions in energy-related 
emissions than the NCEP package as a whole or its cap-and-trade 
proposal alone. Figure 8 in my written testimony shows 
emissions permit prices are significantly higher for those 
proposals.
    Another observation is that the safety valve feature of the 
NCEP cap-and-trade proposal protects against the possibility of 
large changes in the energy system and energy prices and of 
large economic impacts if reducing emissions is more costly 
than expected. However, if the safety valve becomes effective, 
emissions will be permitted to rise above the targeted level. 
So you have insurance on the cost, but on emissions levels you 
have more uncertainty.
    So policies with a firm cap on emissions provide emissions 
certainty regardless of cost to the energy system and the 
economy, and, therefore, when you are looking at that type of 
proposal, estimates of energy system and economic costs are 
subject to much greater uncertainty.
    That concludes my testimony. Thank you and I will be happy 
to answer any questions you might have.
    [The prepared statement of Dr. Gruenspecht follows:]

    Prepared Statement of Howard Gruenspecht, Deputy Administrator, 
        Energy Information Administration, Department of Energy

    Mr. Chairman and members of the committee, I appreciate the 
opportunity to appear before you today to discuss the Energy 
Information Administration's (EIA) recent analyses of greenhouse gas 
reduction policies.
    EIA is the independent statistical and analytical agency within the 
Department of Energy. We are charged with providing objective, timely, 
and relevant data, analyses, and projections for the use of Congress, 
the Administration, and the public. We do not take positions on policy 
issues, but we do produce data, analyses, and forecasts that are meant 
to assist policy makers in their energy policy deliberations. Because 
we have an element of statutory independence with respect to this work, 
our views are strictly those of EIA and should not be construed as 
representing those of the Department of Energy, the Administration, or 
any other organization.
    My testimony today will focus on EIA's recent assessment of the 
impacts on energy supply, demand, and the economy that would result 
from the recommendations proposed in a December 2004 report entitled 
Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's 
Energy Challenges, prepared by the National Commission on Energy Policy 
(NCEP), a nongovernmental privately-funded entity. ETA's report, 
Impacts of Modeled Recommendations of the National Commission on Energy 
Policy, released in April 2005, compares cases incorporating the NCEP 
recommendations to the projections of domestic energy consumption, 
supply, prices, and energy-related carbon dioxide emissions through 
2025 in the reference case of the Annual Energy Outlook 2005 (AEO2005). 
AEO2005 is based on Federal and State laws and regulations in effect on 
October 31, 2004. The potential impacts of pending or proposed 
legislation, regulations, and standards--or of sections of legislation 
that have been enacted but that require funds or implementing 
regulations that have not been provided or specified--are not reflected 
in the projections. AEO2005 explicitly includes the impact of the 
American Jobs Creation Act of 2004, the Military Construction 
Appropriations Act for Fiscal Year 2005, and the Working Families Tax 
Relief Act of 2004. AEO2005 does not include the potential impact of 
energy legislation that is now being considered by the Congress or 
regulations such as the Environmental Protection Agency's (EPA) Clean 
Air Interstate and Clean Air Mercury rules that were promulgated 
earlier this year.
    The projections in the AEO2005 and our analysis of the impacts of 
the NCEP policy recommendations are not meant to be exact predictions 
of the future but represent likely energy futures, given technological 
and demographic trends, current laws and regulations, and consumer 
behavior as derived from known data. EIA recognizes that projections of 
energy markets are highly uncertain and subject to many random events 
that cannot be foreseen such as weather, political disruptions, and 
technological breakthroughs. In addition to these phenomena, long-term 
trends in technology development, demographics, economic growth, and 
energy resources may move along a different path than expected in the 
projections. Both the AEO2005 and our report on the NCEP policy 
recommendations include a number of alternative cases intended to 
examine these uncertainties.
    Since ETA's report has been provided to the committee and is 
available to the public on EIA's web site, my testimony presents only a 
summary of its key findings. My testimony focuses on the NCEP case in 
our report, which includes all of the NCEP recommendations that EIA was 
able to model. However, I will also discuss some results for individual 
recommendations modeled separately, such as the proposed cap-and-trade 
program (CAP-TRADE case) linked to an intensity target for greenhouse 
gas (GHG) emissions, the proposed fuel economy standards (CAFE case), 
and the deployment incentives (INCENT case). Then, I will turn to 
sensitivity cases that highlight the effect of alternative technology 
assumptions on our results. Lastly, I will offer some comparisons to 
findings from some previous EIA analyses of policies to limit GHG 
emissions.

                    MAIN RESULTS OF THE EIA ANALYSIS

    The December 2004 NCEP report outlined a broad array of policy 
measures, not all of which were amenable to analysis using the EIA 
model of U.S. energy markets, the National Energy Modeling System 
(NEMS). Our analysis focused on the recommendations that could be 
modeled and which were thought to have a significant potential to 
affect energy consumption supply and prices. Where the NCEP 
recommendations required further specification, specific assumptions 
were developed in consultation with staff of the requesting committee.
    Our results show that the largest projected impacts on emissions, 
energy production, consumption, prices, and imports result from three 
of the NCEP recommendations: the cap-and-trade program linked to an 
intensity target for GHG emissions beginning in 2010, a major increase 
in corporate average fuel economy (CAFE) standards for cars and light 
trucks, and the new building and appliance efficiency standards. Other 
recommended policies generally affect specific fuels or technologies 
but do not have large overall market or emissions impacts.
    The impacts of the modeled NCEP recommendations, analyzed together 
unless otherwise noted, relative to the AEO2005 reference case, are 
discussed below.

Energy Consumption
    Primary energy consumption is 2.26 quadrillion Btu (1.9 percent) 
lower in 2015 and 6.73 quadrillion Btu (5 percent) lower in 2025 as the 
combination of efficiency programs and new CAFE standards reduces 
energy demand. Fossil fuel energy consumption is 2.5 quadrillion Btu 
(2.4 percent) lower in 2015 and 8.1 quadrillion Btu (6.9 percent) lower 
in 2025. In absolute terms, the use of all fossil fuels is projected to 
grow from 2003 levels through 2025.
    Figure 1* illustrates the impacts of the NCEP policies on oil 
consumption. Oil consumption in the NCEP case is 0.83 million barrels 
per day (3.4 percent) lower in 2015 and 2.1 million barrels per day 
(7.4 percent) lower in 2025. The import share of petroleum product 
supplied declines from 62.4 percent to 61.3 percent in 2015 and from 
68.4 percent to 66.8 percent in 2025. As shown in Figure 1 almost all 
of the projected reduction in oil consumption results from the 
recommendation to increase fuel economy standards (CAFE case). More 
than two-thirds of oil consumption is currently used in the 
transportation sector, and the transportation share of total oil use is 
projected to grow to 71 percent in 2025 in the reference case. Because 
of the GHG permit safety valve, which caps the price of traded permits 
at $6.10 per metric ton of carbon dioxide (CO2) in 2010 
rising to $8.50 per metric ton in 2025 (2003 dollars), the maximum 
direct effect of the cap-and-trade policy on the delivered price of 
gasoline, diesel, or jet fuel is roughly 7 cents per gallon (2003 
dollars). Taken alone, a 7-cent price increase is not expected to spur 
either a switch to alternative fuels or prompt a significant increase 
in fuel efficiency (CAP-TRADE case).
---------------------------------------------------------------------------
    * Figures 1-9 have been retained in committee files.
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    Figure 2 illustrates the impacts of the NCEP policies on natural 
gas consumption. Natural gas consumption in the NCEP case is slightly 
lower (0.45 quadrillion Btu or 1. 6 percent) in 2015 and 1.1 
quadrillion Btu (3.6 percent) lower in 2025, due mainly to lower 
electricity demand from the building standards recommendation and the 
incentives provided for deployment of renewable, coal-fired integrated 
gasification combined-cycle (IGCC), and nuclear power plants that 
further reduce the size of the market for natural-gas-fired electricity 
generation. In contrast, when the cap-and-trade program is considered 
alone (CAP-TRADE case), projected natural gas consumption rises above 
the reference case level as natural gas replaces coal in electricity 
generation.
    Figure 3 illustrates the impacts of the NCEP policies on coal 
consumption. Coal consumption in the NCEP case is slightly reduced 
(0.46 quadrillion Btu or 1.8 percent) in 2015 and more significantly 
reduced (3.0 quadrillion Btu or 9.8 percent) in 2025, due mainly to the 
lower electricity demand and shifts in the generation fuel mix that are 
caused by the cap-and-trade program. The technology incentives and 
building standards packages have offsetting effects on coal use, by 
encouraging IGCC plants while reducing electricity generation, so the 
net effect on coal use of the cap-and-trade program alone (CAP-TRADE 
case) is similar to that of the combined NCEP policy case.
    Figure 4 shows how the NCEP policies affect projected electric 
generation capacity additions over the 2004 to 2025 period. Because of 
the early deployment incentives (INCENT case) and the cap-and-trade 
proposal, projected IGCC capacity additions more than double, and 
renewable generation increases by 23 percent relative to the reference 
case. However, the projected capacity additions of conventional coal-
fired technology decline to less than 25 percent of the reference case 
level. The shift from conventional coal-fired plants to more efficient 
IGCC plants results in an increase in the amount of generation per ton 
of coal consumed.

Energy Prices
    The NCEP policy recommendations generally reduce the demand for 
fossil fuels, which tends to lower wellhead or minemouth prices. 
However, the cost of permits required under the cap-and-trade program 
tends to increase the delivered price of fossil fuels. When these 
effects are taken together, the cost of permits tends to dominate even 
with the safety-valve limit on permit prices in place, so the energy 
prices paid by end users generally rise.
    The average petroleum price to all users (including the price of 
emissions permits) is 2.2 percent higher in 2015 and 1.4 percent higher 
in 2025 than in the reference case, with the permit prices more than 
offsetting the lower crude oil prices resulting from the new CAFE 
standard. When the cap-and-trade (CAP-TRADE) program is considered 
without new fuel economy standards, the reduction in oil demand is much 
smaller, so the expected impact on delivered petroleum prices is 
larger.
    The average delivered natural gas price in our NCEP case is $0.17 
per thousand cubic feet (2.7 percent) lower in 2015, with the wellhead 
cost reduction partially offset by the increased GHG permit price, and 
$0.52 per thousand cubic feet (7.6 percent) higher in 2025, largely 
because of the permit price which is added to the delivered fuel costs. 
The 2015 result reflects the impacts of building and appliance 
standards, which reduce residential electricity demand, and incentives 
for IGCC, which favor coal-fired generation relative to natural gas.
    When the costs of emissions permits are included, the average 
delivered coal price is $0.54 per million Btu (43 percent) higher in 
2015 and $0.74 per million Btu (56 percent) higher in 2025 than in the 
reference case because of the high carbon content of coal. The much 
higher percentage change in delivered coal prices compared to the other 
fossil fuels reflects both its high carbon content per unit of energy 
and its relatively low price in the reference case.
    The average delivered electricity price is projected to be 
unchanged in 2015 but is 0.4 cents per kilowatt-hour (5.8 percent) 
higher in 2025 because of the mandatory cap-and-trade program. EIA's 
electricity price estimates reflect the assumption that consumers 
capture the economic benefits of the allocation of GHG permits to 
regulated utilities in areas of the country where electricity rates are 
set under cost-of-service regulation.

Emissions
    Projected reductions in energy-related CO2 emissions, 
which are concentrated in the electric power and transportation 
sectors, are 2.8 percent in 2015 and 7.7 percent in 2025. These 
reductions are larger than the corresponding reductions in primary 
energy use (1.9 and 5.1 percent, respectively for 2015 and 2025), as 
the NCEP policy recommendations promote a less CO2-intensive 
energy mix.
    Covered GHG emissions are 393 million metric tons equivalent (5.2 
percent) lower in 2015 and 964 million metric tons CO2 
equivalent (11 percent) lower in 2025. Covered GHG emissions intensity 
decreases by 5.1 percent in 2015 and by 10.6 percent in 2025. The 
absolute level of covered GHG emissions is projected to grow at an 
annual average rate of 1.1 percent over the 2003 to 2025 period, 
compared to annual average growth of 1.5 percent in the reference case.
    As shown in Figure 5, reductions in emissions of non-CO2 
GHG emissions, which are not represented in a detailed fashion in NEMS, 
account for over 50 percent of the covered GHG emissions reductions in 
2015 and 35 percent of the covered GHG emissions reductions in 2025. 
Estimates for non-CO2 GHG emissions were developed using 
emissions baselines and abatement cost curves based on engineering cost 
estimates that were supplied by EPA. Real-world factors affecting the 
behavior of decisionmakers and the use of incomplete cost information 
may result in an overstatement of the actual level of non-
CO2 abatement achieved at each level of the permit price. 
However, as discussed below, due to the safety-valve feature of the 
proposed cap-and-trade program, the projected energy sector and 
economic impacts of the NCEP policy recommendations would not change 
significantly even if the assumptions used regarding the supply of GHG 
abatement opportunities were too optimistic.
    Because of the safety-valve price mechanism in the cap-and-trade 
program for GHGs, the GHG intensity targets specified by the NCEP are 
not reached. EIA projects that total emission reductions fall short of 
the emission target by 557 million metric tons CO2 
equivalent in 2025.

Economic Impacts
    Figure 6 shows the projected effect of t1 NCEP policy 
recommendations and the cap-and-trade policy considered separately on 
the projected level of real gross domestic product (GDP). By 2025, real 
GDP in the NCEP and CAP-TRADE cases are, respectively, 0.4 percent ($79 
billion dollars) and 0.13 percent ($27 billion dollars) below the 
reference case levels. These changes do not materially affect average 
economic growth rates for the 2003 to 2025 period. Real consumption is 
also reduced over the 2010 to 2025 period relative to the reference 
case, with the impact reaching about 0.55 percent in 2025 ($74 billion 
in year 2000 dollars).
    Cap and trade systems or emissions taxes are generally considered 
the most economically efficient approach for reducing emissions, since 
they allow reductions to be made where they can be achieved at the 
lowest cost. In a pure cap-and-trade program, the price of emissions 
permits, which generally rises as the cap is made more stringent, is a 
good indicator of economic impacts. However, in a program that combines 
a cap-and-trade program with regulatory measures, a lower permit price 
does not imply lower economic impacts. Although the regulatory measures 
included in the NCEP case result in a lower projected price of 
emissions permits than would be expected if the cap-and-trade policy 
was implemented alone, the projected economic impacts in the NCEP case 
are higher than for the cap-and-trade only case in our analysis.

                        TECHNOLOGY SENSITIVITIES

    While the AEO2005 reference case used as the basis for comparisons 
in our analysis incorporates significant improvements in technology 
cost and performance over time, it may either overstate or understate 
the actual future pace of improvement, since the rate at which the 
characteristics of energy-using and producing technologies will change 
is highly uncertain. Relative to the reference case, ETA's high 
technology case generally assumes earlier availability, lower costs, 
and higher efficiencies for end-use technologies and new fossil-fired, 
nuclear, and nonhydropower renewable generating technologies.
    Although the NCEP recommends increases in the funding for research 
and development, EIA, consistent with its established practice in other 
recent studies, did not attempt to estimate how increased government 
spending might specifically impact technology development. Instead, to 
illustrate the importance of technology characteristics in assessing 
the impacts of the NCEP recommendations, EIA prepared a set of NCEP 
policy cases using its high technology assumptions. Figure 7 shows how 
the use of high technology assumptions tends to reduce projected energy 
use with or without the recommended NCEP policies. Relative to the 
AEO2005 high technology case, the high technology case combined with 
the NCEP recommendations reduces fossil fuel use by 1.46 quadrillion 
Btu (1.5 percent) in 2015 and 4.48 quadrillion Btu (4.1 percent) in 
2025.
    Under the high technology assumptions, the NCEP's greenhouse gas 
intensity goals are met, reducing covered GHG emissions intensity from 
480 to 463 metric tons CO2 equivalent per million dollars of 
GDP in 2015 (3.5 percent) and from 405 to 373 metric tons 
CO2 equivalent per million dollars in 2025 (7.9 percent). 
Attainment of the emissions intensity goal depends heavily on estimated 
reductions of non-CO2 GHG emissions, subject to the caveats 
above and on the use of banked GHG emissions permits that are exhausted 
in 2025, at the end of the forecast horizon for this analysis. Because 
energy consumption is already lower in the high technology case than in 
the reference case, the NCEP recommendations have a smaller relative 
impact to the high technology case. However, due the lower baseline 
consumption, the GHG intensity goals are easier to attain.

          RELATIONSHIP TO PREVIOUS EIA GREENHOUSE GAS ANALYSES

    EIA has completed several other reports on policy proposals to 
limit or reduce GHG emissions. EIA's previous analyses of emission 
reduction proposals indicate that the economic impacts are largely 
determined by the size of the energy market change required to satisfy 
the policy and the speed with which the change must occur. In 2003, EIA 
considered the original version of the Climate Stewardship Act (S. 
139), which would cap GHG emissions at the 2000 level in 2010 and the 
1990 level in 2016 and beyond. In 2004, EIA considered an amended 
version of that bill (S.A. 2028) that removed a provision for a 
tightening of the emissions cap beginning in 2016. The NCEP proposal, 
S.A. 2028, and S. 139 all have a 2010 start date for their cap-and-
trade systems. The NCEP proposal is less stringent than the others 
because it is expressed in terms of GHG emission intensity, starts from 
the 2010 level, and includes a safety valve.
    These earlier reports suggest that either version of the Climate 
Stewardship Act is projected to provide larger reductions in emissions 
from the energy sector than the NCEP policy recommendations. To achieve 
this, higher permit prices (Figure 8) and larger energy system changes, 
particularly for electricity generation and demand, are required.
    That is, S.A. 2028 and S. 139 would require more significant 
changes in the U.S. energy system and larger increases in delivered 
energy prices than the NCEP recommendations, resulting in larger 
estimated economic impacts. As permit prices increase, electricity 
prices typically increase and reduce demand while electricity 
generation tends to shift away from coal technologies because of the 
high carbon content of the fuel and toward low or no-carbon emitting 
technologies like renewable, natural gas, and nuclear power generation 
(Figure 9).
    Finally, while all baseline and policy projections are inherently 
uncertain, differences in policy design can affect the impacts on the 
energy system and the level of GHG emissions. The safety-valve feature 
of the NCEP cap-and-trade proposal would allow GHG emissions to rise 
above the level projected in our report in the event that emissions 
reduction inside or outside the energy sector proves to be more costly 
than we expect, while protecting against the prospect of larger energy 
system and economic impacts in these circumstances. In contrast, 
policies that impose a ``hard'' cap on emissions without a safety-valve 
price for GHG credits, would force the GHG emissions target to be met 
through higher GHG prices, regardless of the cost to the economy.
    This concludes my testimony, Mr. Chairman and members of the 
Committee. I would be pleased to answer any questions you may have.

    The Chairman. Well, I want to thank you very much for your 
concise and understandable testimony. We appreciate it.
    Dr. Smith.

      STATEMENT OF ANNE E. SMITH, PH.D., VICE PRESIDENT, 
                       CRA INTERNATIONAL

    Dr. Smith. Mr. Chairman, members of the committee, thank 
you for your invitation to participate in today's hearing. My 
name is Anne Smith. I am an economist and a vice president at 
CRA International. The opinions I will be presenting here are 
my own and not those of my company, CRA International.
    The role of technology frames the entire climate policy 
decision. If we believe the conclusion of climate scientists, 
then we must act to stabilize greenhouse gas concentrations at 
some level in order to achieve significant reductions in 
climate risk. To accomplish this goal by about mid-century, 
this century, all new global energy needs will have to be 
satisfied from essentially carbon-free sources. That takes more 
than a few percent reductions here and there.
    No technologies available today, even as a group, are 
capable of providing this much carbon-free energy at an 
acceptable cost, and that fact makes the central challenge of 
climate policy all about stimulating breakthroughs that will 
lead to entirely new technologies that can accomplish this 
goal.
    None of the emissions limitations or the safety valves or 
subsidies proposed in the NCEP or by Senators McCain or 
Lieberman or in the amendment proposed by Senator Bingaman 
provide adequate incentives for this research and development, 
or R&D. Caps on emissions starting in 2010 can only motivate 
use of currently available technology and, although an 
assurance of high future carbon prices could motivate 
investment in the R&D that is required to create these 
radically new technologies, unfortunately the safety valve 
limits the rate of increase in carbon prices to a level that is 
too slow--too low, sorry, to stimulate that R&D.
    Now, even choosing a higher rate of escalation in the 
safety valve price would not work because it would not provide 
a credible private sector incentive for the R&D. The reason for 
this is explained more in my testimony, my written statement, 
but this is because once new technologies are developed then 
the most attractive choice for a future government will be to 
allow those allowance prices to fall down to the lowest level 
possible to incentivize the uptake of those new technologies. 
But that carbon price will never be high enough, that low 
carbon price will never be high enough to provide an adequate 
reward to the firms, the private sector firms, who invested in 
the R&D. This is because there is a fixed cost to R&D and by 
the time the technologies are available that fixed cost and 
expenditure by the private sector will be sunk and it will not 
be necessary for the government to ex post pay them back in 
order to get the technologies adopted.
    So here is the Catch-22 we face. Any announced future 
carbon price that is high enough to induce the breakthrough R&D 
would not be credible and any carbon price that is low enough 
to be credible as a sustainable policy in the United States 
would not be sufficient to induce the R&D breakthrough.
    Some people are saying that subsidies are necessary in 
combination with the safety valve price to achieve the needed 
R&D. In fact, the kinds of subsidies that are proposed in the 
Bingaman amendment and the NCEP proposal would only promote 
technologies that can be built at near-commercial scale today 
or in the very near future.
    If anything, this would just help--these subsidies would 
just help lock into place the current ways of reducing 
emissions, that would become obsolete if the R&D that we need 
becomes successful.
    The approach of layering subsidies onto a safety valve 
actually reveals that the policy, the safety valve policy that 
has been proposed with subsidies, would not be as cheap as the 
safety valve price would suggest. Consider this. If the safety 
valve price is set at a level that is supposed to be the 
maximum acceptable cost that our country is willing to spend on 
near-term emissions reductions now, then the subsidies 
represent an end run around that spending limit. They directly 
cause spending on projects that cost more and exceed the price 
of the safety valve on a dollars per ton reduction basis.
    This is how it happens. The private sector will be willing 
to pay up to an amount equal to the safety valve price and then 
the Government will use funds that it has collected from the 
private sector to pay even more for those same projects. So the 
policy will be more expensive than advertised.
    Now, that might be justifiable if the policy were to 
provide incentives for breakthroughs toward a zero emissions 
world, but for reasons I have already explained it will not do 
that.
    So I want to be clear. Placing an economy-wide price on 
carbon emissions before the R&D is accomplished can be 
justified as a supplement to a meaningful R&D mission, but we 
need to first figure out what the R&D goals and targets are 
before we know how to set that price for today.
    I also want to be clear, the safety valve is a far better 
way to achieve this role of achieving near-term emissions 
reductions that are affordable than a hard cap. A low price on 
carbon emissions can serve to motivate low-cost emissions 
reductions and including a safety valve is important to limit 
the damage to the economy that could occur under a hard cap.
    But if setting a stable price, a stable and low price on 
carbon emissions, is the only near-term objective of the 
policy, then the rest of the cap-and-trade system is not needed 
and a carbon tax would do just as well.
    Some people think that a cap-and-trade system is better 
than a carbon tax approach and in part this is because the 
carbon cap approach allows the Government to make valuable 
allowance allocations to help offset the burden. But they are 
mistakenly believing that a carefully devised allocation scheme 
could make everybody better off and this is simply not 
possible. This I have also explained in detail in my written 
statement, the reasons for that.
    The possibilities of allocations, allowance allocations, 
does not make a cap-and-trade system any more cost-effective 
than a tax and yet, as we have seen, it can greatly complicate 
the process of getting the policy into place.
    Now, the safety valve is neither more nor less than a 
carbon tax and it would simple, more simple, more transparent, 
to propose a carbon tax than to devise a costly and complex 
apparatus of emissions trading to achieve what is a fairly 
modest goal of setting a low and stable price on carbon 
emissions.
    Now, I believe that the focus of the current debate on how 
to set a safety valve or a cap is encouraging policymakers to 
neglect the much more important and more urgently needed 
actions for reducing climate risks. The top priority for 
developing a climate change policy should be a greatly expanded 
government-funded R&D program, R&D, not subsidy program, along 
with concerted efforts to reduce barriers that currently limit 
technology transfer to developing countries, where some cheaper 
near-term reductions could be achieved now.
    Both of these actions present major challenges and both 
must really be initiated immediately if they are going to have 
their desired effect in time to achieve the long-term emissions 
reductions that we want. Yet they are receiving minimal 
attention from policymakers, who are transfixed by the 
challenges of creating an unnecessarily complex scheme to set a 
low price on current carbon emissions even though that 
component of the climate policy will provide no reduction in 
climate risk.
    So thank you for the opportunity, giving me an opportunity 
to share my views on this important topic. I would be happy to 
answer questions.
    [The prepared statement of Dr. Smith follows:]

      Prepared Statement of Anne E. Smith, Ph.D., Vice President, 
                           CRA International

    Mr. Chairman and Members of the Committee, thank you for your 
invitation to participate in today's hearing. I am Anne Smith, and I am 
a Vice President of CRA International. Starting with my Ph.D. thesis in 
economics at Stanford University, I have spent the past twenty-five 
years assessing the most cost-effective ways to design policies for 
managing environmental risks. For the past fifteen years I have focused 
my attention on the design of policies to address climate change risks, 
with a particular interest in the implications of different ways of 
implementing greenhouse (GHG) gas emissions trading programs. I thank 
you for the opportunity to share my findings and climate policy design 
insights with you. My written and oral testimony today is a statement 
of my own research and opinions, and does not represent a position of 
my company, CRA International.
    I would like to start by summarizing what I think are the most 
important and overarching considerations that should be accounted for 
in devising a sound and effective policy to mitigate risks of climate 
change. I will then provide a basis for these points, present more 
extensive detail on the trade-offs in policy design alternatives, and 
summarize results of analysis my colleagues and I have done of the 
comparative costs and effectiveness of proposals now before the 
Congress.
    The key points that I have to offer about designing an effective 
climate change policy are:

   The linkage between near-term domestic GHG reductions and 
        real reduction of climate change risk is, for all practical 
        purposes, nonexistent. Near-term domestic controls cannot have 
        any meaningful impact on global emission levels at any cost 
        that is currently deemed realistic. Such policies also will not 
        stimulate the kinds of technological progress necessary to 
        enable meaningful emissions reductions later on (because one 
        can expect that carbon prices will be driven to the lowest 
        level necessary to incentivize adoption of important new 
        technology--a level that is too low to provide innovators with 
        a return of their one-time investment cost).
   The current debate about how to impose ineffectual near-term 
        controls is encouraging policy makers to neglect much more 
        important, more urgently needed actions for reducing climate 
        change risks. The top priority for climate change policy should 
        be a greatly expanded government-funded research and 
        development (R&D) program, along with concerted efforts to 
        reduce barriers to technology transfer to key developing 
        countries. Neither of these will be easy to accomplish 
        effectively, yet they are receiving minimal attention by policy 
        makers.
   Developing new technologies is crucial and it will require 
        long-run, high-risk, high-cost R&D to produce radically new 
        GHG-free energy sources. Even with moderately expensive GHG 
        limits, the private sector will under-invest in this kind of 
        R&D, and only government can provide the needed R&D investment. 
        The existing climate policy proposals, including the McCain/
        Lieberman (M/L) Bill and the NCEP or Bingaman proposals, focus 
        on providing subsidies to existing technologies rather than R&D 
        aimed at developing new technologies. New government efforts to 
        pick winning technologies and subsidize their deployment would 
        probably undermine the cost-effectiveness of any emissions 
        control program, without producing the forward-looking R&D that 
        we really need.
   Although no near-term emissions control program will have 
        much impact on solving the climate problem, a price on carbon 
        in the near-term can be justified as a supplement to a 
        meaningful R&D mission once that mission has clearly defined 
        targets for success. The near-term control program's role would 
        be to stimulate emissions reductions that can be achieved now 
        more cheaply than the present value of future control costs 
        targeted by the R&D program; the maximum near-term carbon price 
        could therefore be determined by discounting the R&D program's 
        defined targets for technology costs and dates of commercial 
        availability.
   The design of such a policy for near-term emissions control 
        matters tremendously. CRA's modeling work and the economics 
        literature indicate the relative cost-effectiveness of the 
        various options for the climate change situation.

          a. Hard caps are the most costly and least desirable option.
          b. The safety valve approach and carbon taxes are 
        alternatives to hard caps
          that are much less costly, and that are more consistent with 
        the inherently subsidiary role of any near-term reductions 
        program. (The contrast between a safety valve and hard cap 
        approach is especially evident in my comparison below of 
        results of CRA's modeling of the McCain/Lieberman Bill and the 
        cap program of the Bingaman Amendment.)
          c. One factor highlighted by CRA's work but often slighted in 
        other analyses is the possibility of using allowances to limit 
        the costs of controls. Domestic GHG controls will cause small 
        but not trivial losses of government revenue. Auctioning some 
        of the allowances and using proceeds to offset other expected 
        reductions in Federal revenue would noticeably reduce the 
        program's total cost to society.
          d. There are no simple analytical methods for determining 
        allocations of allowances to individual companies or sectors to 
        equitably mitigate the financial impacts of the policy.
          e. There is no allocation design that can make all affected 
        parties better off under a cap-and-trade or other carbon 
        pricing policy.
          f. The inherent complexity of a safety valve approach does 
        not appear to be justified compared to a simpler carbon tax. A 
        carbon tax would provide identical emissions reduction 
        incentives at identical costs to those of the safety valve 
        proposal without the political, institutional, and analytical 
        complications apparent in today's safety valve proposals.

    To provide a foundation supporting the above statements, I will 
begin with a review of the basic elements of climate science and 
projections of future greenhouse gas emissions that are relevant to 
economic questions about the design of climate policies. In section 2, 
I will describe the range of potential policy designs, which include 
carbon-pricing schemes and technology strategies. Section 3 will focus 
on just the carbon-pricing approaches in more detail, and will include 
a comparative analysis that my colleagues and I have done of the costs 
and effectiveness of proposals now before the Congress. I will address 
costs and risks to the economy from different policy designs, the 
ability of economically feasible mandatory caps on emissions to 
accomplish long-term climate goals, the role of allocations in policy 
design, and alternatives to ``mandatory limits on greenhouse gas 
emissions.'' In Section 4, I will turn to technology strategies. I will 
explain the reasons for my conclusion that the most important first 
step for the Congress to take in developing a cost-effective US climate 
policy is to provide incentives for R&D into new energy technologies.
    In all of the following, I wish to be clear that I use the term R&D 
as a distinctly different concept from providing subsidies for the 
initial uptake of existing but yet-to-be deployed technologies. By R&D, 
I mean investment to create technologies that do not exist today, and 
which would require major new scientific breakthroughs before they 
could become an option that any private entity might consider proposing 
in a competition for actual implementation under a subsidy program. The 
R&D may entail basic science as well as work that is identifiably on an 
energy technology with low or zero carbon emissions. Subsidies are 
aimed at bringing technologies into the market, and by definition, such 
technologies must be already reasonably well developed, if not yet 
cost-effective to use under current prices without supporting funding. 
There may be a sometimes unclear line dividing the two, but it is clear 
that we do not yet have enough forms of energy technologies that could, 
as a group, provide a carbon-free energy economy at any reasonable 
cost. Creating that capability should be the mission of an R&D program.
1. Key Points from Climate Science and Global Emissions Scenarios
    The key points from climate science and emissions scenarios that 
are critical to the economic analysis of policy options are:

   Increases in global average temperatures are related to the 
        concentration of greenhouse gases in the atmosphere. Once 
        emitted, greenhouse gases remain in the atmosphere for many 
        decades, so cumulative emissions over a long period of time 
        determine changes in greenhouse gas concentrations. As a 
        result, climate change risk is a function of cumulative 
        greenhouse gas emissions, not emissions in any given year.
   Discussions of long-term objectives for climate policy 
        usually focus on stabilizing greenhouse gas concentrations at 
        some level, so as to limit temperature increases. The 
        concentration of greenhouse gases in the atmosphere will 
        continue to increase as long as there are net additions of 
        greenhouse gases. To achieve stabilization of concentrations 
        and temperature at any level will require that average economy-
        wide greenhouse gas emissions be reduced to nearly zero.
   Given the scale of projected increases in global greenhouse 
        gas emissions, achieving zero net carbon emissions by the 
        middle of the next century will require producing at least as 
        much energy as is now produced from all sources by means of 
        processes that have near-zero net carbon emissions. It is not 
        possible to accomplish this with current technologies at 
        anything close to the current or projected cost of energy 
        produced from oil, natural gas, and coal.
   Within the next decade or two, developing countries will 
        overtake the industrial world in total greenhouse gas 
        emissions, so that by 2025 more than half of global annual 
        emissions of greenhouse gases will be coming from developing 
        countries. Thus no long-term objective of climate policy can be 
        achieved without effective actions to reduce emissions from 
        developing countries. Moreover, comparison of greenhouse gas 
        intensity between developing and industrial countries suggests 
        that there is a large potential for near-term emission 
        reductions in developing countries at costs far lower than 
        comparable emission reductions in the United States and other 
        industrial countries.

    These features of the climate problem have some very strong 
implications for policy design. Since only cumulative emissions over 
long time periods matter for climate risk, mandatory caps that place 
specific limits on near-term emissions in each year create significant 
cost risks without accompanying benefits. Near-term limits on 
greenhouse gas emissions require the use of current technology for 
reducing greenhouse gas emissions, and as I will discuss in Section 4, 
they provide no credible incentive for research and development aimed 
at wholly new and more affordable technologies.
    Nearly-zero greenhouse gas emissions cannot be achieved with 
current technologies without massive disruption to standards of living. 
Once technologies are developed that can make massive emissions cuts 
affordable (even if still quite costly) then it will be possible to 
``make up for'' reductions that we might not undertake today. Therefore 
the only reductions in emissions that make sense economically until 
zero-carbon energy becomes affordable as the mainstay of our energy 
system are those that are very cheap now.\1\
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    \1\ Their cost should be less than the present value of the cost of 
``making up'' for them when the zero-carbon economy becomes viable. For 
example, if nearly all GHG emissions could be eliminated or offset at 
$25/tonne CO equivalent starting in 2050 (i.e., $93/tonne carbon-
equivalent), then the most that it makes economic sense to pay for 
emissions reductions in 2010 is about $3.60/tonne CO2-eq. 
(or $13/tonne carbon-eq.), using a 5% real discount rate.
---------------------------------------------------------------------------
    These considerations suggest that the most important long-term 
feature of any policy initiative is the impact it will have on 
investment in R&D and the development of new technologies to provide 
essentially carbon-free energy at an affordable cost. For near-term 
emission reductions, the most cost-effective emission reductions 
available today are in developing countries, placing a high priority on 
near-term control policies to bring about changes in how energy is used 
in developing countries.
2. Overview of Range of Available Policy Approaches
    Proposed approaches for climate change policies that involve a 
commitment by the government to bring about changes in future 
greenhouse gas emissions include:

   Pure cap-and-trade
   Cap-and-trade with a safety valve
   Carbon tax
   An R&D-focused ``technology strategy''
   Market transformation and technology transfer in developing 
        countries

    These policy approaches form a continuum, all of which can be 
implemented in a market-based manner. At one end of the scale are 
policy designs that impose specific, rigid limits on greenhouse gas 
emissions on specified dates. These are the pure cap-and-trade 
programs, which place a cap on emissions and allow trading of 
allowances between regulated parties to create an incentive for choice 
of the most cost-effective mitigation options. Much attention has been 
paid to these designs, which have been used successfully in other 
environmental areas such as the Acid Rain program (Title IV) of the 
Clean Air Act. The McCain/Lieberman amendment to the 2005 Senate Energy 
Bill (S. 1151) falls in this category.
    The rigidity of emission limits is progressively loosened in 
proposals for combining cap-and-trade with a ``safety valve'' or for 
simply using a carbon tax to penalize the use of all fossil fuels in 
proportion to their carbon content. Both safety valve and carbon tax 
approaches avoid the imposition of a rigid cap, and instead rely on the 
economic incentive of putting a price on carbon emissions to achieve 
changes in emissions levels.
    An R&D-focused technology strategy would commit the Federal 
government to supporting the research to create new technologies whose 
adoption in the future will enable much larger and more cost-effective 
emission reductions than are possible today; this also can, and should 
be designed in a market-based manner.
    Thus, even now, the Congress is looking at a continuum of 
proposals, with the most rigid being the M/L Bill with its specific 
targets and timetables for near-term reductions, and the least rigid 
and potentially most cost-effective being a focus on devising and 
implementing a major and comprehensive R&D program to produce 
affordable, zero-emitting technology that will be possible to adopt on 
a massive scale, throughout our economy and that of the globe.
    The pure cap-and-trade approach places the highest priority on 
achieving fixed and predictable emission reductions, and accepts 
whatever the cost of achieving those emission reductions may be. The 
pure carbon tax limits the cost of achieving emission reductions to be 
no greater, per unit of carbon removed, than the tax. The emission 
reduction achievable from a carbon tax is uncertain, because it depends 
on how much emission reduction is possible at a cost equal to or less 
than the tax. Thus the carbon tax places the highest priority on cost 
containment, while tolerating some uncertainty in the level of emission 
reductions to be achieved. The safety valve becomes indistinguishable 
from a carbon tax once the price limit on emission allowances is 
reached.
    Technology policy and policies toward developing countries address 
the two features of climate policy that are not addressed by mandatory 
limits on near-term emissions. These, I will suggest, offer far more 
potential for cost-effective emission reductions in the near and long 
term, and are appropriate places for Congress to consider immediate 
action.
    This Congress has considered proposals in four out of these five 
categories. The proposed McCain/Lieberman amendment to the Senate 
Energy Bill of 2005 fell in the first category, of mandatory caps. 
Proposals by the National Commission on Energy Policy (NCEP) and 
Senator Bingaman (S.A. 868) fall into the second, safety valve, 
category. An approach to reducing emissions from developing countries 
was passed into law as Title XVI of the Energy Policy Act of 2005, 
along with some of the elements of a technology strategy. Only carbon 
taxes per se are not talked about in Washington, but the choice between 
carbon caps and carbon taxes is a very important one in the literature 
on climate policy.
    I do not believe it is appropriate to narrow consideration at this 
time to only ``mandatory'' programs in the sense of binding caps on 
specific schedules, which if taken literally would include only the 
McCain/Lieberman proposal. Although used and justifiable in other 
environmental areas, this is not the most suitable policy design for 
climate change. Costs of large near-term reductions are high, mandatory 
caps create large risks and uncertainty about cost, and even mandatory 
caps cannot provide a credible incentive for R&D to develop needed 
technologies. Safety valve proposals, which become indistinguishable 
from carbon taxes once the safety valve becomes effective, offer 
additional flexibility and need not imply greater climate risks.
    Therefore, I would encourage you to include in your thinking about 
``mandatory'' programs all policies that force households and 
businesses to take into account a cost of greenhouse gas emissions. 
This would recognize that carbon taxes, as well as the NCEP and Senator 
Bingaman's approaches, are all ``mandatory'' approaches to emissions 
reductions.
    However, none of the mandatory programs aimed at putting limits on 
future carbon emissions will provide a credible incentive for R&D or 
actions by developing countries. Such mandatory programs are not the 
only actions that can be taken today. I have concluded that commitments 
to support technology development and bring about change in the rate of 
growth of emissions from developing countries are a more effective and 
appropriate focus for current action on climate policy. To my mind, it 
makes the most economic sense to start where resources committed to 
mitigation of climate change can achieve the greatest gains, 
considering both near-term and long-term outcomes as a whole. 
Therefore, we should start with a clearly articulated and carefully 
implemented R&D program for developing affordable zero-carbon emitting 
technologies. Neither the technologies nor the necessary R&D program to 
create them presently exists.
    The first three approaches (pure cap-and-trade, cap-and-trade with 
a safety valve, and carbon taxes) all function by placing a direct 
price on GHG emissions. In the next section, I will discuss each of the 
individually, highlighting their respective strengths and weaknesses. I 
will then provide comparisons of the outcomes under a pure cap-and-
trade proposal (i.e., the McCain/Lieberman proposal) to those of a 
proposal that directly limits costs rather than emissions (i.e., the 
GHG cap program of the Bingaman/NCEP proposal) to highlight how they 
tend to differ in their impacts. I complete the next section by 
addressing a number of issues related to allocation of allowances that 
I feel are greatly misunderstood, yet extremely important if a cap-and-
trade approach is selected instead of a carbon tax approach for 
imposing a price on carbon emissions. The following, and last section, 
will then turn to an important limitation of all approaches that 
directly price emissions in the unique situation of climate change 
policy, and the reasons that an R&D-focused technology strategy needs 
to be the first and foremost consideration in any policy to address 
climate change risks. It is my view that none of the proposed policies 
to date properly address this R&D need. In general, they have confused 
subsidies with the need for R&D on new technologies, and for the most 
part the subsidy programs that have been proposed are also unnecessary 
for motivating a least-cost response under a carbon-pricing program.
3. Approaches that Place a Direct Price on Emissions
            A. Pure cap-and-trade with rigid emission limits
    Emission caps are enforced, under cap-and-trade proposals, by 
distributing a set of emission allowances, limited to the quantitative 
cap. These emission allowances can be traded, so that emission 
reductions will occur where they are most cost-effective given current 
technology. The cost of a cap-and-trade program depends on how tightly 
the caps are set initially and how they are tightened over time. How 
emission allowances are distributed also affects the overall economic 
impact of this policy approach.
    Near-term caps, such as those proposed by Senators McCain and 
Lieberman, can only be met through use of costly measures based on 
today's technology. This raises their costs substantially compared to a 
policy sequence in which new and more affordable technologies are 
developed first, so that much larger emission reductions can be 
achieved at much lower cost.
    Emission caps, even if never tightened, will become more expensive 
over time, because energy needs are always growing as population 
increases and the economy expands. Holding greenhouse gas emissions 
constant in the face of ever-increasing energy demand requires going to 
ever more costly control options. The depth of the cuts required can be 
seen by comparing business-as-usual, or current-policy emissions to 
emissions under the cap. Based on the current EIA Annual Energy Outlook 
forecast for emissions under current policies, the limits proposed by 
Senators McCain and Lieberman would require total CO2 
emissions from covered sectors to be reduced to 15% below current 
policy levels in 2010 and 26% below current policy levels in 2020. 
Continuing the McCain/Lieberman cap to 2050 would require a reduction 
of emissions to 48% below current policy levels in that year. 
Tightening the cap to a level consistent with current proposals for 
programs that could stabilize greenhouse gas concentrations in the 
atmosphere would require emissions to be reduced to more than 80% below 
what CRA International projects for current policy emissions in 2050.
    The imposition of rigid limits creates unnecessary cost risks, even 
in the near-term, because rigid limits can become very expensive if 
economic growth exceeds expectations or if costs of measures required 
to reduce emissions turn out to be higher than assumed. Since climate 
risks are not affected by variations in emissions from one year to the 
next, but only by cumulative emissions over long time periods, these 
cost risks associated with rigid caps are completely unnecessary to 
achieving long-term climate goals.
    The perception that fixed caps create excessive cost risks is, I 
believe, widely shared. The McCain/Lieberman amendment would have 
created specific fixed and mandatory caps. Other policy approaches 
before Congress are based on a recognition that setting this kind of 
mandatory cap is not the only way to take effective action to address 
climate change. All the other approaches before the Congress involve 
market based incentives, but do not place a rigid cap on emissions. 
These approaches are more suitable to the nature of the climate 
problem.
            B. Cap-and-trade with a safety valve
    Combining cap-and-trade with a safety valve has the purpose of 
reducing the cost risk associated with the pure cap-and-trade approach. 
Senator Bingaman and NCEP's proposals also reflect a concept called an 
``intensity-based'' cap, but this only serves to reduce the expected 
costs of the policy. The real reason that these proposals have reduced 
risk of unexpectedly (and unacceptably) high costs lies wholly in the 
safety valve provision.
    The original concept of an ``intensity-based'' target is that caps 
would only be tightened in relation to economic activity levels. If 
economic activity is high, an intensity approach would allow a somewhat 
looser cap to accommodate the extra need for energy, rather than to 
choke it off by having a rigid cap no matter what the level of economic 
activity. However, as implemented in these two current proposals, the 
``intensity-based'' cap would, in fact, still be an absolute cap, 
computed up to ten years in advance and rigid thereafter. Its primary 
novelty is that by computing a cap that is tied to economic growth 
rather than historical outcomes, it would more gradually phase in the 
cap's apparent stringency. This certainly makes such a cap less costly 
than a tighter cap that prevents any further emissions growth at all. 
However, as long as the cap is binding at all (which is the intention), 
there is still uncertainty on how costly it will actually be to attain, 
especially given its rigidity over ten-year periods. (A cap that is 
truly flexible from year to year in response to economic activity 
outcomes might somewhat mitigate this cost uncertainty, but would 
require continual, year-to-year updating of allocations. This updating 
would probably be more detrimental than helpful in producing compliance 
planning certainty, while still not assuring that costs of control 
would remain below some planned level.)
    Nevertheless, the Bingaman and NCEP proposals do have much less 
cost risk than previous cap-and-trade proposals, entirely due to the 
safety valve provision. The safety valve places a ceiling on the price 
of carbon allowances under the cap provision. This would be 
accomplished by allowing companies to achieve compliance by paying the 
safety valve price to the government in lieu of turning in actual 
allowances that have been issued. Alternatively, the government could 
issue more allowances at the safety valve price, which would then be 
turned in along with originally-issued allowances. Either way, the 
effect of the safety valve is to make the cap itself flexible rather 
than rigid. However, its flexibility is linked to the cost of control 
rather than to economic activity per se.
    In summary, the safety valve is a very important way of minimizing 
cost risk under a carbon emissions control policy, and it does so by 
converting the carbon cap into a carbon tax if the cost of control to 
meet the cap is higher than the pre-agreed safety valve price. By 
design (and also just like a tax), this can alter the amount of 
emission reduction that is achieved, thus making emissions reductions 
uncertain instead.
            C. Carbon taxes
    Once the safety valve becomes effective, the environmental outcomes 
and control costs under a program based on safety valves become 
indistinguishable from a carbon tax. However, a carbon tax policy would 
avoid creating the costs and bureaucracy associated with allocating 
allowances and administering an emission trading and enforcement 
system.
    All of these approaches--rigid caps, caps with safety valve, and 
carbon taxes--share a common feature of mandatory but market-based 
emission limitation. They require an emitter to pay for its legal 
emissions, either by purchasing an allowance, foregoing revenues from 
the sale of an allowance it was allocated, or paying a tax. Each 
creates revenues, and the choice must be made in designing the policy 
of who will collect these revenues and how they will be used. This is 
the choice between auction and allocation of allowances under a cap-
and-trade system.
    The safety valve involves the sale of emission allowances for a 
fixed price. It is equivalent to charging a carbon tax on the use of 
fossil fuels, with the tax rate set for each fuel based on its carbon 
content. Use of a carbon tax would also leave control of how to use the 
revenues under the normal budget process. In contrast, revenues from 
auctioning allowances or from selling allowances under a safety valve 
can be placed outside the budget process, as they are in both the 
McCain-Lieberman and Bingaman proposals. Using a free allocation of 
carbon allowances to compensate some of those harmed by the imposition 
of limits on greenhouse gas emissions is also a use of potential 
revenues that could accrue to the government, and removes decisions 
about that use of revenues from the normal budget and authorization and 
appropriation process. This has a very important influence on overall 
economic costs.
    The proposed cap-and-trade and safety valve programs are likely to 
impose higher costs than a carbon tax. In part, this is true because 
they are likely to have greater administrative costs than an explicit 
tax. But more importantly, by taking revenues outside the normal budget 
process, these policy designs eliminate the possibility of using some 
or all of the revenues to replace taxes that would otherwise have to be 
raised through other federal tax programs. As I discuss in subsection E 
below, not allowing revenues from allowance auctions to be used to 
offset impacts of emission limitations on total government revenues 
substantially increases the cost of the Bingaman and McCain/Lieberman 
approaches.
    Otherwise, the effects of cap-and-trade with a safety valve and a 
carbon tax are indistinguishable. Consumers of energy will experience 
increases in the cost of energy, in one case by the price that energy 
producers must pay for carbon allowances and the other by the carbon 
tax they must pay. The response of businesses and households to these 
altered prices will be identical. Differences will arise only from how 
potential revenues from the safety valve or carbon tax are utilized.
            D. Analysis of the costs of mandatory caps and safety 
                    valves
    In order to quantify the costs and emission impacts of the McCain/
Lieberman and Bingaman amendments, my colleagues and I have used CRA's 
Multi-Region National Model of the U.S. economy.\2\ This model has been 
used in a variety of studies over the past 10 years, and was used by 
the National Commission on Energy Policy in its own analysis of the 
economic impacts of its proposals.
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    \2\ For documentation of the MRN model, see http://www.crai.com/
pubs/pub_3694.pdf.
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    We have analyzed a range of estimates for the impacts of the 
McCain/Lieberman proposal (M/L) and of the carbon cap program in the 
Bingaman Amendment (BA). For M/L our range was based on assumptions 
about the cost at which a carbon free ``backstop'' technology will 
become available and how that cost will drop over time; the 
availability and cost of ``offsets'' to CO2 emissions in 
covered sectors; and the choices that will be made about long-term 
emission limits after 2020. For the BA, at the low end of the range, we 
assume that regulated non-CO2 GHGs are able to be costlessly 
reduced up to the point where the marginal cost of reducing those other 
GHGs exceeds the safety valve price, based on marginal abatement cost 
curves prepared by MIT. At the high end of the range, we assume that 
non-CO2 GHGs are reduced costlessly only up to the point 
where they achieve their own share of the intensity targets. Our 
baseline or ``current policy'' emissions trajectory was based on the 
AEO 2005 reference case forecast of CO2 emissions, and was 
not varied, though this would be another source of cost uncertainty, 
especially for the M/L rigid caps.
    The form of Senator Bingaman's carbon cap proposal that we analyzed 
sets a cap on greenhouse gas (GHG) emissions from 2010 onward. The cap 
is to be calculated in 2006 so that it will cause greenhouse gas 
intensity (GHG emissions divided by GDP) to fall by 2.4% per year from 
2010 to 2020, and then to fall by 2.8% per year thereafter. The 
required improvements in GHG intensity are converted to fixed caps for 
the next decade by multiplying the required GHG intensity times the 
level of GDP in each year that is projected as of 2006.
    We applied a ``safety valve'' which allows regulated entities to 
purchase carbon allowances for a price of $7 per ton of CO2 
in 2010, escalating at 5% per year (nominal). Both the safety valve 
escalation and the annual improvement in GHG intensity can be revised 
by joint resolution. The bill requires the President to report to 
Congress on what other countries are doing to reduce GHG emissions as a 
basis for recommending such revisions. The proposal includes some, but 
not all, emissions of non-CO2 GHGs in the calculation of GHG 
intensity and allows banking of allowances for use in future years.
    We assumed that under Senator Bingaman's proposal a large fraction 
of carbon allowances will be ``allocated'' to businesses that face 
disproportionately large negative impacts, and that 5% in 2010, rising 
to 10% by 2020, of the allowances will be auctioned to provide funding 
for subsidies for the development and deployment of selected energy 
technologies.
    Sources of economic impacts. Economic impacts arise from four major 
sources. Direct costs of complying with emission limitations or of 
adjusting energy supply and use in response to a safety valve/carbon 
tax are incurred by energy producers and consumers. These costs arise 
from the necessity of diverting resources from other productive uses to 
reducing greenhouse gas emissions. The activities involved include 
substituting more costly but lower carbon forms of energy for fossil 
fuels, making investments and incurring higher costs to improve energy 
efficiency, and losing the benefits of foregone energy services.
    A second set of costs arises from an increased excess burden of 
existing taxes. Both the Bingaman and M/L proposals provide for 
allocations of allowances and specify how revenues from allowance 
auctions will be utilized. They do not allow proceeds to be used to 
reduce other taxes. It is widely accepted among economists who study 
the Federal tax system that the current set of income, payroll and 
corporate taxes impose a deadweight loss on the U.S. economy. It has 
been found in a number of studies that a system of emission limits or 
carbon taxes that raises energy costs effectively increases the burden 
of existing taxes on the economy.\3\ Using the revenues from sale of 
carbon allowances or from a carbon tax to substitute for revenues that 
would otherwise be raised through conventional taxes can reduce or 
eliminate this distortion. Allocating emission allowances at no cost 
removes that ability to reduce the distortions of the tax system and 
contributes to higher costs, as does reserving revenues for new 
spending programs that are created by the policy.
---------------------------------------------------------------------------
    \3\ On the issue of how existing tax distortions are magnified by 
emission limits, see Larry Goulder, Ian Parry and Dallas Burtraw, 
``Revenue-Raising vs. Other Approaches to Environmental Protection: The 
Critical Significance of Pre-Existing Tax Distortions,'' RAND Journal 
of Economics, Winter 1997; and Larry Goulder and Lans Bovenberg, 
``Optimal Environmental Taxation in the Presence of Other Taxes: 
General Equilibrium Analyses,'' American Economic Review, September, 
1996.
---------------------------------------------------------------------------
    CRA's analyses have revealed a need for governments to use 
allowance auctions under a GHG cap to generate a certain amount of new 
government revenue to offset likely reductions in existing tax revenues 
due to a decline in economic activity from the cost of the policy. If 
such offsetting revenues are not tapped from the value of the 
allowances, then governments will either have to cut services or else 
raise existing tax rates. The latter action would actually exacerbate 
the costs of the policy, and thereby create an inefficiency due to tax 
distortions even while the carbon allowance market may function in a 
perfectly efficient manner in achieving cost-effective emissions 
reductions to meet the cap. Neither of the proposals analyzed provides 
for any revenues to be used to offset tax base erosion.\4\ Although 
there are some revenues from auctions and safety valve sales, these 
revenue sources are earmarked for new spending programs rather than to 
supplement other, falling sources of government revenues.
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    \4\ In very approximate-terms, the share of the allowances that the 
government would need to offset tax base erosion and thus avoid 
exacerbating policy costs appears to be between 30% and 60%. This is 
based on multiple scenarios analyzed by CRA International using its MRN 
model, and apparently has been corroborated by analyses by Prof. 
Goulder of Stanford University (personal communication).
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    A third cost element arises from the transition costs of job search 
which are triggered by the changes in real wages and shift in industry 
structure causes by emission limits or safety valve/carbon tax 
policies. This cost element shows up directly in the results as an 
increase in transitional unemployment, and contributes to reduced GDP 
and to lower household consumption and welfare.
    Finally, since MRN is a fully dynamic computable general 
equilibrium model with forward-looking expectations, the prospect of 
rising carbon allowance prices and future economic impacts leads 
households to change their current saving and investment behavior. 
Households reduce their current consumption, in order to save and 
provide for higher future income to cover the increasing costs of 
tighter emission limits and rising safety valve/carbon taxes. This 
anticipatory behavior makes future costs show up in the present. The 
banking option included in both M/L and BA also encourages businesses 
to undertake emission reductions in early years in excess of those 
required by carbon limits, in order to avoid even higher future 
mitigation costs due to tightening emission limits or higher safety 
valve/carbon taxes. This also contributes to costs in early years.
    I provide details of our comparison of the impacts of M/L and BA in 
Exhibits 1-4* at the end of this testimony. Generally speaking, our 
results suggest that M/L impacts are about 3 to 4 times larger than the 
impacts for the BA cap program. Key economic indicators all follow this 
pattern:
---------------------------------------------------------------------------
    * The exhibits have been retained in committee files.

   For 2010, the GDP loss under BA would be about $21 billion 
        to $34 billion, or a 0.1% to 0.2% reduction (compared to 0.3% 
        to 1.0% for MIL). The GDP loss increases over time, both 
        because the percent impact of BA increases with time, and 
        because GDP increases with time.
   GDP loss under BA in 2020 is $70 billion to $96 billion. 
        (This compares to $214 to $517 billion for M/L) It reflects a 
        0.3% to 0.4% reduction in 2020 GDP (compared to 0.8% to 1.9% 
        for M/L).
   Per household consumption losses under BA are $135 to $147 
        in 2010 and $147 to $164 in 2020. (Comparable M/L losses are in 
        the $450 to $800 range.)
   Job losses under BA in 2020 are 281,000 to 326,000 (compared 
        to 793,000 to 1,306,000 under M/L).
   Reduction in coal output in 2020 is 8% to 11% (compared to 
        23% to 42% for M/L).
   Reduction in refined oil output in 2020 is 2% (compared to 
        6%-13% for M/L).
   Carbon prices are $13 to $18/tonne C in 2010 and $21 to 29/
        tonne C in 2020. (M/L carbon prices are $47-$130 in 2010 and 
        $75-$209 in 2020.)
   Under BA, carbon allowance prices hit the safety valve price 
        in 2020 in the high case and 2035 in the low case.

    The greater cost certainty associated with the safety valve is 
apparent in the fact that our M/L cost ranges are much wider than those 
we estimated for the BA cap. However, the lower overall costs of the BA 
cap simply reflect the fact that it imposes a much less stringent 
demand for near-term emissions reductions. Over the period from 2020 to 
2050 BA provides emission reductions that total between one-third and 
two-fifths (32% to 40%) of those provided by M/L. Since the costs of BA 
range from 25% to 33% of M/L, the comparison also illustrates the law 
of diminishing returns, in that it costs proportionately more to 
achieve the larger emission reductions required by M/L.
            E. Issues in allocating allowances
    Allocations versus auctions. I understand the committee is very 
interested in the issue of allocation of allowances under Senator 
Bingaman's proposal. This is a feature of policy design for which there 
are several alternatives. Senator Bingaman distinguishes between 
auction and allocation. Some allowances would be allocated to parties 
that suffer disproportionate harm from emission limits, and some would 
be auctioned and provide revenues.
    The first question that the Committee might want to consider is who 
should control the use of the revenues from any auctioned or safety 
valve allowances. If revenues are placed in the general fund, then 
Congress will retain the ability to make the decisions about how the 
revenues will be utilized. This will allow Congress to consider all 
societal needs together, and to balance competing needs as they evolve. 
To place the proceeds into a Trust Fund that earmarks them for spending 
only related to climate policy is tantamount to deciding now that 
climate-related spending needs to be separated from all other 
government spending decisions, and given a separate, more elevated 
priority than all other societal needs, including future needs that may 
not be anticipated at present. Public finance practitioners generally 
frown on the idea of earmarking funds from particular revenue sources 
to particular purposes, because the amount of money that will be 
collected from a particular source is only connected loosely, if at 
all, to the amount that it is wise to spend on even a related purpose. 
Thus earmarking is likely to produce either too much or too little 
funding, and it removes the decision about how much should be spent 
from the normal budget, authorization, and appropriation process.
    In this regard, I also note that free allocation of allowances is 
not the only way to provide for compensation of affected parties. Any 
compensation that can be achieved by a free allocation formula could, 
in principle, be replicated under a 100% auction--it would only require 
that the auction revenues be returned to companies by the same formula 
that would have been used for allocations. Funds could be appropriated 
to provide compensation for those disproportionately harmed, or 
specific tax credits could be enacted. Determining how to make this 
compensation using normal budget processes would be no harder than 
determining how to allocate allowances under the procedures outlined in 
Senator Bingaman's proposal.
    While general principles of public finance suggest that separation 
of revenues from such a policy into a Trust Fund is probably unwise, my 
personal research has found that such an approach also could exacerbate 
the total costs of any carbon-pricing policy, and thus would be 
inconsistent with principles of minimizing policy costs. Paradoxically, 
allocating all of the allowances at no cost to affected parties, and/or 
using all of the proceeds from sale of allowances to fund new spending 
programs, can lead to far larger costs to the economy than necessary. 
This policy cost inflation can be averted by using some allowance or 
carbon tax revenues to replace other taxes that would have to be raised 
to meet budget targets. By allowing carbon policy revenues to flow to 
the general fund, Congress retains its ability to determine how much of 
the proceeds from allowance sales or carbon taxes should be used for 
replacement of other tax revenues that can be expected to decline under 
the carbon policy.
    Free allocations cannot compensate all businesses and households. 
Impacts on households and industry are not determined by where 
regulations are put in place. An upstream system like that in Senator 
Bingaman's proposal still imposes costs on households and industries. 
Not all the costs are borne by fuel suppliers, even if they are the 
point of regulation. All users of energy have higher production costs. 
Some will be able to pass some of these costs to their consumers, while 
others will have little ability to pass costs through, and the brunt of 
the financial impact will be borne by their shareholders. In the end, 
households cannot pass the costs on to anybody, and they ultimately 
bear the entire cost, as consumers of higher cost of goods and 
services, and as shareholders in companies that cannot pass the costs 
on.
    Conceptually, allocations could be used to help compensate the 
companies that bear an exceptional and unfair burden. We have, in other 
contexts, estimated the average loss in capital value to owners of 
assets in aggregated economic sectors such as the oil, gas, coal and 
electricity generation sectors. However, there is no simple formula to 
identify exactly which companies these are, or what amount of 
allocation would actually provide for an equitable burden sharing 
arrangement. Companies within the same economic sector may face diverse 
impacts, so that an estimate of the ``average'' loss of profitability 
for each sector may bear no correlation to the sum of losses across the 
negatively affected companies within each sector. Even if one could 
identify reasonable allocations to each sector of the economy, 
comparable allocations to each company within a sector would have 
little chance of equalizing burdens within the sector. Attempts to 
analytically identify company-specific burdens within a sector would be 
even more challenging than attempts to identify needs by sector, as the 
relevant data are not even publicly available. Thus, the idealized 
concept of mitigating the impact of the rule on individual companies 
cannot be estimated quantitatively at the level of detail needed to 
define company-level allocations, let alone be condensed to a 
relatively simple formula.
    It is also important to realize that the energy sectors (including 
non-regulated entities in the energy sectors) are not the only sectors 
that will bear losses of capital value as a result of a carbon pricing 
policy. All sectors of the economy will be affected to some degree, as 
all are consumers of energy to varying degrees. As more and more of the 
needs to be compensated are recognized, the identification of a 
``fair'' allocations rule will become exceedingly complex.
    More importantly, once it is recognized that needs for compensation 
include all individual energy consumers, and not just companies, policy 
makers will have to realize that it is not possible to offset losses 
for everyone through allocations of allowances. The total cost of a 
cap-and-trade system will always exceed the total value of the 
allowances in that system:

   This is because companies must pay (1) to reduce emissions 
        down to the level of the cap and also (2) for every ton of 
        emissions that remains after meeting the cap. The value of the 
        allowances equals only the second component of total costs. At 
        most, the government can give that entire value back to the 
        companies by free allocation of 100% of the allowances, but 
        that leaves companies still incurring the first cost component, 
        and without any way to compensate them for that cost--which is 
        the real net cost to society.
   It is true that companies may be able to pass some of these 
        two cost components on to their customers, and so directly-
        regulated companies could be given more compensation than the 
        cost that their shareholders bear if all of the allowances were 
        allocated to them alone. However, this only means that a part 
        of the net cost has been spread to other, non-regulated 
        parties, including consumers. They, in turn, would require 
        their share of the allowance allocation to be compensated for 
        the part of the cost that was passed to them. There is not 
        enough value in the allowances to cover all costs to regulated 
        companies if they cannot pass those costs on, and neither can 
        that value cover all the incurred costs after they are divided 
        up and spread throughout the entire economy.

    Thus, a carbon pricing policy will always impose a real net cost on 
the economy that cannot be eliminated through any allocation formula 
that may be devised. All that an allocation scheme can do is alter the 
companies and individual consumers that end up bearing the burden of 
that cost.
    These challenges in identifying fair allocations are not a result 
of proposing an upstream point of compliance. They would be equally 
difficult under any downstream or hybrid form of implementation. They 
do, however, present more prominent issues when using a cap-and-trade 
approach than under a carbon tax, because the former system does 
require that a specific decision be made for how to distribute the 
allowances. (At the same time, needs for compensation and burden 
sharing would also exist under a carbon tax, and there would also be 
equivalent degrees of ability to achieve such compensation under a 
carbon tax.)
    Administrative costs and bureaucracy for small and distant emission 
reductions. I have estimated that under Senator Bingaman's proposal, 
the price of carbon allowances would rise above the safety valve level 
between 2020 and 2035. EIA puts this somewhat earlier.
    This effectively turns the Bingaman proposal into a carbon tax 
program, but with the much higher costs of an administrative apparatus 
for issuing, enforcing, and trading carbon allowances that doesn't 
actually do anything other than impose a pre-determined price on carbon 
emissions.
    This leads to the question of whether it is desirable to create the 
bureaucracy and administrative burden of a comprehensive national 
emission trading program for the small reductions that are possible 
with a safety valve. The main differences between safety valve 
proposals and simply establishing a federal fuels tax based on carbon 
content are (1) that the safety valve has a greater administrative 
burden, and (2) the safety valve approach allows revenues that would 
otherwise go into the normal budget process to be handed out by an 
executive agency or quasi-government corporation.
    Thus the government cedes the ability to set overall social 
priorities for the use of the funds. Further, it sets the stage for 
automatically spending whatever is collected on climate-related 
technologies, without regard to the need for spending at such a level. 
Because it is not tied to an R&D program with clearly specified goals 
and a plan for meeting those goals, much of the spending is likely to 
result in subsidies on investments that would occur anyway (because 
they are cost-effective under the carbon price) or on investments that 
are not desirable (because they are only feasible at a cost that is 
higher than the safety valve price, which by definition reflects the 
maximum that is deemed reasonable to spend on near-term emissions 
reductions).\5\ The use of an outside entity does not solve the problem 
of creating a good R&D program; but it does mean that Congress loses 
the opportunity to make those R&D spending decisions directly and 
transparently.
---------------------------------------------------------------------------
    \5\ Nuclear power presents a different situation. Although the 
technology is nearly zero-emitting (there are some emissions associated 
with its fuel cycle), available now, and cost-effective under even a 
modest carbon pricing scheme, its deployment is hampered by existing 
policy. Removal of institutional and political barriers to new nuclear 
generation might be the most important way of enabling existing nuclear 
generation technology to provide cost-effective emissions reductions 
within the next two decades.
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4. The Need for R&D Strategy to Be the Leading Edge of Climate Policy
            A. New technology is not encouraged by mandatory limits
    Although M/L has much more substantial (and uncertain) costs than 
the BA cap proposal, both proposals have substantial costs. But despite 
these costs to the economy, neither fixed caps nor safety valve/carbon 
tax policy designs can provide an adequate incentive for the critical 
piece of the solution--which is creation of radically new technologies. 
In my opinion, it would be better now to put resources into developing 
new technologies than in forcing the use of existing technology to 
achieve relatively small and costly emission reductions. Creating an 
effective R&D program will not be cheap, but it ultimately has to 
happen if climate risks are to be reduced. The difficult decisions are 
how much to spend now, and how to design programs to stimulate R&D that 
avoid mistakes of the past.
    The subsidies to current technology embodied in BA and M/L are not 
likely to bring about that change in the fundamental direction of R&D, 
because they are directed at the demonstration and use of current 
technology. These subsidies should be carefully distinguished from 
funding for R&D. Most subsidies would be unnecessary under a carbon-
pricing program, as the market price of carbon due to the cap provides 
the appropriate financial incentives for the optimal use of the control 
methods that would then also benefit from the subsidies. A well-
designed policy to address needs for R&D in entirely new technologies 
is needed, not subsidies to get existing technologies deployed in the 
market place. A very different commitment is needed to create programs 
that will change the direction of basic research toward creation of 
climate friendly, zero carbon technologies. Subsidies for demonstration 
and use of currently available technologies do not create incentives 
for creation of entirely new technologies.
    In BA, the carbon intensity basis for mandatory caps ensures that 
they rise gradually, so that there is little change in emissions for 
the next decade. The safety valve, by design, takes over from the 
mandatory cap when its costs begin to rise. By design, the safety valve 
will not stimulate the desired level of R&D. By attempting to limit 
cost to a level deemed tolerable, it eliminates adequate incentives for 
R&D on new technology.
    Nor will an adequate incentive be provided if the safety valve were 
eliminated, now or in the future. This would provide a trajectory of 
rising allowance prices and tightening limits. But those future policy 
results cannot be a credible incentive for current R&D, as I explain 
next.
            B. Carbon pricing programs cannot provide credible 
                    incentives for technology development
    Whether cap-and-trade or a carbon tax is the policy approach taken, 
these mandatory programs cannot achieve the most important need in a 
climate program, which is to stimulate development of the kinds of 
technologies that alone can make significant mitigation of climate risk 
possible in the long run.
    Emission caps are not only premature and risky for the economy. 
They are not capable of stimulating the kind of technology development 
that is an absolute necessity to achieve any of the objectives of 
climate policy. Putting a stop to the continued growth of greenhouse 
gas concentrations in the atmosphere requires meeting all of today's 
energy needs in a way that produces zero net carbon emissions, and does 
so at acceptable cost. That is not possible with the set of 
technologies that exist today.
    Hoffert et al. argue that ``the most effective way to reduce 
CO2 emissions with economic growth and equity is to develop 
revolutionary changes in the technology of energy production, 
distribution, storage and conversion.''\6\ They go on to identify an 
entire portfolio of technologies, suggesting that the solution will lie 
in achieving advances in more than one of the following categories of 
research:
---------------------------------------------------------------------------
    \6\ M.I. Hoffert et al., ``Advanced Technology Paths to Global 
Climate Stability: Energy for a Greenhouse Planet'' Science, Vol. 298, 
Nov. 1, 2002, p.981.

   wind, solar and biomass
   nuclear fission
   nuclear fusion
   hydrogen fuel cells
   energy efficiency
   carbon sequestration

    Currently available technologies cannot provide sufficient or low 
cost reductions to meet the GHG challenge. Developing that supply will 
require basic science and fundamental breakthroughs in a number of 
disciplines. The magnitude of possible reductions in the next decade or 
two achievable with today's technology is dwarfed by the magnitude of 
reductions that successful innovation would supply through these 
routes.\7\
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    \7\ For example, if all of the existing U.S. natural gas-fired 
combined cycle generating capacity were to suddenly be fully utilized, 
we estimate based on our models of the U.S. power sector that current 
annual U.S. CO2 emissions would be reduced by about 80 
MMTC--about a 4% reduction in total U.S. GHG emissions--and it would 
come at a cost of about $80/tonne C, even if gas prices would not be 
inflated by the sudden surge in natural gas demand.
---------------------------------------------------------------------------
    Emission caps cannot provide adequate incentives. Even combined 
with an allowance trading system that puts a price on emissions, fixed 
caps cannot provide the incentives for the necessary technological 
change to occur. Thus, efforts to address climate change by imposing 
costly caps or taxes in the near-term will fail to provide long-term 
reductions. Additionally, if the R&D externality is being effectively 
addressed, implementation today of a cap or tax that will not become 
stringent until a later date will provide little or no further benefit 
in the form of an ``announcement effect.'' The only role for near-term 
GHG caps or taxes would be to achieve emissions reductions that are 
justifiable immediately because their cost per ton removed is less than 
the present value of the cost of avoided future emission reductions 
that would come from the future technologies, once they become 
available. Any other degree of stringency is unwarranted before R&D is 
successful, and unnecessary to supplement policies that will address 
the fundamental market failures associated with R&D.
    Announcements of high future carbon prices to stimulate R&D are not 
credible, because those carbon prices would not be necessary once 
technologies are developed.\8\ When new technology and new capacity 
investments are the issue, the only policy strategies that matter 
immediately are those that will increase incentives to invest in R&D, 
and direct the R&D toward technologies that will create a much larger 
supply of carbon-free energy alternatives at acceptable costs. 
Therefore, the only attribute of a cap-and-trade program that will 
matter will be the future course of the cap and its implications for 
future allowance prices.
---------------------------------------------------------------------------
    \8\ These points are developed in a more rigorous fashion in W.D. 
Montgomery and Anne E. Smith ``Price, Quantity and Technology 
Strategies for Climate Change Policy.'' To appear in Human-Induced 
Climate Change: An Interdisciplinary Assessment, Cambridge University 
Press, forthcoming 2005.
---------------------------------------------------------------------------
    None of the ``mandatory'' programs under consideration could 
stimulate the kind of R&D in new energy technologies that is required. 
The ``safety valve'' in the NCEP program and Senator Bingaman's 
amendment is designed to provide assurance that the price of emission 
allowances will not reach economically unsustainable levels. But that 
policy design causes the prices to be set at a level far too low to 
provide an adequate incentive for private investors to develop 
radically new technologies.
    To motivate the large R&D investments required, it would be 
necessary for governments to announce policies that will lead to high 
enough implicit taxes on carbon emissions to provide an adequate 
expected return on R&D investment. This tax will necessarily exceed the 
tax needed to induce adoption of the technology once it is developed. 
Once affordable technologies are produced, a relatively low carbon tax 
price will be enough to motivate companies to adopt the new 
technologies. That lower carbon price will not be enough to compensate 
the investors who paid for the R&D, but it will be enough to get it 
utilized.
    Even if laws passed today served to announce a future emissions tax 
high enough to create such an incentive, no future Congress or 
Administration would keep that commitment once the technology was 
developed. As in the case of patents, there is a tradeoff between 
efficiency in resource allocation and providing an incentive for R&D. A 
carbon price above the level necessary to induce adoption of the new 
technology will cause avoidable deadweight losses as all energy supply 
and use decisions are distorted. Reducing implicit carbon taxes to the 
lowest possible level to get the new technology deployed will always be 
beneficial to the economy. Therefore, future governments will face 
irresistible pressure to let the implicit tax on carbon emissions fall 
back to a level just sufficient to get the R&D utilized, taking away 
all the rewards to innovation.
    This leads to a fundamental dynamic inconsistency that makes any 
effort to set emission caps or announce future carbon prices sufficient 
to stimulate R&D not credible. Since private investors can understand 
this is the optimal strategy for government--and indeed would likely be 
skeptical of the political ability of any government to proceed with 
what will look like ``corporate welfare''--they will not be motivated 
to invest in R&D by any announcement of future climate policy.
            C. Design of technology policy
    What this argument demonstrates is that it is not possible to rely 
on caps on future emissions, or on announcements of a safety valve or 
carbon tax, to motivate R&D to develop the new technologies needed for 
long-term reduction of climate risk. This means that there is an 
extraordinarily high priority to designing effective programs to 
stimulate that R&D through incentives provided today. I would urge 
Congress to turn its interest in climate policy toward a subject it 
knows well--how to craft a program that will lead to effective use of 
private and government funds to carry out the R&D needed to provide the 
radically new technologies required to stabilize concentrations of 
greenhouse gases and ultimately, global climate.
            D. Large opportunities for near-term emission reductions 
                    exist in developing countries
    For near-term emission reductions, developing countries offer far 
larger and more cost-effective opportunity for emission reduction that 
mandatory emission limits on U.S. businesses and consumers. There are a 
number of ways in which the U.S. Congress could act to increase 
technology transfer and encourage foreign investment in developing 
countries, and these actions could lead to near-term reductions in 
emission larger than any of the mandatory limits on U.S. emissions 
under considerations.
    The provisions of the McCain/Lieberman and Bingaman Amendment 
proposals dealing with developing countries create no mechanism for 
bringing about changes in those countries. A great deal of the 
difference in greenhouse gas intensity between developing countries and 
industrial countries can be explained by fundamental failures of 
markets and institutions in developing countries. Much more cost-
effective emission reductions are possible in the near-term through 
programs directed at developing countries by focusing on fundamental 
institutional and market reforms to create the property rights and 
investment climate required for private foreign direct investment and 
technology transfer.\9\ These needs are already a focus of the Climate 
Change Title (Title XVI) of the Energy Policy Act of 2005, which passed 
into law after the Bingaman Amendment was released. I believe that 
approach of Title XVI should be followed, and further enhanced if 
necessary. The more general and less focused provisions expressed in 
the Bingaman Amendment proposal are unnecessary additions, and could 
distract from implementing the more focused provisions that already 
exist as law.
---------------------------------------------------------------------------
    \9\ Such policies are discussed at greater length in W. David 
Montgomery & Sugandha D. Tuladhar, ``Impact Of Economic Liberalization 
On GHG Emission Trends In India,'' Climate Policy Center, May, 2005.

    The Chairman. Thank you very much, doctor.
    Mr. Grumet.

  STATEMENT OF JASON S. GRUMET, EXECUTIVE DIRECTOR, NATIONAL 
                  COMMISSION ON ENERGY POLICY

    Mr. Grumet. Thank you, Mr. Chairman. My name is Jason 
Grumet and on behalf of our bipartisan membership of our 
Commission I want to thank you. I want to thank Senator 
Bingaman and the rest of the committee for the attention you 
have given to this issue and our proposal--why do I not start 
again.
    What you missed, Mr. Chairman, was largely me thanking you, 
so I would like to repeat that if I might, which was to thank 
you for the attention that you brought to this topic and our 
proposal and also for having not only the hearing on climate 
science, but this follow-up hearing.
    Let me just begin by directly embracing I think the way 
that you laid out the criteria for success, because I think we 
agree fundamentally that the details are very important, that 
this is not easy, that to succeed we must establish a program 
that is going to achieve the greatest reduction at the lowest 
cost. It must be economically efficient, it must be fair, it 
must protect our economic vitality, our economic 
competitiveness. It must also instill the desire for a global 
and truly effective solution.
    These are the criteria, Mr. Chairman, that I think are 
clearly expressed in the sense of the Senate resolution. They 
are also the criteria which explicitly animated the Energy 
Commission's policy approach of trying to combine a modest 
carbon price and augment that with the technology incentives 
that could bring technologies forward in a timeframe that this 
challenge requires.
    Now I want to just talk for a moment about our overall 
architecture and then move to the costs and benefits of our 
proposal. By and large, our goal was to establish a robust 
architecture that could evolve over time as our understanding 
of science progresses, as actions of other countries progress, 
but explicitly to establish a modest initial cost. We achieve 
that by suggesting a mandatory economy-wide system of market-
based regulations. The goal there is to maximize efficiency and 
also to encourage the private sector to innovate, which of 
course we have found is always the ultimate solution to these 
kinds of challenges.
    Equally important, Mr. Chairman, we propose a very gradual 
reduction target and we propose a cost certain, cost cap, to 
protect our economy against uncertainties that I think we all 
fear.
    Finally, we believe that a modest carbon price, of course, 
is not in and of itself going to be adequate to bring forth 
these technologies and we explicitly propose to augment this 
modest market-based system with a continued active effort on 
the part of government to advance these technologies.
    Finally, we propose that our policy be explicitly linked to 
the actions of our key trade partners, China, India, and 
developing countries.
    Now let me turn, as this is an economically focused 
hearing, to the costs and benefits. I would suggest to you that 
there is actually surprising agreement on the costs of our 
proposal. Dr. Smith and Dr. Montgomery of Charles River 
Associates provided the economic modeling that we used in our 
report to express our sense of the projected costs and benefits 
and caused us to conclude that we thought the benefits were 
quite modest. Dr. Gruenspecht and the good people at EIA have 
done a follow-up analysis which in many ways has eclipsed our 
own.
    Just let me try to put this in perspective, because the 
economy is a very big place, so very small effects taken out of 
context can be somewhat misleading. The EIA suggests that due 
to the imposition of our mandatory economy-wide carbon program 
gross domestic product in the United States between 2005 and 
2025 will grow by 80.6 percent as opposed to 80.8 percent. If I 
can pull my favorite quote out of the report--and Dr. 
Gruenspecht, they are practiced in not using adjectives, but I 
found this quote helpful. It says: ``The overall growth rate of 
the economy between 2003 and 2025 in terms of both real and 
potential GDP is not materially affected by the commission 
proposal.''
    Put another way, Mr. Chairman, our Nation will be as 
wealthy on January 15, 2025, as we would otherwise be on 
January 1, 2025, as a result of the costs of this program.
    Now, the numbers I agree are less, I think, instructive 
than the overall frame, and simply I would suggest that the 
dire suggestions of economic impacts that have framed our Kyoto 
debate simply do not obtain here. Coal is not driven from the 
economy. Coal use in fact continues to increase, as Dr. 
Gruenspecht said, part of the reason why the United Mine 
Workers have endorsed this proposal. Natural gas demand does 
not skyrocket. In fact, as Dr. Gruenspecht indicated, it 
ultimately goes down, and if you focus just on the carbon 
program it increases by no more than 1 percent. The economic 
dislocations that we have all feared simply do not appear.
    I think a lot of that comes to bear on the cost certainty 
our program provides. It has gotten us out of this ``my modeler 
is smarter than your modeler'' debate that causes this dramatic 
gap in people's different projections.
    But now let me turn a little bit to benefits, because, 
while the costs have clarified, I think there is a growing 
disagreement among experts about the benefits and the logic of 
combining the market program with an incentive program. 
Predictably, the environmental community has concluded that our 
$7 a ton initial carbon price is not enough and business and 
trade associations have suggested that it is too much. I credit 
Dr. Smith with the I think creative argument, if I understand 
it, that it is at once not enough and too much, which I think 
raises the complexity of the debate quite a bit.
    But our Commission by and large avoids extremes and I 
think, like democracy itself, it is best useful to compare this 
combined approach in the comparison to alternatives. Our 
alternatives are quite simple. We can either put the entire 
burden on the private sector--a market signal is a good thing, 
but I think most agree that Kyoto was too much of a good thing. 
By placing the entire burden on the private sector, we have 
unacceptable costs, unacceptable dislocations, and we fail to 
address the long-term market failures that Dr. Smith addressed 
through R&D.
    But conversely, placing the entire burden on the public 
sector, which I think is a fair description of the status quo, 
where we raise tax revenues for big government programs to 
choose the right technologies, is simply not the way we have 
learned to solve problems in this country. It provides no 
incentive for private sector innovation, no incentive to deploy 
technologies. Even if the taxpayers support the full cost of 
deployment, if the costs of venting a ton of carbon to the 
atmosphere there is simply no incentive to bring these 
technologies forward.
    Finally, I think I am personally leery of Apollo metaphors 
that suggest big government spending, absent any particular 
strategy to suggest how much money, how it will be spent, 
ultimately who is going to raise that money. Fundamentally, it 
is the marketplace and not any of us, no matter how well 
intentioned or expert, that must ultimately decide how to move 
these technologies forward.
    So in closing, let me just contrast I think the extremes 
with the benefits of a balanced system. The combination of a 
modest cost price on carbon and a technology program provides 
real near-term reductions. Our proposal is anticipated to 
reduce the growth in annual greenhouse gas emissions by two-
thirds over the next decade, allowing us then to move into 
ultimately a cap and a reduction.
    Early market signals avoid locking in bad investments and, 
contrary to Dr. Smith's expectations, it was the CEO's on our 
commission, the people who actually make billion dollar long-
term investments, who were strongest of the view that a modest 
market signal now would have dramatic long-term impacts on 
their ideas and challenges.
    It is an equitable approach, Mr. Chairman, because it 
shares the burdens. Someone is going to have to pay for this 
technology and it shares the burdens between the public sector 
and shareholders.
    Mr. Chairman, while I think our Commission was a bid 
prudish in our interest in not exceeding or spending money that 
we do not have, it provides an opportunity to actually generate 
revenue so that you can move these technologies forward in a 
revenue-neutral way.
    Finally, Mr. Chairman, it allows us to establish our 
international leadership. We all agree that we cannot solve 
this problem absent commensurate and real efforts by China and 
India. We need to establish our opportunity to work with those 
countries more aggressively than we can right now. It is clear 
that we cannot in the United States solve this problem absent 
participation by those other countries. I think it is equally 
true that the rest of the world cannot solve this problem 
absent the leadership of the United States.
    Thank you for this opportunity and we offer whatever our 
Commission can do as you address these difficult issues in the 
time ahead.
    [The prepared statement of Mr. Grumet follows:]

      Prepared Statement of Jason S. Grumet, Executive Director, 
                  National Commission on Energy Policy

    Good morning, Chairman Domenici and Members of the Committee, and 
thank you for holding this hearing to explore the benefits and economic 
impacts of approaches to reduce greenhouse gas emissions. I speak to 
you today on behalf of the National Commission on Energy Policy, a 
diverse and bi-partisan group of energy experts that first came 
together in 2002 and last December issued a comprehensive set of 
consensus recommendations for future U.S. energy policy.
    I would like to begin by commending Chairman Domenici and Senator 
Bingaman and many others on this Committee for their leadership in 
winning Senate adoption of a landmark resolution recognizing the 
importance of the climate problem and, for the first time, putting this 
body on record in support of the need for mandatory efforts to reduce 
greenhouse gas emissions. I believe that in years to come, passage of 
this resolution will come to be seen as a pivotal moment in the 
evolution of our collective response to the risks posed by climate 
change.
    The resolution marks a turning point, but it also represents a 
logical next step for the Senate on this issue. When the Senate last 
expressed its views on climate change--in the Byrd-Hagel resolution of 
1997--it set out two basic criteria for future U.S. climate policy that 
continue to serve as critical guideposts for our discussions today. The 
first criterion is that any efforts to combat climate change must not 
compromise the vitality or competitiveness of the U.S. economy. The 
second criterion is that all nations, and particularly developing 
nations with rapidly growing emissions, must also act to address this 
problem. As we heard from the panel of distinguished scientists who 
testified before this Committee in July, the scientific consensus about 
climate change has steadily strengthened over the last decade. While a 
majority of Senators have now agreed that it is time to act, Senators 
on this Committee have clearly expressed a shared view that the 
solution to this global problem will not come easily. It was also 
widely and correctly noted at the previous hearing that mitigating the 
risks from global warming will require the deployment of an array of 
clean energy technologies, many of which have not been commercialized 
or even invented. The challenge before us is to determine the most 
effective and efficient means of developing and deploying these new 
technologies while satisfying the criteria articulated in both the 
Byrd-Hagel and the more recent Bingaman-Domenici resolutions.
    Our group, the National Commission on Energy Policy, has developed 
an approach that we believe can reduce domestic emissions, spur 
technology development and meet the twin tests of economic 
responsibility and international equity.
    But before outlining key elements of that approach, let me say a 
few additional words about the Commission itself. The Commission was 
formed in 2002 by the Hewlett Foundation and several other private, 
philanthropic foundations. Its ideologically and professionally diverse 
16-member board included recognized energy experts from business, 
government, academia, and the non-profit sector. Our final 
recommendations, which are described in a report that was released on 
December 8, 2004, were informed by intense discussions over several 
years, by dozens of analyses contained in a 2,800 page Technical 
Appendix, and by extensive outreach to over 200 other groups. Those 
recommendations, I should stress, deal with a comprehensive set of 
energy policy issues including (in addition to climate change) our 
nation's dependence on oil and the need for increased investment in new 
energy technologies and critical energy infrastructure.
    As a group, however, we recognized from the outset that climate 
change presented one of the central energy challenges of our time and 
so we devoted considerable energy to developing a detailed set of 
recommendations for addressing this issue. I would like to begin my 
remarks by summarizing the Commission's view that volunteerism and tax-
payer supported incentives alone do not provide an effective or 
economically efficient response to this challenge. After explaining our 
support for mandatory market-based limits to slow, stop and ultimately 
reverse the growth of greenhouse gas emissions, I will focus on the 
attributes of a mandatory program that are needed to protect our 
economy.
    The Imperative of Mandatory Action--Our Commission strongly 
supports the need for continued government efforts to accelerate the 
development and early deployment of low and non-carbon energy sources. 
We applaud the Administration's efforts in this regard. However, in a 
competitive market-economy, where companies are encouraged and in some 
cases obligated to maximize shareholder value, it is contrary to the 
rules of free-market competition to expect companies to invest scarce 
resources absent a profit motive. While there are numerous cases where 
a combination of good will, good public relations, and positive 
ulterior motives (like reduced energy bills), create an adequate basis 
to reduce greenhouse gas emissions, these cases will remain limited if 
the financial value of reducing a ton of GHG emissions remains zero.
    It is somewhat ironic that the European Union is actively 
implementing market-based regulatory approaches developed here in the 
Unites States while we pursue a top-down program of government-
directed, tax-payer funded research and deployment incentives. 
Developing and commercializing new technologies will cost money. The 
question is who is best positioned to secure and effectively spend 
these resources. While there is certainly a role for public funding and 
government incentives, the Commission believes. that there must also be 
a role for those who emit greenhouse gases to share in the costs of 
developing solutions. As we have learned over the last twenty years, 
given a rational reason to invest, the private sector is far better 
than the government in developing technological solutions. The success 
of the acid rain program demonstrates that the most effective way to 
engage the ingenuity of the private sector is to place a monetary value 
on a ton of reduced emissions thus creating a real economic incentive 
to develop cleaner forms of energy. By imposing a modest market signal 
to pull private sector technology investment forward in combination 
with continued tax-payer supported investment to push longer-term 
solutions, the Commission believes we can significantly reduce GHG 
emissions without hampering economic growth or prosperity.
    Many in the environmental community and some industry analysts have 
argued that the modest-market signal proposed by the Commission is 
inadequate, in and of itself, to spur the technology innovation needed 
to solve the climate problem. The Commission wholeheartedly agrees. 
While modeling performed by Charles Rivers Associates under contract to 
the Commission and by the Energy Information Administration 
demonstrates that a modest carbon price will inspire considerable near-
term reductions, both analyses conclude that.proposed market-signal is 
unlikely by itself to make technologies such as carbon sequestration, a 
massive deployment of renewable energy generation, or advanced nuclear 
facilities cost-competitive over the next two decades. This conclusion 
is precisely why the Commission believes that an effective response to 
climate change requires both a market signal and significant technology 
incentives.
    This basis of this conclusion is best revealed by examining the 
alternatives. While providing a strong incentive for technology 
development, imposing a much higher carbon price on corporations and 
share-holders would be economically disruptive and politically 
unacceptable. This approach would strand billions of dollars of 
existing, long-lived capital stock and cause potentially significant 
economic dislocations while new technologies were developed and 
deployed. It also fails to address widely accepted market failures that 
discourage the investment of private capital in the development of 
long-term technologies with uncertain market value. Conversely, the 
placing the entire burden on the public sector is equally unacceptable. 
By discouraging private investment and innovation, this approach will 
ultimately prove ineffective, too costly to the Treasury or both. 
Moreover, absent a market signal, there will be little or no incentive 
to deploy low carbon technologies even if the tax payer covers the full 
cost of their development. In sum, relying entirely upon the private or 
public sectors to advance our national interest in technology 
advancement, offers a policy prescription that is akin to pushing one-
end of a rope.
    The elegance of combining a both market signals and public 
incentives is further supported by the opportunity to auction a small 
fraction of the emission permits in order support technology innovation 
without burdening the general tax base. The Commission proposed to 
double U.S. energy R&D, triple international energy R&D partnerships, 
and provide significant incentives to accelerate the deployment of coal 
gasification and sequestration, bio-fuels, renewable generation, 
domestically produced efficient vehicles and advanced nuclear 
facilities using the $35 billion in revenue generated by auctioning up 
to 10% of the emission permits over a decade.
    Overview of Commission Proposal--In addition to advocating for the 
combination of a market-based price signal and technology incentives, 
the Commission's proposal is explicitly designed to ensure that the 
proposed market-based emission reduction requirements do not undermine 
economic growth or competitiveness. Specifically, the Commission 
recommends that the United States adopt a mandatory, economy-wide, 
tradable-permits system for reducing greenhouse gas emissions, with a 
safety valve designed to limit costs. This approach is similar to the 
successful acid rain program in the United States, but differs in one 
very critical respect. Rather than proposing a hard cap on emissions, 
we have proposed an absolute cap program costs.
    The aim of the Commission's proposal is to slow growth in U.S. 
emissions over the 2010-2020 timeframe as a prelude to stopping and 
eventually reversing current emissions trends in the 2020s and beyond. 
We also explicitly designed our approach to recognize the importance of 
participation by major trading partners like China and India. Our 
program includes a regular 5-year review of progress which is intended 
to assess both the performance of the U.S. program and progress by 
other countries. If major U.S. trading partners and competitors 
(including China, India, Mexico, and Brazil) fail to implement 
comparable emission control programs, further U.S. efforts--including 
the gradual increase in stringency built into our program--could be 
suspended or adjusted. Conversely, the U.S. program could be 
strengthened if international progress, technology advances, or 
scientific developments warrant.
    International participation and other issues will be the subject of 
future hearings, so I want to return now to the main focus of this 
panel: economic impacts.
    Two key policy choices: 1) a modest reduction target; 2) the cost-
cap or ``safety-valve'' enable the Commission to propose a mandatory, 
economy-wide GHG reduction program that according to EIA does not 
``materially affect,'' the U.S. economy. I will describe each of these 
design features in turn.
    Modest Reduction Target--The Commission believes that if we begin 
now, there is time to gradually phase-in GHG reductions across the 
economy. Like the Administration, we believe that reducing the GHG 
intensity of the economy is an effective means of slowing, stopping and 
ultimately reducing U.S. GHG emissions. Over the first decade of the 
program, we propose to set an economy-wide emission limit based upon a 
2.4% decrease in GHG emission intensity. If achieved, this target would 
slow annual emissions growth by roughly \2/3\ from business as usual 
allowing actual emissions to increase by 0.5% per year instead of by 
the currently projected 1.5% annual increase in total emissions. Absent 
Congressional intervention to adjust the target, the intensity decline 
would increase to 2.8% after a decade effectively stopping emissions 
growth. Many have argued that this reduction pathway is too slow and 
criticize the Commission plan for explicitly allowing emissions to 
increase for a decade after implementation. We acknowledge this 
critique, but believe that a modest and low-cost reduction pathway is 
critical to achieving the near-term consensus needed for timely action. 
The Commission believes that it is critical for the United States to 
move forward now to implement a robust regulatory architecture that can 
adjust over time as our understanding of climate impacts and the costs 
of solutions matures.
    Cost-Certainty (the ``Safety-Valve'')--Under a traditional cap and 
trade program the reduction target is fixed in statute or regulation 
while the costs are ``best guesses'' of what will be necessary to 
achieve the fixed targets. While our experience in the acid rain 
program suggests that projected costs are more likely to be exaggerated 
than understated, there remains a real possibility that costs for 
meeting any target will be higher than expected or desired. Under the 
safety-valve, regulated entities are allowed to buy additional permits 
from the government at a pre-determined price. This feature of the 
Commission's proposal ensures that program compliance costs will not 
exceed estimates. If technology fails to progress at the projected 
rate, the program will reduce less emissions than desired but 
compliance costs will not increase.
    EIA's analysis and the work of Charles River and others reveal that 
expectations of technological progress are by far the most significant 
assumptions affecting the costs of achieving a particular emissions 
target Under EIA's base-case average technology assumptions achieving 
the Commissions modest 2.4% annual intensity reduction will begin to 
cost more than the safety-valve price beginning in 2015 causing firms 
to avail themselves of safety-valve permits. However, when EIA projects 
costs using more optimistic assumptions about technology progress that 
seek to capture the Commission's ``recycling'' of auction revenue back 
into technology incentives, the target is met throughout the first 
decade with the safety-valve never being triggered at all. Under the 
more optimistic technology assumptions, a $7/ton incentive results in 
nearly double the reductions, but the overall cost of the program is 
the same.
    The Commission's decision to place a priority on cost-certainty 
over emissions certainty reflects our appreciation of strongly held and 
fundamentally irresolvable disagreements about technological progress 
and the ultimate costs of emission reductions. Rather than spending 
several more years paralyzed by differing climate change modeling 
assumptions, the safety-valve allows us to begin, albeit cautiously, to 
reduce U.S. greenhouse gas emissions while protecting our economy, 
affording time for key industries to adjust and maintaining America's 
global competitiveness.
    The safety valve also gives businesses the planning certainty they 
need to make wise long-run investments that will minimize the costs of 
achieving greenhouse gas emissions reductions over time. We chose an 
initial safety valve level of $7 per metric ton of carbon dioxide 
equivalent because analyses suggest that it roughly reflects the mid-
point in the scientific literature of the expected harm that can 
presently be attributed to a ton of GHG emissions given current 
scientific understanding. Equally if not more important, the $7 figure 
is low enough to ensure that valuable, long-lived energy assets won't 
be prematurely retired, yet also high enough to send a meaningful 
market signal for future investment in clean, low-carbon energy 
alternatives. In our proposal, the safety valve price increases 
gradually over time, at a nominal rate of 5 percent per year, to 
generate a steadily stronger market signal for reducing emissions.
    Overall Economic Impacts--To assure ourselves that we had 
successfully addressed potential economic concerns, we subjected our 
proposal to detailed economic analysis. The analysis indicated that the 
impacts of the program on businesses and households would be modest. 
Our own modeling results were subsequently supported by an independent 
analysis of our proposal by the Department of Energy's Energy 
Information Administration (EIA).
    EIA's analysis indicates that the impacts of the program on 
businesses and households are likely to be modest. Projected annual GDP 
growth would decline by less than .02% against a baseline average 
growth or 3.1%. This impact equate to an average annual cost of $78 per 
household between program inception and 2025. Assessed cumulatively 
between 2005 and 2025, overall, predicted GDP growth would change from 
80.8 percent to 80.6 percent, or a difference of 0.2 percent. In the 
EIA's own words: ``the overall growth rate of the economy between 2003 
and 2025, in terms of both real GDP and potential GDP, is not 
materially altered.'' Put another way, the nation would be as wealthy 
on January 15, 2025 with the program in place, as it would have been on 
January 1, 2025 under business as usual. At the relatively minor cost 
of slowing economic growth by two weeks twenty years hence, we can make 
a significant start to address global climate change.
    Because the models predict that a large share of reductions in the 
early years of the program would come from industrial greenhouse gases 
such as HFCs, PFCs, and SF6, total energy consumption would be expected 
to decline by only 1 percent below forecast levels for 2020, while 
still growing 14 percent in absolute terms over the first decade of 
program implementation (i.e., 2010-2020). Also noteworthy, natural gas 
demand is barely affected by the Commission's climate proposal 
increasing by less than 1% over business as usual. When additional 
proposals to increase energy efficiency and support coal gasification 
are modeled, total natural gas demand actually declines against 
business as usual projections. Finally, while coal use grows more 
slowly than under BAU, significant growth in coal is projected by both 
the Commission and EIA's analysis even when excluding new markets that 
will be created by IGCC.
    Of course, a very small fraction of a very large economy can still 
look like a lot of money if taken out of context. You will undoubtedly 
hear from critics that our proposal will cost $313 billion in lost GDP 
between 2005 and 2025. What the critics are less likely to mention is 
that this is just a tiny fraction of the $323 trillion of cumulative 
growth in GDP the economy is expected to generate over the same time 
period. Similarly, those who oppose any action on climate change are 
likely to point to EIA's estimate of 140,000 lost jobs by 2020 as a 
result of the tradable permits program. Again, this number needs to be 
viewed in context. EIA's estimate of job losses comes to just 0.4 
percent of the 36 million new jobs that the economy is expected to 
create between 2005 and 2025.
    At Chairman Inhofe's request, EIA also recently examined the 
impacts of the program assuming higher natural gas prices and higher 
costs for reducing emissions of non-CO2 greenhouse gas 
emissions. EIA found that the costs of the Commission's proposal would 
actually be less if natural gas prices turned out to be higher than 
projected. Higher natural gas prices under business-as-usual 
assumptions would tend to lower total demand for energy, thus making it 
somewhat easier to meet the Commission's proposed emission target. 
While more pessimistic assumptions regarding the costs of controlling 
non-CO2 greenhouse gas emissions would result in lower total 
reductions of greenhouse gas emissions, they would not materially 
affect program costs. This recent analysis makes clear the value of the 
safety-valve both as a substantive protection in case 2005 economic 
assumptions are not borne out over time and as a political device to 
set aside some of the more contentious and unknowable ``what if'' 
arguments that have undermined our ability to forge a consensus for 
mandatory actions to reduce GHG emissions.
    The trade-off for low cost is a program that also achieves 
relatively modest emission reduction benefits, at least in its early 
stages. We believe that a flexible, gradual, market-based approach that 
provides cost certainty is appropriate at a time when uncertainties 
remain about the pace of actual warming and about the speed with which 
we can develop and commercialize lower-carbon alternatives. While this 
program will necessarily need to evolve as other nations join in the 
reduction effort and as our understanding of the climate induced 
impacts continues to improve. We believe that it is the right approach 
to get us started.
    In fact, the importance of getting started is exactly what I hope 
you will not lose sight of as the inevitable debate about numbers and 
dollars and tons and jobs unfolds in the months to come. A war of 
numbers too easily leads to paralysis. And right now it matters less 
which numbers you choose than that you recognize the essential 
principle at the core of our proposal: Strictly voluntary, seemingly 
costless approaches will not enable the marketplace to attach a known 
value to carbon reductions. Only when reductions have real value--
however small--can companies justify long-term investments in new, low-
carbon energy alternatives and only then will we unleash the ingenuity 
and innovation of the private sector in addressing the climate change 
problem and in developing the clean technologies that will be in global 
demand for decades to come.
    Finally, the Commission firmly recognizes that climate change is a 
global problem requiring an effective and equitable global solution. 
The United States can not meaningfully mitigate the risks of climate 
change absent commensurate efforts by the rest of the world. Similarly, 
the rest of the world can not solve the climate problem absent 
leadership from the United States. The Commission believes that 
undertaking mandatory domestic reduction efforts here at home is a 
condition precedent to achieving a truly global solution. This 
recognition that actions in the developing world will inevitably follow 
those of the United States provides further impetus to take action now 
so that we can work more effectively to encourage similar actions 
overseas.
    Thank you for this opportunity to testify. I speak on behalf of the 
entire Commission in offering whatever further support and information 
we can provide to assist your deliberations in the months to come.
 summary of key features of the national commission on energy policy's 
             proposal for reducing greenhouse gas emissions

   Mandatory, economy-wide, tradable permits system would go 
        into effect in 2010. This would allow U.S. companies adequate 
        lead time to plan and make needed adjustments or investments. 
        The program would cover carbon dioxide (CO2) and 
        other major greenhouse gases (including methane, nitrous oxide, 
        hydrofluoro- carbons, perfluorocarbons, and sulfur 
        hexafluoride).
   Environmental target based on annual reductions in emissions 
        intensity, where intensity is measured in tons of 
        CO2-equivalent emissions per dollar of GDP. Between 
        2010 and 2019 the Commission recommends a target emissions 
        intensity decline of 2.4 percent per year. Based on current GDP 
        forecasts, achieving this target would reduce projected 
        emissions growth from a business-as-usual rate of 1.5 percent 
        per year to 0.5 percent per year. Starting in 2020 and subject 
        to the Congressional review described below, the Commission 
        proposes raising the target intensity decline to 2.8 percent 
        per year (the ``stop phase'' in the figure).
   Cost cap is achieved by making additional permits (beyond 
        the quantity of permits established through the target 
        intensity decline described above) available for purchase from 
        the government at a pre-determined price. The Commission 
        proposes an initial cost cap or ``safety valve'' permit price 
        of $7 per metric ton of CO2-equivalent. This price 
        would increase by 5 percent per year in nominal terms.
   Permit allocation for a given year would be calculated well 
        in advance based on available GDP forecasts. For the first 
        three years of program implementation, the Commission 
        recommends that 95 percent of initial permits be issued at no 
        cost to emitting sources. The remaining 5 percent would be 
        auctioned. Starting in 2013 and every year thereafter, an 
        additional 0.5 percent of the target allocation would be 
        auctioned, up to a limit of 10 percent of the total permit 
        pool.
   Congressional review in 2015 and every five years thereafter 
        to assess the U.S. program and evaluate progress by other 
        countries. If major U.S. trading partners and competitors 
        (including China, India, Mexico, and Brazil) fail to implement 
        comparable emission control programs further U.S. efforts 
        (including continued escalation of the safety valve price and 
        permit auction, as well as more aggressive intensity reduction 
        target in 2020) could be suspended. Conversely, the U.S. 
        program could be strengthened if international progress, 
        technology advances, or scientific developments warrant.

    The Chairman. Thank you.
    Dr. Morgenstern.

   STATEMENT OF RICHARD D. MORGENSTERN, PH.D., ECONOMIST AND 
            SENIOR FELLOW, RESOURCES FOR THE FUTURE

    Dr. Morgenstern. Thank you, Mr. Chairman. Mr. Chairman, 
Senator Bingaman, members of the committee, I appreciate the 
opportunity to appear here today. I am an economist and senior 
fellow at Resources for the Future, a 53-year-old nonpartisan 
think tank based here in Washington. The views I present are 
strictly my own.
    I begin by observing what many press reports have failed to 
note, that proposals such as those advanced by the NCEP differ 
dramatically from the Kyoto Protocol. Whereas Kyoto sought 
significant near-term reductions, NCEP is designed not to avert 
climate change over the next 20 years. Rather, its principal 
aim is to develop and deploy new technologies to address the 
problem in the decades ahead.
    Recent EIA analyses, which we have already heard from Dr. 
Gruenspecht on, clarify the differences. I have a table in my 
testimony that demonstrates this clearly, but looking at 
several analyses conducted by EIA over the past several years, 
the differences are striking between NCEP and Kyoto. What you 
find is that the reductions are only about one-fifth as much as 
those proposed under Kyoto in NCEP, allowance prices in 2020 
are about eight dollars a ton of CO2, and although 
there is a small decline compared to the forecast level, coal 
use actually increases 14 percent over the current levels. The 
overall economic impacts measured in terms of potential GDP are 
about one-eighteenth as much as the Kyoto Protocol.
    The NCEP approach relies on market-based policies, in this 
case a cap-and-trade mechanism, with a safety valve or price 
cap, combined with a set of direct subsidies to new 
technologies. The revenues are derived from a sale of a small 
portion of the allowances. Thus the NCEP proposal is revenue 
neutral.
    Market-based mechanisms of this sort have two distinct 
effects. On the one hand, they create incentives to reduce 
emissions in the near term, thus mitigating environmental 
damages associated with those emissions. Second, they alter 
incentives for the private sector to develop and adopt new 
technologies. In fact, few would disagree that it is the 
private sector, not the Government, which has driven innovation 
and growth in our society. According to the National Science 
Foundation, for example, industry funded about two-thirds of 
the research and development in this country in 2003.
    While anecdotal evidence on the private sector contribution 
is extensive, I would call your attention to a recently 
published scholarly paper by David Popp. It documents that 
following the passage of the Clean Air Act in 1990, which for 
the first time put an incentive on the development of 
technologies which would reduce emissions beyond the targeted 
level, that the level of patent activity for these particular 
types of innovations which increased the effectiveness, the 
environmental effectiveness of these technologies, increased. 
Heretofore the emphasis in new patents had been focused 
principally on only cost-reducing technologies, but it was this 
emphasis on environmentally friendly reductions which was 
induced as a result of the Clean Air Act.
    At the same time, there is an important role for government 
clearly in encouraging the development of new technologies, 
based largely on the spillovers and externalities associated 
with innovations. The existence of these spillovers reduces the 
private incentives to pursue innovation as others will mimic 
these initial innovations without compensating or fully 
compensating the inventors. Patents offer some protection, but 
that is limited. Learning by doing creates additional benefits 
for society from the early adoption and diffusion of these 
technologies.
    While the rationale for government support of research and 
development and demonstration is quite strong, such programs 
cannot do the job completely by themselves. For example, 
government-funded technology programs may succeed in bringing 
down the cost of promising technologies, like IGCC, so that 
they will eventually overtake conventional pulverized coal 
technologies.
    That said, how can technology programs ever make capture 
and sequestration cheap enough so that firms will voluntarily 
undertake such efforts? To accomplish sequestration, some form 
of mandatory government policy is going to be required. The 
real choice is between a command and control approach and a 
market-based approach. NCEP has wisely chosen a market-based 
approach to encourage this near-term mitigation.
    Now, those who oppose a mandatory program fail to recognize 
several points. First, the signal that it sends to firms and 
households, especially in their investment decisions for long-
lived equipment, like power plants, homes, and many appliances. 
Second, the value of cheap near-term reductions in buying time 
for further R&D on these new technologies. Third, the 
opportunity to encourage a broad set of technologies, not just 
the winners picked by the Government program.
    Virtually all economists recognize the rationale for some 
form of mandatory program. Arguably, there is a disagreement 
about the extent of the disincentive for carbon emissions that 
should be imposed in the near term. The NCEP recommendation of 
$7 a ton of CO2 is quite consistent with the 
estimates found in the economics literature on this point.
    Let me now turn to a further discussion of the safety 
valve. As has been noted by others, it is in effect a type of 
insurance designed to protect the economy against unexpected 
price increases caused by weather, stronger than predicted 
economic growth, technology failures, or other factors. Despite 
the success of the cap-and-trade approach without the safety 
valve in the acid rain program, problems have arisen in some 
other arenas.
    For example, during the California energy crisis the price 
of NOX permits rose to about $80,000 per ton. More 
recently, in the early phase of the European Union trading 
system prices have moved around fairly dramatically. Canada, 
our neighbor to the north, has included a safety valve in its 
recent proposals on climate change.
    Now, differences among forecasters have plagued previous 
policy proposals. Back in 1997, the Council of Economic 
Advisers forecast prices below the equivalent of $8 per ton of 
CO2, compared to EIA's estimate of $43 per ton of 
CO2. With a safety valve, emissions estimates may 
vary, but costs cannot rise above the established price.
    Some in opposing the safety valve try to label it as a 
disguised tax. In this regard I would make two points. First, 
if the price cap is not reached then it is strictly a cap-and-
trade mechanism, just like the acid rain program. However, even 
if the price cap is reached, only a very small portion of the 
revenues flow to the government, in this case to fund the R&D. 
The bulk of the revenues flow directly back to the private 
sector. Since a tax is principally defined in terms of the 
revenues it generates and since only a small portion of the 
revenues ever end up in the hands of government, it clearly is 
inaccurate in my judgment to describe it as a tax.
    In conclusion, Mr. Chairman, we have come a long way since 
the early discussions on the Kyoto Protocol. We are no longer 
talking about steep emissions reductions with concurrent risks 
to the economy. Rather, the debate has now shifted to the 
appropriate mechanism for motivating both the public and 
private sectors to pursue technology innovation over the long 
term and capturing the low-hanging fruit of cheap emissions 
reductions in the short run, all the while protecting us from 
unwarranted economic impacts.
    That completes my initial remarks and I would be pleased to 
answer any questions. Thank you.
    [The prepared statement of Dr. Morgenstern follows:]

  Prepared Statement of Richard D. Morgenstern, Ph.D., Economist and 
                Senior Fellow, Resources for the Future

    Mr. Chairman, I am pleased to appear before this committee to 
comment on the recently adopted Senate resolution calling for a ``. . . 
national program of mandatory market-based limits and incentives on 
greenhouse gases that (1) will not significantly harm the United States 
economy; and (2) will encourage comparable action by other nations that 
are major trading partners and key contributors to global emissions.''
    To set the context, I will briefly discuss a number of policy 
developments since the late 1990s when the Kyoto Protocol was being 
negotiated. Then, I will turn to some design issues relevant to the 
implementation of the new Senate Resolution, including the mechanisms 
that will encourage the development and adoption of new technologies, 
and the use of a safety valve or price cap as an integral part of a 
cap-and-trade system. Finally, I will comment on possible means of 
encouraging comparable mitigation actions by other large emitters.
    I speak as an economist who has been involved with the issue of 
climate change for almost two decades. Previously a tenured college 
professor, I have also had the privilege of serving in senior policy 
positions under prior Republican and Democratic administrations. 
Currently, I am a senior fellow at Resources for the Future (RFF), a 
53-year-old research institution, headquartered here in Washington, 
D.C., that specializes in energy, environmental, and natural resource 
issues. RFF is both independent and nonpartisan, and shares the results 
of its economic and policy analyses with members of both parties, as 
well as with environmental and business advocates, academics, members 
of the press, and interested citizens. RFF encourages scholars to 
express their individual opinions, which may differ from those of other 
RFF scholars, officers, and directors. I emphasize that the views I 
present today are mine alone.
    Let me begin by observing what many recent press reports have 
failed to note: recent policy proposals, such as those advanced by the 
National Commission on Energy Policy (NCEP), differ dramatically from 
the Kyoto Protocol. While the details of Kyoto are well known to 
members of this committee, the NCEP proposal is novel in a number of 
respects, as it combines federal support for innovative technologies 
with a program to reduce greenhouse gas emissions that involves a cap 
on costs. Overall, the NCEP program would have a minimal impact on the 
U.S. economy and is revenue neutral with respect to the federal budget. 
Whereas the Kyoto Protocol involves fairly steep short-term reductions 
and, correspondingly, potentially high costs, the NCEP proposal calls 
for relatively modest initial emissions reductions which are, in fact, 
quite similar to the voluntary intensity reductions proposed by the 
Bush administration. Because of the more modest start, combined with 
the safety valve, the costs of the NCEP proposal are much lower.
    To see this point more clearly, consider the results of three 
separate analyses by the independent Energy Information Administration 
(ETA) of the costs of alternative climate proposals conducted over the 
past several years. Relying on its standard National Energy Modeling 
System, ETA compared the effects of implementing the Kyoto Protocol, 
The Climate Stewardship Act introduced by Senators McCain and Lieberman 
(S. 139), and the NCEP proposal. Although the EIA studies were 
conducted in different years, and involve slightly different baselines, 
the results are quite illuminating (see the accompanying table).

  EIA's ANALYSIS OF THE KYOTO PROTOCOL, S. 139,  AND ENERGY COMMISSION
                             PROPOSALS: 2020
------------------------------------------------------------------------
                                                                 Kyoto
                                            NCEP      S. 139     (+9%)
------------------------------------------------------------------------
GHG emissions (% domestic reduction)...       4.5       17.8       23.9
GHG emissions (tons CO2 reduced).......     404       1346       1690
Allowance price ($2003 per ton CO2)....       8         35         43
Coal use (% change from forecast)......      -5.7      -37.4      -72.1
Coal use (% change from 2003)..........      14.5      -23.2      -68.9
Natural gas use (% change from               10.6        4.6       10.3
 forecast).............................
Electricity price (% change from              3.4       19.4       44.6
 forecast).............................
Potential GDP (% loss).................       0.02       0.13       0.36
Real GDP (% loss)......................       0.09       0.22       0.64
------------------------------------------------------------------------
SOURCES.
NCEP: GHG emissions and allowance price is from EIA analysis, Table 118
  (May 2005). All other data is from Table 1, ``AEO 2005 Reference
  Case'' and ``Greenhouse Gas Policy.'' (EIA, April 2005). This is
  available at www.eia.doe.gov/oiaf/servicerpt/bingaman/index.html.
McCain Lieberman (S. 139): From Analysis of Senate Amendment 2028, the
  Climate Stewardship Act of 2003. Emissions data and allowance price is
  from Table B20. GDP is from Table B21. All other data is from Table
  B1. (ETA, May 2004). This is available at www.eia.doe.gov/oiaf/
  servicerpt/ml/pdf/sroiaf (2003)02.pdf.
Kyoto Protocol: Impacts of the Kyoto Protocol on U.S. Energy Markets and
  Economic Activity. Emissions data is from Table B19. Allowance price
  and GDP is from Table ES-2. All other data is from Table B1. (EIA,
  October 1998). This is available at www.eia.doe.gov/oiaf/kyoto/pdf/
  sroiaf9803.pdf.

    For the Kyoto Protocol, EIA forecast greenhouse gas reductions of 
23.9 percent in 2020. Under Kyoto, allowance prices were predicted to 
reach $43 per ton of carbon dioxide, while coal use was expected to 
decline by 68.9 percent below 2003 levels. Real GDP was forecasted to 
decline by 0.36 percent. In analyzing the NCEP proposal, EIA foresaw 
smaller emissions reductions and, most importantly, quite different 
economic impacts. Allowance prices were effectively capped at $7 per 
ton of carbon dioxide; coal use was forecast to increase by 14.5 
percent above 2003 levels by 2020, and real GDP losses were 
considerably smaller (0.09 percent). EIA noted that this policy would 
not ``materially'' affect average economic growth rates for the 2003 to 
2025 period (p. xi). For McCain Lieberman, EIA forecast impacts that 
would fall between Kyoto and NCEP, although they were considerably 
closer to Kyoto in terms of both emissions reductions and costs.
    The principal reason that NCEP's approach is so much less costly 
than Kyoto or S. 139 is that it is not designed to avert climate change 
over the next 20 years. Rather, the focus is on developing and 
deploying technologies needed to address the problem in the decades 
beyond. NCEP does this primarily in two ways: 1) by directly 
subsidizing a wide range of new technologies including coal, nuclear, 
fuel-efficient vehicles, biofuels and others; and 2) by encouraging 
private-sector research and development through incentives for the 
deployment of cost-effective carbon saving technologies of all types. 
NCEP's cap-and-trade system has the added benefit of generating a 
revenue stream to fund the technology subsidies.
    It is widely recognized that major progress on climate change will 
not be possible without new technologies. It is also widely recognized 
that government has an important role to play in spurring the 
development and diffusion of these technologies. Without some kind of 
additional incentives, the private sector typically will under-invest 
in research, development, and demonstration because innovators cannot 
reap the full benefits to society of their advances. The existence of 
these ``spillovers'' reduces private incentive to pursue innovation, as 
others will mimic the innovation without compensating the inventors. 
While patents and similar means are used to protect investments in 
innovation, that protection is limited. A successful innovator 
typically captures substantial rewards, but those gains are sometimes 
only a fraction of the total benefits to society arising from the 
innovation. This rationale underlies government support of research, 
development, and demonstration programs, including the National Science 
Foundation, public universities, and others.
    Environmental and knowledge externalities have long been at the 
center of debates about technology policy. More recently, we have come 
to understand some additional market failures that may operate in the 
adoption and diffusion of new technologies. For a variety of reasons, 
the cost or value of a new technology to one user may depend on how 
many other users have adopted the technology. Generally speaking, users 
will be better off the more others use that same technology, as this 
increases what is known as ``learning by doing'' and ``network'' 
externalities. Typically, it takes time for potential users to learn of 
a new technology, try it, adapt it to their particular circumstances, 
and become convinced of its superiority. Consequently, the early 
adopter of a new technology creates a positive benefit for others by 
generating information about the existence, characteristics, and likely 
success of the new technology.
    The argument for public support is even stronger in the case of 
climate change technologies, where not only do inventors fail to 
capture all the gains from their investments but the gains themselves 
are not fully translated to the firms' bottom line because there is no 
market value associated with emissions reductions. Further, the 
prospect of future value--which is driven by policy outcomes--is 
uncertain.
    Absent government incentives, corporate concern for the environment 
may overcome some hurdles. Working against this kind of ``corporate 
altruism,'' however, is the need to compete in the marketplace. A 
company that puts meaningful effort into reducing greenhouse gas 
emissions, rather than reducing costs, may eventually lose out to one 
that only seeks to reduce costs.
    It is exactly this need to align public and private interests that 
underlies the argument for an emissions trading program, or similar 
mechanism, alongside technology development and demonstration programs. 
While the government seeks technologies to cut carbon emissions, the 
private sector seeks technologies to cut costs. Market-based policies 
that put a value on emissions reductions encourage firms to conserve 
energy, reduce emissions from existing technologies, and adopt new low-
carbon or no-carbon technologies. In contrast, policies that only focus 
on technology adoption fail to take advantage of reductions that could 
come from existing technologies and conservation.
    Market-based policies to reduce emissions have two distinct 
effects: they reduce emissions in the near term and they alter the 
incentives that firms have for developing and adopting new technologies 
for the future. Few would disagree that it is the private sector, not 
the government, which has driven innovation and growth in modern 
economies. Industry, according to data from the National Science 
Foundation, funded 63 percent and performed 68 percent of all research 
and development in 2003 (the latest year for which data is 
available).\1\ Even as the government tries to encourage greenhouse 
gas-reducing technologies, private efforts to improve greenhouse gas-
increasing technologies will likely continue unless firms see some kind 
of value associated with emissions reductions.
---------------------------------------------------------------------------
    \1\ www.nsf.gov/sbe/srs/infbrief/nsf04307/start.htm.
---------------------------------------------------------------------------
    Technology programs alone may succeed in bringing down the cost of 
integrated gasification and combined cycle (IGCC) coal plants so that 
they eventually overtake conventional pulverized coal. That said, how 
can technology programs ever make capture and sequestration cheap 
enough so that firms will voluntarily capture and sequester emissions? 
The real choice is whether capture and sequestration will eventually be 
required under a command-and-control style regulation, or whether a 
market-based system will be used to flexibly encourage adoption of the 
cheapest option. There is growing evidence on the performance of these 
alternative approaches, including a volume I recently co-edited which 
compares the U.S. and European records of both command-and-control and 
market-based mechanisms.\2\ Overall, the analysis finds that market-
based programs are considerably cheaper than command-and-control 
alternatives. For example, the U.S. sulfur dioxide program achieved 
savings of over 40 percent compared to the command-and-control 
alternatives. Additionally, market-based programs have the advantage of 
encouraging innovation in a direction that minimizes costs and reduces 
emissions.
---------------------------------------------------------------------------
    \2\ Harrington, Winston, Richard Morgenstern and Thomas Sterner. 
2004. Choosing Environmental Policy: Comparing Instruments and Outcomes 
in the United States and Europe Washington D.C.: RFF Press
---------------------------------------------------------------------------
    Another point sometimes overlooked is the opportunity for 
relatively inexpensive emissions reductions right now. Emissions 
reductions using more conventional technologies may not provide a 
complete solution to the climate problem, but by delaying the 
accumulation of greenhouse gases in the atmosphere, they provide 
additional time to develop long-term solutions. Even if a major 
technology breakthrough is needed to reach climate stabilization goals, 
there are many small-and medium-sized innovations--the type typically 
associated with learning by doing--that can yield significant benefits. 
Sending a signal about the value of emissions reductions provides the 
right information to the private sector about the importance of 
undertaking those activities.
    Consistent with this logic, the NCEP proposal tries to link the 
technology development and the mitigation sides of the problem into a 
coherent policy framework. By coupling technology incentives with an 
emissions trading program they provide significant incentives--along 
with the necessary funding--to develop new technologies that are 
essential to the long-term success of any effort to reduce greenhouse 
gases.
    As a final point on the link between research and development, and 
mitigation, I will mention one particular line of thought in 
circulation these days that is somewhat at odds with the ideas laid out 
here. Because climate change is such a long-term problem, the thinking 
goes, it is not appropriate to encourage emissions reductions now--the 
policy focus should, instead, be entirely oriented to technology 
development. Although there are many complex issues here, the single 
point I would make is that even this view supports near-term emissions 
reductions as long as the cost is no higher than the expected value of 
future mitigation benefits. While one can debate the true magnitude of 
these benefits, the economics literature on this issue would certainly 
support the $7 per ton of carbon dioxide proposed by NCEP.
    I now turn my focus to a discussion of the use of a safety valve or 
price cap to avoid unpleasant cost surprises. In the context of a 
mandatory cap-and-trade system, a safety valve would specify a maximum 
market price at which the government stands ready to sell additional 
emissions allowances in order to prevent excessive prices.
    At the outset, one must ask a basic question: given the success of 
cap-and-trade programs without a safety valve, such as the one for 
sulfur dioxide, what is the basis for including a safety valve to 
control carbon dioxide and other greenhouse gases? The answer is simple 
and straightforward: carbon controls are potentially more costly to the 
economy than these other programs and, most importantly, there is 
greater uncertainty about the true costs. Unforeseen events such as a 
warm summer or cold winter, a spurt in economic growth, or a 
technological failure of some sort, may drive up control costs 
dramatically. One needs only point to the unforeseen events in 
California's RECLAIM program that propelled the prices of permits for 
nitrogen oxides above $80,000 per ton, or the similar, albeit less 
costly, problems that arose in comparable programs on the East Coast. 
Because of these concerns a number of nations are considering safety 
valves. For example, Canada recently announced it would incorporate 
such a mechanism in its domestic program.
    As Harvard economist Martin Weitzman pointed out three decades ago, 
when higher control costs are of concern but the potential 
environmental damages are not particularly sensitive to short-term 
emissions fluctuations, it is unnecessary to impose strict quantity-
based controls. Although the experience with sulfur dioxide trading 
suggests that the actual costs may be lower than expected, recent 
Congressional debates indicate a clear concern that mandatory carbon 
mitigation policies may become quite costly--even those involving 
modest targets. Part of the cost uncertainty arises from uncertainty 
about the level of future baseline emissions that would occur even in 
the absence of new policies. There are also uncertainties about the 
cost of reducing emissions below baseline, and about the overall 
efficiency of the emissions trading system.
    One way to address this issue is by using a safety valve that fixes 
binding emissions targets as long as costs remain reasonable and allows 
the target to rise if costs are unexpectedly high. In practical terms, 
the safety valve would involve an initial allocation of permits 
followed by the subsequent sale of additional permits that would become 
available at a fixed trigger price. Several of my RFF colleagues and I 
first proposed applying this mechanism to the control of carbon dioxide 
back in 1997.\3\ Recently, NCEP has embraced the idea as part of a 
broader package that involves incentives for technology development, as 
described previously.
---------------------------------------------------------------------------
    \3\ Kopp, Raymond J., Richard D. Morgenstern, and William Pizer 
1997.''Something for Everyone: A Climate Policy that Both 
Environmentalists and Industry Can Live With,'' Weathervane, September 
29, available at www.weathervane.rff.org/features/feature015.html. 
Kopp, Raymond J., Richard D. Morgenstern, and William Pizer. 2000. 
``Limiting Cost, Assuring Effort, and Encouraging Ratification: 
Compliance under the Kyoto Protocol,'' Weathervane, June 26, available 
at www.weathervane.rff.org/features/parisconf0721/KMP-RFF-CIRED.pdf.
---------------------------------------------------------------------------
    In daily life, most individuals like to avoid unpleasant surprises 
(hence the popularity of insurance). It is possible to use certain 
policy options to avoid unpleasant surprises in the broader economy as 
well. Just as the Federal Reserve protects against wide swings in bond 
and currency prices, the incorporation of a safety valve in a 
greenhouse gas mitigation policy would prevent sharp increases in 
energy prices. The ideal climate policy is one that sets an upper limit 
on mitigation expenditures. Most consumers are interested in reducing 
their out-of-pocket expenditures for energy as well as other goods and 
services, and most businesses are interested in maintaining a stable 
environment for purposes of planning and investment. The risk of 
unexpectedly high compliance costs under a strict permit system would 
threaten that stability.
    The safety valve approach guarantees that emissions will not exceed 
the target as long as the price of the tradable permits does not rise 
above the trigger price. It differs in a few important respects from a 
well-known provision in the 1990 Clean Air Act Amendments that 
establishes a $2,000 per ton penalty (1990$) for violations of the 
stipulated sulfur dioxide emissions standards. Since the Clean Air Act 
penalty is far above the expected marginal control cost, it has a very 
low probability of being invoked. The notion of a safety valve reflects 
the society's willingness to pay for carbon mitigation. It is not 
intended strictly as a punitive measure. For those who believe that the 
costs of reducing greenhouse gas emissions are relatively low, permit 
prices would never reach the trigger level and emissions would remain 
capped.
    One thing that has plagued policy proposals in the past is that 
different analysts using different models can produce quite disparate 
results. For example, in analyzing the Kyoto Protocol, President 
Clinton's Council of Economic Advisers forecasted allowance prices 
below $7 per ton of carbon dioxide as compared to EIA's $43 estimate. 
Interestingly, with the safety valve the emissions estimates may vary 
among models but the costs cannot rise above the price cap. Observe 
that the EIA estimates of the NCEP proposal, which contains a safety 
valve, are extremely close to those of the respected consulting firm, 
Charles River Associates, which conducted that macro-economic analysis 
for NCEP. Similarly, recent EIA sensitivity analyses of the NCEP 
proposal reveal that compliance costs are virtually invariant with 
respect to a wide range of assumptions about natural gas supplies, the 
availability of non-carbon offsets, and other factors.
    A final point about safety valves concerns the claim by some that 
such a mechanism is unnecessary as long as banking and offsets are 
allowed. Citing the successful sulfur dioxide trading system, 
unexpected events of the type that doomed the RECLAIM program in 
California are dismissed as the product of a flawed design--namely, the 
absence of provision for emissions banking and offsets--rather than as 
an inherent problem of applying a fixed quantity trading system to 
control emissions. The alternative view, espoused by at least two 
former chairmen of the President's Council of Economic Advisors, is 
that banking or offset systems cannot reasonably adapt to unexpected 
events such as higher energy demand or inadequate technology as 
effectively as a safety valve. According to this view, offsets can 
reduce the expected cost of a particular goal, but they cannot address 
concerns about unexpected events. In fact, if the system becomes 
dependent on such offsets, their inclusion can actually increase 
uncertainty about program costs if the availability and cost of the 
offsets themselves is not certain. In regard to the banking or 
borrowing of emissions, the two Council chairmen note that ``. . . 
[The] . . . features that . . . provide additional allowances when 
shortages arise...are helpful, but only to the extent they can 
ameliorate sizeable, immediate and persistent adverse events.'' \4\ 
That is, offsets or banking systems may reduce the problem, but they 
may not be sufficient to address all the uncertainties arising from 
unexpected spurts in economic growth, weather variations, or other 
events.
---------------------------------------------------------------------------
    \4\ Hubbard, R. Glenn and Joseph E. Stiglitz. 2003. ``Letter to 
Honorable John McCain and Honorable Joseph Lieberman,'' June 12.
---------------------------------------------------------------------------
    Finally, I will briefly comment on the challenges of bringing 
developing countries into an emissions limiting agreement. While this 
is clearly a critical need for long-term success of any effort to 
address climate change, so far, no proposal has made much headway in 
this area. Developing nations are certainly not lining up behind the 
idea of binding emissions limits as laid out in the Kyoto Protocol. The 
president's proposed use of intensity targets, which takes into account 
economic growth when measuring environmental performance, is more 
attractive to some developing nations than fixed emissions levels. 
However, there is no serious indication that developing nations are 
prepared to adopt this approach either. Senators McCain and Lieberman's 
Climate Stewardship Act incorporates some limited incentives for 
developing nations by allowing up to 15 percent of the total emissions 
to come from offsets, including offsets from abroad. Recent proposals 
by Senator Bingaman incorporate a similar mechanism, albeit at a lower 
(three percent) level. How well such international offsets would 
compete against domestic agricultural and forestry projects, or against 
domestic non-carbon dioxide sources is an open question. Nonetheless, 
this approach clearly has some appeal.
    The recent Senate resolution on climate change represents an 
important step forward in redefining the initial terms of developing 
country participation in greenhouse gas mitigation by opening the door 
to potential linkages between climate change and other issues of 
international concern. The original Byrd-Hagel language requiring ``new 
specific scheduled commitments to limit or reduce greenhouse gas 
emissions'' by developing countries has been replaced by the 
stipulation that U.S. policies ``encourage comparable action by other 
nations that are major trading partners and key contributors to global 
emissions.'' This new language lowers the bar somewhat for developing 
countries and creates a more realistic expectation for participation by 
these countries. At the same time, it properly focuses attention on 
major trading partners with large emissions.
    Consistent with this new Senate language, a proposal advanced by 
Senator Bingaman calls for periodic Congressional review of the new 
U.S. mandatory program. Under this mechanism Congress would make a 
determination every five years to accelerate, decelerate, or leave 
unchanged the key program parameters including the emissions target and 
the safety valve price. In making this determination, Congress would 
review a wide range of factors, including recent technological 
advances. Of particular interest would be the mitigation actions of 
other nations, both developed and developing, to reduce emissions. 
Further, if the United States or other developed nations had 
established a program to support clean energy projects in a poor 
nation, that too would become part of the review. If one believes, as I 
do, that the key to international cooperation on climate change is 
linkage on a broad range of issues, including global trade, development 
aid, and technology transfer, then such a procedure would potentially 
provide Congress an opportunity to influence the actions of both 
developing and developed nations as climate policies evolve over the 
next few years, all the while avoiding, in EIN's words, ``material'' 
impacts on the U.S. economy.
    In sum, Mr. Chairman, we have come a long way since the early 
discussions on the Kyoto Protocol. We are no longer talking about steep 
near-term emissions reductions with the concurrent dangers for the U.S. 
economy. Rather, the debate has now shifted to motivating both the 
public and private sectors to pursue technology innovation over the 
long term and capturing the low-hanging fruit of cheap emissions 
reductions in the near term, all the while protecting the economy from 
unwarranted burdens. Such an approach has great potential to encourage 
the development and adoption of new technologies that can put the 
United States and other nations on a long-term path to address the 
climate change issue.
    I thank you for the opportunity to appear before this committee and 
I would be pleased to answer any questions.

    The Chairman. Thank you very much.
    I think I am going to do what I have usually done and hold 
mine for another time. Senator Bingaman, you can start and I 
will ask my questions later.
    Senator Bingaman. Well, thank you very much. Thank you, all 
of you, for your testimony.
    Let me just try to take the framework that Dr. Morgenstern 
has laid out and ask Mr. Grumet if he thinks it is an accurate 
description of what is involved here. First, he talks about the 
contrast between a command and control approach to dealing with 
greenhouse gas emissions versus a market-based approach, and 
characterizes this national commission proposal as a market-
based approach which tries to send a modest signal to the 
market that will cause the development and promotion of new 
technologies. He says that is the primary objective, as I 
understand what he just testified to, that is the primary 
objective the commission is trying to achieve with its 
recommendations.
    Do you agree that is the primary objective?
    Mr. Grumet. I think Dr. Morgenstern's characterization is 
fundamentally accurate and fair. The ultimate goal, as I think 
all the panelists here agree, is to advance technology. The 
only solution to climate change requires the significant 
advancement of technology. The debate, of course, is how best 
to do that. While our Commission had contentious discussions, I 
would say equal to those that I have heard take place in the 
Senate, one thing that we all agreed about very strongly and 
very early was that if we were going to move forward to address 
greenhouse gas emissions, as we believed was appropriate, the 
marketplace had to be the ultimate arbiter of which 
technologies moved forward, how quickly, and in what amount; 
that no matter how well intended or educated we all were, no 20 
or 40 or 100 people could make the same kinds of decisions 
about how best to spend other people's money than 200 million 
people could make about how to spend their own.
    So fundamentally, yes, we believe it is about sending a 
market signal, but also being realistic and not setting a 
signal so high that would make it politically irresponsible and 
create unacceptable dislocations.
    Senator Bingaman. Well, let me just ask. The way you have 
chosen, the Commission has chosen, to try to send this market 
signal is by designing a cap-and-trade system and putting a 
safety valve in it and saying, in order to be in compliance it 
cannot cost you more than $7 per ton of carbon that you put 
into the atmosphere.
    Just to be the devil's advocate here, are there not other 
ways that the Government could incentivize the private sector 
to promote and develop these new technologies through cost-
sharing, R&D, or various other things that would also get us to 
the same place or perhaps get us there in a more direct way?
    Mr. Grumet. Senator Bingaman, I think there are certainly a 
variety of mechanisms, some of which you have heard described 
here today. Incentives sound lovely. We all like incentives. 
But fundamentally, somebody has to pay for those incentives, 
and in less attractive garb a massive Government program of 
incentives of the size which would be necessary to develop and 
deploy these technologies would require many tens of billions 
of dollars of taxpayer money, and we believe that the 
government is simply less efficient at choosing those solutions 
than the marketplace.
    So it is possible. I am certainly interested in Dr. Smith's 
view of how much money it would take to advance the kinds of 
technologies at the pace that she believes is appropriate. We 
simply thought that it was not prudent, that it ultimately 
would be too costly, too inefficient, or some combination of 
both. So the marketplace had to be the dominant mechanism, but 
that mechanism could be augmented necessarily by raising some 
revenue to advance technology.
    Senator Bingaman. So as I understand it, your Commission 
basically came down with the idea that the Government should do 
more to fund R&D of this type, but in addition to that or in 
parallel, we should enact some type of cap-and-trade system to 
incentivize or encourage or prod the private sector into doing 
much more in technology development than they otherwise would?
    Mr. Grumet. Senator, that is absolutely right. I think we 
all concluded quickly that the private sector, not the 
Government, was best capable of making these decisions, but 
that the Government needed to play a role, that placing the 
entire burden on shareholders was inappropriate and failed to 
meet the fairness test that Chairman Domenici addressed at the 
outset, that sharing that burden, dramatically finding ways to 
engage both the collective spirit and ingenuity of the private 
and public sectors, would have a synergistic benefit that we 
think is the ultimately coherent policy approach.
    Senator Bingaman. Well, let me ask. One of the things that 
we sort of got hung up on when we were talking about this in 
the context of the energy bill, and very legitimately, 
questions were raised about how would--if you had a cap-and-
trade system like the one you have described here, how would 
you allocate the credits or emissions credits, whatever, in a 
way that would be fair to everyone involved, would not 
advantage some sector of the economy over another?
    Where are you and where is the Commission in its 
deliberations on that? Do you think that can be done? Is it 
still to be done in the future? Are you in the process of doing 
it?
    Mr. Grumet. Senator Bingaman, I think as you and Senator 
Domenici both expressed during the closing hours of this 
discussion on the energy bill, there are clearly winners and 
losers. There are winners and losers if there is a carbon price 
of zero, there are winners and losers if there is a carbon 
price of $7, $10, or $100.
    One way that you can address those fairness issues is 
through the allocation of permits. It is important to stress 
that who you distribute the permits to in no meaningful way 
affects the overall economic costs of the program. Dr. 
Gruenspecht and CRA were able to analyze the total costs of our 
program with no knowledge of how the allocation would 
ultimately be meted out.
    But to make the approach ultimately equitable and 
politically feasible, these are critically important decisions. 
I have to go off book here because our Commission did not try 
to specify a particular allocation formula, based on the view 
that that was ultimately such a political decision that we 
would really not be serving ourselves or the Senate very well 
by trying. We have started to host a series of very well 
attended workshops to try to bring together the various sectors 
of the economy and the interests to imagine different 
approaches. I think that it is surely possible to establish an 
equitable approach to allocation, just as was done in the acid 
rain program, and commend you for committing to consider these 
issues further. I think that will become ultimately the 
fundamental challenge, probably the last challenge in moving 
forward with legislation.
    Senator Bingaman. Mr. Chairman, I notice the lights have 
not been on during my questioning. I do not mind continuing to 
ask questions, but I think I have been doing this for 5 minutes 
or more, so I will stop so others can go ahead.
    The Chairman. I think you have, but we were going to let 
you go on for a little while longer.
    I think that we will go on our side now. Senator Martinez 
was next, but he did not want to proceed.
    Senator Thomas, you are next.
    Senator Thomas. Thank you, Mr. Chairman.
    A very complicated issue and I appreciate all the detail 
that you have said. Would it be possible for you in two or 
three sentences to sum up your recommendation, where should we 
go from here, not go into all the details, but say what 
basically are you recommending for us to do? Would you each do 
that?
    Dr. Gruenspecht. I am from the Energy Information 
Administration, so I am not recommending any actions.
    [Laughter.]
    Senator Thomas. Well, thank you very much. I appreciate 
that.
    Doctor?
    Dr. Smith. What I would like to say is that we need to 
first and foremost figure out how we are going to get to where 
we want to be, what sort of program is needed, how will we 
accomplish it, what will its targets be in terms of costs for 
reducing emissions----
    Senator Thomas. But that is, you are just asking questions. 
I want to know your answer. What would you do?
    Dr. Smith. I would design an effective R&D program that the 
Government could fund and get it started, and using that 
mission of the R&D devise some understanding of what sort of 
economy-wide emissions price should be placed on the economy 
today.
    Senator Thomas. I see. Given things like AML funds and so 
on, do you think the Government is prepared to handle that 
money properly?
    Dr. Smith. Sorry? What kind of funds? I did not hear.
    Senator Thomas. Well, just some of the funds that have not 
gone where they were intended to go when the Government is in 
charge.
    Dr. Smith. It is clear that funding of R&D needs to be a 
partnership of the private sector and the Government. The 
Government needs to sort out what amount of funding needs to 
flow and then find the means to support that funding.
    Senator Thomas. Thank you.
    Mr. Grumet, you have talked in detail, but sum up where we 
are going.
    Mr. Grumet. In a couple of sentences, our Commission 
believes that we need to act as soon as possible to establish a 
modest long-term market signal that inspires the ingenuity of 
the private sector, support those exercises with continued 
government funding for longer term R&D, and link that program 
to efforts in developing countries so that we make sure that we 
ultimately have an effective and equitable global solution.
    Senator Thomas. Thank you.
    Dr. Morgenstern. I would endorse a balanced approach 
involving a cap-and-trade with an R&D system which stimulates 
both private and public sector, quite similar to the NCEP, and 
that is my one sentence. My second sentence would be that there 
is really not that much difference between what Dr. Smith is 
proposing and what the NCEP is proposing, in the following way.
    Dr. Smith in testimony recognizes that there is an economic 
logic to have a cap-and-trade approach. In Dr. Montgomery's 
testimony, which was not given today but was scheduled 
previously, he actually went so far as to name a number. His 
number was $4 a ton of CO2. So we are really talking 
about a difference, in a sense, between $4 and $7. I would note 
simply for the record that there is a substantial literature 
that would support a $7 basis and there is really not a large 
difference in truth between the two.
    Senator Thomas. I notice you shaking your head.
    Dr. Smith. Dr. Montgomery did not suggest $4 per ton. It 
was a footnote that was an example of how you could back out 
what an appropriate spending would be once you know where you 
are headed with the R&D, and it was predicated on an example 
where the R&D would produce massive zero-emitting emissions 
reductions by 2050, I think, at a cost of $25 a ton.
    So it was not a recommendation. It was an example. I 
believe I kept it in my testimony.
    The other point is I am not recommending a cap-and-trade 
program. I am recommending an economy-wide price signal that 
would be predicated on the ultimate goal and mission of an R&D 
program once that is designed. So I am not debating the needs 
for some carbon price signal in the near term, but I am 
debating the way that it ought to be introduced and set up as a 
policy in the economy.
    Senator Thomas. Thank you.
    Two comments as I close. One is that this trade thing seems 
to me, having been involved in world trade a little bit, what 
you are doing is giving away something that people that are not 
generating anything, that is not going to make any change 
particularly in the world.
    The second is I see some of these numbers here in the 
reducing of coal, which is our largest fossil fuel resource. So 
when you look at energy issues on one side and these issues on 
the other, you have to have some balance in the kinds of fuels 
that we have available to keep people's lights on. So it is 
easy to talk about reducing all those uses, and at the same 
time what are you going to substitute it for?
    So thank you all for being here.
    The Chairman. Senator Salazar, I think I am going to go to 
Senator Murkowski, because she was here before you, if you do 
not mind.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    All of you have keyed in on the focus on technology, 
research and development. In the energy bill that was just 
passed, and signed by the President, we had a component or a 
section in there that related to the technology to provide for 
incentives that was, I guess if we had to characterize, our 
portion of the energy bill that related to climate change. 
There were those of us that looked at the legislation that 
Senator Hagel had put together in working with many of us and 
said, this is a step in the right direction.
    Your comment on that? Is that sufficient? Do we need more? 
Dr. Smith, I think you said specifically that you think that 
policymakers have paid minimal attention to the R&D, the 
technology end of it. Are we going in the right direction with 
what we have passed?
    Dr. Smith. Are you speaking of title XVI?
    Senator Murkowski. I do not know what the title is.
    Dr. Smith. The part that passed----
    Senator Murkowski. Yes, yes.
    Dr. Smith. That is a start in the direction of defining a 
technology strategy, but it does not create the vision and 
mission of an R&D policies end point. Until we know where we 
are going, it is very difficult to organize an effective R&D 
program, let alone to determine how much should be spent on it.
    So I think it had the right orientation of focusing on the 
R&D, but it did not provide and has not yet produced the vision 
of what needs to be accomplished in the R&D and then how to 
motivate our resources to get there.
    I would say also, in the proposed amendment that reflects 
the NCEP proposals the subsidies do not reflect an R&D program. 
That is not what I mean by a revolutionary change in technology 
for providing energy over the next century.
    Senator Murkowski. Any other comments on that?
    Mr. Grumet. Senator, if I may. I think the energy bill is 
absolutely directionally correct. I agree with Dr. Smith on the 
need to do more. I also share the concerns of many that we are 
going to have a hard time finding all the money to support all 
the good things that the energy bill sets forth. So that is why 
this combination of market signal and an R&D program made sense 
to us.
    To Dr. Smith's comments differentiating between 
breakthroughs and advances, I guess I am not clear about the 
technology. What I am clear about is no democratic process can 
determine a 100-year future to enable us then to move 100 years 
back and ask the right questions. Climate change is a century-
scale problem. We are going to have to take a first step and 
then iterate from there. I believe that the energy bill and our 
Commission's support for advanced nuclear designs, for carbon 
capture and sequestration, for gasification, for dramatic 
increases in biofuels, to encourage the domestic production of 
more efficient transportation systems, and down the line are 
those gap technologies.
    I would encourage the committee to look to the work of Dr. 
Sakalow from Princeton, who has identified 15 what he calls 
wedge technologies, the technologies I just mentioned and also 
efficiency technologies, natural sinks like agriculture and 
forestry. I think he makes a compelling case that if you look 
at those 15 technological categories, while ultimately the 
marketplace must choose among them, it provides a menu that I 
actually find quite encouraging.
    Over the next 50 years, I think one can see optimism that 
both domestically and globally by moving forward with these 
technologies we can actually get to the goals that I think Dr. 
Smith and I share.
    Senator Murkowski. Dr. Gruenspecht.
    Dr. Gruenspecht. Thank you. I would say that we in our 
analysis did a sensitivity run looking at different energy 
technologies--what difference would a different set of 
technologies make. It does make a considerable difference to 
the results, both with and without additional policies. So 
there is no question that technology matters.
    We do sometimes have trouble relating changes in 
legislative provisions to changes in technology. A lot depends 
on what happens with a program. I think one of your colleagues 
mentioned earlier that some programs get run well, some 
programs do not. There are also issues of what is the amount of 
actual appropriations--is it just money moved from one category 
to another category--so you close an old program and start a 
new program. All those questions come up.
    So it is very hard for us to look at the effects of a 
particular program, particular legislative language, and say 
what difference that makes to technology. But there's no 
question that technology makes a difference.
    I would also note that the Department of Energy has a 
climate change technology program. I think it is also 
referenced in the energy bill. They do have a vision and 
framework for strategy and planning that is on the web site, 
and it is my understanding that they will put out a strategic 
plan, a long-term strategic plan for public comment, some time 
in the near future, that I think does address some of the--or 
may address some of the issues that Dr. Smith raised.
    So I think there is an effort to provide a road map, if you 
will, that the Department will be coming forth with in the 
fairly near future. That might be of interest to you.
    Thank you very much.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Senator Salazar, I am going to ask a few 
questions since I did not ask any. Then you are next. Is that 
acceptable to you?
    Senator Salazar. Yes.
    The Chairman. Let me talk a minute about the Kyoto since we 
get that thrown at us quite often. First, I would like to 
reiterate an observation that seems to evade most people that 
criticize America, that the decision about Kyoto was not made 
solely by a President. The U.S. Senate voted and told the 
President of the United States, do not send that treaty up 
here, because we would not approve it, and that vote was 98 to 
zero. So everybody should know that for every time Europeans 
decide to chastise President Bush about it they should add, and 
the U.S. Senate decided it would not work.
    Now, having said that, what would a reduction of emissions 
to 1990 levels do to the U.S. economy, either of the economists 
here, or you? It is my understanding that only two members of 
the European Union are likely to meet Kyoto commitments. If 
mandatory controls are deemed to be the answer to the climate 
change problem, why are such controls not working in Europe?
    Dr. Gruenspecht. We at the Energy Information 
Administration back in the late 1990's did some analysis of the 
Kyoto Protocol and those analyses suggested, I think, pretty 
significant economic impacts. I should also point out, though, 
that various EIA analyses are not directly comparable for 
several reasons.
    One, the reference case used as a baseline for the analysis 
has changed a lot since that earlier work was done. Second, our 
Kyoto analysis did not look at non-CO2 greenhouse 
gases, which we know from the analysis we did for the NCEP 
proposal requested by Senator Bingaman, make a difference. 
Third, there is frankly uncertainty in interpreting what the 
Kyoto Protocol itself means.
    Let me give you an example. There is a period from 2008 to 
2012 where there is an emissions limitation under that 
agreement, but the question is what do you assume beyond 2012? 
Do you assume it stays at the same level? Do you make an 
assumption about what the negotiators in that framework will 
agree to beyond 2012? So there are lots of open questions.
    But I take your point that certainly a large emission 
reduction in a short period does tend to produce much larger 
economic impacts.
    The Chairman. Anybody else want to? I do not want to spend 
all my time on Kyoto. It just irks me that it is constantly 
referred to by Europeans, even with reference to the 
hurricanes. It is just amazing that they are talking about, 
since America did not sign the Kyoto agreement, we are reaping 
what we are entitled to in hurricanes. I do not know how 
anybody can even say such a thing.
    Yes, Mr. Economist.
    Dr. Morgenstern. Well, the only thing I would add to Dr. 
Gruenspecht's point is that the reductions required for the 
Europeans are in fact lower than they were for the United 
States, so that it is not even fair to make that comparison 
about what the impact is on them as opposed to what it is on 
us.
    The Chairman. A very good point.
    The other point, I do not want anybody, including you, Mr. 
Grumet, anybody working on this approach, to think that we 
ought to look at acid rain. We should, but that is an easy 
comparison. You understand that the area of involvement is very 
minor in terms of the numbers of participants in the 
SOX problem. There are just two major ones, whereas 
when you are trying to put together all the players in this 
area there are many, many scores of them. So it might be a 
similar idea, but it certainly is not a similar problem. Is 
that a fair statement?
    Mr. Grumet. Mr. Chairman, I think that is exactly right. I 
think that the Energy Commission's approach tries to directly 
recognize that. I think there was no argument, really 
significant argument, that you needed a safety valve on the 
SO2 proposal. It was manageable. The technologies 
here are greater, I think much greater, and I think the 
response needs to be different.
    The Chairman. I have got three quick questions. The next 
question has to do with an appropriate incentive to move the 
technology. I am listening attentively to the difference in 
opinions here on how we move the technology. Dr. Smith, I 
understand yours, and I understand yours on behalf of your 
Commission. But let me ask, in the energy bill we recognized 
that it probably would be difficult for the U.S. Government to 
appropriate money for the experimental technology, say three or 
four major new projects in the gasification, sequestration 
area. So we provided an incentive provision that says two ways 
to do this. One is appropriate and the other is by a new type 
of loan that the Federal Government could make on a 75-25 basis 
at reduced interest rates, with insurance being paid by the 
applicant so that it is cost-neutral.
    Is that an incentive in anyone's opinion for anybody to use 
that, or is that not sufficient?
    Dr. Smith.
    Dr. Smith. That is an incentive to implement a technology 
that can be implemented today, that exists at a near-reasonable 
but still too high a cost to be justified in the marketplace. 
When I speak of R&D, I mean what may involve basic research, 
basic scientific research, to make breakthroughs that would 
allow technology to come in at maybe half the cost of what can 
be done with the current technologies today at some price that 
is in the realm of too costly for the marketplace, but may be 
subsidizable.
    The Chairman. Anybody else have a comment on that?
    Mr. Grumet. Mr. Chairman, I think the tax credits are very 
thoughtful and appropriate mechanisms. I think those will 
encourage IGCC. I just have maybe lower expectations than Dr. 
Smith. I think deploying a fleet of carbon-sequestered IGCC 
facilities in the next 20 years is an incredible accomplishment 
that we should strive toward.
    The Chairman. Well, that is why we put it in there. We 
thought that. She may be right, though, and we have to have 
another thing going on basic. And we do not put enough money in 
basic research, so I do not know where we would ever get enough 
here, unless it came from the carbon that you are speaking of, 
the carbon, the assessment of a carbon tax, which seems to be 
anathema.
    Dr. Smith, you indicated--you had an observation: For the 
near-term emissions reductions, the most cost-effective 
emission reduction available today are in the developing 
countries. I think you said that. Placing a high priority on 
near-term control policies to bring about changes in how energy 
is used in developing countries is most important, as you 
indicated.
    Would you elaborate for us on how we might help get that 
done, or is that up to somebody else and it will happen or not 
without us?
    Dr. Smith. One of the greatest barriers that we have 
identified--and my colleague David Montgomery has been working 
on this one at some length in the last few years. One of the 
greatest barriers to getting the technology into other 
countries is simply the basic rule of law, property rights, and 
inviolability of contracts and enforceability, general freedom 
of markets, and even pricing energy at its cost.
    If these things could be changed, then better investments 
can be made with today's technology. Even with the efficiency 
standards that we have today, those could be better deployed 
into these developing countries and achieve much greater 
reductions in emissions globally, which is all that we really 
care about, than we can achieve in our own country at that 
cost.
    The Chairman. So those countries would have to do that, 
make those stabilizing decisions?
    Dr. Smith. It is a challenge. Again, the Hagel-Pryor 
amendment that passed into law with the Energy Policy Act has 
some provisions to move in that direction. It is a very good 
first step. It identifies the right challenges, I think. But it 
is still going to be a challenge to implement.
    The Chairman. My last question goes to you, Mr. Grumet. You 
are busy having task force, or whatever you call them--what do 
you call them?
    Mr. Grumet. Workshops.
    The Chairman. Workshops, trying to address the issues that 
Senator Bingaman and I introduced on the floor, that you had a 
great idea and we introduced a great bill, but how do you 
implement it? Are those workshops aimed at trying to fill in 
some gaps as to what might be a fair way to implement?
    Mr. Grumet. That is certainly the aspiration, Chairman 
Domenici. I should say, though, that I think we are realistic 
in the expectations we have for 3 or 4 half-day sessions. We 
found that there was a dramatic degree of misunderstanding 
about the different options and I think our hope was actually 
to bring people together so that we could then fight more 
effectively before you in the future.
    We are not optimistic or even seeking to bring together a 
consensus, but I think that we can elevate the understanding so 
that we can have a more effective real debate.
    The Chairman. It seems to me those stakeholders who are 
participating may be the ones who come up with the answers.
    Mr. Grumet. That would certainly be our hope.
    The Chairman. Senator Salazar.
    Senator Salazar. Thank you very much, Chairman Domenici and 
Senator Bingaman, for holding these hearings on this very, very 
important issue.
    I have two quick questions. The first relates to 
agriculture and how the agricultural community might actually 
benefit from a cap-and-trade system and the second question has 
to do with the EU and their cap-and-trade program and how that 
is working. I am going to ask the questions and let you comment 
on both of them.
    First of all, with respect to my question on agriculture, 
it seems to me that farmers in Idaho who are growing potatoes 
by the thousands and thousands of acres or farmers in my State 
that are growing alfalfa could see significant positive impacts 
from being involved in a cap-and-trade system, because they 
obviously are consuming large amounts of carbon dioxide in the 
growth of their plants.
    I am one of the defenders of our energy bill because I 
think it did for the first time in our country push forward 
renewable energy as a major component of our future energy 
policy, and I think that is creating opportunities and will 
create opportunities for rural America and for agriculture. But 
I also see the issue of how we deal with climate change as 
creating an opportunity for farmers who are consuming so much 
carbon dioxide in their plants.
    I would like you to comment, Mr. Grumet or Dr. Smith, Dr. 
Morgenstern, whoever of you wants to comment on that issue of 
agricultural opportunities as we deal with the issue of climate 
change. Then, second, if you would also comment on how the 
European Union cap-and-trade system is in fact working, since 
it is up and running.
    Mr. Grumet. Maybe I will start with agriculture and then 
turn it over to somebody else to talk about the EU. Senator 
Salazar, I think your instinct is exactly right that, given a 
rational incentive, there is money to be made in agriculture 
for lower carbon activities. I think it is also particularly 
important to think about this as we see that the commodity 
price supports and the Doha Trade Round and others are now 
being called into question. We are sensing a growing interest 
in the agriculture community, thinking about how in fact 
carbon-smart activities could also be a profit center.
    I just point to two examples. Obviously, if there is a 
value to reducing a ton of emissions that would provide a 
significant incentive to sequester carbon through more 
intelligent agricultural practices. In addition, farms have a 
tremendous opportunity to provide energy and do so in a low-
carbon, low-cost way. I think we were very pleased to 
participate in a workshop that Senator Craig held talking about 
how to bring cellulosic biomass from wheat straw into the 
marketplace. What we find, of course, is that that product, 
while desirable, is more costly than gasoline. It is also far 
lower in carbon emissions. If there was a value in the 
marketplace to lower carbon emissions, it would provide an 
additional incentive to those thoughtful types of breakthrough 
technologies that I think we all want to see advance.
    Senator Salazar. Mr. Chairman, I had the opportunity to be 
in Europe last week to participate in a discussion of the EU 
system. I am not an expert on it, but I can report a little bit 
about some of the results. It is operating, as you know, in two 
phases. There is a warmup phase for the first several years and 
then beginning in 2008 is when the larger version goes into 
place.
    At this point they have over 11,000 sources actually 
participating in the program. All 25 countries have actually 
set up programs and have approved plans. There have been a fair 
number of trades. There has also been a fair amount of price 
volatility. The range of prices has ranged from somewhere 
around eight euros per ton of CO2 up to almost 30 
euros per ton of CO2. Currently it is around 22 or 
24 euros.
    It is interesting to try to draw some lessons from their 
experience for our experience. Of course, everything is still 
in the early phases and it will undoubtedly evolve. But I think 
there is a couple of points that one can make. First of all, 
the price volatility that they have experienced, which in many 
ways is tied to changes in weather patterns and fuel market 
changes, would probably not be experienced under the NCEP 
proposal, simply because the safety valve would undoubtedly 
have dampened that. So that is one difference.
    Second, there have been some complaints in Europe raised 
about potential windfall profits in their system, and in part 
that may be tied to the allocation system. Undoubtedly, 
Congress would do a fairly detailed--would make fairly detailed 
decisions about allocation that I would expect would obviate 
that problem.
    Senator Salazar. Dr. Morgenstern, what has caused the 
volatility in terms of price from $8 to $30?
    Dr. Morgenstern. Well, the experts in Europe believe that 
it has to do with weather, different expectations about 
weather, and frankly fuel volatility. International oil market 
prices and other fuel changed have been the largest driving 
forces. That is what they have explained to me and I am just 
reporting that to you.
    But the safety valve, as I say, had it been in place would 
have dampened that and would have prevented that from 
occurring.
    Senator Salazar. In the European cap-and-trade market, what 
has been the experience of agriculture with respect to that 
market? Are there programs under way that agriculture is 
benefiting from because of the cap-and-trade system there?
    Dr. Morgenstern. Well, that is a very interesting point. 
The design of the system as I understand it does not include 
agriculture at this point, and in fact the design of the system 
only covers one-half of the total emissions in the economy. So 
we could actually--so a sector like agriculture is not able to 
participate in the I system. In the NCEP proposal it would be 
able to participate.
    It is interesting in terms of the EU compliance. Because 
they have only about less than half really of their economy, 
the emissions, covered by this trading system, it is very 
likely that the other half will in fact not make the targets, 
and we may have a system where the trading system seems to be 
highly successful, but the overall outcome in terms of the EU 
meeting its targets may not come to pass. Obviously we do not 
know. They may be able to buy tons from Russia or something. I 
do not know how that will play out.
    But sectors like agriculture or sectors like 
transportation, which are not able to participate by design in 
their system, are reportedly having the most difficult time 
meeting their targets.
    Senator Salazar. Thank you very much.
    Senator Craig [presiding]. Thank you.
    We have a vote under way, I think, now. Is that correct? 
Two votes stacked. The chairman has gone to vote and I think 
plans to return, so we will move on for a time.
    Senator Talent.
    Senator Talent. I will be brief, Mr. Chairman.
    Mr. Grumet, if we adopted NCEP how much would it reduce 
global warming? How many degrees reduction would we get?
    Mr. Grumet. Senator Talent, I am guessing you know my 
answer is that the NCEP proposal in the first 10 years would 
have no meaningfully ecologically visible impact on the globe's 
warming, nor would Kyoto, nor would McCain-Lieberman or 
anything else.
    Senator Talent. Maybe after the 10 years, what will we get?
    Mr. Grumet. All of these are century-scale efforts. I think 
that there is a recognition in the scientific community that if 
we allow greenhouse gas concentrations to double or triple we 
may find very unfortunate effects that would result from a 
three to five degree increase in temperature. The goal is to 
mitigate that.
    Senator Talent. After 10 years, do we know?
    Mr. Grumet. Senator, we will never know. I think that is a 
fair----
    Senator Talent. Fair enough.
    Just to make this brief, because maybe Senator Smith wants 
to go before the vote, I think the NCEP concept explicitly 
anticipates that after 5 years or 10 years we will consider 
another step. Is that correct?
    Mr. Grumet. Absolutely, sir.
    Senator Talent. Now, here is my concern about how this 
might operate on the ground. If you are a company and you are 
thinking about investing in a chemical plant or a refinery--and 
we certainly need more refinery space--and Congress has passed 
NCEP, maybe you can quantify the costs of NCEP. But what you 
know is that in passing it, Congress explicitly anticipates 
doing something else 5 years or 10 years down the road. You do 
not know--as a matter of fact, what is being I think marketed 
as a virtue of NCEP is that we do not know, that we will make 
some adjustment down the road.
    So you are thinking of investing hundreds and hundreds of 
millions of dollars in a plant. You are going to have to get a 
rate of return on it. You certainly do not want a financial 
disaster, and you have this thing hanging out there. Now, do 
you not think that under those circumstances you might 
consider, you know, we can make a similar investment in China 
and we have a pretty good idea what our costs are going to be 
there?
    Mr. Grumet. Well, Senator, certainty in terms of projecting 
atmospheric or global temperatures or business is always a 
desire and never an option. The question that our Commission 
dealt with in terms of business certainty was, was there more 
certainty in the status quo, where people have all kinds of 
different proposals, many much more aggressive than ours, many 
much less aggressive, and we kind of have a spiritual fight 
about are we going to do it all or do none of it.
    I think our group came to conclude that setting a path 
forward that had a gradual program, that recognized that we had 
to slow emissions before we sought to stop and ultimately 
reverse them, that obligated the Congress of the United States 
to affirmatively engage before those changes were made, that 
had a set of dials for an intensity reduction so you would not 
have discontinuities and big jumps, I think our group thought 
that provided more certainty than rolling the dice and seeing 
what happened next.
    Senator Talent. When I chaired the Small Business Committee 
in the House I had to constantly remind myself, we love small 
business because it produces jobs, it hires people, it produces 
technological innovation, but nobody ever started a small 
business to create jobs. They start a small business or, for 
that matter, they make an investment as a big business in order 
to get a return on the investment.
    I just think we have to be very careful. I understand what 
you are doing and I think from our perspective here it seems to 
make sense. We talk with all the stakeholders, we have this 
initial step. My concern is on the ground it is going to 
produce actually more investment precisely because of the 
uncertainty, it is going to produce more investment where they 
do not care about global warming, and we may end up with more 
greenhouse gases and fewer jobs, and that would be the one dumb 
thing to do, would be to hurt the economy and get nothing in 
favor of it.
    I understand what you are doing. I am just concerned that 
the uncertainty may have exactly the opposite of what you 
intend.
    Thank you, Mr. Chairman.
    Senator Craig. Thank you very much.
    Senator Smith, I got here before you did. I am going to ask 
one question. I think we can get both of our questions in.
    I wanted to ask this of EIA. Figure 4 in your charts, 
doctor. I find it very interesting as you look at the spread of 
savings and usage, and figure 4 represents that item, 
generating capacity additions by type 2004 through 1925. I have 
traveled the world about as much as anybody on the climate 
change issue. I do not know how many COPS I have been to, but 
it is a fascinating cottage industry to watch. Now, having said 
that, I do not mean that as a slam at all. But there is a great 
industry that has grown up around climate change itself, for 
better or for worse.
    But there is a reality out there and the reality is that 
there are some technologies, if fully implemented, could have 
tremendous effect on emissions. One of them is nuclear. We 
worked very hard to incentivize new nuclear in the energy bill 
and, while I have not read all of your testimony, I would hope 
that you would analyze and make a reasonable argument that if 
we fully implemented and fully fund what we have just done as a 
country we could move ourselves ahead in a dramatic way, but 
most important is that we would also build technologies that 
were available to the world to use.
    So I am sitting with the Chinese representative in Buenos 
Aires. He talks about 100 new nuclear plants, 100. They are 
still dominantly coal. They are going to build a lot of coal. 
We are now working with India. They could come on line. We have 
at least four on the drawing boards in this country now that 
could be pouring concrete by 2008, could be on line by 2015. 
Yet nothing shows up here in your charts as to increased 
generating capacity as it relates to nuclear. Or am I just 
missing it?
    Dr. Gruenspecht. First let me say, I am a retiree from the 
cottage industry that you mentioned having to do with global 
warming. So I was quite involved in the early 1990's, less 
involved today.
    I would say that this is an analysis of the NCEP policy 
proposal.
    Senator Craig. So I am directing it at the wrong----
    Dr. Gruenspecht. No, you are directing it correctly, I 
think. The NCEP policy proposal had a modest incentive, I 
think, that in our estimation produced one additional nuclear 
plant, and there it is in our chart.
    This analysis, I will say, was done before the passage of 
the energy bill and, as you mentioned, the energy bill has some 
very significant incentives for nuclear, including a production 
tax credit. That is a very significant incentive for up to 
6,000 megawatts. It has the insurance proposal that the 
administration advanced. It has title 17. Presumably, the 
incentives there, which are very open-ended, could be used for 
nuclear.
    What I would say is that this chart does not reflect the 
energy bill. It reflects the incremental effect of the NCEP 
proposal. We will in fact at EIA need to look at the energy 
bill in the context of our next annual cycle of long-run 
projections, and those are very significant provisions and 
those provisions would have an effect. But this analysis and 
the testimony was about the NCEP proposal.
    Senator Craig. I got you, I got you.
    I am a little frustrated that we are still--and we should, 
I guess--be hypothesizing where the future is. I do believe 
there is a responsibility, though, to suggest, those of you who 
are advocates, that what we have just done is a significant 
work and we ought to be fully funding it and implementing it, 
because there are technologies in there that spread across the 
spectrum into the world at large, that are going to be very 
beneficial in the long term, while we still debate conceptual 
ideas of how to do other things.
    Dr. Gruenspecht. Let me just say one more thing. Obviously, 
EIA has no crystal ball about what the funding will actually 
be. But at least with respect to the production tax credits, 
that is not a proposal that requires funding as we understand 
it.
    Senator Craig. That is correct.
    Dr. Gruenspecht. And we will need to deal with that.
    Senator Craig. Senator Smith.
    Senator Smith. Let me begin my comments by admitting to our 
questioners--thanking you for being here, or our panelists, but 
admitting to you that I am suspicious of government-planned 
markets. Last week I was one of the few Republicans who voted 
against the cap-and-trade system for mercury that was proposed 
by the Bush administration. The environmentalists loved my 
vote, but now they want me to vote for a cap-and-trade system 
as to carbon.
    How do you reconcile that?
    Mr. Grumet. Senator, I will wade into these delightful 
waters. I think that the general conclusion that our Commission 
brought to this discussion is that market-based programs are 
more efficient and more effective and should be used everywhere 
possible, with one exception. That exception is when the use of 
the free market creates distributional impacts that concentrate 
pollution in one place and not another.
    I take no position on the mercury decision, but note that, 
mercury being a neurotoxin, there are concerns about market 
trading in mercury, which I assume attach to your concerns and 
your vote. Carbon being harmless to breathe, it is actually the 
perfect pollutant in which a market-based system can provide 
you with all the incentives with none of the anxieties about 
those distributional impacts.
    So I imagine that is the basis of the differentiation.
    Senator Smith. I guess my concerns or my suspicions about 
the EU's approach and the difficulties they are running into, 
my suspicions I guess are further heightened by all of this.
    But when it comes to carbon, I live in a State where every 
year we burn up tens of millions of acres of trees. 2 years 
ago--I think it was 2 years; maybe it is 3 now--we had the 
Biscuit Fire. It burned up more land than there is acreage in 
the State of Rhode Island. The amount of carbon that that put 
out was 40 million tons.
    I know you are not foresters. 40 million tons, just that 
right there, that is about 10 percent of the emissions of all 
the coal plants in America. I guess my question is what is the 
best forest policy? When you think of requestration, should we 
just leave these carbon moonscapes as they are and let natural 
regeneration go? Or would we be better off in terms of global 
warming to replant these areas, knowing that that takes half 
the time that the other takes?
    Dr. Smith. May I comment?
    Senator Smith. Yes.
    Dr. Smith. First I would like to point out that 40 million 
tons is about our estimate of how much the NCEP proposal would 
produce in reduction in 2010. So you are right that it is a 
very large amount, but it is also a very small amount that we 
are saying would occur under the NCEP proposal. Effectively we 
are saying it will give us the equivalent of one less forest 
fire of that sort.
    On the other hand, it certainly makes sense to reforest 
where one has burned down if that is the best use of the land. 
That will certainly sequester over time some of the emissions 
back in.
    Senator Smith. So replanting is good for global warming 
purposes?
    Dr. Smith. Replanting generally is good for reducing carbon 
emissions if it makes sense as a land use, too.
    Senator Smith. Any other comments on that?
    Mr. Grumet. I come from a part of the country that is 
largely paved, so I am not going to offer my thoughts about 
forestry. I would just note that Dr. Smith chose to identify 
the first year of this program, which begins very gradually. In 
2025 our modest program is expected to reduce a billion tons of 
carbon a year. So 40 million is a big number, but I think in 
context it is certainly not fully offsetting what we would 
consider a mandatory economy-wide reduction program.
    Senator Smith [presiding]. It is interesting you say that. 
This is no criticism, but it is the areas that are all paved 
over that are telling the areas where forests how to run their 
forests.
    I think all of my colleagues have left to vote and I need 
to do the same as well, because I think it is just about to 
end. So let me--I am given instructions that we are adjourned.
    [Whereupon, at 11:41 a.m., the hearing was adjourned.]


                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

    Responses of James W. Hurrell to Questions From Senator Bingaman
    Question 1. Over the last several decades, anthropogenic emissions 
have ``substantially contributed'' to the increase in average global 
temperatures. Upon receiving a question from one of the Senators, one 
of the panelists suggested that ``80 percent'' of the warming was due 
to human activities. Do all the panelists agree? Please provide 
information as to how this estimate was derived.
    Answer. The strongest evidence to support this statement comes from 
numerical experiments performed with state-of-the-art global climate 
models. These models encapsulate the current understanding of the 
physical processes involved in the climate system, the interactions, 
and the performance of the system as a whole. They have been 
extensively tested and evaluated using observations. Today's best 
climate models are now able to reproduce the climate of the past 
century, and simulations of the evolution of global surface temperature 
over the past millennium are consistent with paleoclimate 
reconstructions.
    As a result, climate modelers are able to test the role of various 
forcings in producing the observed changes in global temperature. 
Forcings imposed on the climate system can be natural in origin, such 
as changes in solar luminosity or volcanic eruptions, or human-induced, 
such as increases in aerosol and greenhouse gas concentrations in the 
atmosphere.
    Climate model simulations that account for such changes in forcings 
have now reliably shown that global surface warming of recent decades 
is a response to the increased concentrations of greenhouse gases and 
sulfate aerosols in the atmosphere. An example, from a climate model 
simulation performed at the National Center for Atmospheric Research 
(NCAR), is provided in Figure 1.* When the model is integrated forward 
in time over the 20th century with only information on imposed natural 
forcings, there is no discernible trend in global surface temperatures 
over the last several decades (blue line). When changes in greenhouse 
gas and aerosol concentrations are added to these natural forcings, 
however, the model not only simulates an increase in global surface 
temperature (red line), but it almost exactly reproduces the observed 
rate of change (black line). Numerous simulations for each case are 
run, and the solid lines represent the mean while the shaded regions 
indicate the ``spread'' about the mean. This spread reflects intrinsic 
natural climate variations arising from purely internal atmospheric 
processes as well as from interactions among the different components 
of the climate system, such as those between the atmosphere and oceans 
or the atmosphere and land.
---------------------------------------------------------------------------
    * Figures 1 and 2 have been retained in committee files.
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    Such results, which have also been produced by several other 
independent modeling groups, increase our confidence in the 
observational record and our understanding of how global mean 
temperature has changed. They also indicate the time histories of the 
important forcings are reasonably known, and the climate processes 
being simulated in models are adequate enough to make the models very 
valuable tools for investigating the causes and processes of past 
climate variations as well future climate change.
    Question 2. We received testimony that sought to distinguish 
between average global temperature changes causes primarily by 
anthropogenic emissions and local/regional temperature changes caused 
at times by natural variation. Please explain in greater detail.
    Answer. Global average temperature increases in recent decades are 
primarily due to changes in anthropogenic forcings (Question 1). 
Evidence for a warmer world is also reflected in other independent 
measures as well, as documented in my written testimony. Some of these 
are regional in character, such as: (1) the rapid melting of glaciers 
in non-polar regions around the world; (2) decreases in the areal 
coverage and thickness of Arctic sea ice, especially during summer, and 
of snow cover over northern continents; and (3) reductions of a few 
weeks in the annual duration of northern lake and river ice cover. Yet, 
in spite of this and other evidence (e.g., rises in global sea levels) 
that gives a collective picture of a warming world, the magnitude of 
the anthropogenic influence on regional climate remains uncertain. A 
principal reason is because the effects of human activities are 
superimposed on the background ``noise'' of natural climate 
variability, which can be very large regionally.
    Global warming does not mean that temperature increases are 
spatially uniform or monotonic: some places warm more than the average 
and some places cool. Land regions have warmed the most (0.7 C since 
1979), with the greatest warming in the boreal winter and spring months 
over the Northern Hemisphere (NH) continents. Regionally, winter 
(December through March) temperatures have been 1-2 C warmer than 
average over much of North America and from Europe eastward to Asia 
over the past two decades, while temperatures over the northern oceans 
have not warmed as much (Figure 2). This pattern is strongly related to 
decade-long changes in natural patterns (or modes) of the atmospheric 
and oceanic circulation. In particular, changes in the behavior of the 
El Nino/Southern Oscillation (ENSO) phenomenon and the Pacific Decadal 
Oscillation (PDO) have contributed substantially to the regional 
cooling of the North Pacific Ocean and the warming over western parts 
of North America, while changes in the behavior of the North Atlantic 
Oscillation (NAO) have driven much of the warming over Europe and Asia.
    Changes in anthropogenic forcing may affect these modes, however, 
so quantifying the anthropogenic and natural components of the observed 
warming on regional scales remains a difficult and critical research 
question. For instance, several recent studies have concluded the 
temporal behavior of the NAO in recent decades is outside the range of 
natural variability, and moreover that this unusual recent behavior is 
linked to the (anthropogenic) warming of the tropical oceans. 
Similarly, some have argued that the recent behavior of ENSO is 
inconsistent with natural variability. Yet, attribution remains 
uncertain.
    Many global climate models, for instance, project changes in the 
statistics of ENSO variability with global warming, specifically of 
greater ENSO activity marked by larger interannual variations relative 
to the warmer mean state. More El Nino events would increase the 
probability of weather regimes that favor the regional patterns in 
Figure 2; yet, the details of ENSO are not well enough simulated in 
climate models to have full confidence in these projected changes, in 
part because the positive atmosphere-ocean feedbacks involved with ENSO 
mean that small errors in simulating the relevant processes can be 
amplified.
    Thus, while it is likely that changes in ENSO, the NAO and other 
natural modes of climate variability will occur as a result of 
anthropogenic climate change, their nature, how large and rapid they 
will be, and their implications for regional climate change around the 
world remain uncertain.
    Question 3. Please explain the meaning of `scientific consensus' 
and comment on the status of the science of climate change in the 
scientific and academic community.
    Answer. A key aspect to scientific consensus is the building of a 
consensus and, thus, the process. In the case of the Intergovernmental 
Panel on Climate Change (IPCC), the process is very open and inclusive.
    The mandate of IPCC is to provide policy makers with an objective 
assessment of the scientific and technical information available about 
climate change, its environmental and socio-economic impacts, and 
possible response options. The IPCC reports on the science of global 
climate change and the effects of human activities on climate in 
particular. Each new IPCC report reviews all the published literature 
over the previous 5 years or so, and assesses the state of knowledge, 
while trying to reconcile disparate claims, resolve discrepancies and 
document uncertainties. For the 2001 Third Assessment Report (TAR), 
Working Group I (which deals with how the climate has changed and the 
possible causes) consisted of 123 lead authors, 516 contributors, 21 
review editors, and over 700 reviewers. The lead authors all have to be 
satisfied with the content of the report and the wording. There are 
also several independent reviews at various stages, including a full 
governmental review, and all comments must be addressed and documented 
by the review editors. Final approval is through an intergovernmental 
meeting. This means that the report cannot be selective in what it 
deals with. It is a very credible document, and very much represents a 
consensus.
    The TAR concluded that climate is changing in ways that cannot be 
accounted for by natural variability and that ``global warming'' is 
happening. There are still and will always be climate change skeptics, 
but the vast majority of reputable scientists accept and agree with the 
major conclusions of the IPCC reports.
    Question 4. What is ``abrupt climate change?'' Can you identify any 
potential thresholds that might be crossed if insufficient action is 
taken to control CO2 emissions? For example, I have heard 
that beyond certain temperature increases, large ice sheets could 
collapse, leading to huge increases in sea level. Can you comment on 
this and other potential thresholds?
    Answer. There is an abundance of scientific evidence that shows 
major and widespread climate changes have occurred with startling 
speed. For example, roughly half of the warming of the North Atlantic 
Ocean since the last ice age was achieved in only a decade, and this 
warming was accompanied by significant changes in climate across most 
of the globe. Research over the past decade has shown that these 
abrupt--or nonlinear--climate changes have been especially common when 
the climate system was being forced to change most rapidly. Thus, the 
rate of buildup of carbon dioxide in the atmosphere may increase the 
possibility of large, abrupt and unwelcome regional or global climate 
events.
    The mechanisms of past abrupt climate changes are not yet fully 
understood, and climate models typically underestimate the size, speed 
and extent of those changes. Hence, future abrupt changes cannot be 
predicted with confidence. Yet, because of greenhouse warming and other 
human alterations of the earth system, and the long lifetime of carbon 
dioxide in the atmosphere, certain thresholds are likely to be crossed 
and we will not know we have crossed them until it is too late to alter 
the outcome.
    So what can we do in the face of such uncertainty? Someone recently 
brought to my attention the analogy of buying insurance. One does this 
not because it lessens the chance of some terrible event, but because 
it smoothes out the financial impacts if a catastrophic event does 
occur. In the case of abrupt changes in climate, buying insurance--in 
the form of sound climate policy--not only reduces the risk of severe 
climate impacts but also smoothes out the risk of having to make abrupt 
changes in policy, which we know are costly.
    Question 5. Can you tell us something about the time horizon for 
stabilizing climate, given how long carbon dioxide remains in the 
atmosphere? Do we need to begin to control emissions now or can we 
wait?
    Answer. Because of the long lifetime of carbon dioxide and the slow 
equilibration of the oceans, there is a substantial future commitment 
to further global climate change even in the absence of further 
emissions of greenhouse gases into the atmosphere. Several modeling 
groups have performed ``commitment'' runs in order to examine the 
climate response even if the concentrations of greenhouse gases in the 
atmosphere had been stabilized in the year 2000. The exact results 
depend upon the model, but they all show a further global warming of 
about another 0.5 C, and additional and significant sea level rises 
caused by thermal expansion of the oceans by the end of the 21st 
century. Further glacial melt is also likely.
    There is now also better quantification of the climate system 
response to different emission scenarios (stabilization at 550, 690 and 
820 ppmv concentrations of carbon dioxide by the year 2100). All global 
climate models contributing the Fourth IPCC Assessment Report (due to 
be published in 2007), for instance, produce similar warming trends in 
global surface temperatures over the next few decades, regardless of 
the emissions scenario. Moreover, nearly half of the early 21st century 
climate change arises from warming we are already committed to. By mid-
century, the choice of scenario becomes more important for the 
magnitude of warming, and by the end of the 21st century there are 
clear consequences for which scenario is followed.
    Question 6. Given that there is still some uncertainty about the 
details of future warming, how should such uncertainty be dealt with in 
designing policy responses?
    Answer. There is indeed uncertainty in the details of future 
warming. Climate models are not perfect, and uncertainties remain. For 
instance, the precise nature of aerosol/cloud interactions and how 
aerosols interact with the water cycle remains a major uncertainty in 
our understanding of climate processes and, thus, their representation 
in models. Yet, the ability of these models to simulate the past record 
(Figure 1) means that the processes being simulated are adequate enough 
to make the models very valuable tools. Moreover, in spite of 
uncertainties and differences among models, they produce a number of 
consistent results concerning future climate change (see Question 5 as 
well as my written testimony).
    Based on this and other evidence, I believe there is a clear need 
to begin to reduce emissions immediately. While some changes arising 
from global warming might be benign or even beneficial, the rate of 
change projected exceeds anything seen in nature in the past 10,000 
years and is apt to be disruptive in many ways. Economists have 
analyzed the costs of various policy responses and they tell us that 
the most cost-effective emission trajectories involve starting now to 
control emissions. Further delay will be costly.
    Question 7. How do we know that emissions of carbon dioxide and 
other greenhouse gases are causing Earth's temperature to rise, as 
opposed to other factors that we have no control over; such as sun 
spots? Some assert that an increase in solar irradiance is the main 
cause of the Earth's current warming trend. Therefore, reducing fossil 
fuel emissions would not impact the Earth's temperature.
    Answer. Although there is little doubt that the sun's radiant 
output impacts the Earth's climate on both decadal and centennial time 
scales, there is no credible evidence to suggest that an increase in 
solar irradiance is the main cause for the recent warming trend. This 
is addressed in my response to Question 1.
    Question 8a. There are some who question the veracity of the 
assertion that the earth has warmed substantially over the last 
century. Arguments typically fall into three categories. It would be 
useful if you would address each in turn:
    Urban Heat Island Effect. This is the claim that the underlying 
temperature data is tainted by the proximity of data-generating 
thermometers to cities. As urban areas have grown over the last fifty 
years, the air temperatures around these cities have increased due to 
larger amounts of heat generating substances like rooftops and 
roadways. Scientists claim to have corrected for the urban heat island 
effect. How was this done, and how can we be sure that it was done 
correctly?
    Answer. While amplified warming does occur in cities and is an 
important local phenomenon, a number of independent and recent studies 
have shown that urbanization is a negligible effect as far as 
continental-and hemispheric-space averages are concerned. Over land, 
temperature data come from fixed weather observing stations with 
thermometers housed in special instrument shelters. Records of 
temperature from many thousands of such stations exist. Some are in 
urban areas. Many are not.
    One concern regarding the construction of global temperature 
records is the variety of changes that may affect temperature 
measurements at an individual station. For example, the thermometer or 
instrument shelter might change, the time of day when the thermometers 
are read might change, or the station might move. These problems are 
addressed through a variety of procedures (for example, checking for 
consistency with data from neighboring stations) that have proven to be 
very effective. Other, perhaps more subtle influences (e.g., 
urbanization) are addressed either actively in the data processing 
stage or through dataset evaluation to ensure as much as possible that 
the data are not biased. For instance, several studies have compared 
global surface temperature time series made up of only rural stations 
with the ``standard'' global temperature time series, only to find out 
that there is no significant bias. The IPCC (2001) stated that urban 
heat island effects could contribute no more than six percent of the 
rising average temperature trends in recent decades, and a National 
Academy study of the surface temperature record concluded that the 
global surface temperature trend accurately reflects warming.
    Question 8b. Satellite and Airborne Balloon Data Contradict Surface 
Temperature Readings. Global mean temperature at the earth's surface is 
estimated to have risen by about half a degree F over the last two 
decades. On the other hand, satellite measurements of radiances and 
airborne balloon observations indicate that the temperature of the 
lower to mid-troposphere (the atmospheric layer extending from the 
earth's surface up to about 8 km) has exhibited almost no change during 
this period. Please explain whether this discrepancy is, indeed, real 
and how to account for it.
    Answer. I argue that there is no contradiction, and the reasons why 
are provided in my written testimony. There are several key points:

   The satellite and surface data differ in what they measure: 
        surface thermometers measure the air temperature at the Earth's 
        surface, while the satellite measurements in question infer 
        temperatures of different broad layers of the atmosphere which 
        respond differently to natural climate variations such as ENSO, 
        greenhouse gases and other factors that influence climate.
   A chronic difficulty in obtaining reliable climate records 
        from satellites has been changes in instruments, platforms, 
        equator-crossing times, and algorithms. The microwave sounding 
        unit (MSU) tropospheric temperature record has overcome some of 
        these problems, but how transitions between different 
        satellites are dealt with and other biases in the data result 
        in a range of global trend estimates. Several groups have 
        analyzed the data, and over 1979-2004 all data versions show 
        warming; however, the trend estimates range from 0.04 to 0.17 
        C decade-1. Such differences highlight the issue of 
        temporal homogeneity in the satellite data.
   Because about 15% of the MSU signal for middle tropospheric 
        temperature actually comes from the lower stratosphere, the 
        real warming of the middle troposphere is greater than that 
        indicated by the MSU data sets. This has been confirmed by new 
        analyses that explicitly remove the stratospheric influence, 
        which is about -0.08 C decade-1 on middle 
        tropospheric MSU temperature trends since 1979.
   By differencing MSU measurements made at different slant 
        angles, new data records can be created that are weighted more 
        toward the lower troposphere. The latest product exhibits a 
        warming trend that is 0.2 C decade-1 larger in the 
        tropics (where the largest ``discrepancy'' with surface warming 
        has been noted) than previous estimates. The result is tropical 
        warming consistent with that found in surface measurements, and 
        consistent with the warming produced by climate models.
   Radiosonde releases provide the longest record of upper-air 
        measurements, and these data exhibit similar warming rates to 
        the surface record since 1958. Unfortunately, vast regions of 
        the oceans and portions of the landmasses (especially in the 
        tropics) are not monitored so that there is always a component 
        of the global or hemispheric mean temperature that is missing. 
        Moreover, measurement errors and sampling issues affect the 
        radiosonde record as well. The correction for non-climatic 
        effects in these records has not received as much attention as 
        for the surface records, but efforts are increasing. A recent 
        study, for instance, finds that after accounting for previously 
        uncorrected errors due to daytime solar heating of the 
        radiosonde instruments, the tropical troposphere has warmed at 
        a rate (0.14 C decade-1) consistent with model 
        simulations and the surface record.

    Question 8c. The Hockey Stick. In recent months, there have been 
assertions that the statistical method used to analyze global 
temperature data for the last several hundred years was biased towards 
generating the ``hockey stick'' shaped curve that shows sustained low 
and stable temperatures for hundreds of years with an extremely sharp 
rise in the last 100 years. Can you comment on whether the observations 
depicted in the hockey stick curve are, indeed, legitimate?
    Answer. An important point is that the ``hockey stick'' curve does 
not serve as the basis for the scientific consensus that the planet is 
warming and that this warming is due to human activities. A very large 
number of independent studies have led to this conclusion.
    That said, the results of the original ``hockey stick'' graph (Mann 
et al. 1998; Nature) are legitimate and remain as a valuable estimate 
inside the set of available climate reconstructions of past centuries. 
Not all reconstructions agree in the details, but their primary 
structure is very similar throughout and they agree with our 
understanding of possible forcing factors, both natural and 
anthropogenic.
    Without going into detail, the recent criticisms raised against the 
statistical method used in Mann et al. (1998) either refer to very 
small effects or they cannot be supported. New investigations into the 
summaries of North American tree rings show that, independent of the 
exact procedure used in the summary of the individual series, all 
methods lead to essentially the same result as the original Mann et al. 
(1998) reconstruction. Strongly differing results can only be achieved 
if a significant portion of the climatic signal in the original proxy 
records is omitted (which, of course, is not desirable). Questions 
regarding the potential for a very large bias in the century-scale 
climate amplitude of the Mann et al. (1998) reconstruction (von Storch 
et al. 2004; Science) cannot be reproduced with a code that is verified 
on the real proxy data. Papers addressing these issues and confirming 
the validity of the Mann et al. (1998) findings are currently in the 
peer-review process.
    Question 9. Some say that global warming might be a positive 
development? Will agricultural crop productivity improve due to the 
greater amount of CO2 in the atmosphere, and can we expect 
the Arctic and Antarctic regions to become more habitable?
    Answer. Modest amounts of warming will have both positive and 
negative impacts. The effects of climate change on agricultural 
productivity depend on numerous inter-related factors, including rising 
temperatures, increased carbon dioxide in the atmosphere, and average 
precipitation levels. A modest increase in global temperatures could 
increase agricultural productivity in some areas by, for instance, 
lengthening the growing season. As stated earlier, however, the rate of 
change projected exceeds anything seen in nature in the past 10,000 
years and is apt to be disruptive in many ways. For instance, there is 
likely to be an amplified change in extremes associated with global 
warming. Extreme events, such as heat waves, floods and droughts, are 
exceedingly important to both natural systems and human systems and 
infrastructure.
    Concerning high latitude regions, where the warming is expected to 
be greatest, there is already strong evidence to suggest the current 
warming is having strong negative impacts. One example is severe 
coastal erosion due to retreating sea ice, increasing sea level, and 
thawing of coastal permafrost. Others include negative impacts to 
buildings, roads, and industry due to thawing of tundra and ice roads. 
Increases in insect outbreaks and forest fires also accompany ongoing 
warming. So the evidence is strong that the negative impacts are very 
likely to outweigh positive ones as rapid warming proceeds.
    Question 10. It is my understanding that the assessments of the 
progression of global warming through the next century and its impacts 
on changing the Earth's climate are largely based on computer modeling. 
It goes without saying that the planet's atmospheric, hydrologic, and 
meteorological systems are highly complicated. What can you say about 
how climate modeling capabilities have advanced since scientists began 
evaluating the problem? What is the level confidence that the computer 
models are providing useful projections of the future climate?
    Answer. The best climate models encapsulate the current 
understanding of the physical processes involved in the climate system, 
the interactions, and the performance of the system as a whole. They 
have been extensively tested and evaluated using observations. They are 
exceedingly useful tools for carrying out numerical climate 
experiments, but they are not perfect, and some models are better than 
others. Uncertainties arise from shortcomings in our understanding of 
climate processes operating in the atmosphere, ocean, land and 
cryosphere, and how to best represent those processes in models. Yet, 
in spite of these uncertainties, today's best climate models are now 
able to reproduce the climate of the past century (Figure 1), and 
simulations of the evolution of global surface temperature over the 
past millennium are consistent with paleoclimate reconstructions. This 
gives increased confidence in future projections.
    The shortcomings in our understanding of the processes involved in 
climate and how they are depicted in models arise from inadequate 
observations and theoretical underpinnings associated with the 
incredible complexity of dealing with scales from molecules and cloud 
droplets to the planetary-scale atmospheric circulation. These issues 
are addressed in several steps:

   Individual climate processes are dealt with as best as is 
        possible given the understanding and computational limitations.
   The processes are assembled in models and then the model 
        components are tested with strong constraints. The components 
        include modules of the atmosphere, the oceans, the land and sea 
        ice, and the land surface. These modules are coupled together 
        to mimic the real world.
   The climate system model as a whole is then integrated in an 
        unconstrained mode and thoroughly tested against observations.

    One strong test is to simulate the annual cycle of seasonal 
variations (the changes in climate from winter to summer). Another is 
to simulate observed variability from one year to the next. Yet another 
is to simulate past climate (Figure 1), even going back in time 
thousands or millions of years tested against records from ice cores, 
tree rings, and other ``proxy'' data.
    As our knowledge of the different components of the climate system 
and their interactions increases, so does the complexity of today's 
climate models. Also, many of the most pressing scientific questions 
regarding the climate system and its response to natural and 
anthropogenic forcings cannot be readily addressed with traditional 
models of the physical climate. One of the open issues for near-term 
climate change, for example, is the response of terrestrial ecosystems 
to increased concentrations of carbon dioxide. Will plants begin 
releasing carbon dioxide to the atmosphere in a warmer climate, thereby 
acting as a positive feedback, or will vegetation absorb more carbon 
dioxide and hence decelerate global warming? Related issues include the 
interactions among land use change, deforestation by biomass burning, 
emission of greenhouse gases and aerosols, weathering of rocks, carbon 
in soils, and marine biogeochemistry.
    Exploration of these questions requires a more comprehensive 
treatment of the integrative Earth system. In order to address these 
emerging issues, physical models are being extended to include the 
interactions of climate with biogeochemistry, atmospheric chemistry, 
ecosystems, glaciers and ice sheets, and anthropogenic environmental 
change. These new ``Earth System Models'', however, will require large 
investments in computing infrastructure before they can be fully 
utilized.
    Question 11. Is the recent rise in global temperature within the 
scope of natural variation? For instance, it has been observed that the 
world appears to be on a cyclical temperature pattern of rising and 
falling into and out of ice ages every several hundred thousand years 
or so. What has caused global temperatures to vary naturally by 5 to 7 
degrees thousands of years ago before humankind started burning fossil 
fuels and releasing large amounts of carbon dioxide and other 
greenhouse gases?
    Answer. Climate varies naturally. We consider natural variability 
as resulting from purely internal atmospheric processes as well as from 
interactions among the different components of the climate system, such 
as those between the atmosphere and oceans or the atmosphere and land. 
However, the most significant forcings with impact on climatic time 
scales are generally imposed upon the climate system.
    External forcings arise from a wide array of processes covering a 
range of spatial and temporal scales. ``Natural'' external forcings 
include changes in the global configuration of the continents, the slow 
increase of solar luminosity that occur over hundreds of millions of 
years, variations in the Earth's orbit, and the injection of aerosols 
high into the atmosphere by explosive volcanic eruptions. Human 
emissions of carbon dioxide and other greenhouse gases, the local 
emission and suspension of small (aerosol) particles on timescales of 
minutes to days, and changes in land use are some examples of 
anthropogenic forcings.
    The global temperature variations reflected in ice core records 
from the distant past reflect the influence of natural external 
forcings on the climate system. However, these reconstructions of past 
temperature swings have also demonstrated that the projected rate of 
global temperature change exceeds anything seen in nature in the past 
10,000 years.
    Greenhouse gas concentrations in the atmosphere are now higher than 
at any time in at least the last 750,000 years. It took at least 10,000 
years from the end of the last ice age for levels of carbon dioxide to 
increase 100 ppmv to 280 ppmv, but that same increase has occurred over 
only the past 150 years to current values of over 370 ppmv. About half 
of that increase has occurred over the last 35 years, owing mainly to 
combustion of fossil fuels and deforestation. In the absence of 
controls, future projections are that the rate of increase in carbon 
dioxide amount may accelerate, and concentrations could double from 
pre-industrial values within the next 50 to 100 years.
    Responses of James W. Hurrell to Questions From Senator Bunning
    Question 1. Would you say that the steps America has taken in the 
recent years to improve energy efficiency and produce lower carbon 
emissions from power generation are the right first steps in addressing 
climate change? Within that construct, given the current U.S. 
electricity supply that is more than 50% derived from coal, is 
encouraging clean coal technology, IGCC and carbon sequestration the 
most important immediate policy action we can take?
    Answer. The only way to minimize human-induced climate change is to 
reduce emissions or increase removal of greenhouse gases from the 
atmosphere. Reducing carbon dioxide emissions from power generation is 
thus a very important step in addressing climate change. Improving 
energy efficiency is also desirable.
    Regarding the second part of your question, I am not an expert in 
energy technology, policy or economics. But regarding carbon 
sequestration, one of the major advances in climate modeling in recent 
years has been the introduction of coupled climate-carbon models. 
Climate change is expected to influence the capacities of the land and 
oceans to act as repositories for anthropogenic carbon dioxide, and 
hence provide a feedback to climate change. These models now allow us 
to assess the nature of this feedback.
    Results show that carbon sink strengths are inversely related to 
the rate of fossil fuel emissions, so that carbon storage capacities of 
the land and oceans decrease and climate warming accelerates with 
faster carbon dioxide emissions. Furthermore, there is a positive 
feedback between the carbon and climate systems, so that further 
warming acts to increase the airborne fraction of anthropogenic carbon 
dioxide and amplify the climate change.
    As a non-expert on energy technology, I can only add that experts 
believe a portfolio of technologies now exists to meet the world's 
energy needs over the next 50 years and limit the trajectory of 
atmospheric carbon dioxide increases. No single element of this 
portfolio (e.g., nuclear power, efficient baseload coal plants, 
efficient vehicles, etc.) can do the entire job by itself.
    Question 2. Scientific research shows that mitigation actions taken 
now mainly have benefits 50 years from now. Dr. Hurrell, you said ``it 
is vital that all nations identify cost-effective steps that they can 
take now.'' Given that viewpoint, do you agree that clean coal 
technology, renewable fuels and nuclear power are the most promising 
areas the government can spend research dollars?
    Answer. I cannot suggest which energy technologies should receive 
greatest emphasis in the near-term because I am not an expert in energy 
technology or policy. However, as noted above, I believe it is 
essential to encourage technological innovation and explore the entire 
spectrum of energy generating technologies, including nuclear, clean 
coal, and renewable fuels.
    Question 3. While you have presented what appears to be a united 
scientific front in the form of the statement from the academies of 
science from 11 countries, I am concerned by some of the news since the 
release of that statement. The Russian Academy of Sciences says it was 
misrepresented and that Russian scientists actually believe that the 
Kyoto Protocol was scientifically ungrounded. I am also aware that 
there was a significant misrepresentation on the science between our 
academy and the British representative. Given this background, wouldn't 
you say there are still some pretty fundamental disagreements about the 
science of climate change among scientists around the world?
    Answer. As outlined in my written testimony, I do not believe there 
are fundamental disagreements about the science of climate change. 
Please also see my response to Question 3 from Senator Bingaman. There 
is overwhelming agreement among climate scientists that human 
activities are increasing the concentrations of greenhouse gases in the 
atmosphere and that this is resulting in significant changes to Earth's 
climate.
    I therefore believe the academies statement accurately represents 
the current state of scientific understanding of climate change. 
However, I was not involved in the process of generating the statement, 
and I respectfully suggest that further concerns are most appropriately 
addressed to representatives of the U.S. National Academy.
    Question 4. In this international academies statement, you find 
that an ``immediate response that will, at a reasonable cost, prevent 
dangerous anthropogenic interference with the climate system,'' but 
continue to say in the following paragraph, ``minimizing the amount of 
this carbon dioxide reaching the atmosphere presents a huge 
challenge.'' Could you please elaborate, since any response can't both 
be a ``reasonable cost'' and a ``huge challenge'' proposition, how you 
resolve the two?
    Answer. Again, I respectfully suggest that questions about the 
international academies statement are most appropriately addressed to 
those who drafted and issued the statement. I would point out that the 
challenge of dealing with climate change involves much more than 
financial costs. One aspect of this challenge is the very long-term 
nature of climate change. The emissions of greenhouse gases that have 
already occurred will result in climate changes that play out for 
decades, or, in the case of sea-level rise, over centuries. We will 
thus need to devise and maintain multi-generational mitigation and 
adaptation strategies. I believe that this can be properly 
characterized as a huge challenge quite apart from the issue of 
financial costs.
    Question 5. Several scientists have cited events like the high 
temperatures in Europe in the summer of 2003 and increased storminess 
in the 1980s and 1990s as evidence of climate change. Don't global 
ecosystems go through natural periods similar to these as well?
    Answer. Climate varies naturally from both internal processes and 
from changes in ``natural'' external forcing (see my response to 
Question 11 from Senator Bingaman). However, the critical point is that 
the projected rate of global temperature change exceeds anything seen 
in nature in the past 10,000 years, and it is unlikely many natural 
systems can adapt. An example is the coral reefs, which some scientists 
believe are already beyond a point of recovery as a result of ocean 
warming. Greenhouse gas concentrations in the atmosphere are now higher 
than at any time in at least the last 750,000 years, with very rapid 
increases in recent decades owing to mainly the combustion of fossil 
fuels and deforestation. In the absence of controls, future projections 
are that the rate of increase in carbon dioxide amount may accelerate, 
and concentrations could double from pre-industrial values within the 
next 50 to 100 years. Thus, we will experience climate conditions in 
the next 100 years that are very different from any experienced during 
the entire development of human society.
    Question 6. There are a number of astrophysicists and other 
scientists who believe that sunspots are a major contributor to 
changing temperatures. A recent survey showed at least 100 such studies 
are underway. Why don't scientists put as much emphasis on this 
possibility or other aspects of natural climate variability as they do 
on emissions from human activity?
    Answer. Scientists put a tremendous effort on unraveling the 
complexities of the climate system, including the role that changes in 
natural external forcings (such as changes in solar luminosity) have 
played in producing past variations in global surface temperature. Our 
understanding of the physical processes involved in the climate system 
is encapsulated in today's climate system models, which are now able to 
reproduce the climate of the past century with impressive fidelity (see 
Figure 1 and my response to Question 1 from Senator Bingaman). As a 
result, climate modelers are able to test the role of various forcings 
in producing the observed changes in global temperature. These 
simulations clearly indicate that the global surface warming of recent 
decades is a response to the increased concentrations of greenhouse 
gases and sulfate aerosols in the atmosphere. When the models are run 
without these forcing changes, and only include ``natural'' forcings 
from changes in solar irradiance and volcanic eruptions, they fail to 
capture the almost linear increase in global surface temperatures since 
the mid-1970s.
    Question 7. Much of the discussion about climate science being 
settled is based on the summary chapter of the Intergovernmental Panel 
on Climate Change of the United Nations. The chapter made specific 
predictions about the pace of rising temperatures and the relative 
importance of human activities to climate change. And yet, the body of 
the report is much more ambiguous and inconclusive about the current 
state of the science. Is anything being done to ensure that the summary 
of the next IPCC report is more reflective of the overall analysis by 
the scientists?
    Answer. I assume the question is referring to the Summary for 
Policy Makers (SPM), which is approved word-by-word and line-by-line in 
an Intergovernmental Meeting in which the U.S. Government fully 
participates. This summary involves negotiations about how the 
scientific findings are expressed, but it does not change the science 
on which it is based. There is also a Technical summary and executive 
summaries for each chapter. The report as a whole goes through a very 
rigorous review process (see my response to Question 3 from Senator 
Bingaman and also my written testimony for more details on the IPCC 
process). The openness of the entire process results in a very 
credible, consensus document.
    Question 8. The natural ``greenhouse effect'' has been known for 
nearly two hundred years and is essential to the provision of our 
current climate. There is significant research in the literature today 
that indicates humans, since the beginning of their existence, have 
caused an increase in the greenhouse effect. Some argue that the 
development of agriculture 6,000 to 8,000 years ago has helped to 
forestall the next ice age. The development of cities, thinning of 
forests, population growth, and most recently the burning of fossil 
fuels, have all had an impact on climate change. Our ecosystems have 
constantly adapted to change, as we as humans have adapted to our 
ecosystems as well. Is it possible that the increased presence of 
CO2 caused by the 8,000 years of modern human existence may 
be something our ecosystems will continue, as they previously have, to 
naturally adapt to?
    Answer. Ecosystems do not adapt to change. Individual species that 
make up ecosystems adapt to changing climate conditions, move, or go 
extinct. Ecosystems change as the mixture and characteristics of 
species within them change. In some cases, ecosystems disappear and are 
replaced by other ecosystems that contain different species and provide 
different services.
    It is true that a broad range of human activities, including land 
use change, thinning or removal of forests, and, more recently, the use 
of fossil fuels, have affected the Earth's climate and ecosystems over 
the course of human history. But we are witnessing a unique period.
    Greenhouse gas concentrations in the atmosphere are now higher than 
at any time in at least the last 750,000 years. It took at least 10,000 
years from the end of the last ice age for levels of carbon dioxide to 
increase 100 ppmv to 280 ppmv, but that same increase has occurred over 
only the past 150 years to current values of over 370 ppmv. About half 
of that increase has occurred over the last 35 years, owing mainly to 
combustion of fossil fuels and deforestation. In the absence of 
controls, future projections are that the rate of increase in carbon 
dioxide amount may accelerate, and concentrations could double from 
pre-industrial values within the next 50 to 100 years. The result is 
that the rate of change as projected exceeds anything seen in nature in 
the past 10,000 years.
    The rapid climate change that we are experiencing now is already 
affecting some ecosystems. The ranges of migrating birds and some fish 
and insect species are changing. Tropical regions are losing animal 
species, especially amphibians, to warming and drying, and coral reefs 
are dying because of excess ocean warmth. Continued rapid climate 
change is expected to result in significant ecosystem impacts over the 
next 100 years and beyond. Some plants and animals may be unable to 
adapt or migrate in response to such a rapidly changing climate. Rare 
ecosystems, like mangrove forests and alpine meadows, could disappear 
in some areas.
     Responses of James W. Hurrell to Questions From Senator Talent
    Question 1. You note that most of the warming since 1979 has 
occurred in cold-weather winter and spring months, and that only 0.7 
degree Centigrade. Is there any harm in this?
    Answer.The warming has occurred in all seasons and over much of the 
globe, but not uniformly. Climate models used to project future climate 
indicate that the largest temperature increases will occur over land 
relative to oceans, with the greatest warming at high latitudes of the 
Northern Hemisphere during the winter and spring seasons--much like the 
pattern we are observing. Over portions of North America, Europe and 
Asia regional increases in average surface temperature since 1979 have 
exceeded 1-2 C (see Figure 2 in my response to Senator Bingaman).
    Modest warming will have both positive and negative impacts. A 
modest increase in global temperatures could increase agricultural 
productivity in some areas by, for instance, lengthening the growing 
season. But in high latitude regions, where the warming is expected to 
be greatest, there is already strong evidence to suggest the current 
warming is having strong negative impacts, such as severe coastal 
erosion due to retreating sea ice, increasing sea level, and thawing of 
coastal permafrost. The thawing of tundra is having negative impacts on 
buildings, roads, and industry. Higher global sea levels associated 
with warmer ocean temperatures mean that storm surges associated with 
hurricanes will be more destructive. Moreover, the rate of future 
warming as projected exceeds anything seen in nature in the past 10,000 
years.
    Question 2. You also note that temperatures from 1861-1920 were 
constant, with a 0.3 degree Centigrade warming from 1921-1950, a 
cooling of 0.1 degree through the mid 1970s, followed by a warming of 
0.55 degree through now. Doesn't this imply temperature fluctuation 
more so than the usual argument of a constant increase in temperature? 
If nothing else, doesn't it imply that nature causes of temperature 
change more than overtake those of human origin (since emissions have 
generally been increasing throughout the Industrial Age and didn't drop 
off in the 50s, 60s, and 70s)?
    Answer. Global average surface temperatures show a linear warming 
trend of 0.6 C  0.2 C since the beginning of the 20th century. 
Linear trends are a simple way to summarize the change in a time series 
over some period of time. In my written testimony, I was noting that 
the change in observed global surface temperatures is more complex than 
a simple linear trend value would indicate (see Figure 1 in my response 
to Senator Bingaman).
    You are correct to note that natural variations are evident in the 
global surface temperature record. Natural variations result from 
purely internal atmospheric processes as well as from interactions 
among the different components of the climate system, such as those 
between the atmosphere and ocean associated with the El Nino/Southern 
Oscillation (ENSO) phenomenon in the tropical Pacific. Changes in solar 
luminosity and the injection of aerosols high into the atmosphere by 
explosive volcanic eruptions are also considered to be ``natural'' 
external forcings. Many of the large amplitude year-to-year 
fluctuations evident in Figure 1 reflect ENSO, volcanic eruptions and 
other variations associated with natural variability. Natural 
variations also affect temperatures on longer time scales, for instance 
associated with multi-decadal variations in the Meridional Overturning 
Circulation (MOC) in the ocean.
    Climate models, when forced with known changes in natural external 
forcings, produce variations in global surface temperatures that mimic 
observations; yet, these simulations fail to reproduce the observed 
warming over recent decades (Figure 1). The recent warming (which, 
incidentally, is well described by a linear trend) can only be captured 
when known changes in anthropogenic forcings are added to the models as 
well. This result, combined with many other pieces of knowledge 
(summarized in my written testimony), led the IPCC to conclude in its 
third assessment report that ``most of the warming observed over the 
last 50 years is attributable to human activities.'' The best 
assessment of global warming remains that the human climate signal 
emerged from the noise of background variability in the late 1970s.
    Question 3. You add that the National Research Council in 2000 
studied the problem and concluded that ``the warming trend in global-
mean surface temperature observations during the past 20 years is 
undoubtedly real and is substantially greater than the average rate of 
warming during the 20th century. The disparity between surface and 
upper air trends in no way invalidates the conclusion that surface 
temperature has been rising.'' Please explain the basis for the strong 
NRC position in the face of remaining data discrepancies.
    Answer. Please see both my written testimony and my answer to 
Question 8 from Senator Bingaman for more relevant details. In short, 
initial analyses of satellite data that measure the temperature of 
broad atmospheric layers indicated that temperatures in the troposphere 
showed little or no warming, in stark contrast with surface air 
measurements. Climate change skeptics used this result to raise 
questions about the reliability of the surface record. The NRC report, 
however, did not find this to be the case. It, like the IPCC 
assessments and many independent studies in the refereed literature, 
concluded that, while the surface record is not perfect, it does depict 
large-scale changes in surface temperature to a high level of 
certainty.
    Independent analyses of global upper-air temperatures derived from 
satellites also show warming since 1979, when the satellite record 
begins. However, trend estimates range from 0.04 to 0.17 C 
decade-1. Such differences highlight the issue of temporal 
homogeneity in the satellite data.
    Question 4. You note that even if we would have stabilized our 
emissions as of 2000, temperatures would still increase by 0.5 degree C 
by 2100. What level of emissions reductions would be needed (and when) 
in the U.S. and world-wide to accomplish this? If developing nations do 
not participate (as we expect they won't) and in fact increase their 
emissions (as we expect they will), what greater level of reductions 
would the U.S. have to make?
    Answer. The first part of your question refers to the so-called 
``commitment'' runs performed by several modeling groups around the 
world in order to examine the climate response if there are no further 
increases in global emissions of greenhouse gases into the atmosphere. 
So, effectively, no additional reductions are required for this 
emission scenario to be realized. However, as you note, further 
increases in emissions are likely, especially as countries like China 
and India strive to reach a standard of living similar to ours.
    The second question is beyond my expertise. I do note, however, the 
CO2 emissions reductions necessary to achieve a given target 
depend on the quantitative details of the stabilization target, the 
emissions judged likely to occur in the absence of a focus on carbon (a 
business-as-usual trajectory), and how natural sinks for atmospheric 
CO2 will behave (see also my response to Question 1 from 
Senator Bunning). For reference, Pacala and Socolow (2004, Science) 
note that stabilization at 500 ppmv (the current CO2 
concentration is near 375 ppmv) requires that emissions be held near 
current levels (7 GtC year-1) for the next 50 years, even 
though they are currently on a doubling path. This is because 
greenhouse gases have very long atmospheric lifetimes. They build up in 
amounts over time, as has been observed.
    Question 5. You note that the benefits of actions taken today won't 
appear for 50 years or more. Can you even quantify those benefits, or 
offer any degree of certainty that they will be realized? Will they 
even materialize unless we take the drastic action of reducing 
emissions to 2000 levels (or lower)?
    Answer. I note in my written testimony that ``it should be 
recognized that mitigation actions taken now mainly have benefits 50 
years and beyond now.'' Again, this statement refers to the long 
lifetime of CO2 in the atmosphere and the slow equilibration 
of the oceans, so that there is a substantial future commitment to 
further global climate change even in the absence of further emissions 
of greenhouse gases into the atmosphere. The consequence of inaction is 
that the rate of increase in carbon dioxide amount may accelerate, and 
concentrations could double from pre-industrial values within the next 
50 to 100 years. The resulting very rapid rate of climate change is apt 
to be disruptive in many ways, as summarized by the IPCC and elsewhere.
    Question 6. If all the countries that have signed Kyoto stay within 
compliance of Kyoto, how much of a reduction in global warming would 
this result in?
    Answer. If the Kyoto Protocol had gone into effect with the U.S. 
included, studies indicate that, under reasonable assumptions, it would 
delay the doubling of carbon dioxide concentrations in the atmosphere 
by about 15 years (from about 2060 to 2075). This result, however, 
depends greatly on what is done after 2012. Without U.S. involvement, 
the gain is closer to 10 years.
    Question 7. Can you confirm that suspended water vapor levels, 
cloud cover percentages and direct solar irradiation changes over time 
all represent variables in these forecasting models that could have 
significant impacts on the conclusions of the results of these models?
    Answer. The best climate models encapsulate the current 
understanding of the physical processes involved in the climate system, 
the interactions, and the performance of the system as a whole. They 
have been extensively tested and evaluated using observations. They are 
exceedingly useful tools for carrying out numerical climate 
experiments, but they are not perfect, and some models are better than 
others.
    Water vapor, cloud, and solar radiation are all dealt with in 
climate models, although there is considerable uncertainty associated 
with the depiction of cloud owing to its complexity. In fact, this is a 
major source of the uncertainty in future climate projections, and it 
is fully expressed in the projections of IPCC. In spite of differences 
among models and the uncertainties that exist, however, climate models 
produce some consistent results regarding future projections of 
climate, as detailed in my written testimony. For instance, regardless 
of the emissions scenario, all climate models produce very similar 
warming trends over the next few decades.
    Question 8. In looking at pre-industrial global temperature 
patterns, would you agree that changes in temperatures over time have 
occurred that had no anthropogenic basis?
    Answer. Yes. And this is true of today's climate as well. Please 
see my answer to your Question 2.
    Question 9. Do we know what the ``best'' global temperature is to 
sustain life?
    Answer. It seems to me that the answer to this question will vary 
depending on the nature of life, whether biota, insects, mammals, or 
humans. The process of evolution guarantees that we are most adapted to 
the current or past climate. Life itself depends enormously on 
intricate webs and predator-prey relationships, so that if one link in 
the chain is upset it can propagate through the whole chain. Examples 
abound. These include how earlier springs lead to earlier hatching of 
insects but perhaps not birds. So, when the birds hatch, their 
traditional food is no longer available and they may be in jeopardy. 
This also happens with disruptions like drought. Drought dries up 
puddles and lakes and destroys the natural predators for mosquito 
larvae, so after a drought there is an expansion of mosquitoes and 
greater risk of outbreaks of vector borne disease such as malaria or 
Rift Valley fever.
    Question 10. What is currently being done to curb emissions from 
parts of the world in poverty who are deforesting their environment and 
burning biomass for all means of day-to-day living, and are these 
emissions continuing to increase in the world?
    Answer. I am not a policy expert, and I am not familiar with the 
policies of other nations. I cannot answer this question, beyond noting 
that deforestation and biomass burning is accelerating in many parts of 
the world.
    Question 11. Do you believe it is practical to seek emission 
controls in parts of the world that are struggling in poverty?
    Answer. My personal view it that it is vital that all nations 
identify cost-effective steps that they can take now, to contribute to 
substantial and long-term reductions in net global greenhouse gas 
emissions. Some countries can do more than others, but it is important 
that the science not be ignored while designing policies.
    Question 12. What is being done to curb emissions in the developing 
countries like China and India?
    Answer. Again, I am not a policy expert. I am unfamiliar with what 
is being done in countries like China and India to curb emissions, but 
I hope they are considering the diverse portfolio of energy 
technologies that exists now and can contribute toward stabilization 
strategies.
   Responses of James W. Hurrell to Questions From Senator Feinstein
    Question 1. Is there any credible scenario for stabilizing 
greenhouse gas emissions that does not involve the United States and 
other major emitters stopping their emissions growth over the next 
couple of decades and sharply reversing their emissions growth by 2050?
    Answer. The answer depends on the stabilization target as well as 
several other factors. Pacala and Socolow (2004, Science) note that 
stabilizing atmospheric concentrations of CO2 at 500 ppmv 
(the current CO2 concentration is near 375 ppmv) requires 
that global emissions be held near current levels (7 GtC 
year-1) for the next 50 years, even though they are 
currently on a doubling path. Holding global emissions near current 
levels for the next 50 years would require that emissions growth in any 
particular nation or group of nations be matched by emissions 
reductions elsewhere. Such an effort requires full consideration of the 
diverse portfolio of energy technologies that exists.
    Question 2. Would the National Commission on Energy Policy's 
proposal stop and then reverse U.S. greenhouse gas emissions?
    Answer. I am not familiar with the proposal you reference. I cannot 
comment.
                                 ______
                                 
   Responses of Ralph J. Cicerone to Questions From Senator Bingaman

    Question 1. Over the last several decades, anthropogenic emissions 
have ``substantially contributed'' to the increase in average global 
temperatures. Upon receiving a question from one of the Senators, one 
of the panelists suggested that ``80 percent'' of the warming was due 
to human activities. Do all the panelists agree? Please provide 
information as to how this estimate was derived.
    Answer. I am not sure of the 80 percent number specifically, but I 
do agree that it is likely that most of the global mean surface 
temperature increase since the late 1970s is due to human activities. 
This conclusion is consistent with that reached by Intergovernmental 
Panel on Climate Change (IPCC) in their 2001 assessment of the 
scientific literature and the 2001 report of the NRC Climate Change 
Science: An Analysis of Some Key Questions.
    This conclusion is generally based on studies that compare the 
observed climate record from 1860 to today with global mean temperature 
simulated in three computational climate model scenarios:

          1) Only natural variability (due to solar and volcanic 
        variability)
          2) Only anthropogenic variability (due to greenhouse gases 
        and aerosols)
          3) Both natural and anthropogenic variability

    In these studies, the models run with only natural variability are 
unable to reproduce the warming observed since the late 1970s, 
typically showing no trend over this time period (e.g., Stott et al., 
2000; Meehl et al., 2004). Thus, we conclude that human-caused climate 
forcings have disrupted Earth's energy balance, causing an increase in 
global mean surface temperatures (NRC, 2005).
    Improved understanding of the natural variability of the climate 
system supports the conclusion that human activities are mostly 
responsible for global temperature increases of the past three decades. 
In particular, new studies of solar variability show that there has 
been little if any trend in the Sun's brightness over the past 25 
years, ruling out solar variability as a major driver of observed 
warming (see Response to #7 for more details).
    Because of the still uncertain level of natural variability 
inherent in the climate record and the uncertainties in the time 
histories of the various forcing agents, a causal linkage between the 
buildup of greenhouse gases in the atmosphere and the observed climate 
changes during the 20th century cannot be unequivocally established. 
The fact that the magnitude of the observed warming is large in 
comparison to natural variability as simulated in climate models is 
suggestive of such a linkage, but it does not constitute 
incontrovertible proof of one because the model simulations could be 
deficient in natural variability on the decadal to century time scale.
    Question 2. We received testimony that sought to distinguish 
between average global temperature changes causes primarily by 
anthropogenic emissions and local/regional temperature changes caused 
at times by natural variation. Please explain in greater detail.
    Answer. As discussed in the response to #1, there is good evidence 
that anthropogenic emissions of greenhouse gases are responsible for 
global mean increases in surface temperature that have been occurring 
since the late 1970s. It is more difficult to attribute changes 
observed on local and regional scales to anthropogenic causes because 
the range of natural climate variability is known to be quite large (in 
excess of several degrees Celsius) on these smaller spatial scales and 
shorter time scales and because global climate models have more skill 
in predicting climate for large regions and long time scales. 
Precipitation also can vary widely. For example, there is evidence to 
suggest that droughts as severe as the ``dust bowl'' of the 1930s were 
much more common in the central United States during the 10th to 14th 
centuries than they have been in the more recent record. Mean 
temperature variations at local sites have exceeded 10 C (18 F) in 
association with the repeated glacial advances and retreats that 
occurred over the course of the past million years.
    Question 3. Please explain the meaning of `scientific consensus' 
and comment on the status of the science of climate change in the 
scientific and academic community.
    Answer. Scientific understanding is continually undergoing changes 
and refinements as hypotheses are tested and experiments are conducted. 
At any one time it is possible in various ways to test the degree of 
consensus that may exist about the state of scientific knowledge in a 
particular area and the degree of uncertainty that may exist. For 
example, the National Research Council has developed a process to 
produce its ``consensus'' reports regarding current scientific 
knowledge. The NRC process begins by selecting a committee of highly-
qualified experts that represents the range of disciplines, expertise, 
and perspectives necessary to make an informed and objective assessment 
on the topic in question. The committee assembles data from a variety 
of sources, including the scientific literature, the testimony of other 
experts, and the public. Using these data, its own collective 
knowledge, and assessment of the existing scientific evidence, the 
committee conducts deliberations and writes a draft report of consensus 
findings with supporting arguments. Each committee member must agree to 
all of the findings and recommendations in the report, although in rare 
cases a committee member can ask that a dissenting opinion be included. 
Each report is subjected to rigorous, anonymous review by a group of 
independent experts before it is approved in final form and released to 
the public. The National Research Council has issued a number of 
reports concerning the state of knowledge and uncertainties in climate 
change science.
    The climate science community has also developed additional 
processes for articulating consensus on the state of science, largely 
through the preparation of assessment reports. The largest and most 
well-known of climate assessment activities is conducted by the 
Intergovernmental Panel on Climate Change (IPCC), which has produced 
major assessments on a regular basis over the past 15 years. The most 
recent IPCC assessment of the science of climate change was published 
in 2001 (IPCC, 2001). An NRC committee examined this assessment and 
found that the full IPCC Working Group I report is an admirable summary 
of research activities in climate science (NRC, 2001a). IPCC (2001) and 
NRC (2001a) both conclude that climate is changing and that the recent 
changes are likely due in large part to human activities.
    A less formal way of identifying a scientific consensus is by 
considering the breadth of the scientific literature and presentations 
at scientific conferences. For example, a recent analysis of over 900 
papers published in refereed scientific journals between 1993 and 2003 
with keywords ``global climate change'' concluded that there is a 
strong convergence of views in the scientific community that climate is 
changing and that recent warming is largely due to human activities 
(Oreskes, 2004).
    Question 4. What is ``abrupt climate change''? Can you identify any 
potential thresholds that might be crossed if insufficient action is 
taken to control CO2 emissions? For example, I have heard 
that beyond certain temperature increases, large ice sheets could 
collapse, leading to huge increases in sea level. Can you comment on 
this and other potential thresholds?
    Answer. Abrupt climate change generally refers to a large shift in 
climate that takes place so rapidly and unexpectedly that human or 
natural systems have difficulty adapting to it. Such a climate shift 
can persist for years or longer--such as marked changes in average 
temperature, or altered patterns of storms, floods, or droughts--over a 
widespread area such as an entire country or continent, In the context 
of past abrupt climate change, ``rapidly'' typically means on the order 
of a decade (NRC, 2002).
    Abrupt climate change can occur when the Earth system gets pushed 
across a threshold, whether by some sudden event like a massive 
volcanic eruption or by the accumulation of more gradual changes in the 
climate system. It is not yet known what the thresholds are or whether 
human-induced increases in greenhouse gases will trigger abrupt climate 
changes. Scientists are concerned about increasing greenhouse gases 
because past abrupt climate changes have been especially common when 
the climate system itself was being altered.
    A question of great societal relevance is whether the North 
Atlantic circulation, including the Gulf Stream, will remain stable 
under the global warming that is expected to continue for the next few 
centuries. A shutdown of the circulation would not induce a new ice 
age, but would cause major changes both in the ocean (major circulation 
regimes, upwelling and sinking regions, distribution of seasonal sea 
ice, ecological systems, and sea level) and in the atmosphere (land-sea 
temperature contrast, and the intensity, frequency, and paths of 
storms).
    Other potential impacts of a global-warming induced abrupt climate 
change could be associated with increased frequency of extreme events 
related to land-surface hydrology. Great variability in precipitation 
patterns, ranging from heavy rainstorms and flooding to persistent 
drought, might become more common. In particular, some models suggest 
that greenhouse warming will cause El Nino manifestations to become 
stronger and more frequent. It is important to note that not all models 
agree on the potential impacts of global warming on abrupt climate 
change.
    Question 5. Can you tell us something about the time horizon for 
stabilizing climate, given how long carbon dioxide remains in the 
atmosphere? Do we need to begin to control emissions now or can we 
wait?
    Answer. Carbon dioxide can remain in the atmosphere for many 
decades and major parts of the climate system respond slowly to changes 
in greenhouse gas concentrations. Although carbon dioxide is the most 
significant greenhouse gas perturbed by humans, other anthropogenic 
greenhouse gases also have an important impact on climate. These 
include (1) methane, for which concentrations have increased by about a 
factor of 2.5 since preindustrial times, but have stopped increasing 
more recently for unknown reasons; (2) halocarbons such as 
chlorofluorocarbons, whose emissions were controlled because they 
contribute to ozone depletion in the stratosphere; and (3) nitrous 
oxide, which continues to rise.
    Even if greenhouse gas levels were stabilized instantly at today's 
levels, the climate would still continue to change as it adapts to the 
increased emissions of recent decades, as illustrated in Figure 1. For 
current models with a midrange climate sensitivity and average 
assumptions about the greenhouse effects of atmospheric aerosols, 
Wigley (2005) estimates next 400 years, with most of the warming 
occurring within the first 100 years (see the center red line in Figure 
1*). Thus, even with no greenhouse gas emissions from this point 
forward, we would be experiencing the impacts of climate change 
throughout the 21st century and beyond.
---------------------------------------------------------------------------
    * Figures 1-3 have been retained in committee files.
---------------------------------------------------------------------------
    If it were possible to control emissions such that they stayed at 
today's levels into the future, we would not be able to stabilize 
climate for at least 400 years, as illustrated in Figure 2. Failure to 
implement significant reductions in net greenhouse gas emissions now, 
will make the job much harder in the future.
    Question 6. Given that there is still some uncertainty about the 
details of future warming, how should such uncertainty be dealt with in 
designing policy responses?
    Answer. Pinpointing the magnitude of future warming is hindered 
both by remaining gaps in understanding the science and by the fact 
that it is difficult to predict society's future actions, particularly 
in the areas of population growth, economic growth, and energy use 
practices. However, a lack of full scientific certainty about some 
aspects of climate change is not a reason for delaying an immediate 
response that will, at a reasonable cost, prevent dangerous 
anthropogenic interference with the climate system. Indeed, relevant 
policy actions that affect population growth, economic growth, energy 
use practices, and other societal factors will have an impact on future 
warming.
    Question 7. How do we know that emissions of carbon dioxide and 
other greenhouse gases are causing Earth's temperature to rise, as 
opposed to other factors that we have no control over; such as sun 
spots? Some assert that an increase in solar irradiance is the main 
cause of the Earth's current warming trend. Therefore, reducing fossil 
fuel emissions would not impact the Earth's temperature.
    Answer. Please see the response to #1, which addresses how 
scientists attempt to determine the contributions of natural and human 
causes to observed climate change.
    The extent to which variations in the Sun might contribute to 
recent observed warming trends is an area of active research. The Sun's 
brightness--its total irradiance--has been measured continuously by a 
series of satellite-based instruments for more than two complete 11-
year solar cycles. These multiple solar irradiance datasets have been 
combined into a composite time series of daily total solar irradiance 
from 1979 to the present. Different assumptions about radiometer 
performance lead to different reconstructions for the past two decades. 
Recent analyses of these measurements, taking into account instrument 
calibration offsets and drifts, argue against any detectable long-term 
trend in the observed irradiance to date. Likewise, models of total 
solar irradiance variability that account for the influences of solar 
activity features--dark sunspots and bright faculae--do not predict a 
secular change in the past two decades. Thus, it is difficult to 
conclude from either measurements or models that the Sun has been 
responsible for the warming observed over the past 25 years, although 
this hypothesis was more plausible before the availability of more 
recent evidence.
    Knowledge of solar irradiance variations prior to the commencement 
of continuous space-based irradiance observations in 1979 is 
rudimentary. Models of sunspot and facular influences developed from 
the contemporary database have been used to extrapolate daily 
variations during the 11-year cycle back to about 1950 using 
contemporary sunspot and facular proxies, and with less certainty 
annually to 1610. Circumstantial evidence from cosmogenic isotope 
proxies of solar activity (14C and 10Be) and 
plausible variations in Sun-like stars motivated an assumption of long-
term secular irradiance trends, but recent work questions the evidence 
from both (Lean et al., 2002). Very recent studies of the long term 
evolution and transport of activity features using solar models suggest 
that secular solar irradiance variations may be limited in amplitude to 
about half the amplitude of the 11-year cycle.
    Question 8. There are some who question the veracity of the 
assertion that the earth has warmed substantially over the last 
century. Arguments typically fall into three categories. It would be 
useful if you would address each in turn:
    a. Urban Heat Island Effect. This is the claim that the underlying 
temperature data is tainted by the proximity of data-generating 
thermometers to cities. As urban areas have grown over the last fifty 
years, the air temperatures around these cities have increased due to 
larger amounts of heat generating substances like rooftops and 
roadways. Scientists claim to have corrected for the urban heat island 
effect.
    b. Satellite and Airborne Balloon Data Contradict Surface 
Temperature Readings. Global mean temperature at the earth's surface is 
estimated to have risen by about half a degree F over the last two 
decades. On the other hand, satellite measurements of radiances and 
airborne balloon observations indicate that the temperature of the 
lower to mid-troposphere (the atmospheric layer extending from the 
earth's surface up to about 8 km) has exhibited almost no change during 
this period.
    c. The Hockey Stick. In recent months, there have been assertions 
that the statistical method used to analyze global temperature data for 
the last several hundred years was biased towards generating the 
``hockey stick'' shaped curve that shows sustained low and stable 
temperatures for hundreds of years with an extremely sharp rise in the 
last 100 years.
    Question 8a. Urban Heat Island Effect. How was this done, and how 
can we be sure that it was done correctly?
    Answer. The possibility of extra heating associated with cities 
biasing the global mean temperature records is a legitimate concern, 
which scientists have researched over the past decade. The conclusion 
of this research is that estimates of long-term global land-surface air 
temperature trends are relatively little affected by whether or not the 
averaging includes urban stations. Urban effects on globally averaged 
land surface air temperatures do not exceed about 0.05 C over the 
period 1900 to 1990, compared to an overall trend of about 0.7 C. This 
conclusion has been reached by comparing the trend at urban stations to 
that at rural stations (e.g., Peterson et al., 1999).
    Question 8b. Satellite and Airborne Balloon Data Contradict Surface 
Temperature Readings. Please explain whether this discrepancy is, 
indeed, real and how to account for it.
    Answer. A National Academies report released in 2000, Reconciling 
Observations of Global Temperature Change, examined different types of 
temperature measurements collected from 1979 to 1999 and concluded that 
the warming trend in global-average surface temperature observations 
during the previous 20 years is undoubtedly real and is substantially 
greater than the average rate of warming during the 20th century. The 
report concludes that the lower atmosphere actually may have warmed 
much less rapidly than the surface from 1979 into the late 1990s, due 
both to natural causes (e.g., the sequence of volcanic eruptions that 
occurred within this particular 20-year period) and human activities 
(e.g., the cooling of the upper part of the troposphere resulting from 
ozone depletion in the stratosphere). The report spurred many research 
groups to do similar analyses. Satellite observations of middle 
troposphere temperatures, after several revisions of the data, now 
compare reasonably with observations from surface stations and 
radiosondes, although some uncertainties remain.
    Question 8c. The Hockey Stick. Can you comment on whether the 
observations depicted in the hockey stick curve are, indeed, 
legitimate?
    Answer. Observations of global mean surface temperature of the past 
1000 years do show a rapid increase in the last 100 years, with 
particularly significant warming in the last 30 years. This result has 
been demonstrated by many different groups of scientists using 
different assumptions and methodologies (see Figure 3).
    Question 9. Some say that global warming might be a positive 
development? Will agricultural crop productivity improve due to the 
greater amount of CO2 in the atmosphere, and can we expect 
the Arctic and Antarctic regions to become more habitable?
    Answer. There will be winners and losers from the impacts of 
climate change, even within a single region, but globally the losses 
are expected to outweigh the benefits. Some impacts include:

   Some regions will have increased agricultural productivity 
        due to longer growing seasons, fertilization by higher levels 
        of atmospheric CO2, or changing precipitation 
        patterns, and there may be an overall increase in timber 
        productivity. However, other areas, particularly arid and semi-
        arid regions, will have decreased agricultural productivity due 
        to likely decrease in available soil moisture.
   Temperate and arctic regions will have decreased energy 
        demands for winter-time heating, although this brings the 
        negative impact of increased energy demands for summer-time 
        cooling.
   Melting of sea-ice in the Arctic could open up new shipping 
        lanes and ecotourism opportunities.
   Melting of the permafrost in the Arctic will compromise 
        infrastructure (e.g., roads and buildings) built on those 
        lands.
   There will likely be shifts in plant and animal habitats, 
        both terrestrial and oceanic, in the Arctic. This could benefit 
        some aspects of life in the Arctic, but indigenous populations 
        who have traditional lifestyles will likely have difficulty 
        adapting quickly to the changes.
   The changes in Antarctica are anticipated to take place more 
        slowly, so it is difficult to say whether the continent will 
        become more habitable anytime soon.

    Question 10. It is my understanding that the assessments of the 
progression of global warming through the next century and its impacts 
on changing the Earth's climate are largely based on computer modeling. 
It goes without saying that the planet's atmospheric, hydrologic, and 
meteorological systems are highly complicated. What can you say about 
how climate modeling capabilities have advanced since scientists began 
evaluating the problem? What is the level confidence that the computer 
models are providing useful projections of the future climate?
    Answer. Climate system models are an important tool for 
interpreting observations and assessing hypothetical futures. They are 
mathematical computer-based expressions of the thermodynamics, fluid 
motions, chemical reactions, and radiative transfer of Earth climate 
that are as comprehensive as allowed by computational feasibility and 
by scientific understanding of their formulation. Their purpose is to 
calculate the evolving state of the global atmosphere, ocean, land 
surface, and sea ice in response to external forcings of both natural 
causes (such as solar and volcanic) and human causes (such as emissions 
and land uses), given geography and initial material compositions. Such 
models have been in use for several decades. They are continually 
improved to increase their comprehensiveness with respect to spatial 
resolution, temporal duration, biogeochemical complexity, and 
representation of important effects of processes that cannot 
practically be calculated on the global scale (such as clouds and 
turbulent mixing). Formulating, constructing, and using such models and 
analyzing, assessing, and interpreting their answers make climate 
system models large and expensive enterprises. The rapid increase over 
recent decades in available computational speed and power offers 
opportunities for more elaborate, more realistic models, but requires 
regular upgrading of the basic computers to avoid obsolescence. Their 
simulation skill is limited by uncertainties in their formulation, the 
limited size of their calculations, and the difficulty of interpreting 
their answers that exhibit almost as much complexity as in nature (NRC, 
2001b). Even though some scientists might prefer a simpler way to 
project future climate, these models are currently the best option 
because they are the only tool that can incorporate the relevant 
information about the climate system.
    The National Academies' report Improving the Effectiveness of U.S. 
Climate Modeling (2001b) offers several recommendations for 
strengthening climate modeling capabilities, some of which have already 
been adopted in the United States. At the time the report was 
published, U.S. modeling capabilities were lagging behind some other 
countries. The report identified a shortfall in computing facilities 
and highly skilled technical workers devoted to climate modeling. 
Federal agencies have begun to centralize their support for climate 
modeling efforts at the National Center for Atmospheric Research and 
the Geophysical Fluid Dynamics Laboratory. However, the U.S. could 
still improve the amount of resources it puts toward climate modeling 
as recommended in Planning Climate and Global Change Research (2003).
    Question 11. The 2001 NAS review of climate-change science that you 
chaired has been interpreted by some as reinforcing the view that 
human-caused climate change is a real and urgent problem, while others 
say it reinforces the view that the uncertainties are so large that no 
action should be taken until they are reduced.
    a. Which group is right?
    b. If you were rewriting your report today, some four years later, 
how would it be different?
    Answer. NRC (2001a) describes the state of science on climate 
change and does not address policy choices. In the intervening years, 
new research has addressed some of the uncertainties identified in NRC 
(2001a). In my opinion, if NRC (2001a) were written today, it would 
give greater emphasis to at least four new findings:

   Longer and more compelling temperature record:
          The years 2001-2004 are four of the five hottest since the 
        late 1880s for global mean surface temperature (1998 was the 
        hottest).
   Better Understanding of Surface and Atmospheric Temperature 
        Trends
          Discrepancies among temperature measurements taken by 
        instruments on the surface of the Earth, on balloon-borne 
        radiosondes, and on satellite platforms engendered debate about 
        the warming trend. In recent years, corrections to each of the 
        data sets (e.g., Sherwood et al., 2005; Mears and Wentz, 2005) 
        along with improved understanding of atmospheric dynamics have 
        made it possible to eliminate the differences or else explain 
        them based on the physical understanding of the system. All 
        three data sets now have a significant warming trend at the 
        surface.
   Ocean Heat Content Changes Consistent with Greenhouse 
        Warming:
          The ocean, which represents the largest reservoir of heat in 
        the climate system, has warmed by about 0.12 F (0.06 C) 
        averaged over the layer extending from the surface down to 750 
        feet, since 1993. Recent studies have shown that the observed 
        heat storage in the oceans is consistent with expected impacts 
        of a human-enhanced greenhouse effect (Hansen et al., 2005).
   Solar Variability too Small to Explain Warming:
          One area of debate has been the extent to which variations in 
        the Sun might contribute to recent observed warming trends. The 
        Sun's total brightness has been measured by a series of 
        satellite-based instruments for more than two complete 11-year 
        solar cycles. Recent analyses of these measurements argue 
        against any detectable long-term trend in the observed 
        brightness to date. Thus, it is difficult to conclude that the 
        Sun has been responsible for the warming observed over the past 
        25 years.

    Responses of Ralph J. Cicerone to Questions From Senator Bunning

    Question 1. Would you say that the steps America has taken in the 
recent years to improve energy efficiency and produce lower carbon 
emissions from power generation are the right first steps in addressing 
climate change? Within that construct, given the current U.S. 
electricity supply that is more than 50% derived from coal, is 
encouraging clean coal technology, IGCC and carbon sequestration the 
most important immediate policy action we can take?
    Answer. Over the last several years, there have been dramatic 
improvements in energy efficiency for most electricity using 
technologies. For example, according to the National Academies' study, 
Energy Research at DOE: Was It Worth It?, the sales-weighted average 
electricity use by refrigerators sold in the United States dropped from 
about 1365 kWh/year in 1979 to about 600 kWh/year in 2001.\1\ The 
record for other electric appliances and air conditioning has also been 
similar. Of course, there has also been a significant growth in the 
number of such appliances installed over the same period due primarily 
to the growth in the number of households. Coupled with increases in 
the average size of a residence and in the number of electricity-using 
devices per household, there has been continued growth in the demand 
for electricity over the same period. According to the Energy 
Information Administration total electricity use in the residential 
sector has increased from 683 billion kWh in 1979 to 1203 billion kWh 
in 2001. Similar behavior has been observed in the commercial sector 
where electricity use has grown from 473 billion kWh in 1979 to 1080 
billion kWh in 2001. The rates of growth in each of these sectors, 
however, have been substantially less than the period prior to 1979. 
Although there are many reasons for this change, it is likely that 
increasing energy efficiency played a significant role. Furthermore, 
the study mentioned above along with other, ongoing Academy work 
suggest that there are a number of research opportunities for 
increasing energy efficiency for a broad range of technologies. 
Nevertheless, while past and projected energy efficiency can contribute 
to at least a slowing of carbon emissions from electricity generation, 
by itself, it is not likely to stop the growth in such emissions. A 
1999 report by the Congressional Research Service, Global Climate 
Change: Carbon Emissions and End-use Energy Demand (RL30036) discusses 
this issue in more detail.
---------------------------------------------------------------------------
    \1\ This report presents an analysis of a number of Department of 
Energy energy efficiency and fossil fuel combustion technology research 
programs.
---------------------------------------------------------------------------
    Research on sequestration of carbon dioxide from the combustion of 
coal for electric power production could be a very important step for 
halting the growth in carbon emissions. Clean coal technology and IGCC 
were initially developed to minimize emissions of air pollutants, such 
as sulfur dioxide. These technologies can contribute to carbon emission 
reductions only to the extent that they increase the efficiency of coal 
combustion and, possibly, make it easier to integrate carbon dioxide 
sequestration technology. The latter has significant potential for 
reducing carbon emissions, but its success is still uncertain. 
Commercial, large-scale carbon sequestration is many years away, at 
best, and research to reach this goal is important (Socolow, 2005). A 
National Academies' workshop report, Novel Approaches to Carbon 
Management: Separation, Capture, Sequestration, and Conversion to 
Useful Products, presented a discussion of a number of new research 
areas to attack this problem. Until commercial sequestration 
technologies are available, however, carbon emission reductions can 
probably best be achieved by encouraging the construction of natural-
gas fired generation plants instead of coal. The domestic supply of 
natural gas appears to be limited, and production increases may not be 
possible much longer. Therefore to continue this path towards 
constraining carbon emissions, increasing the importation of natural 
gas, generally in the form of liquefied natural gas (LNG), probably is 
essential.
    In formulating a national strategy for minimizing CO2 
emissions from energy production and use, we should consider a range of 
technology options, from improving energy efficiency to carbon 
sequestration to nuclear energy. It is important to clearly and 
carefully develop reasonable expectations of potential emissions 
reductions associated with the full suite of technology options.
    Question 2. While you have presented what appears to be a united 
scientific front in the form of the statement from the academies of 
science from 11 countries, I am concerned by some of the news since the 
release of that statement. The Russian Academy of Sciences says it was 
misrepresented and that Russian scientists actually believe that the 
Kyoto Protocol was scientifically ungrounded. I am also aware that 
there was a significant misrepresentation on the science between our 
academy and the British representative. Given this background, wouldn't 
you say there are still some pretty fundamental disagreements about the 
science of climate change among scientists around the world?
    Answer. No, disagreements about the underlying science are actually 
relatively minor. The statement agreed to by the science academies of 
the G8 nations, China, India, and Brazil makes this quite clear. The 
full statement can be viewed at 
http://www.nationalacademies.org/morenews/20050607.html. Note also that 
the statement does not address the relative merits of the Kyoto 
Protocol. Disagreements remain between governments in terms of 
determining an appropriate policy response.
    Question 3. In this international academies statement, you find 
that an ``immediate response that will, at a reasonable cost, prevent 
dangerous anthropogenic interference with the climate system,'' but 
continue to say in the following paragraph, ``minimizing the amount of 
this carbon dioxide reaching the atmosphere presents a huge 
challenge.'' Could you please elaborate, since any response can't both 
be a ``reasonable cost'' and a ``huge challenge'' proposition, how you 
resolve the two?
    Answer. The question has taken out of context two phrases from the 
statement produced by the science academies of the G8 nations, Brazil, 
China and India. The two paragraphs in full are as follows:

          ``Action taken now to reduce significantly the build-up of 
        greenhouse gases in the atmosphere will lessen the magnitude 
        and rate of climate change. As the United Nations Framework 
        Convention on Climate Change (UNFCCC) recognises, a lack of 
        full scientific certainty about some aspects of climate change 
        is not a reason for delaying an immediate response that will, 
        at a reasonable cost, prevent dangerous anthropogenic 
        interference with the climate system.
          As nations and economies develop over the next 25 years, 
        world primary energy demand is estimated to increase by almost 
        60%. Fossil fuels, which are responsible for the majority of 
        carbon dioxide emissions produced by human activities, provide 
        valuable resources for many nations and are projected to 
        provide 85% of this demand (IEA 2004). Minimising the amount of 
        this carbon dioxide reaching the atmosphere presents a huge 
        challenge. There are many potentially cost-effective 
        technological options that could contribute to stabilising 
        greenhouse gas concentrations. These are at various stages of 
        research and development. However barriers to their broad 
        deployment still need to be overcome.''

    In the first paragraph above, the goal of preventing dangerous 
anthropogenic interference with the climate system is identified and 
the second paragraph recognizes that this is a challenging goal, for 
which potential technological options are becoming available, but not 
yet widely deployed. Indeed, the statement of the eleven national 
science academies recommends several actions to work towards meeting 
the goal:

   ``Identify cost-effective steps that can be taken now to 
        contribute to substantial and long-term reduction in net global 
        greenhouse gas emissions. Recognise that delayed action will 
        increase the risk of adverse environmental effects and will 
        likely incur a greater cost.
   Work with developing nations to build a scientific and 
        technological capacity best suited to their circumstances, 
        enabling them to develop innovative solutions to mitigate and 
        adapt to the adverse effects of climate change, while 
        explicitly recognising their legitimate development rights.
   Show leadership in developing and deploying clean energy 
        technologies and approaches to energy efficiency, and share 
        this knowledge with all other nations.''

    Question 4. Several scientists have cited events like the high 
temperatures in Europe in the summer of 2003 and increased storminess 
in the 1980s and 1990s as evidence of climate change. Don't global 
ecosystems go through natural periods similar to these as well?
    Answer. Yes, climate variability is known to have occurred 
throughout Earth's history, presumably due to natural causes. 
Scientists have hypothesized that human-caused global warming will lead 
to more frequent and more severe extreme events, including heat waves, 
severe storms, and hurricanes. A recent climate modeling study found 
that European heat waves in the latter half of the 21st century may be 
more intense, more frequent, and longer lasting than those of the late 
20th century (Meehl and Tebaldi, 2004). However, it is not possible to 
determine definitively whether events such as the 2003 European heat 
wave are due to human or natural causes.
    Question 5. There are a number of astrophysicists and other 
scientists who believe that sunspots are a major contributor to 
changing temperatures. A recent survey showed at least 100 such studies 
are underway. Why don't scientists put as much emphasis on this 
possibility or other aspects of natural climate variability as they do 
on emissions from human activity?
    Answer. Actually, scientists have conducted significant research on 
natural climate variability, including how solar variability, 
volcanoes, the biosphere, weathering of rocks, and other natural 
processes can affect climate. Research on climate variability also 
addresses multiple modes of natural variability in the climate system, 
such as the El Nino Southern Oscillation (ENSO), the North Atlantic 
Oscillation (NAO), and the Pacific Decadal Oscillation (PDO), and the 
extent to which these longer term (multi-year to multi-decadal) 
variations might explain recent trends. So far, none of these processes 
have been able to explain the increases in global mean temperature 
observed since the late 1970s.
    The extent to which variations in the Sun might contribute to 
recent observed warming trends is an area of active research. The Sun's 
brightness--its total irradiance--has been measured continuously by a 
series of satellite-based instruments for more than two complete 11-
year solar cycles. These multiple solar irradiance datasets have been 
combined into a composite time series of daily total solar irradiance 
from 1979 to the present. Different assumptions about radiometer 
performance lead to different reconstructions for the past two decades. 
Recent analyses of these measurements, taking into account instrument 
calibration offsets and drifts, argue against any detectable long-term 
trend in the observed irradiance to date. Likewise, models of total 
solar irradiance variability that account for the influences of solar 
activity features--dark sunspots and bright faculae--do not predict a 
secular change in the past two decades. Thus, it is difficult to 
conclude from either measurements or models that the Sun has been 
responsible for the warming observed over the past 25 years, although 
this hypothesis was more plausible before the availability of more 
recent evidence.
    Knowledge of solar irradiance variations prior to the commencement 
of continuous space-based irradiance observations in 1979 is 
rudimentary. Models of sunspot and facular influences developed from 
the contemporary database have been used to extrapolate daily 
variations during the 11-year cycle back to about 1950 using 
contemporary sunspot and facular proxies, and with less certainty 
annually to 1610. Circumstantial evidence from cosmogenic isotope 
proxies of solar activity (14C and 10Be) and 
plausible variations in Sun-like stars motivated an assumption of long-
term secular irradiance trends, but recent work questions the evidence 
from both (Lean et al., 2002). Very recent studies of the long term 
evolution and transport of activity features using solar models suggest 
that secular solar irradiance variations may be limited in amplitude to 
about half the amplitude of the 11-year cycle.
    Question 6. Much of the discussion about climate science being 
settled is based on the summary chapter of the Intergovernmental Panel 
on Climate Change of the United Nations. The chapter made specific 
predictions about the pace of rising temperatures and the relative 
importance of human activities to climate change. And yet, the body of 
the report is much more ambiguous and inconclusive about the current 
state of the science. Is anything being done to ensure that the summary 
of the next IPCC report is more reflective of the overall analysis by 
the scientists?
    Answer. Certainly some nuance will be lost when summarizing 
hundreds of pages of detailed text in a 59-page Technical Summary or a 
17-page Summary for Policymakers, as was the case for the Working Group 
I portion of the IPCC Third Assessment Report (IPCC, 2001a). Yet, it is 
not clear that the summaries represented the state of science 
differently than the full text. The 2001 NRC report Climate Change 
Science concluded the following:

          ``The committee finds that the full IPCC Working Group I 
        (WGI) report is an admirable summary of research activities in 
        climate science, and the full report is adequately summarized 
        in the Technical Summary. The full WGI report and its Technical 
        Summary are not specifically directed at policy. The Summary 
        for Policymakers reflects less emphasis on communicating the 
        basis for uncertainty and a stronger emphasis on areas of major 
        concern associated with human induced climate change. This 
        change in emphasis appears to be the result of a summary 
        process in which scientists work with policy makers on the 
        document.
          Written responses from U.S. coordinating and lead scientific 
        authors to the committee indicate, however, that (a) no changes 
        were made without the consent of the convening lead authors 
        (this group represents a fraction of the lead and contributing 
        authors) and (b) most changes that did occur lacked significant 
        impact.
          It is critical that the IPCC process remain truly 
        representative of the scientific community. The committee's 
        concerns focus primarily on whether the process is likely to 
        become less representative in the future because of the growing 
        voluntary time commitment required to participate as a lead or 
        coordinating author and the potential that the scientific 
        process will be viewed as being too heavily influenced by 
        governments which have specific postures with regard to 
        treaties, emission controls, and other policy instruments. The 
        United States should promote actions that improve the IPCC 
        process while also ensuring that its strengths are 
        maintained.'' (NRC, 2001a)

    Another IPCC assessment is underway now, with the reports due to be 
released in 2007. It is our understanding that similar measures will be 
taken to ensure that the summaries accurately reflect the body of the 
report. For this Fourth Assessment Report, Working Group I is co-
chaired by Susan Solomon, a highly respected scientist employed by the 
U.S. National Oceanic and Atmospheric Administration (NOAA).
    Question 7. The natural ``greenhouse effect'' has been known for 
nearly two hundred years and is essential to the provision of our 
current climate. There is significant research in the literature today 
that indicates humans, since the beginning of their existence, have 
caused an increase in the greenhouse effect. Some argue that the 
development of agriculture 6,000 to 8,000 years ago has helped to 
forestall the next ice age. The development of cities, thinning of 
forests, population growth, and most recently the burning of fossil 
fuels, have all had an impact on climate change. Our ecosystems have 
constantly adapted to change, as we as humans have adapted to our 
ecosystems as well. Is it possible that the increased presence of 
CO2 caused by the 8,000 years of modern human existence may 
be something our ecosystems will continue, as they previously have, to 
naturally adapt to?
    Answer. Yes, many ecosystems and human systems will likely be able 
to adapt to some of the changes associated with global warming. But, 
CO2 and other greenhouse gases have increased much more 
rapidly in the past century than at any other time for which we have 
clear documentation and the levels of these gases are higher than at 
anytime in the last 420,000 years (Petit et al., 1999). Thus, 
greenhouse warming is happening more rapidly than ecosystems are 
accustomed to.
    It is not clear how well natural systems will be able to adapt to 
this more rapid and significant change. It is likely that there will be 
major disruptions to some ecosystems and that terrestrial plant and 
animal species will be unable to migrate quickly enough to accommodate 
regional climatic changes. Without intervention, it is likely that more 
species will become endangered in the coming decades due to climatic 
changes in habitat combined with human-caused fragmentation of habitats 
and restriction of migration routes. Habitats of marine species are 
expected to shift poleward, with an expansion in habitat for warm-water 
species and a decrease in habitat for cold-water species. (IPCC, 2001b)
    Question 8. Dr. Cicerone, you said that ``Observations and data are 
the foundation of climate change science.'' Yet observational data is 
available for at best the past 140 years. And reconstructive climate 
data for the last 2000 years offers widely divergent conclusions as to 
timing of trends, peaks and troughs. Climate change is a phenomenon 
most apparent over significantly larger time periods. While the panel 
before us presented temperature and CO2 level reconstruction 
that paints the 20th century as one-time anomaly, could you summarize 
the research that indicates contrary positions? Isn't it true that at 
previous times in the earth's history CO2 emissions have 
been exponentially higher than current levels?
    Answer. Actually, observations of the last 2000 years do not offer 
widely divergent conclusions as to the timing of trends, peaks, and 
troughs. In fact, all the estimates of global mean observed surface 
temperature of the past 1000 years show a rapid increase in the last 
100 years, with particularly significant warming in the last 30 years 
reaching maximum temperatures in the late 1990s and early 21st century. 
This result has been demonstrated by many different groups of 
scientists using different assumptions and methodologies (see Figure 
1).* It is consistent with direct measurements of the greenhouse gases 
CO2 and CH4 extracted from ice cores.
---------------------------------------------------------------------------
    * Retained in committee files.
---------------------------------------------------------------------------
    Global mean temperatures over geological timescales are 
hypothesized to have been much warmer (and much colder) at times. Based 
on models and inferences about atmospheric composition from geological 
data, it is thought that the early Earth (i.e., billions of years ago) 
was warmed by a high concentration of greenhouse gases, probably mainly 
CO2, perhaps in the range of a few hundred to 1000 times 
present atmospheric levels (Kump et al., 2000). To explain such high 
levels of atmospheric CO2, most attention has focused on the 
dominant process that draws down atmospheric CO2 relative to 
production on geological timescales: the chemical weathering of 
continental silicate rocks. In a planet with much less exposed land 
mass, this removal process for CO2 would be much slower, 
allowing CO2 to build up in the atmosphere. It should be 
emphasized, however, that this hypothesis is based largely on models 
and inference rather than conclusive proxy evidence. Also, the changes 
associated with global warming are happening at a much more rapid pace 
than those that may have happened on geological timescales.
    Geological evidence also suggests that atmospheric CO2 
changed dramatically on timescales of a few to tens of millions of 
years during much of the Phanerozoic eon (from about 540 million years 
ago until 20 million years ago). The record suggests that for at least 
two-thirds of the last 400 million years, levels of atmospheric 
CO2 were 5-10 times higher than at present. It appears that 
these oscillations in atmospheric CO2 were linked to 
recurring changes from greenhouse to icehouse climate states (Berner 
and Kothavala, 2001; Royer et al., 2004).
    Question 9. The panel touched on some energy alternatives such as 
biomass, natural gas, and nuclear power, yet there was little mention 
of hydrogen power. From a scientific viewpoint, where do you think we 
are on being able to really utilize hydrogen power? What is the 
potential of hydrogen power?
    Answer. Hydrogen, like electricity, is an energy carrier, not a 
primary fuel. It must be made from other energy sources. It has the 
potential for reducing carbon emissions if it is generated from non-
fossil energy (nuclear or renewables) or if the carbon from fossil fuel 
sources is sequestered. The National Academies has recently issued two 
major reports on the subject of hydrogen covering the potential of 
future technologies for its production, as well as its use in 
transportation and stationary applications: The Hydrogen Economy--
Opportunities, Costs, Barriers, and R&D Needs (2004), and Review of the 
Research Program of the Freedom CAR and Fuel Partnership (2005). 
Transforming the current petroleum-based transportation system, for 
example, to a clean, hydrogen-fueled system is extremely challenging 
requiring a fundamental transformation of automotive technologies and 
the supporting fuel infrastructure. Even if all the technical 
challenges are met, transitioning from the current fuel infrastructure 
based on gasoline and diesel fuel to one based on hydrogen derived from 
a variety of sources (e.g., coal, natural gas, solar, wind, biological 
conversion, nuclear) will be a formidable social and economic 
challenge. Research and development in support of such a transformation 
is justified by the potentially enormous beneficial impact to the 
nation.
    Much progress has been made in many hydrogen technologies, such as 
fuel cells. Nevertheless, many technical barriers exist and need to be 
overcome, and fundamental invention is probably needed to achieve 
performance and cost levels that will lead to cost competitive hydrogen 
and commercially acceptable vehicles. For example, fuel cells face 
performance, durability, efficiency and cost issues, and hydrogen 
storage for onboard vehicles faces difficult size, weight and cost 
barriers. Even assuming that the technical and cost targets for 
commercial readiness could be met in the 2015 to 2020 time frame, it 
would take many decades for the turnover of the vehicle fleet in order 
to have a significant impact on carbon emissions from the 
transportation sector. This implies that the conventional internal 
combustion engine will be the automotive power plant that consumes most 
of the fuel in the vehicle fleet for several decades to come and 
improving technology to reduce fuel consumption and emissions from 
internal combustion engines is, therefore, critically important as 
well.
    Question 10. The panel established very clearly that we should 
adopt policies that decrease carbon emissions regardless of any other 
carbon emissions policies we pursue. We are currently or will shortly 
be providing expanded incentives for clean coal, nuclear energy and 
renewable fuels. Do you feel this is money well spent? What 
technologies do you feel the government should be more involved in 
developing?
    Answer. Nuclear and renewable energy technologies release very 
little carbon. As noted above, clean coal technology and IGCC coupled 
with full sequestration can also result in little or not carbon 
emissions. All of these technologies, however, have drawbacks. The 
economic competitiveness of nuclear energy is still questionable 
compared to current fossil technologies under existing regulatory 
conditions, and issues of nuclear waste and public acceptance still 
remain. Only a few renewable energy technologies are economic at this 
time, and then only at particularly favorable sites. Also, as noted, 
the successful development of carbon sequestration is uncertain. 
Nevertheless, these are our options for carbon-free fuels.
    In the transportation sector, it will also be important to 
understand the competition that will arise between electricity-based, 
liquid-fuel-based (e.g., cellulosic ethanol), and hydrogen-based 
transportation technologies. This is particularly important as clean 
alternative combustion engines and hybrid vehicles, fuel cells, and 
batteries evolve. Understanding which pathway, or combination of 
pathways, will provide the best opportunities for reducing CO2 
emissions and improving energy security will require a balanced 
research and development portfolio and extensive systems analysis.
    In all of these cases, continued research and development is 
important. There remains, however, the question of how best to pursue 
the goal of reducing carbon emissions. A systematic, comprehensive 
comparison of the options described in the above three questions has 
not been done. Such an analysis would have to account for the complex 
array of economic, technical, environmental, regulatory, and public 
acceptance issues that affect each of the options. With the results of 
this assessment in hand, policy choices that provide effective 
incentives for the most promising carbon management options are more 
probable.
    Responses of Ralph J. Cicerone to Questions From Senator Talent
    Question 1. The Academies letter says that it is ``likely'' that 
man is the cause of global warming--what exactly do we know, and what 
are we inferring from the data we have? How well to the models of today 
replicate actual observed climate patterns of recent times? What margin 
of error do you attach to the best models we have today?
    Answer. It is likely that most of the global mean surface 
temperature increase since the late 1970s is due to human activities. 
This conclusion is consistent with that reached by Intergovernmental 
Panel on Climate Change (IPCC) in their 2001 assessment of the 
scientific literature and the 2001 report of the NRC Climate Change 
Science: An Analysis of Some Key Questions.
    This conclusion is generally based on studies that compare the 
observed climate record from 1860 to today with global mean temperature 
simulated in three computational climate model scenarios:

          1) Only natural variability (due to solar and volcanic 
        variability)
          2) Only anthropogenic variability (due to greenhouse gases 
        and aerosols)
          3) Both natural and anthropogenic variability

    In these studies, the models run with only natural variability are 
unable to reproduce the warming observed since the late 1970s, 
typically showing no trend over this time period (e.g., Stott et al., 
2000; Meehl et al., 2004). Thus, we conclude that human-caused climate 
forcings have disrupted Earth's energy balance, causing an increase in 
global mean surface temperatures (NRC, 2005).
    Improved understanding of the natural variability of the climate 
system supports the conclusion that human activities are mostly 
responsible for global temperature increases of the past three decades. 
In particular, new studies of solar variability show that there has 
been little if any trend in the Sun's brightness over the past 25 
years, ruling out solar variability as a major driver of observed 
warming (see Response to #2 for more details).
    Because of the still uncertain level of natural variability 
inherent in the climate record and the uncertainties in the time 
histories of the various forcing agents, a causal linkage between the 
buildup of greenhouse gases in the atmosphere and the observed climate 
changes during the 20th century cannot be unequivocally established. 
The fact that the magnitude of the observed warming is large in 
comparison to natural variability as simulated in climate models is 
suggestive of such a linkage, but it does not constitute 
incontrovertible proof of one because the model simulations could be 
deficient in natural variability on the decadal to century time scale.
    Question 2. There are a number of astrophysicists and other 
scientists who believe that sunspots are a major contributor to 
changing temperatures. A recent survey showed at least 100 such studies 
are underway. Why don't scientists put as much emphasis on this 
possibility or other aspects of natural climate variability as they do 
on emissions from human activity?
    Answer. Actually, scientists have conducted significant research on 
natural climate variability, including how solar variability, 
volcanoes, the biosphere, weathering of rocks, and other natural 
processes can affect climate. Research on climate variability also 
addresses multiple modes of natural variability in the climate system, 
such as the El Nino Southern Oscillation (ENSO), the North Atlantic 
Oscillation (NAO), and the Pacific Decadal Oscillation (PDO), and the 
extent to which these longer term (multi-year to multi-decadal) 
variations might explain recent trends. So far, none of these processes 
have been able to explain the increases in global mean temperature 
observed since the late 1970s.
    The extent to which variations in the Sun might contribute to 
recent observed warming trends is an area of active research. The Sun's 
brightness--its total irradiance--has been measured continuously by a 
series of satellite-based instruments for more than two complete 11-
year solar cycles. These multiple solar irradiance datasets have been 
combined into a composite time series of daily total solar irradiance 
from 1979 to the present. Different assumptions about radiometer 
performance lead to different reconstructions for the past two decades. 
Recent analyses of these measurements, taking into account instrument 
calibration offsets and drifts, argue against any detectable long-term 
trend in the observed irradiance to date. Likewise, models of total 
solar irradiance variability that account for the influences of solar 
activity features--dark sunspots and bright faculae--do not predict a 
secular change in the past two decades. Thus, it is difficult to 
conclude from either measurements or models that the Sun has been 
responsible for the warming observed over the past 25 years, although 
this hypothesis was more plausible before the availability of more 
recent evidence.
    Knowledge of solar irradiance variations prior to the commencement 
of continuous space-based irradiance observations in 1979 is 
rudimentary. Models of sunspot and facular influences developed from 
the contemporary database have been used to extrapolate daily 
variations during the 11-year cycle back to about 1950 using 
contemporary sunspot and facular proxies, and with less certainty 
annually to 1610. Circumstantial evidence from cosmogenic isotope 
proxies of solar activity (14C and 10Be) and 
plausible variations in Sun-like stars motivated an assumption of long-
term secular irradiance trends, but recent work questions the evidence 
from both (Lean et al., 2002). Very recent studies of the long term 
evolution and transport of activity features using solar models suggest 
that secular solar irradiance variations may be limited in amplitude to 
about half the amplitude of the 11-year cycle.
    Question 3. Is it true that the Canadian Climate Center study and 
the U.K. Hadley Center studies used by the Clinton Administration to 
justify Kyoto were the two that predicted the most extreme results? Is 
it also true that Dr. Pat Michaels and Tom Karl of NOAA independently 
confirmed that these models could not reproduce past U.S. temperature 
trends over any averaging period (e.g., 5, 10, or 25 year periods)? 
Didn't the Canadian model over-predict warming by 300%?
    Answer. To my knowledge, the Clinton Administration never used any 
specific models to ``justify Kyoto.'' The U.S. National Assessment of 
Potential Climate Change Impacts (NAST, 2000) did use climate scenarios 
from both the Canadian Climate Center (CCC) and the U.K. Hadley Center 
in its analyses, along with several other models and historical data. 
The National Assessment, which fulfills the requirements of the U.S. 
Global Change Research Act of 1990, evaluated the potential risk to the 
United States from climate impacts if greenhouse gas emissions 
continued on a business-as-usual trajectory. It did not consider any 
Kyoto-based analyses. The two models were selected by the National 
Assessment Synthesis Team (NAST), an independent, non-governmental 
committee for several reasons:

          1) They were published and part of the international debate 
        leading to the IPCC reports, also completed in 2001.
          2) The model computations covered the period from 1895 to 
        2100, allowing the National Assessment to (a) compare model 
        results and historical observations to judge the veracity of 
        the simulations and (b) examine future climate conditions 
        projected by the models.
          3) They preserved model results on a daily basis (rather than 
        monthly means, for example), allowing the National Assessment 
        to include ecosystem impact analysis.
          4) They provided access to all the available model results.
          5) They bracketed the range of model simulations or, in other 
        words, they were far from the most extreme results. The CCC 
        model was one of the warmer models in the IPCC family, whereas 
        the Hadley Center model was at the lower end of the spectrum, 
        but somewhat closer to the middle (see NAST, 2001, p. 31-40).

    These two models were not the only ones used in the National 
Assessment. Some participants also used the National Center for 
Atmospheric Research (NCAR) Climate System Model, however it was not 
ready until part way through the assessment so not every group included 
it. At the time, U.S. modeling capabilities were lagging behind some 
other countries, in part because of a shortfall in computing facilities 
and highly skilled technical workers devoted to climate modeling (NRC, 
2001b). In addition to global models, some participants in the National 
Assessment also looked at historical analogues or regional model 
simulations.
    In regard to the questions about the accuracy of the models, it is 
important to note that all global climate models have some flaws. All 
the models used in the National Assessment were compared to 
observations to judge their ability to simulate the last 100 years. All 
the available models suggest a warming range of 0.4 to 0.8 C over the 
20th century, which is the same range as the observations. The Hadley 
model predicts 0.55 C and the Canadian 0.7 C, well within the 
observed range. The Canadian model did not over-predict 20th century 
global mean temperature trends by 300%. Most models of this generation 
captured the ups and downs of the observed record of the last 100 years 
when they included the impacts of solar variability, greenhouse gases, 
and aerosols. However, they were not designed in a way to perfectly 
reproduce the year-to-year variation for a specific region over any 
period of years in the 20th century. Thus, conclusions in the National 
Assessment about interannual variation were not based on the global 
model results.
    Question 4. To what degree can we attribute warming to controllable 
GHG emissions, i.e., what portion of the observed warming is due to 
human emissions?
    Answer. It is likely that most of the global mean surface 
temperature increase since the late 1970s is due to human activities. 
This conclusion is consistent with that reached by Intergovernmental 
Panel on Climate Change (IPCC) in their 2001 assessment of the 
scientific literature and the 2001 report of the NRC Climate Change 
Science: An Analysis of Some Key Questions.
    This conclusion is generally based on studies that compare the 
observed climate record from 1860 to today with global mean temperature 
simulated in three computational climate model scenarios:

          1) Only natural variability (due to solar and volcanic 
        variability)
          2) Only anthropogenic variability (due to greenhouse gases 
        and aerosols)
          3) Both natural and anthropogenic variability

    In these studies, the models run with only natural variability are 
unable to reproduce the warming observed since the late 1970s, 
typically showing no trend over this time period (e.g., Stott et al., 
2000; Meehl et al., 2004). Thus, we conclude that human-caused climate 
forcings have disrupted Earth's energy balance, causing an increase in 
global mean surface temperatures (NRC, 2005).
    Question 5. Assuming the technology was available today, what would 
be the necessary GHG emissions cuts in the U.S.A to stop the warming 
and level out global temperatures? Does this assume no increases in 
emissions by developing nations?
    Answer. Carbon dioxide can remain in the atmosphere for many 
decades and major parts of the climate system respond slowly to changes 
in greenhouse gas concentrations. Although carbon dioxide is the most 
significant greenhouse gas perturbed by humans, other anthropogenic 
greenhouse gases also have an important impact on climate. These 
include (1) methane, for which concentrations have increased by about a 
factor of 2.5 since preindustrial times, but have stopped increasing 
more recently for unknown reasons; (2) halocarbons such as 
chlorofluorocarbons, whose emissions were controlled because they 
contribute to ozone depletion in the stratosphere; and (3) nitrous 
oxide, which continues to rise.
    Even if greenhouse gas levels were stabilized instantly at today's 
levels, the climate would still continue to change as it adapts to the 
increased emissions of recent decades, as illustrated in Figure 1. For 
current models with a midrange climate sensitivity and average 
assumptions about the greenhouse effects of atmospheric aerosols, 
Wigley (2005) estimates that global mean surface temperatures will 
increase by about 0.4 C over the next 400 years, with most of the 
warming occurring within the first 100 years (see the center red line 
in Figure 1).* Thus, even with no greenhouse gas emissions from this 
point forward, we would be experiencing the impacts of climate change 
throughout the 21st century and beyond.
---------------------------------------------------------------------------
    * Retained in committee files.
---------------------------------------------------------------------------
    Because instantly stopping all greenhouse gas emissions is 
unrealistic, scientists have considered what steps would be necessary 
to stabilize atmospheric CO2 levels at several targets 
ranging from 450 ppm to 1000 ppm (compared to today's levels of 380 ppm 
and pre-industrial concentrations of 280 ppm). Depending on the target, 
a range of emissions cuts are required by developed and developing 
countries. For example, Wigley (1997) found that to achieve CO2 
stabilization at 550 ppm, developed countries would need to begin 
reducing emissions 1% a year by 2010 and developing countries would 
need to do so by 2030. Note that stabilizing CO2 
concentrations at 550 ppm is estimated to lead to a global mean 
temperature increase of about 2.5 C over 1990 levels in 2150 (IPCC, 
2001).
    Question 6. The statement from the academies of science from 11 
countries has turned out to be quite controversial. The Russian Academy 
of Sciences says it was misrepresented in the statement and that 
Russian scientists actually believe that the Kyoto Protocol was 
scientifically ungrounded. Also, the president of the American Academy 
has complained that his British counterpart misrepresented the U.S. 
view of the science and that there might be an end to future 
collaboration between U.S. and British scientists. Aren't there still 
some pretty fundamental disagreements about the science of climate 
change among scientists around the world?
    Answer. No, disagreements about the underlying science are actually 
relatively minor. The statement agreed to by the science academies of 
the G8 nations, China, India, and Brazil makes this quite clear. The 
full statement can be viewed at 
http://www.nationalacademies.org/morenews/20050607.html. Note also that 
the statement does not address the relative merits of the Kyoto 
Protocol. Disagreements remain between governments in terms of 
determining an appropriate policy response.
    Question 7. The 4th paragraph of the joint science academies' 
statement talks about undertaking an ``immediate response that will, at 
a reasonable cost, PREVENT dangerous anthropogenic interference with 
the climate system.'' But the 5th paragraph says, ``minimizing the 
amount of this carbon dioxide reaching the atmosphere presents a huge 
challenge.'' Since it can't be both, would you describe the measure you 
would endorse as a ``reasonable cost'' proposition or a ``huge 
challenge''?
    Answer. The question has taken out of context two phrases from the 
statement produced by the science academies of the G8 nations, Brazil, 
China and India. The two paragraphs in full are as follows:

          ``Action taken now to reduce significantly the build-up of 
        greenhouse gases in the atmosphere will lessen the magnitude 
        and rate of climate change. As the United Nations Framework 
        Convention on Climate Change (UNFCCC) recognises, a lack of 
        full scientific certainty about some aspects of climate change 
        is not a reason for delaying an immediate response that will, 
        at a reasonable cost, prevent dangerous anthropogenic 
        interference with the climate system.
          As nations and economies develop over the next 25 years, 
        world primary energy demand is estimated to increase by almost 
        60%. Fossil fuels, which are responsible for the majority of 
        carbon dioxide emissions produced by human activities, provide 
        valuable resources for many nations and are projected to 
        provide 85% of this demand (IEA 2004)3. Minimising the amount 
        of this carbon dioxide reaching the atmosphere presents a huge 
        challenge. There are many potentially cost-effective 
        technological options that could contribute to stabilising 
        greenhouse gas concentrations. These are at various stages of 
        research and development. However barriers to their broad 
        deployment still need to be overcome.''

    In the first paragraph above, the goal of preventing dangerous 
anthropogenic interference with the climate system is identified and 
the second paragraph recognizes that this is a challenging goal, for 
which potential technological options are becoming available, but not 
yet widely deployed. Indeed, the statement of the eleven national 
science academies recommends several actions to work towards meeting 
the goal:

   ``Identify cost-effective steps that can be taken now to 
        contribute to substantial and long-term reduction in net global 
        greenhouse gas emissions. Recognise that delayed action will 
        increase the risk of adverse environmental effects and will 
        likely incur a greater cost.
   Work with developing nations to build a scientific and 
        technological capacity best suited to their circumstances, 
        enabling them to develop innovative solutions to mitigate and 
        adapt to the adverse effects of climate change, while 
        explicitly recognising their legitimate development rights.
   Show leadership in developing and deploying clean energy 
        technologies and approaches to energy efficiency, and share 
        this knowledge with all other nations.''

    Question 8. If all the countries that have signed Kyoto stay within 
compliance of Kyoto, how much of a reduction in global warming would 
this result in?
    Answer. Estimates for warming between 1990 and 2100 range from 1.4 
to 5.8 C (IPCC, 2001). In the analysis of Reilly et al. (1999), if all 
nations complied with the Kyoto Protocol, global mean surface 
temperatures would be about 0.5 C less than if no intervention is 
taken. At the treaty's implementation in February 2005, the agreement 
had been ratified by 141 countries representing about 60% of global 
emissions. Thus, the Kyoto Protocol as currently being implemented, 
might be expected to reduce future warming by about 0.3 C by 2100.
    Question 9. Can you confirm that suspended water vapor levels, 
cloud cover percentages and direct solar irradiation changes over time 
all represent variables in these forecasting models that could have 
significant impacts on the conclusions of the results of these models?
    Answer. Yes, water vapor, cloud cover, and solar irradiation are 
important variables that all climate models incorporate.
    Question 10. In looking at pre-industrial global temperature 
patterns, would you agree that changes in temperatures over time have 
occurred that had no anthropogenic basis?
    Answer. Yes, pre-industrial temperature showed natural climate 
variability, likely due to solar variability, volcanoes, the biosphere, 
weathering of rocks, and other natural processes. There are also 
multiple modes of natural variability in the climate system, such as 
the El Nino Southern Oscillation (ENSO), the North Atlantic Oscillation 
(NAO), and the Pacific Decadal Oscillation (PDO), which cause longer 
term (multi-year to multi-decadal) variations.
    Question 11. Do we know what the ``best'' global temperature is to 
sustain life?
    Answer. No, but we do know that human systems have developed in a 
way to take advantage of current climate conditions. We live and have 
built major infrastructure along coastlines, assuming that sea levels 
will not change significantly. We have developed agricultural lands in 
locations that current climate conditions favor. We have constructed 
elaborate systems to distribute fresh water that depend on current snow 
pack levels, rainfall amounts, and river flows. These and other major 
infrastructural investments are not easily or quickly shifted. Thus, 
while humans--especially those who live in richer and more educated 
countries--will no doubt be able to adapt, it is unlikely that they 
could do so without exacting economic, health, and other tolls.
    Question 12. What is currently being done to curb emissions from 
parts of the world in poverty who are deforesting their environment and 
burning biomass for all means of day-to-day living, and are these 
emissions continuing to increase in the world?
    Answer. I am not familiar with efforts to control biomass burning 
emissions in developing countries. Based on satellite observations of 
large fires, Duncan et al. (2003) found no significant trends in 
emissions from burning of forests and grasslands over the past two 
decades. Their analysis did not consider emissions from burning biofuel 
(e.g., wood, agricultural waste) for day-to-day living. Streets et al. 
(2001) analyzed greenhouse gas emissions from China over the 1990s and 
found a slow decline in emissions from the use of biofuel for cooking 
and heating.
    Question 13. Do you believe it is practical to seek emission 
controls in parts of the world that are struggling in poverty?
    Answer. Whether to seek emission controls in impoverished parts of 
the world is largely a policy decision, for which science and 
technology can inform only part of the answer. Certainly, higher 
quality fuels and better developed technology for using those fuels 
provide greater energy output and less pollution. So, there are 
compelling reasons for curbing emissions in these countries in addition 
to addressing global warming.
    Question 14. What is being done to curb emissions in the developing 
countries like China and India?
    Answer. Streets et al. (2001) analyzed greenhouse gas emissions 
from China over the 1990s and found that emissions increased 
significantly from 1990 until about 1996, when they began decreasing 
until 2000. They attribute the decrease to a radical reform of China's 
coal and energy industries, as well as the economic downturn in China 
associated with the Asian economic crisis of 1997-1998. At the time, 
the authors predicted that as China's economy recovered from the 
economic downturn and completed major reforms, rates of greenhouse gas 
emissions would begin to slowly increase. More recently, China has 
taken several steps to begin controlling their greenhouse gas 
emissions, including:

   In October, 2004 China enacted their first fuel efficiency 
        standards for new passenger cars (see http://www.usatoday.com/
        money/world/2004-10-08-china-fuel-efficiency_x.htm ). The first 
        phase began this summer. The second phase begins in 2008 and 
        mandates a 10% improvement. Unlike U.S. standards which 
        regulate corporate averages, the Chinese standards set a 
        maximum fuel consumption rate for every vehicle sold, with the 
        rate varying for 32 different car and truck weight classes.
   In January 2005, the National Development and Reform 
        Commission (NDRC) published the China Medium and Long Term 
        Energy Conservation Plan which targets an average annual 
        reduction of 2.2% in energy intensity to 2010. The main thrust 
        of the plan is to give priority to energy conservation over 
        development of new energy sources.
   In March, 2005 China enacted a renewable energy law 
        requiring an increase in consumption of renewable energy from 
        current levels of about 3% to 10% by 2020. My understanding is 
        that renewable energy in the law includes hydroelectricity, 
        wind power, solar energy, geothermal energy and marine energy. 
        (See http://www.renewableenergyaccess.com/assets/download/
        China_RE_ Law_05.doc)
   China's Air Conditioner Energy Efficiency Standards have 
        recently been tightened by 10-20%

    Emissions from India have increased significantly over the past 
several decades as the country has become more industrialized. Analyses 
by Shukla et al. (e.g., 2003) indicate that a portfolio of strategies--
including increasing efficiency, upgrading transportation systems, and 
penetration of renewable and nuclear energy sources--will likely be 
necessary to control emissions as India's economy and population expand 
in the coming decades. I am not familiar with specific measures to 
control emissions in India.
   Responses of Ralph J. Cicerone to Questions From Senator Feinstein
    Question 1. Is there any credible scenario for stabilizing 
greenhouse gas emissions that does not involve the United States and 
other major emitters stopping their emissions growth over the next 
couple of decades and sharply reversing their emissions growth by 2050?
    Answer. Stabilizing CO2 concentrations in the atmosphere 
requires CO2 emissions to drop well below current levels. 
Although the ocean has the capacity to uptake 70 to 80% of foreseeable 
anthropogenic CO2 emissions, this process takes centuries 
due to the slow rate of ocean mixing. It is hard to envision any 
scenario for stabilizing greenhouse gas emissions and the resultant 
concentrations of these gases in the atmosphere that does not involve 
significant emissions reductions by major emitters.
    Question 2. Would the National Commission on Energy Policy's 
proposal stop and then reverse U.S. greenhouse gas emissions?
    Answer. My understanding is that the proposal by the National 
Commission on Energy Policy aims to slow, stop, and then reverse growth 
in the rate of greenhouse gas emissions. Under the proposal, total 
annual emissions would continue to increase until around 2020, then 
level out, and eventually start to decrease.
                                 ______
                                 
   Responses of Sir John Houghton to Questions From Senator Bingaman

    Question 1. Over the last several decades, anthropogenic emissions 
have ``substantially contributed'' to the increase in average global 
temperatures. Upon receiving a question from one of the Senators, one 
of the panelists suggested that ``80 percent'' of the warming was due 
to human activities. Do all the panelists agree? Please provide 
information as to how this estimate was derived.
    Answer. I was not the panelist that quoted the 80%. It is, however, 
close to the estimate that I have also often quoted quite independently 
and arrived at as follows. In answering the question of how much of the 
recent warming is due to human activities there are two relevant 
considerations: (1) estimates of radiative forcing and (2) estimates of 
natural variability. I deal with these in turn.

                     ESTIMATES OF RADIATIVE FORCING

    It is the radiative forcings that are driving change. For the 
latest estimates of radiative forcings I refer to the paper by J. 
Hansen et al., Earth's Energy Imbalance: Confirmation and Implications, 
in Sciencexpress for 2 May 2005--a paper that provides more detail and 
updates similar information in Fig 3 in the Summary for Policymakers 
(SPM) and in chapter 6 of the IPCC 2001 Report, Climate Change 2001: 
the Scientific Basis.
    `Natural' forcings are mainly those due to volcanoes (in Hansen's 
paper the blue line labelled stratospheric aerosols--because it is dust 
in the stratosphere that causes forcings from volcanoes) and changes in 
solar irradiance. The estimated solar irradiance change of about 0.2 
watts per square metre occurred mostly in the first half of the 20th 
century and is believed to be a significant factor in leading to the 
warming during that period. Changes in solar radiation in the second 
half of the century are small as indicated from measurements from 
satellite instruments since the 1970s.
    The other forcings are almost entirely anthropogenic (apart from a 
small component of black carbon from `natural' forest fires). Note that 
greenhouse gases provide by far the largest positive (warming) forcing 
and that significant negative (cooling) forcing comes from 
anthropogenic aerosols. This latter is sometimes called global dimming 
as it tends to offset some of the greenhouse gas warming. Note that by 
far the largest contribution to radiative forcing over the last 50 
years comes from increases in greenhouse gases and that at least 95% of 
the positive (warming) forcing over this period comes from human 
activities. Note also that most of the negative forcing is also of 
human origin and that this will reduce if, as is expected, sulphur 
dioxide (that leads to reflective tropospheric aerosol formation) 
pollution controls become more severe during coming decades.
    Fig 1B in the Hansen et al. paper compares model simulations of 
surface temperature change over the 20th century, that include all the 
forcings of Fig 1A, with observations of surface temperature change. It 
should be compared with Fig 4 in the SPM of the IPCC 2001 Report. It 
deals more comprehensively and accurately with the various forcings 
than did the IPCC Report and extends them to the present. It shows a 
remarkable degree of agreement between simulations and observations.

                    ESTIMATES OF NATURAL VARIABILITY

    Looking at estimates of anthropogenic radiative forcing enables us 
to establish that the observed warming over the last 50 years is 
entirely consistent with it being due almost entirely to human 
activities. However, it is known that the global average temperature 
and hence the climate can also change due to unforced variations that 
occur because of variations within the climate system itself. Estimates 
of such natural variability come from long climate model simulations 
that agree reasonably well with such variability found in observational 
studies (as explained in chapters 8 and 12 of the IPCC 2001 Report). 
Such studies show that more than about 20% of the rise in global 
average temperature since 1950 of about 0.45 C is very unlikely (less 
than 10% probability) to come from natural unforced variability.
    Taking these two considerations together leads to the conclusion 
that it is very likely (greater than 90% probability) that at least 75% 
of the warming over the last 50 years in due to human activities.
    Question 2. We received testimony that sought to distinguish 
between average global temperature changes causes primarily by 
anthropogenic emissions and local/regional temperature changes caused 
at times by natural variation. Please explain in greater detail.
    Answer. The climate shows natural variability (i.e. unforced 
variability--see answer to question 1) in all climate characteristics 
(temperature, precipitation, humidity, wind speed, etc.) and on all 
time and space scales. The shorter the time scale and the smaller the 
space scale the larger is this variability. That is why it is easier to 
identify trends in climate due to anthropogenic emissions in annual and 
global averages of quantities such as temperature rather than in 
shorter-term or local climate data.
    Climate regimes are patterns of climate behaviour that have been 
identified in different regions. They represent an important component 
of the description of climate in different parts of the world. Examples 
of these regimes are the Pacific North Atlantic Anomaly (PNA), the 
North Atlantic Oscillation (NAO) and the El Nino-Southern Oscillation 
(ENSO). The last of these is the best known and the most important; El 
Nino events are associated with extreme climate events such as floods 
and droughts in Africa, Australia, America and Asia. There seems no 
doubt that these regimes are influenced by increases in greenhouse 
gases; understanding the detail of these influences is an important 
topic of current research.
    Question 3. Please explain the meaning of `scientific consensus' 
and comment on the status of the science of climate change in the 
scientific and academic community.
    Answer. Because discussion and debate are essential to the 
advancement of science, use of the expression `scientific consensus' 
needs to be explained. In the context of the IPCC reports `consensus' 
does not mean that agreement has been reached on all matters concerning 
climate change. What the IPCC has done in its reports is to distinguish 
between what is reasonably well known and understood from those areas 
where there is still much uncertainty and debate. What is often 
described as the IPCC `consensus' (although the IPCC itself has never 
used that term) concerns matters such as the estimates of global 
average temperature rise (including its range of uncertainty), the 
range of estimates of sea level rise and the descriptions of likely 
dominant impacts in terms of precipitation and extremes--all under 
stated assumptions regarding future anthropogenic emissions.
    The IPCC Reports have been given very strong support by many 
scientific bodies including most recently in a statement issued on the 
7 June 2005 by the Academies of Science of the leading nations of the 
world (the G8 countries plus China, India and Brazil).
    The science of climate change has grown very substantially over the 
last twenty years--so has the number of scientists working in the 
field. It has become an increasingly well established and respected 
academic discipline. Climate data has expanded a great deal and climate 
models have developed in size (thanks to increased computing power) and 
sophistication. Modeling of regional change is now developing rapidly 
into a useful and effective tool for the analysis and projection of 
regional changes. As the science has advanced, not only have the basic 
messages regarding climate change in the IPCC's 1990 and 1995 Reports 
been confirmed but the impacts then projected have proved, in general, 
to be too conservative.
    Question 4. What is ``abrupt climate change?'' Can you identify any 
potential thresholds that might be crossed if insufficient action is 
taken to control CO2 emissions? For example, I have heard 
that beyond certain temperature increases, large ice sheets could 
collapse, leading to huge increases in sea level. Can you comment on 
this and other potential thresholds?
    Answer. The climate system is complex and highly non-linear in 
character. `Abrupt climate change' refers to the possibility of unusual 
and rapid change occurring due to thresholds being reached or 
instabilities occurring. Some examples are:

          1) If the average temperature in the vicinity of Greenland 
        rises by more than about 3 C (5.5 F)--very likely to occur 
        within the next 50 years--studies indicate that melt down of 
        the Greenland ice sheet is likely to begin (Climate Change 
        2001, the Scientific Basis IPCC 2001 Report, chapter 11). 
        Complete melt down, that could take 1000 years or more, would 
        lead to 7m (23 ft.) of global sea level rise.
          2) There is a lot of current concern regarding the stability 
        of the West Antarctic Ice Sheet. It could lose mass over the 
        next 1000 years with an associated sea level rise of several 
        meters but there is incomplete understanding of some of the 
        underlying processes (Climate Change 2001: Synthesis Report, 
        IPCC 2001, Report Q4).
          3) The long term stability of the ocean's Conveyor Belt (a 
        circulation in the deep ocean coupling the oceans together) is 
        also of concern. It is partially driven by the Thermohaline 
        Circulation (THC) whose main source is the sinking of cold, 
        dense water with high salinity at high latitudes in the 
        Atlantic ocean. Increased precipitation at these latitudes and 
        increased ice melt reduces the water's salinity, and hence its 
        density, making it less likely to sink, so weakening the THC. 
        All climate models that couple the ocean and atmospheric 
        circulations show this weakening of the THC and hence also of 
        the Gulf Stream. It is possible for the THC to be cut off 
        completely--some models with `business as usual' growth in 
        CO2 emissions show cut-off occurring within 100-300 
        years; there is also paleoclimatic evidence of it occurring in 
        the past. If cut-off were to occur, the effect on the world's 
        climate, especially in regions surrounding the north Atlantic, 
        could be profound (Climate Change 2001, the Scientific Basis 
        IPCC 2001 Report, chapters 7 and 9).

    Question 5. Can you tell us something about the time horizon for 
stabilizing climate, given how long carbon dioxide remains in the 
atmosphere? Do we need to begin to control emissions now or can we 
wait?
    Answer. There are three main time scales concerned with the 
stabilization of climate.

          1) The first is the time response of the oceans to change. If 
        emissions of greenhouse gases were to end immediately, the 
        global average temperature would continue to rise at a similar 
        rate as now for 30 to 50 years as the ocean's upper layers warm 
        and then much more slowly over centuries as the lower layers of 
        the ocean warm.
          2) The second time scale is concerned with the life time of 
        carbon dioxide in the atmosphere that is largely determined by 
        exchange with the ocean. Its life time in the atmosphere is 
        complex but is typically of the order of decades (for exchange 
        with the ocean's upper layers) and centuries (for exchange with 
        the deeper ocean). If anthropogenic input of carbon dioxide to 
        the atmosphere were to halt, its atmospheric concentration 
        would only decline slowly.
          3) The third time scale of importance is that applying to 
        changes in anthropogenic emissions. Because of inertia in the 
        system of energy infrastructure, changes in these emissions 
        will take the order of decades to be realized.

    For reasons associated with all these time scales--reducing the 
build up of further commitment to change associated with (1), 
recognizing the long time scale for emissions reductions to be 
reflected in the atmospheric carbon dioxide concentration with (2) and 
the time scales associated with energy infrastructure in (3)--there is 
an urgency to begin seriously to reduce emissions now.
    Question 6. Given that there is still some uncertainty about the 
details of future warming, how should such uncertainty be dealt with in 
designing policy responses?
    Answer. The need for appropriate policy responses despite 
scientific uncertainty was recognized 13 years ago in 1992 in the 
Framework Convention on Climate Change agreed by all nations at the 
Earth Summit in Rio de Janeiro, signed by President George Bush Senior 
for the United States and subsequently ratified unanimously by the U.S. 
Senate. In Article 3 it includes an agreement that the Parties to the 
Convention should ``take precautionary measures to anticipate, prevent 
or minimize the causes of climate change and mitigate its adverse 
effects. Where there are threats of serious or irreversible damage, 
lack of full scientific certainty should not be used as a reason for 
postponing such measures, taking into account that policies and 
measures to deal with climate change should be cost-effective so as to 
ensure global benefits at the lowest possible cost.''
    Scientific certainty regarding many aspects of climate change has 
increased substantially since 1992 so that the need to take action is 
even stronger that it was then. A range of responses can be designed.

          1) There are responses addressing energy efficiency e.g. in 
        buildings, appliances, vehicles and in industry. Many of these 
        will require regulation or incentives for them to be achieved 
        on the scale required. Most of them are win-win in character, 
        as most will lead to significant--even large--savings in cost 
        or materials as well as in carbon emissions. There are numerous 
        examples, for instance from U.S. industries, showing the value 
        to the U.S. economy of such measures.
          2) There are responses that also enhance energy security that 
        are also win-win.
          3) There are responses to do with adaptation to climate 
        change, for instance to prepare, especially in the more 
        vulnerable areas, for the expected increase in the number and 
        intensity of extreme events (e.g. floods, droughts, heat 
        waves). There is much evidence to show that more adequate 
        preparation substantially reduces the damaging impacts of such 
        events.
          4) There are responses that would be much more cost-effective 
        to take now rather than later, for instance in the design of 
        power infrastructure with a typical life of 30-50 years. To 
        have to replace such infrastructure before the end of its 
        useful life would be costly.
          5) There are technologies concerned with carbon-free energy 
        sources (e.g. solar, biomass, biofuels, hydrogen technologies) 
        that need to be developed as rapidly as possible to the level 
        at which they can begin to act as significant alternatives to 
        conventional fossil fuel energy sources.

    Question 7. How do we know that emissions of carbon dioxide and 
other greenhouse gases are causing Earth's temperature to rise, as 
opposed to other factors that we have no control over; such as sun 
spots? Some assert that an increase in solar irradiance is the main 
cause of the Earth's current warming trend. Therefore, reducing fossil 
fuel emissions would not impact the Earth's temperature.
    Answer. Measurements of solar irradiance have been made since 1979 
from satellite mounted instruments. Small changes of up to 0.1% occur 
associated with the 11 year solar cycle. There is no evidence for 
changes greater than about 0.2% occurring in the longer term. Over the 
last 50 years, radiative forcing due to changes in solar irradiance is 
much smaller than that due to anthropogenic increases in greenhouse 
gases (Climate Change 2001, the Scientific Basis IPCC 2001 Report, 
chapter 6 and J. Hansen et al., Earth's Energy Imbalance: Confirmation 
and Implications, in Sciencexpress for 2 May 2005 doi:1110252).
    Question 8a. There are some who question the veracity of the 
assertion that the earth has warmed substantially over the last 
century. Arguments typically fall into three categories. It would be 
useful if you would address each in turn:
    Urban Heat Island Effect. This is the claim that the underlying 
temperature data is tainted by the proximity of data-generating 
thermometers to cities. As urban areas have grown over the last fifty 
years, the air temperatures around these cities have increased due to 
larger amounts of heat generating substances like rooftops and 
roadways. Scientists claim to have corrected for the urban heat island 
effect. How was this done, and how can we be sure that it was done 
correctly?
    Answer. During development of the global surface temperature 
compilations, data from each observing station were quality-controlled. 
This included comparisons with neighbouring stations. Records showing 
complex inconsistencies relative to their neighbours were rejected from 
the analysis. This will have removed many urban stations where ongoing 
changes in the environment have caused multiple, non-climatic changes 
in the record. Where the neighbour-comparisons showed simpler 
inconsistencies such as a relative warming trend, the urban records 
were retained but were adjusted to be consistent with their rural 
neighbours (e.g. Hansen, J. et al., 2001, J. Geophys. Res., 106, D20, 
23,947-23,963).
    There is substantial evidence that this procedure has been 
successful and that the land surface air temperature record used in 
assessment of climate change is not greatly influenced by urban 
warming. First, global rural temperature trends have been very similar 
to those based on the full network of stations (Peterson, T.C. et al., 
1999, Geophys. Res. Lett. 26, 329-332). Secondly, ocean surface 
temperatures have risen nearly as much as those over land (Folland, 
C.K. & Karl, T.R. et al. 2001, chapter 2 in Climate Change 2001: The 
Scientific Basis. IPCC 2001 Report). A somewhat greater warming over 
land than over the ocean under increasing greenhouse gases is expected 
because of the greater thermal capacity of the oceans. Thirdly, 
temperatures on calm nights, when urban heat islands are mainly 
evident, show no more warming than temperatures on windy nights at a 
worldwide subset of the stations used to monitor global surface air 
temperature (Parker, D.E., 2004, Nature, 432, 290).
    Uncertainties regarding urbanisation effects are allowed for in the 
global average surface temperature curve shown in the IPCC 2001 Report 
(Climate Change 2001: The Scientific Basis, Summary for Policymakers, 
Figure 1a). These uncertainties play a diminished role because land is 
only 30% of the global surface. Even the overall uncertainties, which 
include the effects of incomplete coverage and possible residual biases 
are much smaller than the global warming signal.
    Question 8b. Satellite and Airborne Balloon Data Contradict Surface 
Temperature Readings. Global mean temperature at the earth's surface is 
estimated to have risen by about half a degree F over the last two 
decades. On the other hand, satellite measurements of radiances and 
airborne balloon observations indicate that the temperature of the 
lower to mid-troposphere (the atmospheric layer extending from the 
earth's surface up to about 8 km) has exhibited almost no change during 
this period. Please explain whether this discrepancy is, indeed, real 
and how to account for it.
    Answer. Over the last few years, much careful and detailed study 
has been addressed to surface, balloon and satellite temperature 
observations taken over the last 25 years and the relationships between 
them. I summarize briefly in this answer the conclusions from a number 
of key papers that are now available describing this work, some of them 
published as recently as this August and two that will be published 
over the next two or three months. Because of the number of papers to 
which I am referring, for convenience I list all the references at the 
end of this answer. The main outcome of this work is that statements 
that the lower to mid-troposphere shows no warming trend or has cooled 
relative to the surface are no longer tenable. Such statements rely 
upon analyses of old radiosonde datasets, which had not adequately 
accounted for instrumental and observational biases, and a single 
satellite dataset. The first U.S. Climate Change Science Program report 
(www.climatescience.gov), which will be published in the late fall, is 
on this subject and will provide a far more detailed answer than is 
possible here.
    Efforts in the last few years have led to significant revisions to 
existing upper-air temperature datasets and the production of a number 
of new balloon-based (Lanzante et al., 2003a, b, Thorne et al., 2005a) 
and satellite-based (Mears et al., 2003, Grody et al., 2004, Mears and 
Wentz, 2005) climate datasets under different, seemingly reasonable, 
approaches. An alternative approach to removing the stratospheric 
influence from the satellite records has also been proposed (Fu et al., 
2004). Therefore the scientific community now have at their disposal a 
much larger number of independently derived estimates of tropospheric 
temperature change to analyse. Globally, the estimates of the average 
temperature trend for the period over which satellite data are 
available range from a slight warming to warming greater than that seen 
at the surface. It can be concluded therefore that the tropospheric 
data are consistent with a temperature trend similar to that at the 
surface, although the uncertainties are such that a relative cooling of 
the troposphere also cannot be ruled out.
    Uncertainty in tropospheric trends is much greater than uncertainty 
in surface trends, reflecting the greater technological challenges of 
adequately monitoring changes aloft than at the surface. Only with the 
advent of recent datasets (see above) has the importance of structural 
uncertainty--the effects of methodological choices employed to identify 
and remove non-climatic influences from the raw data during dataset 
construction upon the climate dataset that results--become apparent 
(Thorne et al., 2005b).
    Much of our uncertainty in temperature trends aloft arises in the 
tropics. Mears and Wentz (2005) have highlighted an error in the 
original satellite record of Christy et al. (2003) which led to a 
spurious cooling bias in the tropics. Balloon-based records are also 
sparsely located in the tropics, and have tended to launch only at 
local daytime (rather than twice-daily that is more common elsewhere). 
Daytime biases in radiosonde records are more pervasive due to solar-
heating effects, and the lack of day and night launches at these 
stations potentially makes identification and removal of any non-
climatic influences much harder (Lanzante et al., 2003a, Sherwood et 
al., 2005).
    Santer et al., 2005 have recently compared tropical temperature 
predictions from 19 climate models run with historical changes in 
human-induced and natural forcing factors with four of the current 
observational datasets (2 balloon based, 2 satellite based). Within the 
tropics our expectations are that surface anomalies will be amplified 
aloft because of latent heat release upon condensation under a 
convective regime. All the models exhibit this behaviour on all 
timescales from monthly variability up to inter-decadal trends 
regardless of differences in model physics, resolution, and the 
forcings applied. The observations also exhibit amplification aloft on 
short timescales, but all except one dataset exhibits damping aloft on 
long timescales. Either in the real-world different processes dictate 
low-and high-frequency behaviour in the tropics and all the models fail 
to capture this, or, more plausibly, most observational datasets retain 
significant biases which impact their suitability for long-term trend 
analysis. Gaining unambiguous clarification of which is the case and 
gaining a cleaner estimate of recent tropospheric temperature changes 
in the tropics is seen as a high priority.
    Question 8c. The Hockey Stick. In recent months, there have been 
assertions that the statistical method used to analyze global 
temperature data for the last several hundred years was biased towards 
generating the ``hockey stick'' shaped curve that shows sustained low 
and stable temperatures for hundreds of years with an extremely sharp 
rise in the last 100 years. Can you comment on whether the observations 
depicted in the hockey stick curve are, indeed, legitimate?
    Answer. I have received a similar question from Senator Talent 
(Q6). I provide the same reply to both questions.
    This is a fast moving area of research. Very recently the 
assertions by McIntyre and McKitrick (2005a, b) (MM), alluded to in the 
question (references at end of answer), have been shown by several 
papers to be largely false in the context of the actual data used by 
Mann and co-workers. Ammann (a palaeontologist at the National Centre 
for Atmospheric Research) and Wahl of Alfred University have two 
papers, one in review and one in press, that reproduce the original 
results published by Mann et al. in Nature in 1998 and Geophysical 
Research Letters, 1999 and prominently used in the IPCC Third 
Assessment Report. They demonstrate that the results of MM are due to 
MM having censored key proxy data from the original Mann et al. (1998) 
data set, and to having made errors in their implementation of the Mann 
et al. method. They specifically show that 15th century temperatures, 
related to the bristlecone pine issue, were not similar to 20th century 
temperatures, as was suggested by MM. Amman and Wahl issued a press 
release in May 2005 on this finding. Fuller details are at http://
www.ucar.edu/news/releases/2005/ammann.shtml These authors state that 
they will make their full computer code available publicly.
    A specific claim is made by MM that the ``hockey stick'' shape of 
the Mann et al. reconstructions is derived from the way Mann et al. 
normalise and centre their principal component pattern data. This has 
recently been tested. Rutherford et al. (in press, Journal of Climate) 
have shown that essentially the same result as Mann et al. is obtained 
using an entirely independent statistical method on similar data. This 
eliminates the step of representing regional tree-ring networks by 
principal components. The likely reason why Mann et al. were able to 
successfully use their particular technique is because the structure of 
paleoclimate data is more complex than the temporal ``red noise'' 
tested by MM.
    Other investigators have reconstructed climate over the past 1000 
years using very different techniques and different selections of data. 
Some of these results are recent, and some were shown in Fig 2.21 of 
the IPCC Third Assessment Science Report, Climate Change 2001. These 
authors tend to find a greater magnitude of climate variability than 
did the Mann et al. ``hockey stick'' results. In particular the 
``Little Ice age'' centred around 1700 is generally cooler. Some of the 
more recent papers of this type show a Little Ice Age cooler by up to 
several tenths of a degree centigrade than any reconstruction shown in 
the Third Assessment Report in Fig 2.21, including that of Mann et al. 
However, all but one recent papers (Esper et al., 2002, Mann & Jones, 
2003, Moberg et al., 2005, Huang, 2004, Jones & Mann, 2004, Bradley et 
al., 2003) find that the warmth of the late 20th century is still 
exceptional, as their reconstructions of the temperature level relative 
to the 20th century in the Medieval warm period are similar to the Mann 
et al. results. Soon & Baliunas concluded that the late 20th century 
was not unusually warm but their methodology was flawed (Mann and 
Jones, 2003) as they equated hydrological influences with temperature 
influences and assumed that regional warmth corresponded to hemispheric 
warmth.
    I am sure that the IPCC Fourth Assessment Report will fully take 
all these new findings into account. In the meantime, it is important 
to recognise that no evidence has emerged that seriously calls into 
question findings regarding the climate of the 20th century and the 
influence of human activities as described in the IPCC 2001 Report.
    Question 9. Some say that global warming might be a positive 
development? Will agricultural crop productivity improve due to the 
greater amount of CO2 in the atmosphere, and can we expect 
the Arctic and Antarctic regions to become more habitable?
    Answer.

                          ON CROP PRODUCTIVITY

    Higher concentrations of CO2 can enhance the 
productivity of crops that undergo C3 photosynthesis (wheat, 
rice and most temperate crops) by fertilizing photosynthesis. In areas 
subject to water stress, productivity may also potentially be enhanced 
through higher CO2 concentrations increasing the efficiency 
of water use. Crops with C4 photosynthesis (maize, sorghum, 
millet, sugar cane) will not benefit from increased CO2 in 
these ways.
    These direct effects of CO2 on crops should be viewed in 
the context of indirect effects due to the climate change arising from 
increasing CO2. Crops are affected by changes in temperature 
and moisture availability. Warming in cold regions is expected to 
create generally more favourable conditions for crops, although the 
expansion of crop areas would be limited by soil quality and day 
length. In regions currently under agriculture, the specific types of 
crops which may be grown are expected to change with warming; C4 
crops may become more favoured in temperate regions. However, higher 
temperatures would be expected to lead to a greater requirement for 
irrigation due to increased water loss by evaporation. Warming may also 
increase the prevalence of some pests and diseases.
    Moreover, changes in precipitation patterns could have major 
impacts. Some regions are predicted to become wetter and others drier. 
Wetter conditions in general would promote growth although increased 
severe heavy rainfall and floods would damage crops. Drier conditions 
in general would place greater demands on irrigation which itself would 
be subject to decreasing supply and competition from other uses such as 
drinking water and industry. Extreme high temperatures and droughts 
could have catastrophic impacts. In summary, some regions would expect 
net positive impacts whilst other would expect net negative impacts. 
Research on cereal yields assessed in the IPCC Third Assessment Report, 
which should be regarded as early work in an ongoing field of research, 
suggested that the greatest decreases in yield are expected in the 
tropics while some temperate and cold regions may see an increase in 
yield in the medium term.
    It should also be noted that other changes in atmospheric chemistry 
related to climate change may affect crop yields. In particular, 
increases in ozone concentration are expected to be detrimental.

              ON HABITABILITY OF THE ARCTIC AND ANTARCTIC

    There may be an expansion of cropping regions towards/into the 
Arctic, although this would also be limited by other factors as 
described above. In general, the problems associated with extreme cold 
temperatures would be expected to decrease. New issues would arise with 
warming, such as ground subsidence due to permafrost melting. 
Antarctica is expected to remain ice covered for the next century and 
beyond.
    Question 10. It is my understanding that the assessments of the 
progression of global warming through the next century and its impacts 
on changing the Earth's climate are largely based on computer modeling. 
It goes without saying that the planet's atmospheric, hydrologic, and 
meteorological systems are highly complicated. What can you say about 
how climate modeling capabilities have advanced since scientists began 
evaluating the problem?
    What is the level confidence that the computer models are providing 
useful projections of the future climate?
    Answer.

   HOW HAVE CLIMATE MODELING CAPABILITIES ADVANCED SINCE SCIENTISTS 
                  FIRST BEGAN EVALUATING THE PROBLEM?

    Since the early days of modern climate modeling in the 1970s, 
scientists have progressively modeled more of the processes that play a 
role in climate. For example, early models represented only the 
atmosphere, with a very simple representation of ocean effects. Later 
the effects of changing ocean currents and ice were taken into account, 
and recently scientists have begun to model the interactions of climate 
with the biosphere. At the same time, our developing understanding of 
each system (atmosphere, ocean, etc.), together with increasing 
computer power, have meant that each component can be represented with 
greater realism.
    As an example, today we are able to represent the circulations of 
the atmosphere and the ocean coupled together with sufficient realism 
that models reproduce many of the observed, large scale features of 
climate. Ten years ago this was only possible with the use of so-called 
`flux adjustments' which corrected for the long term effects of slight 
errors in the models' heat distribution. Ten years before that we had 
not even begun to include the effects of ocean currents in models.
    The ongoing development of models has led to increasing confidence 
in the modeling of many climate phenomena such as El Nino, monsoons, 
Arctic climate processes and the North Atlantic Oscillation.
    Throughout this history of development, the models' prediction of a 
substantial global warming in response to increasing greenhouse gases 
has been consistent and unambiguous. As models improve we are able to 
add more detail and confidence.

WHAT IS THE LEVEL OF CONFIDENCE THAT THE COMPUTER MODELS ARE PROVIDING 
                 USEFUL PROJECTIONS OF FUTURE CLIMATE?

    Confidence in model projections comes from three sources: the fact 
that they are based in fundamental physical principles such as 
conservation of energy, the fact that when driven by present day levels 
of solar energy input and concentrations of greenhouse gases and other 
trace species, they reproduce many observed features of present 
climate, and the fact that when driven by historical variations in 
those factors, they reproduce observed variations in climate. The 
development over the past 20 years of model formulation (discussed 
above) has seen a parallel increase in the veracity with which the 
models represent observed climate changes and variability.
    The success of models in reproducing present and past climate lead 
us to believe that they are capturing much of the fundamental physics 
of the climate system. Hence the comprehensive climate models provide 
the best tool available to assess future climate change. Nonetheless 
there are quantitative differences between projections made with 
different models, and these differences represent a level of 
uncertainty in the modeling. By detailed analysis of the models, 
scientists can identify sources of uncertainty--for example the 
modeling of clouds continues to be an important issue--and by a 
painstaking process of research reduce that uncertainty over time. 
Models generally have greatest skill on larger scales, and as a 
generalization, the larger the scale (global, continental) the more 
robust are the modeling results.
    Question 11. It is often asserted, by those who dispute the 
strength of the evidence of human-caused climate change, that the IPCC 
process has been politicized in a way that has tended to exaggerate the 
evidence for the reality of the problem and to understate the 
uncertainties. As the Chair of the IPCC's Working Group I on the 
science of climate change itself, could you characterize for us any 
political pressures you and your Working Group have experienced?
    Answer. First, let me say that, as chair of Working Group I, a 
crucially important task for me was to ensure that any bias, agendas or 
pressures for political or other reasons (for instance personal 
agendas) were not allowed to get in the way of accurate, honest and 
balanced appraisal of the science.
    During my years working with Working Group I, although I was 
supported in that task by the U.K. government, I played no part at all 
in the formulation or presentation of U.K. policy on climate change. 
The U.K. government made it clear that they expected me to avoid and 
refuse all political or other improper interference from whatever 
quarter in my IPCC work.
    The occasions when political pressures were most apparent were the 
intergovernmental meetings when the Summaries for Policymakers (SPM) 
were discussed and approved. At these meetings, typically about 100 
governments were represented and about 40 scientists representing the 
lead authors of the chapters were present to ensure the scientific 
integrity of the final document. The meetings were also open to 
representatives of non-governmental organizations from both the 
environmental and industry sides. The purpose of these meetings was to 
make sure that the SPMs were accurate and balanced scientifically and 
also that their presentations were clear, understandable and policy 
relevant.
    The political pressures at these meetings that tended to be the 
most obvious and persistent came from a small group of oil producing 
states assisted by some of the industrial NGOs who worked to weaken or 
remove statements expressing the reality of climate change and its 
likely impacts. Less persistent pressures to strengthen such statements 
tended to come from some of the environmental NGOs and from a few 
country delegates. All proposals for change arising from these 
pressures were subjected to careful scientific scrutiny. After this 
thorough scrutiny (sometimes taking a substantial amount of time) the 
final text was accepted by all parties and all scientists without 
dissention--with one exception that occurred in 1995 when it became 
necessary to add a footnote expressing dissension by two countries, a 
footnote that was in fact withdrawn before the document's publication.
    The final summary in each case was as accurate, balanced and 
unbiased as it was possible to make it. In every case, the SPM was 
improved in both accuracy and clarity by the process of the 
intergovernmental meeting. I can say categorically that there was no 
tendency to exaggerate evidence for the reality of the problem or to 
understate the uncertainties. If anything, the tendency was the other 
way--to be cautious in our statements and to make sure that we fully 
represented the uncertainties. The growth in the confidence expressed 
by the IPCC in its statements from the 1990 report through the 1995 
report to the 2001 report, I believe, illustrates the IPCC's tendency 
to caution.
    Question 12. In the 1970s, climate scientists claimed that the 
world was cooling and anthropogenic activities might be prematurely 
forcing the planet into an ice age. Today we hear that the earth is 
warming. What can you say about the scientific debate on cooling 
several decades ago and why is today's situation with global warming 
different?
    Answer. There were some very cold winters in Europe and North 
America in the 1960s that led some scientists to speculate that we 
might be entering a new ice age. Most climate scientists disagreed with 
and indeed opposed that speculation--as I did--pointing out that there 
was nothing in the 1960s outside the range of natural variation. Also, 
according to the theory that ice ages are triggered by regular 
variations in the Earth's orbit that can be predicted precisely from 
astronomical data, the current interglacial period has tens of 
thousands of years to run before the appropriate conditions for the 
next ice age occur.
    The current situation with global warming is very different. First, 
the basic physics of increasing surface temperature with increasing 
greenhouse gases has been known since the early 19th century. Secondly, 
the increase in global average temperature during the last 50 years is 
very unlikely to be due solely to natural variability. Thirdly, climate 
models that include the relevant physics and dynamics of the 
atmosphere's and ocean's structure and circulation are unable to 
simulate the profile of temperature increase unless the radiative 
forcing due to the anthropogenic increase of greenhouse gases is 
included in addition to all known natural forcings.

    Responses of Sir John Houghton to Questions From Senator Bunning

    Question 1. Would you say that the steps America has taken in the 
recent years to improve energy efficiency and produce lower carbon 
emissions from power generation are the right first steps in addressing 
climate change? Within that construct, given the current U.S. 
electricity supply that is more than 50% derived from coal, is 
encouraging clean coal technology, IGCC and carbon sequestration the 
most important immediate policy action we can take?
    Answer. I agree that increasing energy efficiency across the board 
(e.g. in buildings, appliances, vehicles and in industry) is an 
essential part of action to address climate change. It has the 
advantage that most such actions are win-win in character i.e. they 
will lead to significant, even large, savings in cost or materials as 
well as in carbon emissions. There are numerous examples, for instance 
from U.S. industries, of the economic and other benefits of increased 
efficiency.
    The other main action to address climate change mitigation is for 
the generation of energy to move as rapidly as possible to be less 
carbon intensive and eventually to be close to carbon free. It is clear 
that clean coal technology (IGCC and carbon sequestration) will play an 
important role in this future.
    Question 2. Sir Houghton, you testified that over two thirds of the 
projected increase in emissions from now until 2030 will come from 
developing countries. Do you believe it would be responsible for EU 
countries and America to adopt an emissions reduction that failed to 
include this part of the world?
    Answer. Countries who have joined the Kyoto Protocol have adopted 
emissions reductions that do not include developing countries. This is 
in line with the Framework Convention on Climate Change (FCCC) agreed 
by all nations in 1992 that states that industrialized nations that 
have already received large benefits from fossil fuel energy should be 
first to take action on climate change. But I agree that any 
international agreements post-Kyoto for emissions reductions need also 
to involve developing countries, especially those that are 
industrializing rapidly. I say a little more about this in my answer to 
Q3.
    Question 3. You indicated in your testimony that America needs to 
take a global leadership position on climate change. You argued that 
developing nations will ``follow, not lead'' on the issue of climate 
change and that mandatory agreements with these nations would not be 
necessary as they voluntarily adopt emissions standards in the future. 
Yet the mandatory cap program recommended by the NCEP specifically 
discounts voluntary cap programs in America as unable to achieve 
necessary reductions. They have argued that without mandates, the 
marketplace will not make the adjustments needed to achieve the very 
aggressive goals envisioned. Do you believe it is consistent to 
advocate a ``follow, not lead'' voluntary approach with developing 
nations while dismissing the same approach in America?
    Answer. Let me explain the arguments behind my use of the phrase 
`follow, not lead' in respect of developing countries.
    As I explained in my written testimony, we in the developed 
countries have already benefited over many generations from abundant 
and cheap fossil fuel energy--although without realizing the potential 
damage to the climate and especially the disproportionate adverse 
impacts falling on the poorer nations. The Framework Convention on 
Climate Change (FCCC) recognized the particular responsibilities this 
placed on developed countries to be the first to take action and to 
provide assistance (e.g. through appropriate finance and technology 
transfer) to developing countries for them to cope with the impacts and 
to develop cost effective sources of energy free of carbon emissions. 
This is at the basis of my `follow, not lead' approach.
    But it is not my intention to associate this approach only with 
voluntary action. Given the fact of first action taken by developed 
countries, for instance through the Kyoto Protocol, I agree that 
further action with mandatory targets and requirements are necessary 
for all countries. That is the urgent challenge of the next stage of 
negotiations that is taking place within the FCCC in which all 
countries--both developed and developing--must be involved.
    Question 4. While you have presented what appears to be a united 
scientific front in the form of the statement from the academies of 
science from 11 countries, I am concerned by some of the news since the 
release of that statement. The Russian Academy of Sciences says it was 
misrepresented and that Russian scientists actually believe that the 
Kyoto Protocol was scientifically ungrounded. I am also aware that 
there was a significant misrepresentation on the science between our 
academy and the British representative.
    Given this background, wouldn't you say there are still some pretty 
fundamental disagreements about the science of climate change among 
scientists around the world?
    Answer. I have consulted the Royal Society in London about the 
questions you have raised about the joint statement from the academies 
and they have provided me with the information that follows in the rest 
of this answer.
    All of the national academies that signed the joint statement on 
global climate change remain committed to it, and there is not, nor has 
there ever been, any disagreement between the signatories over its 
content.
    There have been media reports that a member of the Russian Academy 
of Sciences, who is well-known for his opposition to the Kyoto 
Protocol, has requested that the Academy's President, Professor Yuri 
Osipov, should withdraw his signature from the joint statement. 
Professor Osipov has not done so.
    There has been an exchange of correspondence between Dr. Bruce 
Alberts, the President of the National Academy of Sciences, and Lord 
May of Oxford, the President of the Royal Society, about a brief 
reference in the Society's media release accompanying the launch of the 
statement to an earlier report published by the NAS in 1992. The 
exchange of correspondence has not been about the content of the joint 
statement.
    The signatories to the joint statement by the national academies 
remain committed to its content and hope that it will help the 
governments of the G8 nations to determine their future actions and 
policies on climate change.
    Question 5. In this international academies statement, you find 
that an ``immediate response that will, at a reasonable cost, prevent 
dangerous anthropogenic interference with the climate system,'' but 
continue to say in the following paragraph, ``minimizing the amount of 
this carbon dioxide reaching the atmosphere presents a huge 
challenge.'' Could you please elaborate, since any response can't both 
be a ``reasonable cost'' and a ``huge challenge'' proposition, how you 
resolve the two?
    Answer. The next paragraph in the academies statement goes on to 
say, `There are many cost-effective technological options that could 
contribute to stabilizing greenhouse gas concentrations. These are at 
various stages of research and development. However barriers to their 
broad deployment still need to be overcome.' The barriers that exist 
are not all economic ones. That this is the case is illustrated by the 
fact that it is generally agreed that many energy efficiency measures 
exist that could be implemented at no net cost or with significant cost 
savings--yet little action is taken about them. Other measures have 
been proposed that are described as win-win, implementation of which is 
not being pursued.
    One of the barriers is the wide campaign of misinformation by 
vested interests that has persuaded people and their leaders to deny 
the existence of the problem of climate change or that even if the 
problem exists, little or no action about it need be taken at the 
moment.
    An important part of the challenge, therefore, is first to ensure 
that governments, industries and the general public receive accurate 
and honest information that will give them the confidence to act, and 
secondly for governments in particular to set up the framework 
(including incentives and other appropriate economic measures) that 
will lead to action at reasonable cost. A further challenge in this 
process will be to carry out honest assessments of the `reasonableness' 
of the costs of mitigation action by comparing them against the costs 
of inaction and the costs of adaptation, including so far as possible 
`costs' that cannot be expressed in monetary terms.
    Question 6. Several scientists have cited events like the high 
temperatures in Europe in the summer of 2003 and increased storminess 
in the 1980s and 1990s as evidence of climate change. Don't global 
ecosystems go through natural periods similar to these as well?
    Answer. There is a great deal of variability in the natural climate 
system and extreme events occur--and always have occurred--on account 
of this natural variability. Because of this variability it is not 
possible, in general, to identify any particular extreme event as due 
to the increase of greenhouse gases through human activities. However, 
in mentioning the heat wave in Europe in 2003, in which over 20,000 
people died, you cite the one recent event that is so very far outside 
the range of natural variability (the average temperature for the 
months of June, July and August in central Switzerland was 5 standard 
deviations away from the average since instrumental records began 140 
years ago) that analysis shows that most of the risk of that event is 
almost certainly due to the increase in greenhouse gases (Stott, P.A. 
et al. 2004, Nature 427, 332-6). It therefore does provide evidence 
that human induced climate change is occurring.
    Regarding the increased storminess of the 1980s and 1990s relative 
to the 1950s, this has been studied by insurance companies. They report 
an increase during this period in the number of weather of weather 
related disasters by a factor of 5 and in the economic cost (adjusted 
for inflation) of such disasters of a factor of 10. Although part of 
these observed upward trends is related to socio-economic factors 
(population growth, increased vulnerability and increased wealth) a 
substantial part is also linked to the increased frequency and 
intensity of such events (Climate Change 2001: the Synthesis Report, 
IPCC 2001).
    This increased trend in the frequency and intensity of such events 
is what is expected in a world that is warming due to increased 
greenhouse gases. As I explained briefly in my written testimony, there 
are scientific reasons for this trend and further it appears as a 
robust result from climate models.
    Question 7. There are a number of astrophysicists and other 
scientists who believe that sunspots are a major contributor to 
changing temperatures. A recent survey showed at least 100 such studies 
are underway. Why don't scientists put as much emphasis on this 
possibility or other aspects of natural climate variability as they do 
on emissions from human activity?
    Answer. The IPCC in its reports has considered all aspects of 
natural variability as well as the effect of greenhouse gas emissions 
from human activity. A substantial section of chapter 6 of the IPCC 
2001 Report, Climate Change: the Scientific Basis is devoted to 
possible solar influences on climate and about 50 papers on the subject 
are cited. It remains a subject of serious scientific research 
interest.
    The IPCC's task, however, has been to compare all known natural 
influences on climate (including solar influences) with the effects of 
increasing greenhouse gases. Measurements of solar irradiance have been 
made since 1979 from satellite mounted instruments. Small changes of 
about 0.1% occur associated with the 11 year sunspot cycle. There is 
some evidence for solar influence on climate over the last few 
centuries, for instance during the first few decades of the 20th 
century. But the influence is small. Over the last 50 years, radiative 
forcing due to changes in solar irradiance is much smaller than that 
due to anthropogenic increases in greenhouse gases (see also J. Hansen 
et al., Earth's Energy Imbalance: Confirmation and Implications, in 
Sciencexpress for 2 May 2005, doi:1110252)
    Question 8. Much of the discussion about climate science being 
settled is based on the summary chapter of the Intergovernmental Panel 
on Climate Change of the United Nations. The chapter made specific 
predictions about the pace of rising temperatures and the relative 
importance of human activities to climate change. And yet, the body of 
the report is much more ambiguous and inconclusive about the current 
state of the science. Is anything being done to ensure that the summary 
of the next IPCC report is more reflective of the overall analysis by 
the scientists?
    Answer. I am aware that statements are often made and quoted 
asserting that the Summaries for Policymakers (SPM) of the IPCC reports 
do not accurately reflect the science of the underlying chapters. Yet, 
to my knowledge, none of those expressing such views have provided 
evidence or examples to support them.
    It is important to recognize the IPCC's purpose in preparing an SPM 
for its reports. As an intergovernmental body, the IPCC is bound to 
produce its conclusions succinctly and in a form that is understandable 
by policymakers and relevant and helpful to their needs. The SPM 
therefore is not a scientific summary of all the science laid out in 
the chapters. It does not list, for instance, all the factors or all 
the arguments involved in the scientific appraisal of any given area. 
Each chapter, in any case, produces its own scientific summary. The SPM 
is a summary of conclusions, largely taken from the chapter summaries, 
selected for their policy relevance and in the drafting of which lead 
authors from the chapters have played a full part.
    It is also important, as your question implies, that the SPM 
adequately expresses the degree of certainty to be associated with any 
conclusion. The IPCC has spent a lot of time debating how this can best 
be done and a large proportion of the time in the intergovernmental 
meetings that have approved the SPMs (see also my answer to Q11 asked 
by Senator Bingaman) has been taken up with ensuring that the final SPM 
text accurately reflects the chapters in the degree of confidence 
expressed in the conclusions. When this has to be done succinctly, as 
the SPM requires, it is helpful for confidence to be expressed 
quantitatively. For instance, in all the IPCC scientific reports, so 
far as possible, numerical values quoted in the conclusions also 
included error bars to express their uncertainty. In addition, in the 
2001 IPCC Report, many of the more qualitative statements have been 
made quantitative by attaching to them numerical estimates of 
probability. For instance, a given conclusion described as likely is 
estimated to have a probability of being true in the range 67% to 90% 
and as very likely when its probability of being true is estimated as 
in the range 90% to 99%, and so on. In this way, uncertainties have 
been presented in a manner that can be more easily interpreted and used 
by policymakers, especially when the impacts of climate change have to 
be folded into the consideration of wider policy issues involving 
future energy generation or the provision of security.
    Further, in the IPCC 2001 SPM, clearly listed are areas of 
importance where there is no evidence of change, for instance in sea 
ice cover in the Antarctic or in the average number and intensity of 
tropical cyclones over the 20th century.
    I have no doubt at all that matters regarding the accuracy and 
balance of the SPM and the way uncertainties are represented continue 
to be very fully discussed within the IPCC as it prepares the Fourth 
Assessment Report.
    Question 9. The natural ``greenhouse effect'' has been known for 
nearly two hundred years and is essential to the provision of our 
current climate. There is significant research in the literature today 
that indicates humans, since the beginning of their existence, have 
caused an increase in the greenhouse effect. Some argue that the 
development of agriculture 6,000 to 8,000 years ago has helped to 
forestall the next ice age. The development of cities, thinning of 
forests, population growth, and most recently the burning of fossil 
fuels, have all had an impact on climate change. Our ecosystems have 
constantly adapted to change, as we as humans have adapted to our 
ecosystems as well. Is it possible that the increased presence of 
CO2 caused by the 8,000 years of modern human existence may 
be something our ecosystems will continue, as they previously have, to 
naturally adapt to?
    Answer. According to data from the Vostok and Taylor Dome ice 
cores, atmospheric CO2 concentration rose by 20ppm (from 
260ppm to 280ppm) between 8,000 years ago and the start of the 
industrial era (circa 1750). Since then, CO2 has risen to 
377ppm in the Mauna Loa record. This is higher than at any time in the 
440,000 year ice core record and also higher than at any time in the 
last 20 million years according to geochemical evidence. There are 
therefore no examples in the recent past to which we can refer for 
evidence of adaptation to current or projected future CO2 
levels.
    The amount of the CO2 rise over the last 250 years has 
been nearly 5 times that seen over the previous 8,000 years, with the 
rate of rise 150 times faster. Ecosystems will already need to be 
adapting more rapidly than before. In the six illustrative SRES 
scenarios examined in the IPCC Third Assessment Report of 2001, the 
CO2 concentration reaches between 540ppm and 970ppm over the 
next 100 years. These correspond to rates of rise of 650 to 2300 times 
faster than over the 8,000 years pre-industrial. Adapting to the 
associated climate change under any of these scenarios will become 
increasingly difficult for both ecosystems and humans.
    Question 10. The panel touched on some energy alternatives such as 
biomass, natural gas, and nuclear power, yet there was little mention 
of hydrogen power. From a scientific viewpoint, where do you think we 
are on being able to really utilize hydrogen power? What is the 
potential of hydrogen power?
    Answer. Hydrogen has many advantages as a fuel in that it is very 
non-polluting and is ideal for using in fuel cells that are potentially 
highly efficient and convenient devices for producing electricity. 
Further, providing the hydrogen is produced from a carbon-free source, 
it does not add to the greenhouse effect.
    Hydrogen power does not, however, exist in isolation from the means 
by which the hydrogen is produced. That may be from solar energy or 
from the energy alternatives that you have mentioned such as biomass, 
natural gas or nuclear sources. Hydrogen essentially provides a 
secondary rather than a primary source of energy.
    There seems to be general recognition that hydrogen has great 
potential and will become an important and probably dominant fuel in 
the future. Before this occurs on a very large scale, substantial 
further development of fuel cells and of technologies for hydrogen 
storage are required especially for use in vehicles.
    Question 11. The panel established very clearly that we should 
adopt policies that decrease carbon emissions regardless of any other 
carbon emissions policies we pursue. We are currently or will shortly 
be providing expanded incentives for clean coal, nuclear energy and 
renewable fuels. Do you feel this is money well spent? What 
technologies do you feel the government should be more involved in 
developing?
    Answer. I am not an expert on energy policy so can only make a 
general comment. It is clear, I believe, that there is no one solution 
to the challenge of moving to carbon free energy, so all possibilities 
need to be explored and assessed. There are also comparatively new 
technologies, especially some in the field of renewables, that will 
require considerable government support before they can become 
commercially competitive.

    Responses of Sir John Houghton to Questions From Senator Talent

    Question 1. There has been a fair amount of criticism of the output 
of the models used to forecast possible climate conditions in the 
future, due in part to the data assumptions made. How responsive has 
the IPCC been to external criticism? Has this criticism led to any 
modeling or data input revisions, and what was the result of these 
revisions?
    Answer. In contrast to models of the economy, for example, climate 
models are not based on empirical or statistical extrapolation but they 
possess a sound theoretical basis in the established laws of physics 
and dynamics. These include the laws of conservation of mass, heat, 
moisture and momentum and the equation of state. Future projections are 
determined through integration of the equations describing these laws 
together with Newton's equations of motion. Such models are essential 
tools for adding together all the non linear processes involved in the 
behaviour of the total climate system. A good description of the 
present state of climate modeling can be found in J.F.B.Mitchell, Can 
we believe predictions of climate change? Q.J.R.Meteorol.Soc., 130, 
2341-2360, 2004.
    There has been enormous development in the size, sophistication and 
skill of climate models over the last 30 years. The global modeling 
community has been closely involved in the IPCC process and contributed 
a great deal to it. In particular, for the 2001 IPCC Report, 20 groups 
in different institutions and countries running over 30 general 
circulation models with full coupling between the atmospheric and ocean 
circulations set up elaborate procedures to evaluate and compare 
formulations and results between all 30 models. This process has been 
highly productive in leading to improvements in model performance, 
creating increasing confidence in model results and providing guidance 
for model developments.
    Many of the criticisms of models commonly voiced concern older 
models in some of which adjustments (e.g. flux adjustments at the 
atmosphere-ocean boundary) had to be made the validity of which was 
questioned. The modeling community has worked to remove such 
limitations. For instance, modern models do not require flux 
adjustments. The main uncertainties in models that remain arise from 
difficulties of adequately dealing with clouds and with the ways in 
which small scale motions (too small for discrete model description) 
influence motions on the larger scale. Uncertainty about clouds is the 
main reason for the range of uncertainty from 1.5 to 4.5 C still 
quoted by the IPCC for the climate sensitivity (the increase in 
equilibrium surface temperature arising from a doubling of carbon 
dioxide).
    Question 2. You say in your written testimony (p. 7) that the Kyoto 
Protocol is just a ``beginning for the process of reduction'' for 
countries that ratified the protocol. What level of cuts are necessary 
to reach the goal of Kyoto? If the EU is having trouble meeting the 
``beginning'' targets, how will they meet the necessary targets without 
wrecking their economies, and how are the rising emissions of 
developing countries factored in?
    Answer. I have consulted with the U.K. government in providing this 
answer. The goal of the Climate Convention is to stabilise greenhouse 
gases in the atmosphere at levels which avoid dangerous anthropogenic 
climate change. The European Union (EU) has suggested that this would 
mean avoiding temperature rises greater than 2 degrees Celsius above 
pre-industrial levels. Recent research indicates that to do so requires 
global greenhouse gas emissions to peak within the next two decades, 
followed by substantial global reductions relative to 1990. These would 
need to be of the order of at least 15% and perhaps as much as 50% by 
2050. Developed countries would need to take greater action which 
suggests that their emissions will need to fall by between 60 and 80% 
of current levels by 2050. Kyoto is thus clearly just a first step as 
its goal is to achieve reductions in developed country emissions in the 
near term (2008 to 2012). However the Protocol includes built in 
mechanisms for considering what actions should be taken by parties in 
the period after 2012 and initial discussions on this are due to begin 
among Kyoto parties at the 1st meeting of the Parties to the Kyoto 
Protocol, this November in Montreal.
    With regard to the EU's Kyoto targets, a recent European Commission 
report (http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/com/2004/
com2004_0818en01.pdf) suggests that a combination of existing domestic 
policies and measures, additional policies and measures which are 
already in an advanced state of planning, and emission credits gained 
through the Kyoto Protocol's project-based mechanisms will deliver a 
total EU-15 emissions cut of 8.6% by 2010 (the EU-15 target is -8%). 
The EU Council of Ministers has set out a range of emission reduction 
pathways, as noted above, to consider when discussing the future with 
other parties. The U.K. aims to use its Presidency of the EU to launch 
the process of developing strategies or pathways to deliver those kinds 
of medium and long term targets. The U.K. hopes to introduce in the EU 
the same kind of process taken by the U.K. in 2003 when it formulated 
its Energy White Paper, undertaking the necessary work to demonstrate 
that future targets adopted are achievable and compatible with healthy 
economic growth.
    Question 3. You note in your written testimony (p. 8) that for the 
U.K. to meet its target of 60% reductions by 2050, it would suffer a 
loss of 6 months' growth over 50 years, or 1% of the growth over that 
time period. How much money in GDP and how many lost jobs does that 
represent? Does this result in any reduction in emissions, particularly 
in light of the fact, as you note, that China is building the 
equivalent of a 1 gigawatt, fossil-fuel powered generating station 
every week?
    Answer. I have consulted with the U.K. government in providing this 
answer. Analysis for the U.K.'s Energy White Paper in 2003 concluded 
that the costs of achieving a 60% reduction in CO2 emissions 
might be around 0.5-1% of GDP in 2050. This would be broadly equivalent 
to a reduction of about 0.01 percentage points a year in the assumed 
GDP growth rate of 2.25% a year. The cost to GDP in 2050 is estimated 
to be between 10bn and 25bn per annum (in 2000 
prices) by 2050 compared with a forecast level of GDP in 2050 of around 
2500bn. There are no figures available for the effect on 
employment. If the U.K. achieves a 60% reduction in its carbon dioxide 
emissions this would mean that the U.K.'s annual emissions had fallen 
to around 65 million tonnes of carbon by 2050, about 90 million tonnes 
lower than they are currently. To put this in context, a new 1 GW coal-
fired power station might be expected to emit around 1.5 million tonnes 
of carbon per year. The Energy White Paper recognises that it won't be 
enough for the U.K. to act alone and that others will need to make 
comparable efforts to meet the challenge of climate change.
    Question 4. The time for greenhouse gas emissions in the atmosphere 
to decay, as predicted by the IGCC model is about 37 months. However, 
actual experience based on studies of volcano eruptions suggest a decay 
time of half of that (Michaels and Knappenberger, 2000) or less 
(Douglass and Knox, Univ. of Rochester, reported in Geophysical 
Research Letters), meaning a lower climate sensitivity and lower the 
future temperature rise. Have the IGCC numbers been rerun to account 
for this actual data, rather than sticking to the modeling assumptions?
    Answer. Different greenhouse gases have different lifetimes in the 
atmosphere. The fundamentals of their atmospheric cycles and lifetimes 
are well understood. I do not recognize to what decay the 37 months 
refers. However, I believe the Senator's question is rather about the 
transient climate response observed after the Pinatubo volcanic 
eruption and how this might be used to constrain our knowledge of 
climate sensitivity and ``global warming commitment'' (the extra-
warming in the pipeline once greenhouse gas concentrations have been 
stabilized). The climate response to stratospheric aerosols induced by 
the Pinatubo eruption has been used in a number of studies to attempt 
to provide information about climate sensitivity or the time constant 
of climate response to perturbations in radiative forcing such as 
occurs with greenhouse gases. The one you cite by Douglass and Knox 
essentially employs an extremely simplistic one-dimensional model that 
includes no allowance for the ocean and also employs an incorrect 
definition of radiative forcing. Other studies have used full three-
dimensional climate models (Kircher et al., Journal of Geophysical 
Research, 104, 19039-19055, 1999; Soden et al., Science, 296, 727-730, 
2002) and find that moderate to high climate sensitivities (i.e. 3 to 
4.5 degrees C for a doubling of CO2 at equilibrium) are 
compatible with the observations. However, as pointed out by R.S. 
Lindzen and C. Giannitsis (J. Geophys. Res., 103, 5929-5941, 1998) in a 
detailed study on the climatic effects of volcanic cooling, the 
uncertainties associated with the climate response are such that no 
clear conclusions can be drawn regarding either climate sensitivity or 
the time scale of climate response from studies on a single volcanic 
eruption such as Pinatubo.
    Question 5. What has been the pattern of findings as the science 
improves--more or less climate sensitivity to carbon concentration in 
the atmosphere, greater or lesser projected warming? E.g., I understand 
that the large majority of models predict a more modest warming of 2-5 
degrees F, as opposed to IGCC's Third Assessment Report which predicts 
about 11 degrees F (6 degrees C) by 2100.
    Answer. The IPCC's Third Assessment Report in fact gave an 
uncertainty range of 1.4 to 5.8 degrees C (2.5 to 10.5 F) for the 
projected global average temperature rise in 2100--you just mention the 
top end of that range. Included in that range are uncertainties in 
projections of how greenhouse gases will increase in the 21st century 
(that is dependent on how emissions due to human activities evolve) in 
addition to uncertainties in our scientific understanding of the 
response of climate to increased greenhouse gases. The range for global 
average temperature rise projected for 2100 published in the IPCC 1995 
Report of 1.0 to 3.5 C (1.8 to 6.3 F) was less than that in 2001, 
largely because of different assumptions about likely emissions of 
aerosols due to human activities and also of greenhouse gases, in the 
21st century.
    The response of climate to increased greenhouse gases is described 
by a quantity called the climate sensitivity that is defined as the 
amount of global average temperature increase for a doubling of 
atmospheric carbon dioxide concentration under equilibrium conditions. 
This is a quantity determined from the science. Your question, I 
believe, is asking how estimates of the climate sensitivity have 
changed as our understanding of the science has improved.
    In both the First and Second IPCC assessment reports of 1990 and 
1995, the range of estimates of climate sensitivity was 1.5 to 4.5 C 
(2.7 to 8.1 F). In the IPCC Third Assessment Report (TAR) of 2001, the 
conclusion drawn in the summary section of chapter 9 was that ``the 
previous estimated range for this quantity, widely cited as +1.5 to 
+4.5 C, still encompasses the more recent model sensitivity results''. 
However, in Table 9.4 of that chapter, the range of values of climate 
sensitivity in the 15 full climate models available to that chapter was 
quoted as from 2.0 to 5.1 C (3.6 to 9.2 F) with a mean of 3.5 C 
(6.3 F), indicating a tendency for models at that time to show 
somewhat higher values of climate sensitivity. Since the publication of 
the TAR there have been a number of studies in which models have 
produced climate sensitivities in excess of 6 C (11 F) (e.g. Murphy 
et al., 2004, Nature, 430, 768-772; Stainforth et al., 2005, Nature, 
433, 403-406). In general, the lower end of the uncertainty range for 
climate sensitivity has tended to remain at 1.5-2 C (2.7-3.6 F) while 
the upper range has increased.
    In conclusion, therefore, as the science has developed and 
improved, there has been a tendency for an increase in the likelihood 
of greater sensitivity and greater warming.
    Question 6. What's the status of the review of the Mann ``hockey 
stick'' temperature curve? I understand that studies by Stephen 
McIntyre and Ross McKitrick suggest that it relied on the statistically 
insignificant bristlecone pine. Is the IPCC taking another look at that 
work, which forms the basis for much of today's climate change debate?
    Answer. I have received a similar question from Senator Bingaman 
(Q8c). I provide the same reply to both questions
    This is a fast moving area of research. Very recently the 
assertions by McIntyre and McKitrick (2005a, b) (MM), alluded to in the 
question (references at end of answer), have been shown by several 
papers to be largely false in the context of the actual data used by 
Mann and co-workers. Ammann (a palaeontologist at the National Centre 
for Atmospheric Research) and Wahl of Alfred University have two 
papers, one in review and one in press, that reproduce the original 
results published by Mann et al. in Nature in 1998 and Geophysical 
Research Letters, 1999 and prominently used in the IPCC Third 
Assessment Report. They demonstrate that the results of MM are due to 
MM having censored key proxy data from the original Mann et al. (1998) 
data set, and to having made errors in their implementation of the Mann 
et al. method. They specifically show that 15th century temperatures, 
related to the bristlecone pine issue, were not similar to 20th century 
temperatures, as was suggested by MM. Amman and Wahl issued a press 
release in May 2005 on this finding. Fuller details are at http://
www.ucar.edu/news/releases/2005/ammann.shtml. These authors state that 
they will make their full computer code available publicly.
    A specific claim is made by MM that the ``hockey stick'' shape of 
the Mann et al. reconstructions is derived from the way Mann et al. 
normalise and centre their principal component pattern data. This has 
recently been tested. Rutherford et al. (in press, Journal of Climate) 
have shown that essentially the same result as Mann et al. is obtained 
using an entirely independent statistical method on similar data. This 
eliminates the step of representing regional tree-ring networks by 
principal components. The likely reason why Mann et al. were able to 
successfully use their particular technique is because the structure of 
paleoclimate data is more complex than the temporal ``red noise'' 
tested by MM.
    Other investigators have reconstructed climate over the past 1000 
years using very different techniques and different selections of data. 
Some of these results are recent, and some were shown in Fig 2.21 of 
the IPCC Third Assessment Science Report, Climate Change 2001. These 
authors tend to find a greater magnitude of climate variability than 
did the Mann et al. ``hockey stick'' results. In particular the 
``Little Ice age'' centred around 1700 is generally cooler. Some of the 
more recent papers of this type show a Little Ice Age cooler by up to 
several tenths of a degree centigrade than any reconstruction shown in 
the Third Assessment Report in Fig 2.21, including that of Mann et al. 
However, all but one recent papers (Esper et al., 2002, Mann & Jones, 
2003, Moberg et al., 2005, Huang, 2004, Jones & Mann, 2004, Bradley et 
al., 2003) find that the warmth of the late 20th century is still 
exceptional, as their reconstructions of the temperature level relative 
to the 20th century in the Medieval warm period are similar to the Mann 
et al. results. Soon & Baliunas concluded that the late 20th century 
was not unusually warm but their methodology was flawed (Mann and 
Jones, 2003) as they equated hydrological influences with temperature 
influences and assumed that regional warmth corresponded to hemispheric 
warmth.
    I am sure that the IPCC Fourth Assessment Report will fully take 
all these new findings into account. In the meantime, it is important 
to recognise that no evidence has emerged that seriously calls into 
question findings regarding the climate of the 20th century and the 
influence of human activities as described in the IPCC 2001 Report.
    Question 7. If all the countries that have signed Kyoto stay within 
compliance of Kyoto, how much of a reduction in global warming would 
this result in?
    Answer. I have consulted with the U.K. government in providing this 
answer. If the developed country parties make the reductions they have 
committed to, in the period 2008-2012 the reduction in projected global 
emissions will be up to about 2%. This takes account of the fact that 
developing country emissions will still rise as they do not have 
emission reduction targets, although mechanisms such as the clean 
development mechanism, together with technology transfer and capacity 
building, will be expected to lead to some reduction in their emissions 
growth. The significance of the first commitment period is as a first 
step for building broader coalitions and a longer-term engagement aimed 
at reducing global emissions of greenhouse gases, as well as the 
establishment of essential monitoring and measuring standards and cost-
effective market mechanisms such as international emissions trading.
    Question 8. Can you confirm that suspended water vapor levels, 
cloud cover percentages and direct solar irradiation changes over time 
all represent variables in these forecasting models that could have 
significant impacts on the conclusions of the results of these models?
    Answer. In the formulation of climate models, estimates of direct 
solar radiation changes with time are included, along with estimates of 
all other known forcing factors, both natural and anthropogenie. There 
are periods such as that from around 1900-1940 when it is believed 
solar radiation changes had a significant effect. Any effect of solar 
radiation changes over the last 50 years, however, has been small 
compared with the effects of increasing anthropogenic greenhouse gas 
emissions Climate Change; the Scientific Basis, the IPCC 2001 Report, 
chapter 6).
    Water vapor concentration and the coverage of cloud (at different 
levels and of different types) are variables within the model equations 
that are generated within the model as the model integrations progress 
by applying the physical laws on which the model depends. These 
variables are not introduced from outside except in the specification 
of initial conditions; the influence of the these is soon lost as the 
integrations progress. The way in which clouds are treated within the 
model equations differs significantly amongst models. The largest 
single uncertainty in model results arises from uncertainties regarding 
this treatment as is explained in Climate Change; the Scientific Basis, 
the IPCC 2001 Report, chapter 8.
    Question 9. In looking at pre-industrial global temperature 
patterns, would you agree that changes in temperatures over time have 
occurred that had no anthropogenic basis?
    Answer. Temperature is a climate variable that has large natural 
variability over all time scales and space scales. The natural 
variability can arise because of external forcing such as changes in 
solar radiation or because of variations within the climate system 
itself. In addition to this natural variability, changes occur because 
of human activities, for instance deforestation, changes in vegetation 
or land use and since the industrial revolution because of changes in 
atmospheric composition especially most recently emissions into the 
atmosphere of growing quantities of greenhouse gases.
    The task of the IPCC has been to study thoroughly all reasons for 
climate variability and change both natural and anthropogenic and, 
through appropriate scientific analysis and the employment of climate 
models, to distinguish as far as possible between natural and 
anthropogenic effects.
    Question 10. Do we know what the ``best'' global temperature is to 
sustain life?
    Answer. Life of all kinds--human and non human--exists successfully 
on earth under a very wide variety of climates. What is important to 
realize is that humans and ecosystems have over millennia and centuries 
adapted to reasonably stable local climatic conditions. But unusually 
large climate changes are beginning to occur on a global scale and at a 
rate that is greater than for at least 10,000 years. If the local 
climate changes too rapidly, adaptation to new conditions may be 
difficult for both ecosystems and humans. The IPCC has concluded, 
`Projected climate change will have beneficial and adverse effects on 
both environmental and socio-economic systems, but the larger the 
changes and rate of change in climate, the more the adverse effects 
predominate' (Climate Change 2001, Synthesis Report,
    Many ecosystems are sensitive to unusual and sustained changes in 
temperature or precipitation. I give two examples. First, many areas of 
tropical corals are suffering `bleaching' because of increases in ocean 
temperature. Corals are also expected to be seriously affected by the 
increased ocean acidity that is occurring because of carbon dioxide 
from anthropogenic sources that is emitted into the atmosphere and then 
dissolved in ocean waters--an environmental problem that has only 
recently been appreciated. (see U.K. Royal Society Report 12/05, Ocean 
acidification due to increasing atmospheric carbon dioxide, 30 June 
2005, available on ). A second example is of 
substantial die back that is occurring in forests at northern high 
latitudes because of increased warming outside their normal range of 
tolerance.
    Over past epochs humans have responded to severe local or regional 
climate changes by moving into other more tolerable areas. In our 
modern extremely crowded world large population movements are no longer 
possible. To some adverse changes, it will be possible for humans to 
adapt, although often at significant cost. For instance, adaptation to 
changes in average water availability, average temperatures or some sea 
level rise might be achieved through alterations to water resource 
infrastructure, building design or sea defences. For many low lying 
areas, however, such as large populated deltas or many islands, 
adaptation to sea level rise is not a practical possibility and many 
millions will be displaced. Further, the increases that are likely in 
the frequency and intensity of floods and droughts will cause large 
problems especially for populations in sub tropical countries that are 
particularly vulnerable to such events.
    Question 11. What is currently being done to curb emissions from 
parts of the world in poverty who are deforesting their environment and 
burning biomass for all means of day-to-day living, and are these 
emissions continuing to increase in the world?
    Answer.

               ARE THESE EMISSIONS CONTINUING TO INCREASE

    Deforestation releases CO2 to the atmosphere both from 
the vegetation directly and also by disturbing the soil. The numbers 
quoted below refer to this. Burning biomass as a day-to-day fuel leads 
to net CO2 emissions if the biomass is not replaced. If the 
biomass is grown explicitly for fuel wood then there are no net 
CO2 emissions as the carbon biomass stock on average remains 
constant.
    CO2 flux from land-use change is increasing at about the 
same rate as fossil fuel usage. On a global scale, in 1980 land-use 
change accounted for about 23% of total anthropogenic emissions and in 
2000 about 24%. Regionally, there are some differences. From 1980 to 
2000, land-use carbon fluxes increased by 30% in tropical America--
close to the global average increase. Larger increases occurred in 
tropical Asia (56%) and tropical Africa (60%).
    (Data taken from: Houghton, R.A., and J.L. Hackler, 2002. Carbon 
Flux to the Atmosphere from Land-Use Changes; and Marland, G. et al., 
2005, Global, Regional, and National CO2 Emissions--both in 
Trends: A Compendium of Data on Global Change, Carbon Dioxide 
Information Analysis Center, Oak Ridge National Laboratory, U.S. 
Department of Energy, Oak Ridge, Tenn., U.S.A. Both are available at: 
.)

                      WHAT IS CURRENTLY BEING DONE

    My main personal experience of this problem comes through the Shell 
Foundation (a large charity set up by the Shell Company mainly to 
support sustainable energy provision in the third world) of which I am 
a Trustee. The Foundation has a large program aimed at the creation of 
local enterprises that build and market simple efficient stoves using 
traditional fuels that will substantially the reduce the amount of fuel 
that is used and also reduce indoor air pollution with the serious 
damage to health that it causes. The Foundation also has programs aimed 
at the creation of enterprises to provide sustainable and affordable 
energy to poor communities often from the use of readily available 
waste material (e.g. rice straw in China, coconut shells in the 
Philippines, etc.). The potential for the multiplication of such 
projects is very large. An aim of the Foundation is to join with other 
bodies and agencies to create mechanisms for the large scale-up of such 
programs so that they can become significant on a global scale both in 
the provision of energy to poor communities and also in reducing 
greenhouse gas emissions.
    Question 12. Do you believe it is practical to seek emission 
controls in parts of the world that are struggling in poverty?
    Answer. I believe the top priority is to achieve emissions 
reductions in the parts of the world that are making the largest 
emissions contributions i.e. the industrialized nations and those 
nations that are rapidly industrializing. Regarding nations `struggling 
in poverty', as you will see from my answer to Q11, I believe there is 
great opportunity for agencies and governments in the developed world 
to assist them to move out of poverty in ways that are sustainable and 
that reduce rather than increase their greenhouse gas emissions.
    Question 13. What is being done to curb emissions in the developing 
countries like China and India?
    Answer. In reply to Question 3 from Senator Bunning, I emphasized 
the importance of developed countries leading by example with regard to 
developing countries such as China and India. I also mentioned the 
responsibility on developed countries to develop partnerships with 
countries that are seeking to industrialize so as to assist them in 
whatever ways they can with the development of low carbon or carbon 
free energy generation. Further, it is essential that developing 
countries are full participants in agreements that need to be reached 
regarding targets and mechanisms in the next stage of negotiations that 
is taking place within the FCCC.

   Responses of Sir John Houghton to Questions From Senator Feinstein

    Question 1. Is there any credible scenario for stabilizing 
greenhouse gas emissions that does not involve the United States and 
other major emitters stopping their emissions growth over the next 
couple of decades and sharply reversing their emissions growth by 2050.
    Answer. All scenarios of global emissions that stabilize carbon 
dioxide concentrations in the atmosphere this century slow emissions 
growth over the next few decades and reverse that growth severely 
during the second half of the century. That applied to global 
emissions. The slowing and reversal of emissions for industrialized 
countries need to occur more quickly than for global emissions so as to 
allow room for growing industrialization in developing countries. I 
provide examples of stabilization profiles for both developed and 
developing countries in my written testimony to the committee.
    Question 2. Would the National Commission on Energy Policy's 
proposal stop and then reverse U.S. greenhouse gas emissions?
    Answer. I am not an expert of energy policy and cannot comment in 
detail on the proposals of the National Commission on Energy Policy. As 
I understand it, their main proposals are limited to stopping the 
growth of emissions by 2020 and do not cover the period after that 
date, although they recognize in their report the need for the reversal 
of emissions growth after 2020.
                                 ______
                                 
    Responses of Dr. Mario Molina to Questions From Senator Bingaman

    Question 1. Over the last several decades, anthropogenic emissions 
have ``substantially contributed'' to the increase in average global 
temperatures. Upon receiving a question from one of the Senators, one 
of the panelists suggested that ``80 percent'' of the warming was due 
to human activities. Do all the panelists agree? Please provide 
information as to how this estimate was derived.
    Answer. Other panelists will need to answer for themselves as to 
whether they agree with the 80 percent figure. While I personally 
believe that estimate is probably in the right ballpark, I think it's 
less important to focus on a particular number than it is to stress the 
broader scientific consensus reflected in recent findings of the 
Intergovernmental Panel on Climate Change (IPCC)--in particular the 
IPCC's finding that ``MOST of the warming of the past 50 years is 
attributable to human activities.''
    As for the techniques used to estimate the extent of human vs. 
natural influences on climate, estimates such as the one noted above 
are generally based on a careful statistical comparison of the 
temperature record over the past century against the timing and 
estimated magnitudes of the positive and negative ``forcings'' (warming 
and cooling influences respectively) known to have been produced in 
this period by both human and natural phenomena. Examples of such 
forcings include volcanic eruptions (which are thought to have had a 
slight overall cooling influence on surface air temperatures over the 
past 50 years), solar changes (which are not thought to have had a 
significant effect over this time period but may account for a slight 
amount of warming), emissions of sulfates and other aerosols (some of 
which would have had a cooling effect), and emissions of carbon 
dioxide, methane, and other greenhouse gases (which would have a strong 
warming effect).
    A crucial test of our confidence in the proposition that human 
activities are having a substantial impact on global climate is that 
when the best current climate models are supplied with the estimated 
time history of all known forcings--natural and human--as inputs, the 
temperature history for the 20th century calculated by the models 
matches the observed temperature record. If the ``model'' climate is 
driven only by the known natural forcings, the match with observations 
is poor; that is, the natural forcings cannot account, by themselves, 
for a large part of the changes in temperature that have been observed.
    Question 2. We received testimony that sought to distinguish 
between average global temperature changes causes primarily by 
anthropogenic emissions and local/regional temperature changes caused 
at times by natural variation. Please explain in greater detail.
    Answer. The surface temperature of the Earth is never uniform. The 
average temperature that features in discussions of climate change 
represents an average over every place on Earth, including some places 
that are warmer than average and some that are cooler. (The average is 
also an average over time--over the 24 hours in each day and the 365 
days in each year, if one is speaking, say, of the average temperature 
for 1850 or 2000 or 2005.) Changes in temperature are likewise not 
uniform spatially or temporally, and this is true whether the changes 
result from human or natural forces.
    For example, volcanic eruptions reduce the average temperature of 
the Earth for a time because the fine particles they inject into the 
stratosphere reflect sunlight back into space before it reaches Earth's 
surface. The cooling they cause is not, however, spatially uniform 
because the particles are most concentrated in the latitude band where 
the eruption has occurred. (The winds that spread these particles 
around blow mostly from west to east moving them quite rapidly along 
lines of constant latitude while spreading them only slowly to the 
north and south.) In addition, the cooling effect declines over time 
because the particles eventually settle back to Earth.
    Particles added to the atmosphere by human activities--including 
especially agricultural burning, fossil-fuel burning, and human-caused 
forest fires--also show the highest concentrations, and therefore the 
largest effects, in the latitudes where they are emitted. Some of these 
particles tend to cool the Earth below them, like those from volcanic 
eruptions, while others (such as black soot from incomplete combustion) 
tend to warm the Earth below.
    Unlike particles from volcanic eruptions, most of the greenhouse 
gases being added to the atmosphere by human activities stay there long 
enough to become uniformly mixed through the atmosphere around the 
globe. But still, the temperature changes that result from these 
greenhouse-gas increases are not uniform over the surface of the Earth, 
because the other forces that shape the surface temperature at any 
given place can act to either amplify or reduce the impact of altered 
greenhouse-gas concentrations on local temperatures. Such forces can 
include natural oscillations in the climate system, like the El Nino-
Southern Oscillation and the Pacific Decadal Oscillation, that can 
modify the global-scale response at a particular location for years or 
even decades, making the response to increased greenhouse gas 
concentrations larger or smaller. Notably, the global-scale warming 
influence of human-made greenhouse gases will not only be superimposed 
on top of all these natural cycles, but may also influence their 
behavior. At the local to regional scale, additional influences--such 
as air pollution, land cover change, and urbanization--can also 
contribute to localized warming or cooling.
    Indeed, because of the complicated dynamics of changes in the 
circulation of the atmosphere and the oceans--changes that can be 
caused by the effects of greenhouse gases or by human and natural 
forces that are independent of greenhouse-gas increases--it is 
perfectly possible, and indeed is often predictable, that some regions 
will become cooler on average even as the Earth as a whole grows warmer 
on average. And, of course, some regions will warm faster than the 
world as a whole is warming, as for example is happening in the Arctic 
for reasons that are quite well understood. Based on global-scale 
``fingerprint'' studies that compare complex patterns of temperature 
and other aspects of climate from observations and climate models, we 
generally expect warming to be greater over land areas than over the 
oceans (due to differences in heat capacity), greater at mid to high 
latitudes than at low latitudes (due to more energy going into 
evaporation in lower latitudes), and greater in the winter than in the 
summer (again due to more heat going into evaporation during the 
summer). These tendencies are based on long-term projections and may or 
may not apply in all regions or localities, especially in the early 
stages of warming. Nevertheless, it is clear that over the next 
century, the human-caused amplification of the greenhouse effect will 
exert a dominant influence on average temperatures at sub-continental 
to global scales.
    Question 3. Please explain the meaning of `scientific consensus' 
and comment on the status of the science of climate change in the 
scientific and academic community.
    Answer. The validity of scientific propositions is not determined 
by popular vote or even by a vote among scientists. It is determined by 
the replicability of observations, experiments, and analyses and the 
demonstrated predictive value of theories based on these, as certified 
by peer review. Peer review takes place when papers submitted for 
publication in scientific journals are reviewed by ``referees'' chosen 
by the editor, as well as when other scientists critique and try to 
replicate published results and when bodies such as the National 
Academy of Sciences and the IPCC use committees of scientists to review 
the state of understanding on specific issues.
    At any given time, in any given scientific discipline, there is a 
set of understandings of the subject constituting what most competent 
specialists in the field consider to have been established. These 
understandings relate to what these specialists believe is known with 
high confidence, what they believe is probably true but not yet 
established with such high confidence, and what they believe the 
important questions are that need further investigation before 
conclusions can be drawn about them with any confidence at all. This 
set of understandings of a topic--the understandings held in common by 
most competent specialists in the relevant field--is what is meant by 
the term ``scientific consensus''.
    The term does not mean some sort of average or common understanding 
held by everybody who is a scientist of any kind. Science is divided 
into many disciplines and specialties, and specialists in one topic are 
not necessarily much better informed about the science of topics 
outside their specialties than are laypeople. (Indeed, an intelligent 
layperson who has made a serious effort to learn about a particular 
scientific topic will probably know more about it than a scientist from 
a different specialty who has not made such an effort.) Thus, one would 
not try to determine the ``scientific consensus'' on climate change by 
polling a random sample of scientists of all specialties. One does it, 
as the U.S. National Academy of Sciences and the IPCC have done it, by 
convening a representative sample of the leading specialists to review 
and discuss current understandings and write down what they come up 
with in a report, which is then subjected to further review by 
additional leading specialists as to its accuracy and clarity.
    Like all science, the science of climate change is evolving--a 
process in which old understandings are strengthened, modified, or 
discarded; earlier questions are wholly or partly answered (or found to 
resist answers); and new questions emerge. Disagreement and controversy 
are a normal part of this process. Much of the attention of scientists 
tends to be focused on questions that are not yet settled, and it is 
the healthy habit of some fraction of the scientific community to be 
constantly challenging understandings that most others have accepted. 
Scientific reputations are made not only by answering questions that no 
one was able to answer before, but also by showing that some 
understanding that was previously commonly accepted is in fact not 
adequate and requires modification.
    The possibility of making their reputation by overturning accepted 
scientific wisdom motivates the ``heretics'' who are found in every 
scientific field. But policy makers and the public need to know that 
such reversals of accepted understandings are far rarer than popular 
accounts of science often suggest. In any given field at any given 
time, the odds are that most of the understandings held in common by 
most of the specialists in that field are right or close to right. The 
greater the body of accumulated evidence and analysis that supports 
those understandings, moreover, the lower is the chance of their being 
overturned. And even in the most celebrated scientific ``revolutions'', 
such as that produced by Einstein's theory of special relativity, the 
``old'' understandings often remain adequate for most purposes. 
(Special relativity notwithstanding, the old Newtonian mechanics remain 
perfectly adequate for predicting what will happen when you drive your 
car at 60 mph into a brick wall.)
    The ``scientific consensus'' on climate change--the understandings 
of climate science currently held in common by almost all scientists in 
this field--is based on a very large body of evidence and analysis from 
a wide range of relevant scientific disciplines and approaches, 
accumulated by thousands of researchers in universities, research 
centers, and field stations all around the world over a period of many 
decades. The robustness of the consensus view is based on:

   the sheer volume of evidence and analysis (which has 
        expanded at a greatly increased rate over the past 15-20 
        years);
   the consistency of the picture that results from different 
        types of observations and different modes of analysis (direct 
        measurements of greenhouse-gas concentrations and the 
        temperature of the ground and atmosphere and oceans; inferences 
        about earlier concentrations and temperatures from glaciers, 
        tree rings, sediments, and the like; application of fundamental 
        principles of atmospheric physics; and computer simulations of 
        past and future climatic change); and
   an intensity and rigor of peer review unusual even by the 
        ordinary standards of science, resulting from the obvious 
        importance to society of getting this particular science right 
        and manifested in the extraordinary number and depth of 
        multiply peer-reviewed reports on the science of climate change 
        by the U.S. National Academy of Sciences, the IPCC, and a 
        number of other national and international scientific bodies.

    The scientific consensus view on climate change will continue to 
evolve as measurements and analyses continue. It is highly unlikely, 
however, that this evolution will change the current core 
understandings--namely that the Earth's climate has recently been 
changing in a manner that is unusual against the backdrop of normal 
variation from natural causes, that increased atmospheric greenhouse-
gas concentrations from human activities are playing a large role in 
these changes, and that continuation along the current path will lead 
to additional climatic changes that are, on balance, increasingly 
harmful to industrialized and developing countries alike--in any 
fundamental way. The evolving understandings will, instead, provide 
more detailed and reliable information than currently available on the 
character, geographic distribution, and timing of future climatic 
changes and on the impacts of these changes. It is important for policy 
makers to recognize that this more detailed and reliable picture is at 
least as likely to be more alarming than the current scientific 
consensus, as described by the National Academy of Sciences and the 
IPCC, as it is to be less alarming than these current portrayals.
    Question 4. What is ``abrupt climate change?'' Can you identify any 
potential thresholds that might be crossed if insufficient action is 
taken to control CO2 emissions? For example, I have heard 
that beyond certain temperature increases, large ice sheets could 
collapse, leading to huge increases in sea level. Can you comment on 
this and other potential thresholds?
    Answer. Improved methods for reconstructing the past climate of the 
Earth from ``paleoclimatological'' evidence such as the composition of 
gas bubbles trapped in the Greenland and Antarctic ice sheets have made 
plain that the climate has sometimes changed more abruptly in the past 
than had previously been supposed--for example, making a transition 
from an interglacial to a glacial period, or the reverse, in a matter 
of one to a few decades, rather than centuries. The fact that such 
rapid changes in outcome have been possible under gradually changing, 
natural ``forcings'' of Earth's climate is anything but reassuring in 
the context of the relatively rapid changes in ``forcing'' being 
generated by human-caused greenhouse gases today. If climate changes 
abruptly rather than gradually, the possibilities for adaptation by 
means of altered agricultural practices and patterns, construction of 
dams and dikes, and so on become much less promising.
    To understand the possibility of abrupt or ``non-linear'' climate 
change it may be helpful to think about a light switch. If you first 
apply only a little bit of force to the switch, it doesn't move and no 
light comes on. But if you progressively add more pressure, you will 
eventually ``flip the switch'' and the light will come on. The light 
produced is not proportional to the pressure applied; that is, you 
don't get a little bit of light as you add a little bit more pressure. 
The light turns on once you push hard enough to move the switch. 
Similarly, the Earth's climate system is likely to contain thresholds 
that could conceivably initiate or accelerate abrupt climate change 
once the ``forcing'' caused by increased atmospheric concentrations of 
greenhouse gases reaches a certain level. One example of such a 
threshold might involve sudden shifts in the thermohaline pattern of 
ocean circulation. As warming temperatures melt the ice at the poles, 
salty ocean waters will be diluted with freshwater. Paleoclimatic 
records suggest that it is possible this gradual freshening of the sea, 
if it reached a certain level, could ``flip a switch'' and greatly 
diminish or even shut down deep ocean currents that are important in 
transporting heat and nutrients from the equator to the poles via 
global ocean circulation patterns. The result could be significant 
changes in regional weather patterns.
    Crossing certain temperature thresholds could also trigger the 
initiation of rapid and irreversible melting of the Greenland Ice Sheet 
or a sudden destabilization of the West Antarctic Ice Sheet, either of 
which would raise global sea levels by about 20 feet. Another 
possibility is that temperatures could increase enough to trigger 
large-scale decomposition of methane clathrates (with attendant large 
amplification of the greenhouse effect). Unfortunately, knowledge of 
these possibilities is not yet sufficient to enable confident 
prediction of whether and when they would materialize along the warming 
trajectory now being traveled. Knowledge of these possibilities is, 
however, sufficient to conclude that we would be wise to slow the rate 
at which we are adding pressure to the switch--in this case, by pushing 
up atmospheric concentrations of heat trapping gases.
    To underscore this point, another analogy may be helpful. We can 
think of ourselves as being on a CO2 ``highway'' that is 
taking us to a rapidly warming future. By adopting more or less 
aggressive measures to curb emissions we can exit this highway at 
various places and thereby stabilize atmospheric concentrations of 
heat-trapping gases at various levels. At the moment, however, we are 
whizzing past exits, and with each one that goes by the risk grows that 
we may be passing a threshold. For example, as rising CO2 
concentrations both increase global temperatures and acidify the 
oceans, coral reefs may already be destined for large-scale 
devastation. We may have already passed that point of no return, but we 
can't be sure since we don't know exactly which exits mark different 
thresholds for drastically changing the way our planet operates.
    The problem is that we are not likely to know that we have missed 
an exit or crossed such a threshold until it is too late to alter the 
outcome. Because CO2 remains in the atmosphere for 
centuries, we can't wait and then make quick corrections once we see 
the results. Meanwhile, the faster we travel the more difficult it 
becomes to safely turn off the highway at any given exit. Thus, slowing 
our current emissions trajectory may be our best hope for anticipating 
and ultimately avoiding really abrupt and potentially catastrophic 
climate changes. By doing so, we can buy time to further develop our 
understanding of Earth's climate systems and to develop the new energy 
technologies that will be needed to stabilize future atmospheric 
greenhouse gas concentrations.
    Question 5. Can you tell us something about the time horizon for 
stabilizing climate, given how long carbon dioxide remains in the 
atmosphere? Do we need to begin to control emissions now or can we 
wait?
    Answer. Human additions of CO2 to the atmosphere produce 
long-lasting increases in the total quantity of CO2 in the 
atmosphere--which boosts the greenhouse effect because, while some 
portion of any additional carbon is quickly removed through uptake by 
plants and by the surface layer of the oceans, much of the carbon 
remains for decades and some of it remains for centuries. Every 
increase in the CO2 content of the atmosphere, moreover, 
initiates changes in the climate that themselves grow for decades (due 
to the inertia of the climate system). The consequences of a given 
increase in temperature, moreover, may continue to build for centuries 
after the increase occurs. (This is the case for the rise in sea-level 
is likely to result from continued warming, for example.)
    Thus, even though some effects are immediate, the full effects of 
any human additions of CO2 and other greenhouse gases to the 
atmosphere will not be felt for decades and centuries after the 
additions occur. Prudence therefore requires controlling emissions long 
before the climate-change impacts being experienced have become 
intolerable. Given that harmful effects of greenhouse-gas-induced 
climate change are already being experienced at a global-average 
temperature increase of around 0.8 degrees C (1.4 degrees F) above the 
pre-industrial level, and given that the full effect of current 
greenhouse-gas concentrations will be a further increase of about 0.6 
degrees C (1.1 degrees F) by the time the ocean reaches equilibrium 
with the increased greenhouse effect that these concentrations entail, 
we would be foolish not to start controlling the offending omissions 
immediately.
    Question 6. Given that there is still some uncertainty about the 
details of future warming, how should such uncertainty be dealt with in 
designing policy responses?
    Let me begin my answer by once again suggesting an analogy. If you 
go to your doctor and he says that if you continue on your present 
course, you are at very high risk of having a heart attack, what do you 
do? Do you ask exactly what day the heart attack will come and how 
severe it will be? Or do you take action right away to diminish your 
risk and try to prevent an attack?
    Similarly, based on what we know now about the risks associated 
with rising greenhouse gas concentrations in the atmosphere, there is a 
clear need to begin reducing emissions right away if we are to improve 
our odds of avoiding the potentially severe and dangerous types of 
consequences that lie ahead. We know that the risk of ``dangerous 
anthropogenic interference'' in the Earth's climate is going to 
continue to grow until we address it. Economists have analyzed the 
costs of various policy responses and they tell us that there are more 
and less cost-effective ways to go about managing this risk. The most 
cost-effective emissions trajectories involve starting now to control 
emissions, just as it is best to initiate one's retirement savings 
early and benefit from the compounding of interest over time. Delay 
will be costly, and is likely to require an even greater allocation of 
resources in the long run. Doing less (or nothing) to control emissions 
now makes it more likely that we will have to do more later--and do it 
more abruptly. As the joint statement of the national academies pointed 
out, this is likely to be more expensive because it is difficult for 
economies to adjust to abrupt policy changes. It is thus not only more 
prudent, but more economically efficient to begin taking action now--
preferably by implementing a policy that sends a clear signal to the 
market about the cost of emissions. A well-designed policy to 
accomplish this can also provide important ancillary benefits by 
promoting efficiency, reducing oil imports, improving air quality, and 
giving U.S. companies a competitive edge in the development and 
deployment of new energy technologies.
    Question 7. How do we know that emissions of carbon dioxide and 
other greenhouse gases are causing Earth's temperature to rise, as 
opposed to other factors that we have no control over; such as sun 
spots? Some assert that an increase in solar irradiance is the main 
cause of the Earth's current warming trend. Therefore, reducing fossil 
fuel emissions would not impact the Earth's temperature.
    Answer. The sun's radiant output is one of many factors that affect 
the Earth's climate. Scientists have intensively studied these various 
factors and how much they have influenced climate over the past 
century. ``Fingerprint'' studies analyze patterns of temperature change 
in models and in observations to help understand the causes of climate 
change. For example, were recent warming trends being caused by an 
increase in solar irradiance, one would expect the stratosphere to be 
warming also. This is not the case--in fact, the stratosphere is 
cooling. Similarly, if sunspots are the main cause of warming, then 
warming trends should correlate with sunspot activity. Again, this is 
not the case. Instead, global average surface temperatures have 
continued to rise with rising atmospheric concentrations of greenhouse 
gases. According to the IPCC, the warming effect due to increased 
greenhouse gas concentrations in the atmosphere over the past century 
is estimated to be more than eight times greater than the effect of 
changes in solar irradiance. In fact, observations do not even show an 
increase in average solar output over the past 50 years. Numerous peer-
reviewed studies have concluded that natural factors, including solar 
output, could not have caused the observed warming of the past half 
century.
    Question 8a. There are some who question the veracity of the 
assertion that the earth has warmed substantially over the last 
century. Arguments typically fall into three categories. It would be 
useful if you would address each in turn:
    Urban Heat Island Effect. This is the claim that the underlying 
temperature data is tainted by the proximity of data-generating 
thermometers to cities. As urban areas have grown over the last fifty 
years, the air temperatures around these cities have increased due to 
larger amounts of heat generating substances like rooftops and 
roadways. Scientists claim to have corrected for the urban heat island 
effect. How was this done, and how can we be sure that it was done 
correctly?
    Answer. The ``urban heat island effect'' is a spatially nonuniform 
warming effect from human activities that some climate-change skeptics 
have claimed has distorted the temperature record of the last 100 years 
so as to cause an overestimate of the effects of greenhouse gases. Some 
(including the author Michael Crichton in his recent novel) have 
claimed that much or all of the entire observed global warming is an 
artifact resulting from many of the measurement stations being in 
cities, which are warmer than the surrounding countryside because of 
the heat released in the operation of vehicles, factories, and homes. 
While a few disreputable skeptics continue to claim this, the fact is 
that their hypothesis has been completely discredited by much-
replicated studies that carefully correct the analysis of temperatures 
from the global thermometer network for the effects of urban heat 
release.
    To correct for the urban heat island effect, for example, 
scientists have compared temperature measurements taken in rural vs. 
urban areas and in some cases have simply excluded measurements taken 
at urban sites. Meanwhile, studies that compare global time series made 
up of temperature measurements taken only at rural stations with time 
series that also include temperature data from urban stations have 
found no difference between the two, suggesting that there is no bias 
in the global temperature trend due to urbanization\1\ In another 
recent study using different methods, Parker (2004) also found no 
effect from urban warming in the global average temperature record.\2\
---------------------------------------------------------------------------
    \1\ See, for example, Peterson, T.C., K.P. Gallo, J. Lawrimore, 
T.W. Owen, A. Huang, and D.A. McKittrick, 1999: Global rural 
temperature trends. Geophys. Res. Letts., 26, 329-332 and Peterson, 
Thomas C., 2003: Assessment of urban versus rural in situ surface 
temperatures in the contiguous U.S.: No difference found. J. Climate, 
18, 2941-2959.
    \2\ Parker, D.E., 2004: Large-scale warming is not urban, Nature, 
432, 290-291, 10.1038/432290b.
---------------------------------------------------------------------------
    Finally, it is worth noting that thermometer readings are not the 
only evidence of warming. Glaciers on every continent, none of which 
are located in urban environments, are retreating. Rising sea levels, 
increasing ocean temperatures, thawing permafrost, and movement of 
animal and plant species all provide additional evidence of a global 
warming trend that cannot be explained by the urban heat island effect.
    Question 8b. Satellite and Airborne Balloon Data Contradict Surface 
Temperature Readings. Global mean temperature at the earth's surface is 
estimated to have risen by about half a degree F over the last two 
decades. On the other hand, satellite measurements of radiances and 
airborne balloon observations indicate that the temperature of the 
lower to mid-troposphere (the atmospheric layer extending from the 
earth's surface up to about 8 km) has exhibited almost no change during 
this period. Please explain whether this discrepancy is, indeed, real 
and how to account for it.
    Answer. Recent peer-reviewed studies have shown that the low-and 
mid-troposphere have in fact warmed at about the same rate as the 
Earth's surface over the past few decades. The earlier notion that the 
troposphere had not warmed was based on significant errors in the 
adjustment of satellite and balloon data. As these errors have been 
corrected, the temperature data for the low-and mid-troposphere have 
consistently shown more warming.\3\ Studies to be published this month 
(11 August 2005) in Science expose the latest of these errors (see 
Sherwood et al., 2005 for balloon data; and Mears and Wentz, 2005 for 
satellite data).\4\ In addition, the rate of warming both at the 
surface and in the troposphere has increased in the years since initial 
analyses of satellite and radiosonde data were undertaken.
---------------------------------------------------------------------------
    \3\ See, for example, Mears, C.A., M.C. Schabel, and F.J. Wentz, 
2003: A Reanalysis of the MSU channel 2 tropospheric temperature 
record. J. Climate, 16, 3650-3664; Vinnikov, K.Y., and N.C. Grody, 
2003: Global warming trend of mean tropospheric temperature observed by 
satellites. Science, 302, 269-272; Vinnikov, K.Y., A. Robock, N.C. 
Grody, and A. Basist, 2004: Analysis of diurnal and seasonal cycles and 
trends in climatic records with arbitrary observation times. Geophys. 
Res. Lett., 31, L06205, doi:10.1029/2003GL019196, 2004; Lanzante, J.R., 
S.A. Klein, and D.J. Seidel, 2003: Temporal homogenization of monthly 
radiosonde temperature data. Part I: Methodology. J. Climate, 16, 224-
240 and Lanzante, J.R., S.A. Klein, and D.J. Seidel, 2003: Temporal 
homogenization of monthly radiosonde temperature data. Part II: Trends, 
sensitivities, and MSU comparison. J. Climate, 16, 241-262.
    \4\ Sherwood, S.C., J.R. Lanzante, C. Meyer, Science, 11 August 
2005: Radiosonde daytime biases and late 20th Century warming. 
(10.1126/science. 1115640) and Mears, C.A., and F.J. Wentz, Science, 11 
Aug. 2005: The effect of diurnal correction on satellite-derived lower 
tropospheric temperature.
---------------------------------------------------------------------------
    Though there are still minor discrepancies between available data 
sets due to the different methods that different research teams use to 
analyze the data, the bottom line is that both the surface and the 
troposphere show significant global warming trends according to all 
available data records: those derived from thermometers at the surface, 
those derived from sensors on satellites, and those obtained from 
weather balloons. These records show no major difference between 
surface and tropospheric warming at the global scale over the past 
several decades.
    Question 8c. The Hockey Stick. In recent months, there have been 
assertions that the statistical method used to analyze global 
temperature data for the last several hundred years was biased towards 
generating the ``hockey stick'' shaped curve that shows sustained low 
and stable temperatures for hundreds of years with an extremely sharp 
rise in the last 100 years. Can you comment on whether the observations 
depicted in the hockey stick curve are, indeed, legitimate?
    Answer. The ``hockey stick'' shape of reconstructions of Earth's 
temperature over the past 1,000 years, which shows a sharp rise in 
temperature over the last 100 years, is a feature that is found in, or 
supported by, many different lines of measurement and analysis by many 
different investigators. It appears, for example, in studies of the 
extent of glaciation in mountain regions, gas bubbles trapped in the 
Greenland and Antarctic ice sheets, tree rings, pollens preserved in 
sediments, and borehole measurements of temperatures at various depths 
in Earth's crust. The critiques that have been offered of the 
statistical techniques that were used to produce one particular version 
of the ``hockey stick'' graph--a version that was prominently displayed 
in the 2001 climate-science report of the IPCC--would not invalidate 
this general conclusion even if the critiques were correct. But it now 
seems quite clear, both from the responses offered by the authors of 
that graph and from analyses that are becoming available from others, 
that these critiques are wrong.
    In addition, it should be stressed that the details of the shape of 
the 1000-year ``hockey stick'' are not an essential element of the key 
understandings in the current scientific consensus about climate 
change--namely, that the planet is now warming at an unusual rate and 
that this current warming is primarily due to human activities. A very 
large number of independent studies have led to this conclusion.\5\
---------------------------------------------------------------------------
    \5\ A thorough analysis of the hockey stick debate can be found at 
www.realclimate.org.
---------------------------------------------------------------------------
    Question 9. Some say that global warming might be a positive 
development? Will agricultural crop productivity improve due to the 
greater amount of CO2 in the atmosphere, and can we expect 
the Arctic and Antarctic regions to become more habitable?
    Answer. The effects of climate change on agricultural productivity 
depend on numerous inter-related factors, including rising 
temperatures, increased CO2 in the atmosphere, average 
precipitation levels, incidence and severity of floods and droughts, 
and the plant-pest-and-pathogen-promoting effects of a warmer, wetter 
world. Early studies that ignore the pest-and-pathogen and flood-
drought issues have suggested that a modest increase in global-average 
temperatures would increase agricultural productivity in some areas, 
while reducing it in others. Even these limited predicted benefits are 
confined to small increases in temperature, however, with 
overwhelmingly negative effects setting in when temperatures reach 
levels expected in many agricultural regions by the middle of this 
century. More recent studies that account for a fuller range of 
climate-linked effects on crops suggest that net negative impacts on 
world agriculture are likely even sooner.
    Modest amounts of global-average warming will have both positive 
and negative impacts on other aspects of human health and well-being as 
well. In some mid-latitude regions, for example, slightly warmer winter 
conditions might have some positive consequences (e.g., lower heating 
bills) as well as some negative ones (e.g., diminished mountain 
snowpack could further strain already inadequate water supplies in 
western parts of the United States). But in these non-agricultural 
respects, too, the net impacts are likely to turn strongly negative for 
most nations, people, and biological systems above a certain 
threshold--both because the rate of climatic change is likely to 
require continual adjustment and because negative impacts will begin to 
overtake positive ones.
    The recent Arctic Climate Impact Assessment presented evidence that 
strong negative impacts are already affecting the Arctic and that these 
negative impacts are likely to intensify as warming proceeds. Impacts 
that are already being registered include severe coastal erosion due to 
retreating sea ice, rising sea level, and thawing of coastal permafrost 
and attendant damage to buildings, roads, and industry. More severe 
insect outbreaks and more frequent forest fires are also likely to 
accompany ongoing warming. The warmest regions of the world, meanwhile, 
may begin to experience conditions that are virtually unprecedented for 
human societies and natural ecosystems. In sum, the evidence is strong 
that negative impacts are very likely to outweigh positive ones as 
rapid warming proceeds.
    Question 10. It is my understanding that the assessments of the 
progression of global warming through the next century and its impacts 
on changing the Earth's climate are largely based on computer modeling. 
It goes without saying that the planet's atmospheric, hydrologic, and 
meteorological systems are highly complicated. What can you say about 
how climate modeling capabilities have advanced since scientists began 
evaluating the problem? What is the level confidence that the computer 
models are providing useful projections of the future climate?
    Answer. You are correct that we gain most of our insight into what 
the future holds by utilizing complex, physically-based computer 
models. These models are quantitative and grounded in the fundamental 
laws of physics and chemistry and are anchored by a very large number 
of scientific measurements. Our confidence in the models is 
strengthened by the fact that they can replicate past and present 
climates as well as the influences of the most important factors that 
affect climate. The models are extensively compared, tested, and 
refined, and they provide us with valuable insights. Climate scientists 
do not use the models blindly, they analyze and understand them and 
check them against everything else that they have learned.
    That said, models are not the only tools scientists use to predict 
what will happen as greenhouse gas concentrations continue to rise. 
Records of past climatic conditions derived from ice cores, tree rings, 
and other data, and observations from the past century also provide 
evidence regarding how climate changes and what the impacts of such 
changes are likely to be. There is no past analog to the geophysical 
experiment that our species is now undertaking--and is committed to for 
some time into the future. Although models may provide only an 
indication of what is most likely to occur, they are among the most 
important tools we have for anticipating the consequences of a changing 
atmosphere rather than simply facing those consequences without 
warning.
    Question 11. You played a central role as a scientist in the debate 
surrounding the stratospheric ozone hole, which led to a resolution 
that is widely regarded as one of the most important and successful 
international environmental agreements ever. Do you see any key 
similarities between the two issues (stratospheric ozone layer and 
climate change) and, more importantly, can you comment on any key 
lessons that might be applicable to the current debate on whether and 
how to address climate change?
    Answer. Ozone is a highly reactive, unstable molecule consisting of 
three atoms of oxygen. It occurs both near the Earth's surface--where 
it is a major constituent of smog, and in the region of the upper 
atmosphere, six to thirty miles above the surface. Paradoxically, while 
surface ozone is harmful to human health and the environment, the 
``other'' ozone--that in the stratosphere--is absolutely necessary for 
life.
    Research has been key to understanding how stratospheric ozone 
blankets the Earth and helps make it a livable planet. Stratospheric 
ozone forms an invisible shield protecting us from the hazardous 
ultraviolet radiation that streams towards the Earth continuously from 
the sun. UV-B radiation can directly harm people. For every 1% increase 
in UV-B radiation, there will be about a 2% increase in non-melanoma 
skin cancer in light-skinned people. We currently have about 750,000 
new cases of skin cancer each year in the United States, of which 
between 0.5% and 1% will result in death. Increased exposure to UV-B 
radiation can also cause cataracts, which are already the third leading 
cause of blindness in the United States. Increased UV-B radiation is 
also associated with decreased immune system response in all 
populations.
    The story of how we reached these international agreements began 
twenty years ago when Sherwood Rowland and I hypothesized that 
chlorofluorocarbon molecules (CFCs) are stable enough to diffuse to the 
stratosphere where the sun's ultraviolet radiation would split off the 
chlorine atom, whereupon each chlorine atom would act as a catalyst, 
destroying thousands of molecules of ozone.
    Back then there was little but laboratory data and numerical models 
to support the hypothesis. In fact, all we really knew was that CFC 
concentrations in the atmosphere had been rising and that a seemingly 
plausible, but unproven, hypothesis existed that chlorine from CFCs 
could destroy ozone.
    CFCs were invented in the early 1930s as a replacement for 
hazardous compounds like ammonia that were then widely used as 
refrigerants. CFCs are odorless, extremely stable, relatively non-
toxic, and nonflammable. Not surprisingly their use quickly spread to a 
wide range of industrial and consumer applications, from refrigeration 
to aerosols propellants to foam products and eventually as solvents in 
the electronics industry.
    Given the scientific consensus that now exists, it is hard to 
imagine the controversy that surrounded this theory two or three short 
decades ago. In part, this controversy was driven by the lack of clear 
and convincing evidence in support of the hypothesis, but it was also 
driven by a concern that CFCs were critical to our quality of life and 
no substitutes existed to replace them.
    How then did we quickly evolve from a politically charged situation 
in the late 1970s to today where 150 nations of the world have agreed 
to phase-out CFCs by the end of this year in all developed countries 
and soon thereafter in developing countries?
    First and foremost, this issue has been driven by major and 
definitive advances in our scientific understanding. We have gone well 
beyond our rudimentary knowledge in 1974 of the impact of CFCs on ozone 
chemistry. While uncertainties remain, laboratory and field 
experiments, observations, and more extensive model simulations have 
enabled us to become much more confident about the atmospheric 
processes that control stratospheric ozone and the role that CFCs and 
other chlorinated and brominated compounds have on those processes.
    The most striking example of our new understanding concerns the so-
called Antarctic ozone hole. When ground-based and satellite data were 
first published showing the existence of this ozone hole, which opens 
in the Antarctic spring, the scientific community, not to mention the 
public at large, were taken completely by surprise. No models or 
theories had predicted any such phenomenon. At first, the scientific 
community was at a loss as to explain its cause. Was it due to CFCs, 
the result of some meteorological conditions, or was some other unknown 
factor at work? Was the condition unique to Antarctica, to polar 
conditions in general, or likely to affect global ozone levels?
    These were more than interesting questions for the scientific 
community to debate. Just about the same time news about the ozone hole 
surfaced in the scientific literature, nations were coming together to 
discuss what actions they should take to protect the ozone layer. But a 
definitive policy decision was dependent on a sound scientific 
understanding of the issue.
    In what must be considered record time and with broad international 
and public and private sector cooperation, two major scientific 
campaigns were organized in 1987 and again in 1988 to collect data 
concerning the Antarctic ozone hole. Based on extensive field 
measurements, lab experiments and modeling, the consensus view emerged 
that CFCs cause the depletion of ozone over Antarctica.
    This finding brought a sense of urgency to policy makers. As we all 
know, ozone is a global issue and requires a global response. 
Reductions in the use of CFCs in the United States--even though the 
United States was the major source of CFCs--were not going to solve the 
problem if other nations continued to expand their own use. 
Subsequently, a series of international scientific studies were 
conducted. These reviews began in the 1970s and were formally brought 
into the Montreal Protocol when it was signed in 1987. They have become 
the bedrock foundation upon which policy decisions concerning ozone 
depletion are taken.
    The original Montreal Protocol called for a 50% reduction in CFCs 
by 1998, but also called for periodic review of scientific and 
technology issues. The first such review was issued in 1989 and led the 
Parties to agree, first, that--on the basis of new scientific 
information--even greater reductions were needed to protect the ozone 
layer and second, that chemical substitutes had advanced enough to make 
practical the full phase-out of CFCs by the end of the century. It is 
important to emphasize that extraordinary technological progress by the 
industrial sector in developing CFC alternatives permitted a faster 
phase-down. A similar process in 1992 led to agreement that CFCs would 
be phased out in the developed world by the end of this year.
    Let me summarize the evidence that is now very clear and broadly 
accepted by experts around the planet:

          1. There is no doubt that the major source of stratospheric 
        chlorine and bromine is from human activities (e.g., CFCs and 
        halons), not from natural sources such as volcanoes or sea 
        spray.
          2. There is no doubt that downward trends of stratospheric 
        ozone occurred at all latitudes, except the tropics, during all 
        seasons. The overwhelming weight of scientific evidence 
        suggests that the observed mid-latitude downward trends of 
        ozone were due primarily to anthropogenic chlorine and bromine.
          3. There is no doubt based on combining ground, aircraft, 
        balloon and satellite data, with laboratory data and 
        theoretical modeling--that the spring-time Antarctic ozone hole 
        is due to anthropogenic chlorine and bromine.
          4. During periods of declining ozone, stations in Antarctica, 
        Australia and mountainous regions in Europe, have shown that 
        ground-level UV-B radiation increases, as is expected to occur 
        with reduced ozone concentrations.
          5. The rate of increase of atmospheric chlorine and bromine 
        in the atmosphere has slowed considerably in the last few 
        years, demonstrating the effectiveness of actions taken under 
        the Montreal Protocol and its amendments. Even so, and if 
        everything goes forward smoothly, the mid-latitude ozone loss 
        and the hole over Antarctica are not expected to disappear 
        until the middle of the 21st century.

               lessons learned from the montreal protocol
    The story I have told about the ozone layer shows science, 
technology, and policy moving forward in harmony. Four factors are 
important in understanding the sources of the Montreal Protocol:

          1. Evolving scientific understanding of the problem did not 
        hamper development and implementation of mandatory policies,
          2. Once mandatory policies were in place, the rate of 
        technological progress exceeded our most optimistic 
        expectations,
          3. The United States and other industrialized nations were 
        willing to take a leadership role and move ahead of developing 
        nations, and
          4. The availability of acceptable substitutes for CFCs was an 
        important ingredient in garnering widespread political support, 
        particularly from the business community.

    In my opinion, these same factors are necessary for progress to 
address global climate change effectively.

    Responses of Dr. Mario Molina to Questions From Senator Bunning

    Question 1. Would you say that the steps America has taken in the 
recent years to improve energy efficiency and produce lower carbon 
emissions from power generation are the right first steps in addressing 
climate change? Within that construct, given the current U.S. 
electricity supply that is more than 50% derived from coal, is 
encouraging clean coal technology, IGCC and carbon sequestration the 
most important immediate policy action we can take?
    Answer. Coal is obviously an extremely important part of our 
current energy mix and plays an especially significant role in the 
generation of electricity. It is also a relatively low-cost fuel and 
one that the United States possesses in abundance. For these reasons, 
all NCEP members agreed that it was critical to advance technologies--
like IGCC with carbon sequestration--that will allow coal to continue 
to play an important role in meeting the nation's and the world's 
energy needs over the long run. As we put it in our report: ``cost-
effective technologies that would allow for continued utilization of 
coal with substantially lower greenhouse gas emissions could represent 
a significant breakthrough--one that would make policy responses to the 
risk of climate change compatible with a new era of expansion for the 
coal industry.'' Because such technologies would advance a variety of 
economic, environmental, and energy security objectives, NCEP strongly 
agrees that developing clean coal IGCC technology and carbon 
sequestration is an important near-term policy priority. Accordingly, 
our report recommends substantially increased federal funding for 
research, development, demonstration and early deployment initiatives 
in this area. The funding levels we recommended are explicitly designed 
to support the early deployment of roughly 10 gigawatts (GW) of 
commercial-scale IGCC power plant capacity, together with additional 
projects to demonstrate carbon sequestration at a variety of sites 
around the country.
    While NCEP agrees that promoting coal IGCC with carbon 
sequestration is a critical policy priority, we also believe it cannot 
be our only policy priority if we are serious about addressing climate 
change. There are at least two reasons why technology incentives, by 
themselves, do not constitute an adequate response to the threat of 
climate change. First, in order for new technologies to succeed it is 
always more effective, and indeed often necessary, to pair a policy 
``push''--in this case public support for RD&D--with a ``pull'' from 
the marketplace. To create a market pull for coal IGCC and other 
climate-friendly technologies, markets need to put a value on avoided 
carbon emissions, so that utilities have clear incentives to pursue 
non-and low carbon alternatives and so that investors can justify 
putting money into new and less proven technologies.
    The second point is that no one technology, by itself, can 
``solve'' the climate problem. On the contrary, most experts believe 
that we will need a portfolio of solutions that includes not only coal 
IGCC with sequestration but a variety of other options such as 
increased energy end-use efficiency, new nuclear technology, more 
natural gas technologies, and renewable energy options like wind and 
solar power. The importance of promoting a broad array of solutions 
rather than putting all our eggs in one technology ``basket'' again 
points to the need for a comprehensive policy framework that can create 
consistent incentives throughout the economy for avoiding carbon 
emissions. A mandatory, market based emissions trading program such as 
we have proposed for limiting carbon emissions is necessary to create 
those consistent incentives and is the critical complement to all other 
policies aimed at advancing a particular technology solution, be it 
coal IGCC or another low-carbon alternative.
    To sum up, all the efforts that have already been made to improve 
efficiency in the electric sector and to reduce carbon emissions from 
electricity generation are important and have helped to keep 
atmospheric concentrations of carbon dioxide lower than they otherwise 
would be. For all the reasons I have described above, however, these 
early efforts must now be followed by the crucial next step of 
implementing an overarching, mandatory policy for gradually limiting 
greenhouse gas emissions in the future. My NCEP colleagues and I 
believe that, over time, such a policy will not only prove most 
effective at promoting new technologies like coal IGCC with carbon 
sequestration, but will also prove the least costly approach for 
addressing the risks posed by future climate change.
    Question 2. As a member of the NCEP, you described the NCEP 
findings as a scientific analysis of why ``business as usual'' can not 
continue. Given the major government initiatives, most notably the 
Energy Bill we wrote in this committee, wouldn't you agree that America 
is no longer operating ``business as usual''?
    Answer. The recently passed energy bill contains a number of 
provisions that I and other members of the NCEP strongly support, 
including new incentives for a variety of technologies that will help 
make our nation more energy secure while also reducing our greenhouse 
gas emissions. By themselves, however, these measures are unlikely 
either to significantly alter our future greenhouse gas emissions 
trajectory or to maximize the results achieved through additional 
government expenditures on new technologies. In a competitive market-
economy, where companies are encouraged and in some cases obligated to 
maximize shareholder value, it is contrary to the rules of free-market 
competition to expect companies to invest scarce resources absent a 
profit motive. While there are numerous cases where a combination of 
good will, good public relations, and positive ulterior motives (like 
reduced energy bills), create an adequate basis for taking action, 
these cases will remain limited if the financial value of reducing a 
ton of greenhouse gas emissions remains zero.
    Unfortunately, the energy bill--notwithstanding the progress it 
makes in other important areas--does not provide that clear market 
signal. It does not directly address climate, nor does it seek to limit 
future greenhouse gas emissions. So in that sense, I would argue we are 
still operating in a ``business as usual'' framework with regard to 
climate change.
    Question 3. While you have presented what appears to be a united 
scientific front in the form of the statement from the academies of 
science from 11 countries, I am concerned by some of the news since the 
release of that statement. The Russian Academy of Sciences says it was 
misrepresented and that Russian scientists actually believe that the 
Kyoto Protocol was scientifically ungrounded. I am also aware that 
there was a significant misrepresentation on the science between our 
academy and the British representative. Given this background, wouldn't 
you say there are still some pretty fundamental disagreements about the 
science of climate change among scientists around the world?
    Answer. I am not aware of the specific controversy or controversies 
to which this question refers and would defer to my fellow witnesses, 
notably Ralph Cicerone, for their view of the matter if in fact any 
such disagreements exist. I will, however, say that while I was not 
involved in drafting the national academies' joint statement on global 
warming, I fully endorse it and believe that it accurately reflects the 
considered, consensus view of the great majority of climate scientists 
around the world. While scientists will always continue to debate 
details (because that is the primary way in which science advances), it 
is clear to me that mainstream scientists around the world are in 
fundamental agreement about the science of climate change.
    Question 4. In this international academies statement, you find 
that an ``immediate response that will, at a reasonable cost, prevent 
dangerous anthropogenic interference with the climate system,'' but 
continue to say in the following paragraph, ``minimizing the amount of 
this carbon dioxide reaching the atmosphere presents a huge 
challenge.'' Could you please elaborate, since any response can't both 
be a ``reasonable cost'' and a ``huge challenge'' proposition, how you 
resolve the two?
    Answer. As I noted in my previous response, I wasn't personally 
involved in drafting the academies' statement. Nevertheless, I believe 
its thrust is quite clear and that it is not, in fact, difficult to 
reconcile the two specific sentences juxtaposed in this question. 
Simply put, it is often the case that the best and most practical 
solution to a very big problem lies in approaching it with relatively 
small steps. It may be helpful to return to the analogy of the heart 
patient I introduced in response to Senator Bingaman's Question #6. If 
the patient does nothing now, but later requires emergency surgery or 
even an artificial heart, managing his condition will be expensive and 
risky and may require major advances in medical science. But the same 
patient can take early steps to reduce his risk of heart attack--such 
as changing his diet and exercising more--that are relatively easy and 
low cost. Of course, he may eventually still require more drastic 
treatment. But, at a minimum he can buy some time and significantly 
increase his odds of a healthy outcome over the long run.
    I believe the national academies were trying to make a very similar 
point. Fundamentally altering our energy systems so that global 
greenhouse gas emissions not only stop owing but begin to decline in 
absolute terms clearly presents a huge challenge. But taking early 
steps to set in motion some of the long-term changes that will 
eventually be required can be done at reasonable cost. As in the 
analogy of the heart patient, timing is everything. The longer we wait, 
the more difficult it becomes to achieve any given stabilization target 
without incurring large, wrenching, and probably quite expensive 
changes to our existing energy systems. That's why the academies' 
statement urges governments to ``recognize that delayed action will 
increase the risk of adverse environmental effects and will likely 
incur a greater cost.''
    The National Commission on Energy Policy shares this view. We too 
concluded that a lack of full scientific certainty must not be an 
excuse for inaction and that the key thing is to start now by taking 
cost-effective steps that will contribute to substantial long-term 
emissions reductions. That's why we recommended a very gradual program 
for limiting greenhouse gas emissions that explicitly holds costs to a 
reasonable level. Our proposal does not solve the climate problem--in 
fact, as our critics often point out, it allows U.S. emissions to 
continue to rise in the first decade of program implementation. But it 
does begin to generate the clear and quantifiable market signals that 
will be needed to elicit technological innovation and long-term 
investment in lower-carbon alternatives. That's a small step to be 
sure, but it may be our best hope for getting started and, by doing so, 
for turning climate change from an overwhelming challenge into a 
difficult, but manageable one.
    Question 5. Several scientists have cited events like the high 
temperatures in Europe in the summer of 2003 and increased storminess 
in the 1980s and 1990s as evidence of climate change. Don't global 
ecosystems go through natural periods similar to these as well?
    Answer. While it is true that there are natural climate cycles that 
can cause events such as those cited in this question, it is also 
true--based on a number of studies--that such events are likely to 
occur with far greater frequency as a result of human-caused increases 
in atmospheric concentrations of greenhouse gases. For example, a study 
by researchers at the U.K. Meteorological Office and Oxford University 
that used both field measurements and computer models concluded that 
the chance of a heat wave as severe as that of 2003 in Europe had at 
least doubled and probably quadrupled due to higher levels of 
greenhouse gases in the atmosphere.\6\ The study further found that 
summers like 2003 (which would be an extremely rare event under normal 
circumstances) are likely to occur every other year by the middle of 
this century due to global warming.
---------------------------------------------------------------------------
    \6\ Stott, Peter, D.A. Stone, M.R. Allen, Nature, 2 December 2004, 
Vol. 432, Human contribution to the heatwave of 2003.
---------------------------------------------------------------------------
    As for severe storms, a recent study by MIT hurricane expert Kerry 
Emanuel (2005) shows that the destructive power of hurricanes has 
increased markedly over the past 30 years and that this increase is 
highly correlated with rising sea surface temperatures due to global 
warming.\7\ This increase in destructiveness is due to both longer 
storm lifetimes and greater storm intensities. Other studies over 
recent years have shown that the incidence of heavy and very heavy 
precipitation events (i.e., major downpours) has likewise increased in 
recent decades, leading to increased flooding and erosion.\8\ These 
trends have been similarly linked to the warming effects caused by 
human-induced increases in the atmospheric concentration of greenhouse 
gases.
---------------------------------------------------------------------------
    \7\ Emanuel, Kerry, 2005, Nature, 4 August 2005, Vol. 436/4, 
Increasing destructiveness of tropical cyclones over the past 30 years.
    \8\ See, for example, Groisman, Pavel, R.W. Knight, T.R. Karl, Feb. 
2001, Bulletin of the American Meteorological Society, Heavy 
precipitation and high streamflow in the contiguous United States: 
trends in the 20th century.
---------------------------------------------------------------------------
    Question 6. There are a number of astrophysicists and other 
scientists who believe that sunspots are a major contributor to 
changing temperatures. A recent survey showed at least 100 such studies 
are underway. Why don't scientists put as much emphasis on this 
possibility or other aspects of natural climate variability as they do 
on emissions from human activity?
    Answer. Sunspots are a cyclical phenomenon--they increase and 
decrease with a period of about 11 years. Such short-cycle ups and 
downs do not produce long-term trends in climate. There is evidence 
that the output of the sun varies also on longer time scales, and there 
is much scientific interest in how this works and how it may have 
affected Earth's climate over geologic time. The IPCC's estimate in its 
2001 report was that the role of changes in the sun's output in the 
climate forcing of the past 250 years is in the range of 10 times 
smaller than the role of anthropogenic greenhouse gases. And a wide 
variety of studies show that the rapid increase in temperature 
experienced in the last part of the 20th century and continuing today 
was not due to changes in solar output, which have been very small in 
this period.
    ``Fingerprint'' studies based on complex patterns of temperature 
changes over the Earth and in different layers of the atmosphere have 
used observations and models to attribute the observed temperature 
record of past decades to particular factors that influence climate. 
Such studies have been helpful in determining which factors are most 
responsible for the observed changes. None of these studies have 
concluded that solar influences are a major factor in the observed 
trends. There is thus no scientific evidence to support the notion that 
sunspots or other natural variables are as important as human-caused 
emissions in explaining recent warming trends.
    Question 7. Much of the discussion about climate science being 
settled is based on the summary chapter of the Intergovernmental Panel 
on Climate Change of the United Nations. The chapter made specific 
predictions about the pace of rising temperatures and the relative 
importance of human activities to climate change. And yet, the body of 
the report is much more ambiguous and inconclusive about the current 
state of the science. Is anything being done to ensure that the summary 
of the next IPCC report is more reflective of the overall analysis by 
the scientists?
    Answer. It is simply not the case that the summary chapter is 
inconsistent with the body of the IPCC report. Rather, any differences 
in tone most likely reflect the difference between a document oriented 
to policy-makers and decision-makers vs. a document oriented to a 
scientific audience. The IPCC technical chapter authors conduct their 
analyses and communicate their results based on the traditional 
decision-making paradigm of the scientific community, namely to have 
95% or better confidence that what you say is the correct explanation 
AND 95% or better confidence that there is no other alternative 
explanation. While this level of certainty is appropriate in the 
context of pure scientific inquiry it is rarely, if ever, achievable in 
the realm of policy making.
    The IPCC Summary for Policymakers thus represents a translation of 
the significance of the scientific findings into terms that 
policymakers can work with. In making this translation, IPCC authors 
agreed on a specific lexicon (i.e., the sequence of words `virtually 
certain,' `very likely,' `likely,' etc.) to define relative levels of 
likelihood and certainty based on best evidence and considered 
scientific judgment. The meaning of these terms is carefully spelled 
out in the IPCC report and their use is footnoted throughout the text. 
Of course, some scientists are not entirely comfortable with the 
results of this translation--after all, it is always possible for a 
reader to misunderstand the scientific nuances and to draw incorrect 
conclusions from necessarily qualitative terms such as ``very likely'' 
or ``virtually certain''. In the case of climate change, as with most 
other important public policy challenges, however, policy makers simply 
do not have the luxury of waiting until all scientific uncertainties 
are resolved before some difficult decisions must be made. As a result 
it will continue to be necessary to undertake the process of 
translation exemplified by the IPCC report's Summary chapter.
    In sum, while I'm sure the IPCC will continue to work to improve 
its approach to communicating scientific understanding, this does not 
mean that the current Summary does not represent a fair and reasonable 
characterization of the best available climate science as the IPCC 
authors felt it should properly be applied in a policymaking context.
    Question 8. The natural ``greenhouse effect'' has been known for 
nearly two hundred years and is essential to the provision of our 
current climate. There is significant research in the literature today 
that indicates humans, since the beginning of their existence, have 
caused an increase in the greenhouse effect. Some argue that the 
development of agriculture 6,000 to 8,000 years ago has helped to 
forestall the next ice age. The development of cities, thinning of 
forests, population growth, and most recently the burning of fossil 
fuels, have all had an impact on climate change. Our ecosystems have 
constantly adapted to change, as we as humans have adapted to our 
ecosystems as well. Is it possible that the increased presence of 
CO2 caused by the 8,000 years of modern human existence may 
be something our ecosystems will continue, as they previously have, to 
naturally adapt to?
    Answer. The advent of agriculture 6,000 to 8,000 years ago may have 
caused changes in the atmosphere which in turn triggered climatic 
changes, but those changes occurred within a range that had been 
experienced on Earth in the preceding million years. In other words, 
ecosystems had to readjust to conditions that had obtained at some 
point in the--geologically speaking--relatively recent past, rather 
than to an entirely new set of conditions. What is happening now is 
that the climate is responding to atmospheric conditions that have not 
occurred for at least several million years. Moreover, this change may 
be happening with unprecedented rapidity. Within a century, atmospheric 
CO2 is projected to be at levels that have not been 
experienced on Earth in tens of millions of years. For natural 
ecosystems, then, the really key issue may not be how much the climate 
is changing, but how fast that change is occurring.
    Climatic conditions have, until recently, also been relatively 
stable over the history of human civilization. Our present societies 
are adapted in many ways to conditions that have obtained for at least 
several centuries. Because of our technological prowess, human 
societies are likely to be better able to adapt to a rapidly changing 
climate than natural ecosystems, which can respond only slowly to 
changing conditions. But the pace of change will have important 
consequences for human adaptability as well. The more quickly 
buildings, infrastructure, agricultural practices, water systems, and 
other aspects of society are forced to change, the more costly it will 
be to adapt and the higher the toll is likely to be in terms of human 
morbidity, mortality, and diminished quality of life. This is 
especially true, of course, for impoverished nations that are already 
more vulnerable to changing natural conditions and that lack the 
resources of more developed societies to adapt effectively.
    Finally, it is worth noting that if human activities 6,000 to 8,000 
years ago could cause climatic impacts of the magnitude indicated by 
the above question, this implies that the far more significant changes 
we are now causing in the atmosphere are likely to have commensurately 
more dramatic consequences for global climate conditions.
    Question 9. NCEP has previously explained that there are 
significant uncertainties, both scientific and technological, and that 
the best approach is ``the search for a mix of affordable technical and 
policy measures.'' Given your support of this proposal, could you 
outline how and what measures you would enact?
    Answer. This question may be primarily intended for other panelists 
who were not, as I was, active participants in the National Commission 
on Energy Policy (NCEP). Nevertheless I will say that, in a nutshell, 
the NCEP's recommended approach is to combine an initially modest, 
economy-wide, market based program for limiting future greenhouse gas 
emissions with substantial new public investments in developing and 
deploying advanced low-or non-carbon energy alternatives. Our specific 
recommendations are outlined in detail in the report we released last 
December. A summary of our proposal with respect to a tradable-permits 
program for limiting greenhouse gas emissions was provided in written 
testimony provided to the Committee by NCEP Executive Director Jason 
Grumet. The full report, copies of which have previously been given to 
the Committee and which is readily available from NCEP, also included 
two illustrative tables summarizing the scope of technology investments 
proposed by the Commission and their possible allocation, both as 
between (1) basic RD&D vs. early deployment incentives and 
international cooperation and (2) as between different technology areas 
(e.g., energy efficiency, advanced fossil fuel technologies, nuclear, 
renewables, etc.).
    Question 10. The panel touched on some energy alternatives such as 
biomass, natural gas, and nuclear power, yet there was little mention 
of hydrogen power. From a scientific viewpoint, where do you think we 
are on being able to really utilize hydrogen power? What is the 
potential of hydrogen power?
    Answer. The most important point to understand about hydrogen is 
that it is not an energy source like coal or nuclear energy or 
sunlight, but only an energy carrier (like electricity), which society 
can choose to produce from one or more of the available energy sources 
in order to improve the convenience, versatility, efficiency, or 
environmental characteristics of our energy system. Like electricity, 
hydrogen is very clean at the point of end-use (but not necessarily at 
the point of its manufacture), and also like electricity, hydrogen uses 
more raw energy in its production than the product contains. Society 
will choose to pay this energy price for hydrogen production when the 
``system'' benefits in terms of the combination of cleanliness, 
convenience, and economics warrant it, but until now this has only been 
the case for chemical uses of hydrogen (such as in fertilizer 
production), not in the energy system.
    One powerful motivation for pursuing the use of hydrogen in the 
energy system is that stripping hydrogen from hydrocarbon fuels such as 
coal, oil, and natural gas would provide a way to ha mess much of the 
energy content of these fuels while capturing the carbon for 
sequestration away from the atmosphere. This is, in essence, what 
happens in an Integrated Gasification Combined Cycle power plant with 
carbon capture, and what would happen in still more advanced coal power 
plants that used fuel cells for converting the hydrogen to electricity 
rather than burning the hydrogen in a gas turbine. Avoidance of the 
carbon emissions from autos, trucks, and buses would likewise be one of 
the main motivations for converting such vehicles to use hydrogen as 
fuel, along with the motivation that the hydrogen could be produced 
from a wide range of energy sources, not just from the petroleum that 
is the only important source of gasoline and diesel fuel for these 
vehicles today.
    In developing our recommendations, other NCEP members and I gave 
considerable emphasis to the development of the coal-gasification and 
carbon-capture-and-sequestration technologies that are likely to be the 
earliest opportunity to benefit from hydrogen in the energy sector. We 
also examined the prospects for the use of hydrogen as a low carbon 
alternative to oil-based transportation fuels. We recognized that 
hydrogen in this role offered some theoretically impressive 
environmental and national security benefits and might have the 
potential, at some point in the future, to play an important role in 
the transportation fuel mix. We also, however, quickly reached the 
conclusion that a number of very significant technological challenges 
must be overcome to realize this potential. In fact, because these 
near-term technological hurdles are so significant we concluded that 
hydrogen in the transport sector offers little to no potential to 
improve oil security and reduce climate change risks in the next twenty 
years. Accordingly, while we remained supportive of basic research into 
hydrogen in portable applications as a potential long-term (i.e., 
roughly mid-century) solution, we also urged that efforts to speed the 
deployment of a hydrogen transportation system not displace other 
activities that could deliver far more significant results in terms of 
reducing greenhouse gas emissions and petroleum consumption over the 
next twenty years. I will note that the National Academy of Sciences, 
in a separate and more comprehensive report on hydrogen that was 
released in 2004, came to very similar conclusions.
    Question 11. The panel established very clearly that we should 
adopt policies that decrease carbon emissions regardless of any other 
carbon emissions policies we pursue. We are currently or will shortly 
be providing expanded incentives for clean coal, nuclear energy and 
renewable fuels. Do you feel this is money well spent? What 
technologies do you feel the government should be more involved in 
developing?
    Answer. As noted in my response to a previous question, the 
recently passed Energy Bill includes a number of provisions, including 
several important provisions related to technology incentives, that I 
and other members of NCEP support. As I have also previously stated, 
however, the effectiveness of these incentives is likely to be 
substantially undermined by the fact that they are not accompanied by a 
mandatory program that would place a firm financial value on avoided 
greenhouse gas emissions.
    It is somewhat ironic that a number of European nations are 
implementing market-based regulatory approaches developed here in the 
Unites States while we pursue a top-down program of government-
directed, tax payer funded research and deployment incentives. 
Developing and commercializing new technologies will cost money. The 
question is who is best positioned to secure and effectively spend 
these resources. While there is certainly a role for public funding and 
government incentives, the Commission believes that there must also be 
a role for those who emit greenhouse gases to share in the costs of 
developing solutions. As we have learned over the last twenty years, 
given a rational reason to invest, the private sector is far better 
than the government in developing technological solutions. The success 
of the acid rain program demonstrates that the most effective way to 
engage the ingenuity of the private sector is to place a monetary value 
on a ton of reduced emissions thus creating a real economic incentive 
to develop cleaner forms of energy.
     Responses of Dr. Mario Molina to Questions From Senator Talent
    Question 1. In your testimony, you state that ``the climate system 
is very complicated and science does not have all of the answers.'' 
Also, ``There is of course much we do not fully understand about the 
timing, geographic distribution, and severity of the changes in climate 
. . . that will result if heat-forcing emissions continue.'' Finally, 
you add that ``not knowing with certainty how the climate system will 
respond should not be an excuse for inaction.'' To me, your statements 
say that we should proceed with caution and not mandate anything until 
we know that the mandated action will, in fact, solve a problem in a 
cost-effective manner. Are you suggesting that the Administration's 
proposal for continued study and incentives for voluntary adoption of 
technology both here and abroad are an insufficient response given the 
certainty of the data both with respect to the quantification of the 
problem and the solution?
    Answer. It is important to recognize that U.S. climate policy for 
more than a decade now has consisted of continued study, technology 
incentives, and voluntary programs. Progress has been achieved during 
that decade, to be sure: individual companies made efforts to reduce 
their emissions, promising new technologies like hybrid vehicles and 
coal IGCC emerged, and we reached a much better understanding of 
climate science and of the dynamics underlying potential responses to 
human-induced changes in the composition of the atmosphere. But the 
more than 10 years that have passed since the first Bush Administration 
signed the original International Framework Convention on Climate 
Change have also demonstrated the limits of voluntarism. Overall, 
energy-related U.S. greenhouse gas emissions have increased by 
approximately 12% between 1993 and 2003, the fuel economy of our 
vehicle fleet has actually declined, and our near-exclusive dependence 
on fossil fuels in all aspects of our energy system remains as 
entrenched as ever. Meanwhile, the risks of continuing on our present 
course have come more clearly into focus than ever before.
    In this context, I believe it's important to think carefully about 
the meaning of caution. Confronted with ever stronger evidence of a 
potential risk, are we really being cautious to continue increasing our 
exposure to that risk? Or is it time to do more, albeit cautiously, to 
reduce this exposure? I would argue that it is indeed time to do more--
and by more I mean moving beyond a policy of pure voluntarism. 
Certainly, the Administration's proposals to promote advanced 
technologies here and abroad can help. I couldn't agree more strongly 
that technology investment and increased cooperation with other 
countries, especially developing countries, are critical components of 
a sound climate policy. But by themselves they are not enough. For 
reasons articulated in my responses to several previous questions, it 
is critical to begin harnessing the power of the marketplace. Simply 
put, companies need to be able to attach a hard value to avoided carbon 
emissions if we are going to expect them to make long-term investments 
in climate-friendly technologies. In a competitive world they will 
never be able to do that absent a mandatory policy.
    NCEP has recommended one approach to implementing such a policy. 
Moreover, we believe our proposal for a tradable permits system for 
greenhouse gases is extremely cautious in the sense that it is cost-
capped, flexible, gradual, and includes multiple opportunities for 
review and adjustment. It is so cautious, in fact, that our own 
analysis and that of the Energy Information Administration indicate it 
will have no material effect on the U.S. economy over the next decade 
or more. The specifics of our proposal can certainly be debated; the 
need for something like it, in my view, cannot. So by all means, let us 
proceed cautiously. But let us not misunderstand caution to imply that 
we should merely continue doing what we have been doing, even if that 
means increasing our exposure to potentially significant climate risks.
    Question 2. You suggest that a 5 degree F temperature increase 
could lead to a whole host of disasters from agriculture losses to 
drought to melting glaciers and changes in ocean circulations. Do you 
have evidence of any of this occurring with a 5 degree F increase in 
temperature, or is this merely speculative? How much of a possible 5 
degree F increase in temperature would be attributable to GHGs that are 
at least nominally under our control? How much of any emission cuts 
that the U.S. might have to make would simply be overtaken by increases 
in emissions by developing nations such as China and India?
    Answer. While global average temperatures have increased by about 
1.5 degrees F since pre-industrial times, the warming that has already 
occurred over the past few decades in Alaska and the rest of the Arctic 
is considerably more dramatic (on the order of 3 degrees F). Not 
surprisingly, Alaska and other northern regions are also providing some 
of the strongest observable evidence to date of the kinds of impacts 
that could be associated with warming of this magnitude. As noted in 
response to a previous question, these impacts include severe coastal 
erosion due to retreating sea ice, rising sea level, and thawing of 
coastal permafrost and attendant damage to buildings, roads, and 
industry. In sum, the proposition that a 5 degree F increase in global 
average temperatures--which would amount to a three-fold increase in 
the amount of warming that has already occurred--could cause serious 
consequences, can hardly be characterized, at this point in time, as 
``merely speculative.''
    On the contrary, further warming of this magnitude is likely to 
greatly amplify many of the negative impacts we are already seeing in 
Alaska and elsewhere. Temperature changes in the high northern 
latitudes, which are likely to continue to be more dramatic than the 
global average, could initiate the rapid deterioration of the Greenland 
Ice Sheet (which would likely raise the rate of sea level rise to well 
over 3 feet per century) and cause much further disruption of natural 
ecosystems, wildlife, and forests. Other consequences in the United 
States alone could include a significant diminution of spring snowpack 
in mountain regions, which would greatly exacerbate the chronic water 
shortages that already exist in the western United States, an increased 
incidence of serious fires in western forests as well as of extreme 
weather events, like heavy downpours and heat waves, and declining 
agricultural productivity in some regions. Meanwhile, impacts in other 
parts of the world would likely be even worse.
    Turning to the issue of international participation, it is of 
course undeniably true that climate change is a global problem and that 
efforts to address it will only be successful if every major emitting 
nation, including developing countries like China and India, takes 
part. It is, however, equally true that such international 
cooperation--and particularly the participation of countries like China 
and India--is unlikely to be forthcoming absent U.S. leadership. As the 
country with the world's highest emissions, in both absolute and per 
capita terms, and as the country that is responsible for by far the 
largest share of the increase in atmospheric greenhouse gas 
concentrations that has already occurred (and hence for a 
disproportionate share of the warming to which the planet is already 
committed), the United States cannot expect other countries to be 
sympathetic to the argument that it should not act because any domestic 
emissions reductions it implements might be offset by emissions 
increases elsewhere. Instead, the United States should set an example 
and demonstrate its own commitment to addressing the climate problem in 
a meaningful way, while at the same time making vigorous efforts to 
engage other nations.
    NCEP recommended just such an approach precisely because we felt it 
was most likely to produce the kind of international participation that 
will ultimately be vital to mounting an effective global response to 
the problem of climate change. Given the interest that countries like 
China and India have in pursuing a more sustainable energy policy--in 
some cases as much from the standpoint of energy security as out of 
concern about climate change or environmental quality--we believe there 
is every reason to be optimistic that a proactive response from the 
United States would inspire further action to limit emissions by other 
countries.
    Question 3. What if the science showed only a 2-4 degree F increase 
in temperature by 2100? Would you still advocate mandatory emissions 
reductions at this time? If so, is the technology available today to 
accomplish those cuts without raising energy costs?
    Answer. Even if the magnitude of predicted warming were somewhat 
lower than current estimates (e.g., 2-4 degrees F as opposed to 5 
degrees F by 2100), the possibility that the actual warming itself and/
or its impacts could be more severe than expected--especially if the 
global climate system responds in non-linear ways as a result of some 
of the potential feedback mechanisms discussed previously--together 
with the near certainty that temperatures would continue to rise well 
into the 22nd century absent some action during the coming decades to 
reduce emissions, would still, in my opinion, argue for mandatory near-
term steps aimed at slowing, then stopping, and eventually reversing 
current emissions trajectories. The significant impacts that are now 
being experienced in some places due to the 1.5 degree F increase we 
have already sustained argue that another 2-4 degrees F would 
constitute dangerous interference with the climate system, something we 
have pledged to avoid under the Framework Convention on Climate Change 
signed by George W.H. Bush.
    Given the current status of technology, the Commission believes 
there is no entirely costless way to achieve this objective: any market 
signal that attaches a positive value to avoiding greenhouse gas 
emissions will necessarily produce an increase in the cost of using 
carbon-producing fossil fuels. It is, however, possible to limit the 
impact on energy costs to a reasonable and, in our view, politically 
and socially acceptable level. Specifically, the approach we have 
proposed (which involves a tradable-permits system for limiting 
greenhouse gas emissions combined with a safety-valve mechanism that 
explicitly caps program costs) is estimated to have only a small impact 
(less than 7% for gasoline, natural gas, and electricity) on predicted 
energy prices over the next 15 to 20 years. Over time, we believe this 
market signal will help prompt the innovation and technology investment 
needed to make further emissions reductions feasible while holding 
costs and overall energy price impacts to a minimum.
    Question 4. In your policy formation statement, you indicate that 
we should search for a mix of affordable technical and policy measures 
that will be able to reduce emissions and adapt to the degree of 
climate change that cannot be avoided without incurring ``unreasonable 
costs.'' Please define what you mean by unreasonable costs. Do these 
costs factor in the transfer of industry and jobs to such developing 
countries as China and India and, if so, do the emission cuts by the 
U.S. plus the increases by China and India result in a net increase or 
decrease in emissions?
    Answer. The Commission made no attempt to define ``unreasonable 
costs'', but we did agree that the explicit cost cap included in our 
proposal for a mandatory greenhouse gas tradable permits program met 
the test of reasonableness. Because of the safety valve mechanism in 
our proposal, we know with certainty that impacts on energy prices for 
consumers and businesses would be relatively modest (less than 7% for 
gasoline, natural gas, and electricity). As I have already noted, the 
Energy Information Administration has concluded that our proposal would 
have no ``material impact'' on the nation's economic growth or 
prosperity between now and 2025. This result rules out the possibility 
that our proposal could cause any significant transfer of industry and 
jobs to other countries.
    While we are confident that implementing the kind of policy we have 
recommended will not cause any offsetting emissions increases in China 
and India, we of course recognize that rapidly growing emissions in 
these countries must also be addressed if there is to be a meaningful 
global response to the climate issue. Just as domestic efforts to 
address climate change will not be successful in the long run absent 
global participation, however, efforts to engage major developing 
countries like China and India are unlikely to be successful absent 
U.S. leadership. The best way to re-establish that leadership, in our 
view, is for the United States to take an initial step domestically 
with the understanding that further emissions reduction efforts will be 
contingent on comparable efforts by other major emitting nations. 
Accordingly, our proposal is explicitly phased and calls for periodic 
reviews to assess international as well as domestic progress. Depending 
on the results of these reviews, the United States could opt to make a 
variety of adjustments to the tradable permits program, including 
suspending further increases in the safety valve price. In addition, to 
encourage emissions mitigation efforts by nations like China and India, 
the Commission recommends that the United States continue and expand 
current bilateral negotiations and provide incentives to promote 
technology transfer and to encourage U.S. companies and organizations 
to form international partnerships for implementing clean energy 
projects in developing countries.
    Question 5. What is the impact of the U.S. adopting Bingaman/NCEP 
and China and India not doing so? When the industry and jobs move to 
China and India, don't global emissions actually go up, as even today, 
the U.S. has and will continue to have better environmental controls 
than developing nations? Wouldn't we be better served transferring the 
technology that we know works to developing nations as they grow in 
their industry and electricity generation?
    Answer. For the reasons described in the previous response, we do 
not believe that implementation of the Bingaman/NCEP proposal will 
cause industry and jobs to move to China and India. Moreover, if China 
and India do not act, we would expect Congress to halt further 
increases in the safety valve price, thereby allowing the effective 
stringency of the U.S. program to diminish over time. We think it far 
more likely, however, that China, India, and other major emitting 
nations will respond positively if the United States adopts a 
meaningful, mandatory policy for reducing greenhouse gas emissions. In 
fact, some of these countries have already begun reducing their 
emissions below forecast levels as they pursue improved energy 
security, energy efficiency, conventional pollution control, and market 
reform. All of these efforts will be enhanced by continued technology 
transfer from the United States to developing nations which we strongly 
support as a complement to, rather than substitute for, domestic 
action.
    Question 6. What do you make of the fact that while NOAA concluded 
that 2004 was the fourth warmest year on record and that some of the 
warming was human-induced, that satellite instruments (which indirectly 
measure the average temperature of the atmosphere in a deep column 
above the surface) are hard pressed to demonstrate any positive trends 
over the past 20 years?
    Answer. This question refers to outdated information about the 
satellite data based on initial analyses by J. Christy and R. Spenser 
that have since been corrected. In addition, the rate of warming both 
at the surface and in the troposphere has increased in the years since 
that initial analysis.
    Recent peer-reviewed analyses of the satellite data have shown that 
the low and mid troposphere have in fact warmed at about the same rate 
as the surface over the past several decades (see e.g., Mears et al., 
2003; Vinnokov and Grody, 2003; Vinnikov et al., 2004).\9\ The earlier 
notion that the troposphere had not warmed was based on significant 
errors in adjustments to the satellite data. As each error was 
corrected, the data showed more warming. Studies published this month 
(11 August 2005) in Science expose the most recently discovered of 
these errors.\10\
---------------------------------------------------------------------------
    \9\ See, for example, Mears, C.A., M.C. Schabel, and F.J. Wentz, 
2003: A Reanalysis of he MSU channel 2 tropospheric temperature record. 
J. Climate, 16, 3650-3664; Vinnikov, K.Y., and N.C. Grody, 2003: Global 
warming trend of mean tropospheric temperature observed by satellites. 
Science, 302, 269-272; and Vinnikov, K.Y., A. Robock, N.C. Grody, and 
A. Basist, 2004: Analysis of diurnal and seasonal cycles and trends in 
climatic records with arbitrary observation times. Geophys. Res. Lett., 
31, L06205, doi:10.1029/2003GL019196, 2004.
    \10\ Mears, C.A., and F.J. Wentz, Science, 2005: The effect of 
diurnal correction on satellite-derived lower tropospheric temperature. 
11 Aug 2005.
---------------------------------------------------------------------------
    Though there are minor discrepancies between data sets due to the 
different methods that research teams use to analyze the data, the 
bottom line is that both the surface and the troposphere show 
significant warming trends according to all the data records: those 
derived from thermometers at the surface, those derived from sensors on 
satellites, and those obtained from weather balloons. There is no major 
difference between surface and tropospheric warming at the global scale 
over the past 50 years.
    Question 7. If all the countries that have signed Kyoto stay within 
compliance of Kyoto, how much of a reduction in global warming would 
this result in?
    Answer. The Kyoto Protocol never represented more than a first step 
toward addressing the climate problem at a global level--indeed it 
sought to define only relatively near-term (2008-2012) emissions 
targets. As such, it was not designed to, by itself, achieve the 
sustained, overall emissions reductions that would be necessary to 
prevent or substantially mitigate expected changes to the Earth's 
climate as a result of increased atmospheric concentrations of 
greenhouse gases. Rather, the argument for ratifying Kyoto (which has 
now been done by nearly all of the United States' major industrialized 
trading partners) always rested on the proposition that it was 
important for the developed countries to lead the way in starting to 
curb future emissions, even if it was understood that these early 
efforts would have little effect in and of themselves unless they were 
followed up in the post Kyoto era by a more comprehensive global 
effort.
    I and other members of NCEP essentially share the conviction that 
near-term, mandatory action and leadership by developed nations like 
the United States are necessary to begin making progress on the climate 
issue. We also believe, however, that we have crafted an approach that 
is preferable to Kyoto insofar as it convincingly addresses the cost, 
equity, and competitiveness concerns that have been raised in 
connection with Kyoto. In any case, all sides in the ongoing domestic 
and international debate over future climate policy should be able to 
agree that the time for debating the merits of the Kyoto Protocol is 
past. That debate is now largely moot and prolonging it only serves 
those whose interests lie in continued policy paralysis and delay.
    Question 8. Can you confirm that suspended water vapor levels, 
cloud cover percentages and direct solar irradiation changes over time 
all represent variables in these forecasting models that could have 
significant impacts on the conclusions of the results of these models?
    Answer. Certainly all of these variables have a significant impact 
on the Earth's climate system and on the predictions generated by 
existing climate models. Accordingly, our ability to accurately 
incorporate these (and many other) variables in our models is 
constantly being refined and compared to actual observations. While 
uncertainties remain in specific areas, however, our overall confidence 
in existing climate models is bolstered by several factors. First, as 
noted in my response to a previous question, current models can 
replicate past and present climates as well as the influences of the 
most important factors that affect climate. Second, a variety of 
models, all of which have been extensively compared, tested, and 
refined, provide essentially coherent and consistent results concerning 
the likely impacts of anticipated changes in the composition of the 
Earth's atmosphere. Thus while different models may treat individual 
variables such as those identified above somewhat differently, the fact 
that they nevertheless come to substantially similar conclusions 
suggests that we can have a high degree of confidence in their overall 
results.
    Question 9. In looking at pre-industrial global temperature 
patterns, would you agree that changes in temperatures over time have 
occurred that had no anthropogenic basis?
    Answer. It is of course true that changes in global temperatures 
occurred before human activities had any significant impact. Scientists 
who study past climates have been able to identify the likely causes of 
most of those changes and have determined that the warming trend 
observed in global average temperatures over the last 50 years is 
strikingly different from past changes and can only be explained by 
including human influences in the calculus. In fact, the IPCC has 
concluded that human activities not only play a role, but are primarily 
responsible for this trend. Two points are relevant here. The first is 
that as noted repeatedly in response to previous questions--it is the 
pace of anticipated climate change, as much as the potential magnitude 
of this change, that we should be worried about. Compared to past 
climate changes that occurred as a result of purely natural influences, 
human-induced climate change appears to be progressing at a rate that 
is simply unmatched in recent geological time. Second, the fact that 
climate change can also occur absent human influence does not lead 
logically to a justification for complacency. One might as well argue 
that because wildfires can also be caused by lightning, people should 
feel free to toss lit matches into the forest.
    Question 10. Do we know what the ``best'' global temperature is to 
sustain life?
    Answer. The most general answer to this question is that there is 
no single ``best'' temperature for sustaining life on Earth. At any 
given temperature, different organisms and ecosystems will evolve 
toward a different equilibrium than they would at any other temperature 
and it is fundamentally impossible to single out any one of these 
states as definitively ``better'' than any other. More than any 
particular temperature, however, it is possible to say that climatic 
stability is important to sustaining life. Dramatic and rapid changes 
in climate are almost always detrimental, both to individual organisms 
and to the larger ecosystems they inhabit.
    To attempt a more specific answer to this question, one would have 
to start by specifying what type of life one is interested in 
sustaining. Insects and weeds, for example, tend to do very well in a 
warmer world (as evidenced by the recent massive increase in spruce 
bark beetle outbreaks and the observed doubling of ragweed pollen 
production). On the other hand, some species, like the golden toad that 
used to inhabit the cloud forest of Costa Rica, have already been 
driven to extinction by the warming that has already occurred over the 
past 50 years. Other species, like the polar bear and ice-dependent 
seals, are increasingly stressed and may find it more and more 
difficult to survive in the wild as continued warming further shrinks 
the summer sea ice on which they depend. Coral reef ecosystems, the 
nursery for many marine species, are also at risk of succumbing to 
warmer temperatures and the changing chemistry of ocean water due to 
rising atmospheric CO2 levels. Many other life forms that 
cannot adapt or relocate quickly are similarly threatened by rapid, 
human-induced climate change.
    Assuming that the priority for most policymakers would be to 
preserve optimal conditions for human life, it remains difficult to 
identify a single ``ideal'' temperature. Here again, however, the more 
relevant point is that human societies and infrastructure the world 
over have developed in climatic conditions that have been remarkably 
stable for 10,000 years. As a result, the assumption that these 
conditions will continue is ``built into'' most aspects of our 
existence, whether we live in highly industrialized societies or in 
societies that are more directly dependent on natural systems for 
shelter and sustenance. A rapidly changing climate could therefore 
impinge on human existence and quality of life in a wide variety of 
ways. At best, the consequences will frequently be costly and 
inconvenient; at worst they could cause significant loss of life and 
higher rates of injury and disease.
    To give just one example, many of the world's coastlines have 
become heavily populated under the implicit assumption that sea level 
would be relatively stable. But global warming is already causing sea 
levels to rise and is likely resulting in higher storm surges, more 
coastal erosion, and a marked increase in the destructive power of 
hurricanes.\11\ If these trends continue, the consequences in wealthier 
countries like the United States could include substantial property 
losses and high costs to move housing and infrastructure as populations 
are forced to relocate further inland. In poorer and more vulnerable 
low-lying countries like Bangladesh, the results would likely be more 
dire and could include significant loss of life, increased incidence of 
disease, and massive population displacements.
---------------------------------------------------------------------------
    \11\ For example, Emanuel (2005) has documented a marked increase 
in the destructive power of hurricanes over the past 30 years as these 
storms have become, on average, more intense and of longer duration 
(Emanuel, Kerry, 2005, Nature, 4 August 2005, Vol. 436/4, Increasing 
destructiveness of tropical cyclones over the past 30 years.).
---------------------------------------------------------------------------
    Question 11. What is currently being done to curb emissions from 
parts of the world in poverty who are deforesting their environment and 
burning biomass for all means of day-to-day living, and are these 
emissions continuing to increase in the world?
    Answer. Developing nations have as much reason as developed nations 
to be concerned about climate change and as much incentive to reduce 
their greenhouse gas emissions, given that they are likely to be 
especially vulnerable to the negative impacts of future warming. What 
they lack, in many cases, are the economic and institutional resources 
to implement policies for reducing emissions, as well as access to the 
technologies that would make it possible to pursue their legitimate 
aspirations for development in a more environmentally sustainable 
manner. This situation speaks to the need for a continued emphasis on 
technology transfer and assistance from developed countries to the 
developing world to overcome these obstacles. At the same time, it must 
be emphasized that many developing countries are already making 
concerted efforts to address environmental and public health concerns 
in ways that will also yield ancillary benefits in terms of reduced 
greenhouse gas emissions. Examples include efforts to reduce methane 
emissions from sewage and garbage (these emissions can be comparatively 
large in many developing countries), to address a major public health 
concern by reducing soot emissions from inefficient cooking stoves and 
2-stroke engines, and to limit deforestation and restore vegetation 
cover as means of controlling erosion and improving water quality. In 
some cases, developing countries have even moved ahead of developed 
countries with respect to adopting progressive environmental or energy 
policies. China, for instance, recently moved to implement tougher 
automobile fuel economy requirements than currently exist in the United 
States.
    Question 12. Do you believe it is practical to seek emission 
controls in parts of the world that are struggling in poverty?
    Answer. With assistance and access to improved technologies, it is 
not only practical but essential for many poor nations to pursue a 
development path that is cleaner, more sustainable, and less carbon-
intensive than the development path traveled by already wealthy, 
industrialized nations. I believe it is the responsibility of developed 
nations to help make this possible.
    Question 13. What is being done to curb emissions in the developing 
countries like China and India?
    Answer. See question 11 above.
   Responses of Dr. Mario Molina to Questions From Senator Feinstein
    Question 1. Is there any credible scenario for stabilizing 
greenhouse gas emissions that does not involve the United States and 
other major emitters stopping their emissions growth over the next 
couple of decades and sharply reversing their emissions growth by 2050?
    Answer. No. To stabilize atmospheric greenhouse gas concentrations 
during this century, total global emissions--including emissions from 
the United States and all other major emitting nations--must begin to 
decline at some point in the coming decades. The steepness of this 
decline or--as you put it the sharpness of the reversal, depends on the 
stabilization target being pursued and on when the decline commences. 
For example, one estimate published by Wigley, Richels, and Edmonds in 
1996 indicates that global emissions must begin to turn down beginning 
in 2035 in order to achieve the goal of stabilizing atmospheric 
CO2 concentrations at 550 ppm by the end of the century. By 
the same token, slowing the rate of emissions growth in the near term 
will allow the eventual decline needed to achieve a given stabilization 
target to be more gradual and/or to commence at a later point in time.
    Question 2. Would the National Commission on Energy Policy's 
proposal stop and then reverse U.S. greenhouse gas emissions?
    Answer. The NCEP proposal lays out a specific approach for 
achieving the slow and stop phases of a program to reduce U.S. 
greenhouse gas emissions. The slow phase covers the first decade of 
program implementation (from 2010 through 2019); the stop phase is 
initiated starting in 2020. Put another way, the NCEP recommendations 
take us to the year 2020 on the below graphic and not beyond. We 
consciously chose not to detail the terms of the ``reverse'' phase, 
recognizing that it would be presumptuous and probably meaningless to 
presuppose the likely evolution of an intentionally flexible and 
contingent program more than two decades into the future. That said, it 
is important to point out that the architecture of our proposed policy 
would readily support the implementation of a reverse phase designed to 
steadily reduce U.S. emissions.*
---------------------------------------------------------------------------
    * The accompanying graphic has been retained in committee files.
---------------------------------------------------------------------------
    As our report states, the NCEP proposal `` should be understood as 
an initial domestic step in the long-term global effort to first slow, 
then stop and ultimately reverse current emission trends. In its 
structure and stringency, the Commission's proposal is designed to 
encourage the timely initiation of what will necessarily be a phased 
process. The Commission believes that this approach is more pragmatic 
and ultimately more effective than years of further legislative 
stalemate in pursuit of a more aggressive initial goal.''
    Put simply, we believe that the accumulated emissions resulting 
from additional years of inaction are almost sure to be greater than 
the possible benefits that would result from postponing more aggressive 
action to a point in the more distant future. Once a market signal is 
in place, we expect that solutions will flourish, anxieties will abate, 
and Congress will be better able to predict and then adopt more 
stringent iterative emissions reduction requirements.

                                 ______
                                 
 Responses of Richard D. Morgenstern to Questions From Senator Bingaman

    Question 1. Questions have been raised about the uncertainties for 
potential investors in new refineries or other energy facilities that 
could be created by the provision in the Bingaman amendment that calls 
for Congress to review emissions goals, price caps, and other features 
every five years. Could you comment on this?
    Answer. My understanding is that this provision gives Congress an 
opportunity to evaluate new information such as the actions of other 
nations or new scientific, technological, or economic developments that 
might affect future emissions goals, price caps, or other design 
elements of the program. It seems quite consistent with the routine 
Congressional reviews conducted in other policy areas. The 
uncertainties inherent in future energy markets, climate science, and 
prospect of future climate policies of one kind or another--with or 
without adoption of the Bingaman amendment--are likely to dominate any 
economic or financial assessment of refineries or other energy 
facilities.
    Question 2. Do I correctly understand that the so-called safety 
valve or cost cap provisions in the National Commission on Energy 
Policy proposal and Bingaman legislation provide for economic 
certainty, but not environmental certainty. Can you explain how that 
works?
    Answer. The safety valve or price cap is, in effect, a type of 
insurance policy designed to protect the economy against unexpected 
price increases caused by weather, stronger than predicted economic 
growth, technology failures, or other factors. Despite the success of 
the cap and trade provision in the acid rain program, which lacks a 
safety valve, problems have arisen in other programs. For example, 
during the California energy crisis the price of nitrogen oxide 
(NOX) permits rose to $80,000 and, more recently, in the 
early phase of the EU trading system, prices have fluctuated between 8-
30 Euros for carbon dioxide (CO2) permits.
    Differences among forecasters have plagued previous policy 
proposals to reduce GHGs. President Clinton's Council of Economic 
Advisers forecasted allowance prices below $8/ton of CO2 
compared to the Energy Information Administration's (EIA) estimate of 
$43. With a safety valve, emissions estimates may vary but costs cannot 
rise above the established price cap. Recent EIA sensitivity analyses 
confirm this point, as they found compliance costs to be virtually 
invariant with respect to a wide range of assumptions about natural gas 
supplies, the availability of non-carbon offsets, and other factors.
    The safety valve differs in a few important respects from a well-
known provision in the 1990 Clean Air Act Amendments that establishes a 
$2,000-per-ton penalty (1990$) for violations of the stipulated sulphur 
dioxide (SO2) emissions standards. Since the Clean Air Act 
penalty is far above the expected marginal control cost, it has a very 
low probability of being invoked. In contrast, the proposed safety 
valve price reflects the society's willingness to pay for carbon 
mitigation and is not intended strictly as a punitive measure. For 
those who believe that the costs of reducing greenhouse gas emissions 
are relatively low, permit prices would never reach the trigger level 
and emissions would remain capped.
    Question 3. Emission trading programs have been highly successful 
in phasing out leaded gasoline and CFCs, and most notably in reducing 
emissions of S02 and NOX through the Acid Rain trading 
program. Is emission trading a good policy instrument for addressing 
climate change? Why or why not?
    Answer. I believe that a market mechanism like emissions trading is 
an excellent policy tool for addressing climate change. Introduction of 
an emissions trading program would have two distinct effects. It would 
create incentives to reduce emissions in the near term, thus mitigating 
environmental damages associated with those emissions. And, at the same 
time, it would alter incentives for the private sector to develop and 
adopt new technologies. While these same effects would occur under a 
carbon tax regime as well, an emissions trading system does not oblige 
the private sector to make payments directly to the government and, 
correspondingly, obviates the need of the government to make decisions 
about how best to recycle the funds. As noted in the response to 
question two, inclusion of a safety valve would protect the economy 
against unexpected price increases caused by weather, stronger-than-
predicted economic growth, technology failures, or other factors.
    Question 4. The United States spends a significant amount of money 
on R&D into non-carbon and low-carbon technologies. How does this 
amount compare to our overall economy, our total spending on energy, 
and our total greenhouse gas emissions? Are other countries spending 
comparable amounts based on their size and emission levels?
    Answer. Various U.S. and foreign government agencies report 
information relevant to this question. In the following paragraphs, I 
have summarized the most relevant and recent information and also 
provided references for future follow-up.
    For each of the past three years, the U.S. Office of Management and 
Budget (OMB) has issued a report to Congress entitled Federal Climate 
Change Expenditures, which details federal spending on programs and tax 
proposals related to climate change. Table 1 provides a summary of 
spending for these programs from 2002 through 2006. The proposed 2006 
budget indicates that approximately $4.7 billion will be spent on R&D 
(this number was calculated by adding the total budgets for the Climate 
Change Science and Technology Programs. Table 1 also shows that over 
the past few years total spending on the Climate Change Science Program 
has decreased slightly. In addition for the 2006 fiscal year, there is 
a small reduction in spending is proposed in the Climate Change 
Technology Program, relative to the enacted 2005 budget. Overall, 
federal climate change expenditures have increased, but this is largely 
due to the increase in spending on energy tax incentive proposals (For 
further information about the breakdown of climate change spending, by 
department, see Appendix B of OMB 2005).

    Table 1.--SUMMARY OF FEDERAL CLIMATE CHANGE EXPENDITURES ON PROGRAMS AND TAX PROPOSALS RELATED TO CLIMATE
                                       CHANGE, FY 2006 PRESIDENT'S BUDGET
                    [Discretionary budget authority and tax proposals in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                     FY 2002   FY 2003   FY 2004   FY 2005   FY 2006    $ Change
                                                     Actual    Enacted   Actual    Enacted   Proposed  2006-2005
----------------------------------------------------------------------------------------------------------------
                                      Climate Change Science Program (CCSP)
U.S. Global Change Research Program...............   1,667     1,722     1,803     1,700      1,711         11
Climate Change Research Initiative................                42       173       217        181        -36
                                                   -------------------------------------------------------------
    Subtotal--CCSP\1\.............................   1,667     1,764     1,976     1,918      1,892        -26

                                    Climate Change Technology Program (CCTP)
Department of Agriculture.........................       3        39        45        48         35        -13
Department of Commerce............................                          28        30          7        -22
Department of Defense.............................                          51        75         60        -15
Department of Energy..............................   1,519     1,583     2,390     2,505      2,506          1
Department of the Interior........................                           1         2          2          0
Department of Transportation......................                           5         1          2          1
Environmental Protection Agency...................     115       106       110       109        113          4
National Aeronautics and Space Administration.....                         227       208        128        -80
National Science Foundation.......................                          11        11         11          1
                                                   -------------------------------------------------------------
    Subtotal--CCTP\1\.............................   1,637     1,728     2,868     2,989      2,865       -124

                                            International Assistance
U.S. Agency for International Development.........     174       214       195       189        162        -27
Department of State...............................       7         6         5         6         11          5
Department of the Treasury\2\.....................      43        56        52        45         25        -20
                                                   -------------------------------------------------------------
    Subtotal International Assistance.............     224       276       252       240        198        -42
Energy Tax Incentive Proposals That Reduce               0         0         0        83        524        441
 Greenhouse Gases\3\..............................
                                                   -------------------------------------------------------------
        Total\1\ \4\..............................   3,522     3,762     5,090     5,223      5,473        250
----------------------------------------------------------------------------------------------------------------
\1\ Subtotals and table total may not add due to rounding. Subtotals and totals supersede numbers released with
  the President's 2006 Budget. Discrepancies resulted from rounding and improved estimates.
\2\ The FY 2004 and FY 2005 enacted level for the Tropical Forestry Conservation Act (TFCA) is $20 million each
  year. In FY 2006, the Administration has requested a total of $99.8 million for debt restructuring programs to
  be available for: bilateral Heavily Indebted Poor Countries (HIPC) and poorest country debt reduction,
  contributions to the HIPC Trust Fund, and TFCA debt reduction. The Budget provides the Treasury Department
  flexibility in determining the amount for each program. The FY 2006 funding level for TFCA has not been
  determined yet.
\3\ The cost of the four energy tax incentives related to climate change included in the President's FY 2006
  Budget is $3.6 billion over five years (2006-2010).
\4\ The International Assistance subtotal contains funds that are also counted in the Climate Change Science
  Program subtotal. Table total line excludes this double-count.
Source: Adapted from OMB 2003, and 2005.

    In its Annual Energy Review EIA provides information on energy 
consumption, energy expenditure, and emissions in relation to GDP. The 
most recent EIA calculations on energy expenditures show that in 2001 
the United States spent $693.6 billion on energy (nominal dollars, EIA 
2004). This amount was 6.8 percent of the GDP that year (ETA 2004). In 
2002, OMB reports that $3.3 billion was spent on the Climate Change 
Science and Technology programs, which is 0.03 percent of the 2002 GDP 
(ETA 2004; OMB 2003).
    Greenhouse gas emissions were estimated to be 6,828.9 million 
metric tons of carbon dioxide equivalents in 2001 and 6,862.0 million 
metric tons of carbon dioxide equivalents in 2002, an increase of 0.5 
percent (EIA 2003). EIA also provides estimates of greenhouse gas 
emissions relative to GDP. In 2001, greenhouse gas emissions were 691 
metric tons of carbon dioxide equivalent per million (2000 chained) 
dollars (EIA 2004). In 2002, this number decreased to 684 metric tons 
of carbon dioxide equivalent per million (2000 chained) dollars (EIA 
2004).
    While I am more familiar with U.S. spending and greenhouse gas 
data, I was able to find some information on foreign spending on 
climate change and greenhouse gas emissions. The European Environment 
Agency (EEA) reported that the EU-15 emitted 4,180 million metric tons 
of CO2 equivalents in 2003 (EEA 2005). Table 2 provides the 
breakdown of emissions by country. EEA also reported that it spent 
831,000 Euros, or $ 934,758 (converted using OECD's Purchasing Power 
Parity for 2004) on ``tackling climate change'' in 2004 (EEA 2004).
    Britain's Department for Environment, Food, and Rural Affairs 
reports that the government funded an #11.5 million research program in 
2000-2001 in order ``to improve . . . understanding of the science and 
impacts of climate change, to quantify the UK's emissions of greenhouse 
gases, and to inform policies on reducing emissions'' (DEFRA 2001). 
This amount is equal to approximately $18.5 million (2001 dollars, 
converted using Purchasing Power Parity).
    A list of sources is presented below:
    DEFRA. 2001. Climate Change UK Programme. Available at http://
www.defra.gov.uk/environment/climatechange/cm4913/4913html/index.htm. 
Last accessed Oct. 2005.
    EEA. 2004. Annual Report 2004. Available at http://
reports.eea.eu.int/report_2004_0622_154840/en/Annual-report-
FINAL_web.pdf. Last accessed Oct. 2005.
    EEA. 2005. European Community Greenhouse Gas Emission Trends. 
Available at http://reports.eea.eu.int/technical_report_2005_4/en/
EC_GHG_Inventory_report_2005.pdf. Last accessed Oct. 2005.
    EIA. 2003. Emissions of Greenhouse Gases in the United States 2002. 
Report #: DOE/EIA-0573(2002/ES). Available at http://www.eia.doe.gov/
oiaf/1605/gg03rpt/summary/index.html. Last accessed Oct. 2005.
    EIA. 2004. Annual Energy Review 2004, Report No. DOE/EIA-
0384(2004). Available at http://www.eia.doe.gov/emeu/aer/contents.html. 
Last accessed Oct. 2005. (Table available at http://www.eia.doe.gov/
emeu/aer/txt/ptb0105.html)
    OECD. 2005. Purchasing Power Parities. Available at www.oecd.org/
dataoecd/61/54/18598754.pdf. Last accessed Oct. 2005.
    OMB. 2003. Federal Climate Change Expenditures, Report to Congress. 
Available at http://www.whitehouse.gov/omb/legislative/
fy04_climate_chg_rpt.pdf. Last accessed Oct. 2005
    OMB. 2005. Federal Climate Change Expenditures, Report to Congress. 
Available at http://www.whitehouse.gov/omb/legislative/
fy06_climate_change_rpt.pdf. Last accessed Oct. 2005

             Table 2.--OVERVIEW OF MEMBER STATES' CONTRIBUTIONS TO EC GHG EMISSIONS EXCLUDING LUCF FROM 1990 TO 2003 IN CO2 EQUIVALENTS (TG)
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Member State                 1990    1991    1992    1993    1994    1995    1996    1997    1998    1999    2000    2001    2002    2003
--------------------------------------------------------------------------------------------------------------------------------------------------------
Austria.................................      79      83      76      76      77      80      83      83      83      80      81      85      86      92
Belgium.................................     146     149     147     146     151     152     157     148     153     146     148     147     145     148
Cyprus..................................       6       6       7       7       7       7       8       8       8       8       9       8       9       9
Czech Republic..........................     192     178     164     158     152     153     155     159     149     140     148     148     143     145
Denmark.................................      69      80      74      76      80      77      90      80      76      73      68      70      69      74
Estonia.................................      43      41      30      23      24      22      23      24      22      20      20      19      20      21
Finland.................................      70      69      67      68      74      71      77      76      73      72      70      76      77      86
France..................................     568     593     585     559     555     563     578     572     584     566     560     564     554     557
Germany.................................   1,244   1,191   1,142   1,126   1,108   1,103   1,121   1,084   1,057   1,021   1,017   1,028   1,015   1,018
Greece..................................     109     109     110     110     113     114     118     123     128     127     132     134     134     138
Hungary.................................     103      95      85      85      85      84      86      84      84      84      81      84      81      83
Ireland.................................      54      55      56      56      57      58      60      63      65      67      69      71      69      68
Italy...................................     511     513     509     505     496     528     519     525     535     544     551     556     555     570
Latvia..................................      25      24      19      16      15      12      12      12      11      10      10      11      11      11
Lithuania...............................      51      45      42      38      35      31      28      24      22      21      21      20      20      17
Luxembourg..............................      13      13      13      13      13      10      10       9       8       9      10      10      11      11
Malta...................................       2       2       3       3       3       3       3       3       3       3       3       3       3       3
Netherlands.............................     212     216     215     221     221     224     233     225     227     215     214     216     213     215
Poland..................................     460     438     440     430     440     417     437     427     404     402     386     383     370     384
Portugal................................      59      61      65      64      65      70      67      70      75      83      80      81      86      81
Slovakia................................      72      63      59      55      52      53      54      54      52      51      48      53      52      52
Slovenia................................      19      17      17      18      18      19      19      20      20      19      19      20      20      20
Spain...................................     284     290     299     287     303     315     307     328     337     365     380     379     399     402
Sweden..................................      72      72      72      72      75      73      77      73      73      70      67      68      69      71
United Kingdom..........................     748     752     729     710     700     691     714     691     686     652     652     663     644     651
EU-25...................................   5,212   5,156   5,023   4,919   4,917   4,931   5,036   4,964   4,935   4,849   4,844   4,894   4,852   4,925
EU-15...................................   4,238   4,246   4,159   4,087   4,088   4,129   4,211   4,150   4,160   4,091   4,100   4,146   4,126   4,180
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: EEA 2005

    Question 5. You seem to agree that the most important long-term 
feature of any climate policy is the impact it will have on investment 
in R&D and the development of new, carbon-free technologies in both the 
private and public sectors. What do you believe are the best policies 
for pursuing needed R&D? Should these R&D initiatives be primarily 
taxpayer funded, government R&D programs, or should we pursue policies 
to provide incentives for private-sector R&D?
    Answer. Few would disagree that the private sector, not the 
government, has driven innovation and growth in the modern economy. For 
example, according to the National Science Foundation, in 2003 industry 
(not government) funded almost two-thirds of all R&D in the United 
States.
    It is also widely recognized that government has an important role 
to play in spurring the development and diffusion of these 
technologies. Without some kind of additional incentives, the private 
sector typically will under-invest in research, development, and 
demonstration because innovators cannot reap the full benefits to 
society of their advances. The existence of these ``spillovers'' 
reduces private incentive to pursue innovation, as others will mimic 
the innovation without compensating the inventors. While patents and 
similar means are used to protect investments in innovation, that 
protection is limited. A successful innovator typically captures 
substantial rewards, but those gains are sometimes only a fraction of 
the total benefits to society arising from the innovation. This 
rationale underlies government support of research, development, and 
demonstration programs, including the National Science Foundation, 
public universities, and other research institutions.
    Environmental and knowledge externalities have long been at the 
center of debates about technology policy. More recently, we have come 
to understand some additional market failures that may operate in the 
adoption and diffusion of new technologies. For a variety of reasons, 
the cost or value of a new technology to one user may depend on how 
many other users have adopted the technology. Generally speaking, users 
will be better off the more others use that same technology, as this 
increases what is known as ``learning by doing'' and ``network'' 
externalities. Typically, it takes time for potential users to learn of 
a new technology, try it, adapt it to their particular circumstances, 
and become convinced of its superiority. Consequently, the early 
adopter of a new technology creates a positive benefit for others by 
generating information about the existence, characteristics, and likely 
success of the new technology.
    The argument for public support is even stronger in the case of 
climate change technologies, where not only do inventors fail to 
capture all the gains from their investments but the gains themselves 
are not fully translated to the firms' bottom line because there is no 
market value associated with emissions reductions. Further, the 
prospect of future value--which is driven by policy outcomes--is 
uncertain.
    Absent government incentives, corporate concern for the environment 
may overcome some hurdles. Working against this kind of ``corporate 
altruism,'' however, is the need to compete in the marketplace. A 
company that puts meaningful effort into reducing greenhouse gas 
emissions, rather than reducing costs, may eventually lose out to one 
that only seeks to reduce costs.
    It is exactly this need to align public and private interests that 
underlies the argument for an emissions trading program, or similar 
mechanism, alongside technology development and demonstration programs. 
While the government seeks technologies to cut carbon emissions, the 
private sector seeks technologies to cut costs. Market-based policies 
that put a value on emissions reductions encourage firms to conserve 
energy, reduce emissions from existing technologies, and adopt new low-
carbon or no-carbon technologies. In contrast, policies that only focus 
on technology adoption fail to take advantage of reductions that could 
come from existing technologies and conservation.
    Question 6. Roughly how large an R&D investment do you believe is 
needed at this time, given that radically new technologies will be 
required in the future to address climate change? Are current energy 
R&D funding levels adequate, or do you think additional resources are 
required?
    Answer. It is difficult to judge the ``optimal'' funding level for 
R&D. As noted in the response to question number 4, OMB reports 
proposed 2006 budgets for climate change science and climate change 
technology of $1,892 and $2,865, respectively. The NCEP proposal would 
approximately double the spending levels on the climate change 
technology program over a 10-year period. While still higher levels may 
be justified, an equally important issue concerns the mechanism used to 
fund the R&D. Recognizing that funding of R&D has a somewhat checkered 
past, due partly to a large (and growing) degree of congressional 
earmarking and annual funding fluctuations, it is important that the 
designated funds be subject to an independent, multiyear, integrated 
planning process. Ideally, an independent group or commission assembled 
for this purpose would have, as its goal, the best allocation of R&D 
funds for long-term, cost-effective climate mitigation and would 
include experts from government, private industry, and academia.\1\
---------------------------------------------------------------------------
    \1\ For further discussion of how this process might work, see 
Kopp, Raymond J., Richard D. Morgenstern, Richard G. Newell and William 
A. Pizer, ``Stimulating Technology to Slow Climate Change,'' in New 
Approaches on Energy and the Environment, (Morgenstern and Portney, 
editors), RFF Press, 2004.
---------------------------------------------------------------------------
    Question 7. What are the advantages and disadvantages of using 
intensity-based emission targets?
    Emissions intensity targets focus on emissions per dollar of real 
GDP, rather than on the absolute level of emissions. In my view, a key 
advantage of intensity-based targets is that they help shift the debate 
away from measuring progress strictly in terms of zero or negative 
growth in emissions as a near-term goal, which is an unrealistic 
objective for a growing economy like that of the United States. In 
contrast, emissions-intensity frameworks start out with the more 
achievable goal of slowing the rate of emissions growth. Especially as 
nations are just beginning to implement mandatory emission reduction 
programs, such a formulation is more pragmatic. Another advantage of 
intensity targets is that they promote an emphasis on progress rather 
than simply on the absolute status of one nation versus another, which 
could help ease some of the concerns about equity among nations. A 
further advantage of intensity-based targets is that developing nations 
often appear favorably in such calculations as they are reaping the 
natural declines arising from modernization. This could facilitate the 
entry of developing nations into meaningful initial commitments.
    That said, intensity targets also have a number of disadvantages. 
First, they are harder to convey to the public than a simple emission 
cap. Second, the main advantage of intensity targets--that they do not 
draw attention to zero growth as a benchmark for progress--will be seen 
as a disadvantage by advocates who seek such a benchmark.
    A final observation is that intensity targets are not a useful way 
to deal with economic shocks that make the cost of any emission limit 
uncertain. Other mechanisms, such as safety valves, can better address 
this problem, as discussed in the response to question 3. A fuller 
discussion of intensity targets can be found in a recent paper by my 
RFF colleague, William Pizer.\2\
---------------------------------------------------------------------------
    \2\ Pizer, William 2000. ``The Case for Intensity Targets,'' 
Discussion Paper 05-02, Resources for the Future, Washington, D.C. 
(forthcoming in Climate Policy).
---------------------------------------------------------------------------
    Question 8. What are your views on setting up a trust fund with the 
proceeds from a cap and trade program and using the revenue to fund 
investment in low-emission energy technologies?
    Answer. While trust funds are sometimes pilloried as ``lock boxes'' 
that distort national spending priorities, the requirements of science 
and technology programs for long-term, stable funding mitigates against 
such concerns. The fact that the revenues for the trust fund would be 
derived from hitherto-untapped sources closely tied to the goals of the 
R&D programs also addresses these concerns. On balance, I think there 
is a good case for setting up a trust fund with the proceeds from a cap 
and trade program and using the revenue to fund investment in low-
emission energy technologies.
    Question 9. Please comment on your view of success of EU program 
and what we can learn as we move forward in the United States.
    Answer. The European Union Emissions Trading System (EU-ETS) is a 
major environmental policy, representing the world's first large-scale 
greenhouse gas trading program. It covers more than 11,000 facilities 
in 25 countries and 6 major industrial sectors. The first stage of the 
program is now in operation, covering CO2 emissions only. 
National allocation plans have been approved in all nations, although 
registries in all nations are not yet fully operational. Protocols have 
been established for uniform monitoring of emissions. Allowances equal 
to monitored emissions must be surrendered on an annual basis, 
beginning at the end of this year. Beginning in 2008, the system will 
be expanded to include additional sectors and additional greenhouse 
gases. Significant trading volumes are already occurring, mostly in the 
power sector, and the system seems poised to deliver real but modest 
reductions compared to a business-as-usual scenario. Possible lessons 
for the United States can be drawn from the early experiences of the 
EU-ETS:

   The price of allowances has fluctuated considerably (8-29 
        Euros) since the beginning of the program in January 2005. Some 
        of the fluctuations are clearly associated with weather and 
        fuel-price dynamics. Many observers believe that over the 
        longer term prices will decline as the early growing pains of 
        the program are resolved and, particularly, as more eastern 
        European nations establish registries and enter the market more 
        actively. Had the EU-ETS adopted a safety valve at a level 
        consistent with the long-term price expectation, as has been 
        widely discussed in the United States, some of the extreme 
        price fluctuations would have been avoided.
   The EU-ETS covers less than 50 percent of the total EU 
        emissions; consequently, the success of the trading program 
        does not imply that the EU will meet its overall emissions 
        targets under the Kyoto Protocol. Rather, achievement of the 
        Kyoto target depends partly on the success of various 
        regulatory and voluntary programs in place in other sectors of 
        the economy, plus the success of governments in purchasing 
        allowances from Russia or other Annex B nations, or through the 
        Clean Development Mechanism. Recent discussions in the United 
        States have focused on economy-wide or near economy-wide 
        systems that, by definition, would not have the same type of 
        problems.
   Because the EU-ETS is based on the operation of a series of 
        national-based institutions throughout the EU, problems in 
        individual nations can affect the prices and availability of 
        allowances elsewhere. The fact that the registries in some 
        nations are not yet operational, particularly in Eastern Europe 
        where net selling is expected, means that the market remains 
        thin and sensitive to single trades. The same problems are not 
        likely to occur in the United States, where discussions have 
        focused on a market entirely organized at the national level.

    Question 10. It is sometime said that using a safety valve is the 
same as adopting a carbon tax. Please explain why you agree or 
disagree.
    Answer. Some, in opposing a safety valve try to smear it by calling 
it a disguised tax. In this regard, I would make two points: first, if 
the price cap level is not reached, then it is strictly a cap-and-trade 
mechanism, just like the acid rain program and not at all like a tax. 
Second, even if the price cap level is reached, only a small portion of 
the revenues would accrue to the government, in this case to fund 
research and development. The bulk of the revenues would flow directly 
back to the private sector. Because a tax is principally defined in 
terms of the revenues it generates, and since only a small portion of 
the revenues ever end up in the hands of the government, it is not 
accurate to describe the safety valve as a tax.
                                 ______
                                 
  Responses of Richard D. Morgenstern to Questions From Senator Akaka

    Question 1. I have some questions about the carbon-trading program 
in the European Union.

   We know that Europe has started a carbon-trading program. 
        Can you please describe the basics of what is happening there? 
        How is the carbon traded, capital generated, and who receives 
        the benefits?
   Second, what is the outlook for success in this trading 
        program?
   Finally, what are the lessons for the U.S. from Europe's 
        experience? Has there been widespread unemployment or lack of 
        economic growth?

    Answer. Please see the answers to Senator Bingaman's question 
number 9.
    Question 2. From your testimony, it sounds like the National 
Commission on Energy Policy proposal would have a very small impact on 
the U.S. economy overall. Further, it will not ``avert'' climate change 
over the next 20 years. However, you apparently believe that it is very 
important to undertake something like the NCEP proposal. Can you 
explain a little more why it is so important if we aren't having an 
effect on climate change?
    Answer. The principal reason that NCEP's approach would have a much 
smaller impact on the U.S. economy than the Kyoto Protocol or S. 139 is 
that, fundamentally it is not designed to avert climate change over the 
next 20 years. Rather, the focus is on developing and deploying 
technologies needed to address the problem in the decades beyond. The 
NCEP proposal does this primarily in two ways: 1) by directly 
subsidizing a wide range of new technologies including coal, nuclear, 
fuel-efficient vehicles, biofuels, and others; and 2) by encouraging 
private-sector research and development through incentives for the 
deployment of cost-effective carbon saving technologies of all types. 
NCEP's cap-and-trade system has the added benefit of generating a 
revenue stream to fund the technology subsidies.
    The NCEP strategy recognizes that large-scale emission reductions 
in the near term are not a prerequisite to long-term success of the 
overall mitigation strategy. Unlike SO2, lead, or other 
pollutants with short-term health impacts, the damages associated with 
climate change are primarily long term in nature. The mitigation 
strategy used to address the issue needs to reflect that understanding 
of the problem.
Responses of Richard D. Morgenstern to Questions From Senator Feinstein
    Question 1. Under the National Commission on Energy Policy's 
proposal, what happens when a covered entity uses the safety valve 
rather than lowering emissions? What is done to ensure that emissions 
are actually reduced?
    Answer. An economic-based measure such as a cap-and-trade system 
provides incentives for industry, consumers, and governments to reduce 
their emissions. Such incentives have been proven successful in the 
SO2 trading program and elsewhere in the United States and 
abroad. A safety valve is designed to protect the economy against 
unexpected price increases caused by weather, stronger than predicted 
economic growth, technology failures, or other factors.
    If the goal is to reduce emissions in the near term without regard 
for the economic consequences, then a safety valve is not necessary. 
However, if the goal is to address the long-term build up of greenhouse 
gases in the atmosphere without imposing undue economic harm, then the 
safety valve is an appropriate mechanism.
    Question 2. Under the Commission's proposal, a company could pay 
the $7/ton fee instead of reducing the greenhouse gases. So, in the 
end, is there really a firm cap on emissions?
    Answer. The $7/ton charge creates incentives for all sources to 
undertake emission reductions up to the point where mitigation costs 
reach that level. With such a scheme in place, more expensive 
mitigation activities would not likely be undertaken.
    Question 3. What policy solutions do you recommend to correct for 
this so we can still make environmental progress?
    Answer. The answer depends in large part on how one defines 
``progress.'' In my view, the creation of incentives to develop and 
deploy new technologies, combined with incentives to undertake low-cost 
emission reductions in the near term, would represent real progress on 
the climate change issue. I believe that zero or negative emissions 
growth in the near term is not a realistic definition of progress for a 
growing economy like that of the United States.
    Question 4. Has anyone looked at the cost of inaction--in other 
words, what the impact will be to the economy to not curb emissions? 
I'm thinking specifically of costs related to:

   health care due to dirtier air,
   insurance costs due to more intense storms,
   government emergency relief services,
   the costs of alternative sources of water in the west as the 
        snowpack decreases,
   the costs of protecting homes, businesses and highways from 
        rising sea levels,
   farm payments due to decreased agriculture output, and
   what the potential impact all of those increased costs will 
        have on economic growth.

    Answer. There is a large and growing literature on the impacts of 
climate change. I would refer you to the extensive studies published by 
the Intergovernmental Panel on Climate Change (IPCC), as well as those 
published by the U.S. EPA.

  Response of Richard D. Morgenstern to Question From Senator Corzine

    Question 1. A cap-and-trade policy is widely acknowledged as a 
mechanism that encourages industry to find the most cost-effective 
opportunities to meet a specific policy goal. It gives companies the 
flexibility to decide what types of actions and technologies work best 
for them. It is also widely acknowledged that improvements in other 
areas such as fuel efficiency would also have a significant impact on 
reducing greenhouse gas emissions, reducing air pollution, and 
increasing our energy independence. Wouldn't the reduction in 
greenhouse gas emissions be that much greater if we coupled a cap-and-
trade policy with stricter CAFE standards?
    Answer. It is true that short of very strict limits on emissions 
which, in turn, would lead to sharp increases in the price of gasoline 
and other carbon-based fuels, the emission reductions from automobiles 
under a cap and trade program of the type proposed by the NCEP are 
likely to be quite modest. Non-price measures clearly have a role to 
play in this sector. As currently designed, however, CAFE standards 
have some well-documented problems. Other program designs might be more 
effective in achieving mobile-source emission reductions with fewer 
unintended side effects.
                                 ______
                                 
     Responses of Anne E. Smith to Questions From Senator Bingaman

    Question 1. Do you believe that climate change is linked to 
anthropogenic emissions?
    Answer. I think there is enough evidence to warrant climate change 
risk management. My testimony outlined my thoughts on the key elements 
of such risk management.
    Question 2. In your written testimony, you state that ``a price on 
carbon in the near-term can be justified as a supplement to a 
meaningful R&D mission once that mission has clearly defined targets 
for success.'' and that ``only government can provide the needed R&D 
investment.''
    Question 2a. What are your thoughts on how those long-term targets 
should be developed and, based on the targets, (i) what near-term 
carbon price would you suggest is reasonable and (ii) what level of 
funding would support a ``meaningful'' R&D program that would support 
these goals?
    Answer. The nation needs to engage in a direct discussion of how to 
create an effective R&D program and what that program should strive to 
accomplish. The latter is what I mean by ``targets for success.'' I, 
myself am just beginning to think about how one might put this 
together, but here are some initial thoughts that might help start a 
discussion. One important question is ``What would the nation be 
willing to pay to achieve a zero-emissions energy system?'' The current 
cost of a global zero-emission system is patently not acceptable. It 
also appears that lithe added cost of achieving a zero net GHG world 
were only a few percent of our current costs of energy, the nation 
might be willing to accept this cost to reduce climate change risk. 
Unfortunately, the latter situation is not a real choice at present, 
and no set of technology forecasts suggests that this will be possible 
even over the next 30 years. However, there might be some higher cost 
that we still would accept at some point in the future if, from that 
point on, it were to provide meaningful reductions in GHG emissions. 
The important question is whether this acceptable cost has any overlap 
with the costs that might be technologically achievable in the coming 
century with a concerted and focused R&D program.
    The acceptable cost could be seen as a ``stretch goal `` for the 
R&D program. Setting such a goal is fundamentally a political process 
as it requires that uncertain risks of climate change be balanced 
against the more certain costs to our economy of using such future 
technologies on a scale that could actually stabilize atmospheric 
emissions. Economics might help inform a rational trade-off, but the 
stakes and associated uncertainties are so pronounced that the final 
choice for a cost goal depends on much broader social considerations.
    Once the stretch goal for the R&D program has been articulated, 
then one can start to estimate reasonable levels of spending on near-
term emissions reductions and the magnitude of the R&D task.
    (i) A reasonable near-term carbon price would be the present value 
of the stretch goal for the future cost that we determine we are 
willing to accept for a zero-emissions economy. Calculating that 
present value is simple if one knows the future ``acceptable'' cost-
per-ton that is the R&D goal, and the associated date of availability. 
Footnote 1 of my written testimony provided an illustrative example of 
such a calculation. It was illustrative because we currently lack both 
a national view of an ``acceptable cost `` for achieving zero net 
emissions, and an R&D program that offers a plan and target time period 
for deployment.
    (ii) The level of funding for the R&D program would be determined 
by a process of identing the types of breakthroughs necessary to 
achieve the stretch goal. Once these R&D milestones have been 
identified, it will be more possible to discuss an appropriate scale 
and form for the R&D program, which in turn will identify the 
appropriate spending, and ramp-up rates for such spending.
    Question 2b. How much do you expect this to cost the government?
    Answer. See my reply to 2a(ii) above.
    Question 2c. How much do you think the government would actually 
spend?
    Answer. If an R&D program were to be developed that has a clearly 
articulated vision of what its targeted outcomes are, is founded on a 
political consensus that such outcomes would enable a national response 
to reduce emissions on a scale sufficient to meaningfully reduce risks 
of climate change, and with a coherent plan for how to make progress 
towards its defined goal, then it is likely that the government could 
agree on the spending necessary to fulfill the plan.
    Question 2d. You said in your testimony that the difficult 
decisions are how much to spend now, and how to design programs to 
stimulate R&D that avoid mistakes of the past. Can you share your 
recommendations?
    Answer. Designing a truly effective R&D program is clearly a major 
challenge yet it has not received even a modest amount of attention 
among climate policy analysts. My recommendation is that the community 
of environmental policy analysts immediately strive to shift their 
attention away from their traditional focus on devising efficient 
regulatory structures and focus it on the challenge of devising 
effective R&D programs. An intellectual cross-fertilization is needed 
between environmental economists and economists who have studied R&D 
processes. I am not saying that R&D should be solely a job for 
government. As I stated in my testimony, the objective should be to 
design a set of incentives that can shift private sector R&D in the 
direction of producing the needed advances for climate technology.
    Question 3. You say that we need to develop ``breakthrough'' 
technologies, and that once they are developed we can make massive 
emissions cuts. You seem to acknowledge that this may still be ``quite 
costly''.
    Question 3a. How many greenhouse gas emissions do you expect will 
be released between now and when these ``breakthrough'' technologies 
are developed and then deployed?
    Answer. The quantity of GHG emissions that will be released over 
the next several decades will depend, at the margin, on the costliness 
of policies that are enacted around the world, and also on whether 
developing nations become engaged in any effort. However, under any 
scenario, we can expect that atmospheric concentrations will continue 
to rise until zero-emissions technologies start to be deployed on a 
global scale.
    Question 3b. How certain are you that these ``breakthrough'' 
technologies will be created?
    Answer. The likelihood of success depends on national and 
international efforts to identify the necessary component 
breakthroughs, and to create the programs that will help make them 
possible. Lack of such efforts reduces the likelihood that they will be 
created.
    Question 3c. What if we fail to develop them?
    Answer. If lower-cost zero-emissions technologies are not 
developed, then the world's economies will probably continue to emit 
GHGs at a rate that causes atmospheric concentrations to continue to 
grow.
    Question 3d. Would you expect massive emission cuts by deploying 
the ``breakthrough'' technologies to lead to massive fuel switching 
from coal and other resources?
    Answer. I have no idea.
    Question 4. In your analysis of the NCEP proposal, how much money 
did you determine would be generated by the sale of allowances due to 
the auction and safety valve?
    Answer. My testimony reported our analysis of the cap-and-trade 
portion of the Bingaman Amendment. We estimated a range of prices and 
emissions outcomes. Our estimates of revenues from the auction plus the 
safety valve sales (in 2005 constant dollars) are:

        2010--$1 to 2 billion
        2015--$2 to 3 billion
        2020--$4 to 7 billion
        2025--$5 to 12 billion
        2030--$7 to 17 billion

    The lower bound reflects just auction revenues, because our low 
case does not trigger any safety valve sales through 2030. Most of the 
difference between the lower bound and upper bound for 2020-2030 
reflects revenues from safety valve sales.
    Our analysis did not include the impact of the CAFE provisions. The 
CAFE standard would reduce the government revenue estimates, especially 
at the upper end of the range, while increasing the overall social 
costs of the program.
    Question 5. According to NCEP recommendations, these revenues would 
then get redirected back into near term low carbon technology 
deployment programs (such as advanced nuclear, biomass, and coal with 
sequestration) as well as doubling basic energy R&D funds for the long 
term. In such a scheme, as the difficulty of the goals increased with 
the rise in the safety valve price, the funds going into technology 
innovation would also likewise increase. In your testimony, you 
indicate that the NCEP/Bingaman Amendment energy innovation funds are 
inadequate for the task at hand. How much more public money do you 
suggest be dedicated to energy research and development? How should 
these activities be funded?
    Answer. My testimony related to the Bingaman Amendment as written, 
and did not relate to any provisions or recommendations in the NCEP 
proposal that were not reflected in the Bingaman Amendment. I did wish 
to suggest that current R&D spending was inadequate for the task at 
hand; rather, I argued that the nation is lacking a clearly targeted 
and carefully planned R&D program to develop much lower cost options 
for a zero-emissions economy, and that the Bingaman Amendment would not 
help fill this gap. I argued that subsidies increased the cost that we 
will spend on near-term technologies to a level above that implied by 
the safety valve, which is inappropriate if the safety valve represents 
the maximum that we should be spending today on near-term reductions. I 
also argued that spending on subsidies did not constitute spending on 
R&D.
    See my reply to question 2a(ii) regarding my thoughts on how to 
determine how much public money should be dedicated to energy R&D. Once 
appropriate funding levels have been determined, I feel that it is up 
to the Congress to determine how to raise the funds. I stated in my 
testimony that I do not think that the funds should come solely from a 
carbon tax allowance auction, or safety valve sales. Such revenue 
sources might generate either too little revenue or too much revenue to 
serve a well-targeted and well planned R&D program, and so they should 
not be formally linked to each other. Additionally, I do not recommend 
that a carbon tax rate or safety valve price be chosen based on R&D 
spending needs; the appropriate level should be based on considerations 
such as I outlined in my reply to question 2a(i).
    Question 6. What are the advantages and disadvantages of using 
intensity-based emission targets?
    Answer. I see no particular advantages or disadvantages of basing a 
cap-and-trade program on intensity-based emission targets. The only 
merit of the concept is that it has enabled the nation to recognize 
that a ``cap'' might allow for emissions to increase from where they 
are today, yet still impose a real cost on the economy, and require 
concerted effort to achieve. However, as implemented in the NCEP 
proposal and the Bingaman Amendment, it is still a cap, with attending 
concerns about cost uncertainty and variability. More importantly, the 
cap in these two proposals, whether intensity-based or not, is rendered 
almost completely irrelevant by the safety valve provision, which 
converts the ``cap'' into an effective tax.
    Question 7. What are your views on setting up a trust fund with the 
proceeds from a cap and trade program and using the revenue to fund 
investment in low emission energy technologies?
    Answer. See the second paragraph of my reply to question 5.
    Question 8. As you know, we are operating under huge budget 
deficits and, therefore, massive appropriations for R&D are unlikely. 
Given this context, if the Bingaman proposal was modified to fund 
``Long-run, high-risk R&D to produce radically new GHG-free energy 
sources,'' rather than subsidies for existing technologies, could you 
support it?
    Answer. My replies under questions 2 and 5 above sum up my view of 
an appropriate set of actions and policies to mitigate climate change 
risk. That approach is fundamentally different from the Bingaman 
proposal, and it would not be achieved by merely changing the 
earmarking of funds for subsidies to earmarking of funds for R&D. 
First, and foremost, specific national goals for an R&D program must be 
articulated and that important gap would not be filled by simply 
altering what the revenues are earmarked to be used for. Spending on 
R&D without first determining what would constitute ``success `` and 
ident0ing how to maximize chances of success would probably just be a 
waste of money.
    My testimony also emphasized that a carbon tax is a simpler and 
more transparent way of achieving a goal of placing a near-term price 
on GHG emissions. I have also concluded that using CAFE standards, 
which currently are in the Bingaman proposal, is less cost-effective 
than using a price signal to drivers of current automobile technology 
combined with a program for the long-run development of a future, zero-
emitting form of personal transportation.
    Question 9. Under what conditions could you support a carbon tax?
    Answer. See my reply to question 2a(i).
    Question 10. You state that ``the `safety valve' in the NCEP 
program and Senator Bingaman's amendment is designed to provide 
assurance that the price of emission allowances will not reach 
economically unsustainable levels. But that policy design causes the 
prices to be set at a level far too low to provide an adequate 
incentive for private investors to develop radically new 
technologies.'' Yet earlier you note that only a low price would be 
justified. What price does your analysis suggest would be appropriate 
to encourage private investors to develop radically new technologies 
(a) on their own, and (b) in conjunction with an appropriate R&D 
program?
    Answer. I conclude that no price signal created by government 
legislation or regulation can provide the incentives necessary for 
private investors to develop radically new technologies. This is 
because of a dynamic inconsistency of incentives that is the subject of 
my recent paper with Dr. David Montgomery, and which is described in my 
written testimony on pp. 17-19. Price signals are useful for motivating 
the private sector to deploy technologies that currently exist but 
which would be more costly than higher-emitting technologies but for a 
carbon price that we are willing to impose and pay for now. Such price 
signals might also motivate private entities to make some evolutionary 
improvements on existing technologies that could quickly bring them 
into the cost-effective range defined by a credible and sustainable 
near-term carbon price. My thoughts on what that near-term carbon price 
level might be are described in my response to question 2a(i) above. 
Motivation to develop revolutionary technologies, requiring the 
coordination of a set of many separate scientific breakthroughs, must 
come from other forms of policy than a carbon price signal. Their 
eventual deployment can be motivated by a carbon price signal once the 
technology has reached the deployment stage, which occurs after the R&D 
stage.

       Responses of Anne E. Smith to Questions From Senator Akaka

    Question 1. From what you and Dr. Morgenstern state in your 
testimonies, there is virtually no way that the U.S. can do anything 
that will reverse global warming. Even reductions to zero carbon 
emissions right now will hardly stabilize temperature.
    Answer. Even if the U.S. were to reduce its emissions to zero right 
now, emissions in developing countries would continue unabated and so 
atmospheric concentrations would continue to increase too. Atmospheric 
stabilization can only be achieved if the entire globe moves to zero 
carbon emissions. This is why it is so important for a US policy 
response to directly address the need for reducing developing country 
emissions and not just focus on reducing US contributions to emissions.
    Question 2. Your testimony emphasizes the importance of investing 
in R&D for technology, particularly ``radically different'' 
technologies for limiting carbon emissions. If the nation were to 
embark on one of the three options in your testimony (cap & trade, 
cost-based, or carbon tax), how do you see economic growth distributed 
in the technology community or the U.S. in general? Which types of 
business would be the winners--where would you expect to see economic 
investment, jobs, and growth? Would it be large coal technologies, for 
example, or small electronics firms or carbon material firms?
    Answer. The ``winners'' will depend on the focus of the R&D program 
that I have argued should be developed as a first step. I do not know 
what that focus would be. However, I am confident that a sound program 
will require a diversified approach and that will imply opportunities 
to contribute to the program will be available in many sectors of the 
economy.

     Responses of Anne E. Smith to Questions From Senator Feinstein

    Question 1. Under the National Commission on Energy Policy's 
proposal, what happens when a covered entity uses the safety valve 
rather than lowering emissions? What is done to ensure that emissions 
are actually reduced?
    Answer. When a covered entity ``uses'' the safety valve, it pays 
money to the government equal to the safety valve price in that year 
times the amount by which its actual emissions exceed its holdings of 
allowances (both allocated allowances and those purchased after the 
allocation). The safety valve therefore does not require that emissions 
are actually reduced; it does however ensure that covered entities have 
a real financial incentive to achieve all the emissions reductions that 
they can find at a cost per ton reduced that is cheaper than the safety 
valve price.
    Question 2. Under the Commission's proposal, a company could pay 
the $7/ton fee instead of reducing the greenhouse gases. So, in the 
end, is there really a firm cap on emissions?
    Answer. No, there is not a firm cap on emissions.
    Question 3. What policy solutions do you recommend to correct for 
this so we can still make environmental progress?
    Answer. My written and oral testimonies have consistently 
recommended that the nation develop and implement an effective, long-
term R&D program to enable us to achieve an affordable, zero net 
emissions energy system within the century--hopefully starting within 
the next 30 years. For near-term actions, I have recommended that we 
focus (1) on achieving transfer of current state-of-the-art 
technologies to developing countries that still investment in less 
efficient technologies even as they grow, and (2) on creating a price 
signal on domestic emissions that will incentivize the reductions that 
are cheaper now than the present value of making those reductions later 
with more advance and cheaper technologies.
    Question 4. Has anyone looked at the cost of inaction--in other 
words, what the impact will be to the economy to not curb emissions? 
I'm thinking specifically of costs related to:

   health care due to dirtier air,
   insurance costs due to more intense storms,
   government emergency relief services,
   the costs of alternative sources of water in the west as the 
        snowpack decreases,
   the costs of protecting homes, businesses and highways from 
        rising sea levels,
   farm payments due to decreased agriculture output,
   and what the potential impact all of those increased costs 
        will have on economic growth.

    Answer. There is no firm scientific basis currently linking the 
above consequences to increasing atmospheric concentrations of 
greenhouse gases. There is a general consensus among climate modelers 
that it is currently impossible to calculate the effects of atmospheric 
concentrations at a sufficient level of regional detail to predict even 
the direction of change in these potential consequences. However, 
various analysts have attempted to make ``what-if'' calculations of 
benefits that assume a particular relationship. Even so, their general 
conclusions have been that very high cost near-term emissions 
reductions (e.g., costs of the level that economists project would 
occur under a hard cap such as McCain-Lieberman's or the Kyoto 
Protocol) are not justifiable. This is largely because these costly 
near-term actions will have no meaningful impact to reduce the risks of 
any of the possible outcomes you have listed above.
    Risks to health of air pollutants are already managed under the 
Clean Air Act, and there are far less costly methods for reducing these 
pollutants than a carbon emissions cap.
    Question 5. Your testimony includes a number of comments regarding 
the allocation of allowances under a greenhouse gas emissions cap-and-
trade programs. This is a critical issue in putting together such 
legislation. What is your recommendation regarding how the allowances 
should be allocated?
    Answer. Allocation schemes mainly alter the burden sharing under a 
cap-and-trade program, and so the decision on allocation of allowances 
is an inherently political process driven by multiple social 
objectives. Analysis methods may be useful to help politicians and 
affected parties understand the sharing of the burden associated with 
different allocation schemes, but they cannot provide enough certainty 
and specificity to positively identify appropriate or ``fair'' 
allocations even if the normative goals were to be specified. It is 
particularly important to recognize that there is no allocation scheme 
under a cap-and-trade program that can make everyone whole: even the 
most cost-effective program will have a net cost, and someone (some 
groups) will ultimately have to bear that cost burden.
    As noted in my testimony, some attributes of an allocation scheme 
can actually exacerbate a cap program's cost, and politicians should 
avoid those situations when attempting to devise a politically 
acceptable set of allocations. These include (a) failing to recognize 
the need to replace government revenues that may decline due to the 
economic impact of the cap, and (b) allocation rules that update what a 
company will receive in future years on the basis of their future 
business outcomes.

       Response of Anne E. Smith to Question From Senator Corzine

    Question 1. Are you convinced that global climate change is linked 
to anthropogenic emissions?
    Answer. I think there is enough evidence to warrant climate change 
risk management. My testimony outlined my thoughts on the key elements 
of such risk management.
                                 ______
                                 
    Responses of Jason S. Grumet to Questions From Senator Bingaman

    Question 1. Emission trading programs have been highly successful 
in phasing out leaded gasoline and CFCs, and most notably in reducing 
emissions of SO2 and NOX through the Acid Rain 
trading program. Is emission trading a good policy instrument for 
addressing climate change? Why or why not?
    Answer. Emission trading has proved to be a highly effective policy 
instrument for addressing a variety of environmental problems. 
Moreover, this approach is likely to be especially well-suited to 
reducing emissions of the chief greenhouse gases implicated in human-
induced climate change.
    The generic advantage of an emission trading approach is that it 
can achieve maximum environmental benefit at minimum cost by allowing 
individual sources to exploit the lowest cost emission-reduction 
opportunities available to them. This means that sources in a position 
to cheaply cut emissions can implement more than their share of 
reductions and sell excess permits or allowances to other sources that 
face higher costs. As such, a trading program is far more flexible and 
cheaper than a command-and-control approach, where strict control 
requirements typically apply to each individual source. The proposal 
put forward by the National Commission on Energy Policy goes even 
further to ensure that costs are known--and ``capped''--in advance by 
including a safety-valve mechanism that allows sources to buy an 
unlimited quantity of additional permits from the government at a pre-
determined price.
    Emission trading programs work best where the following conditions 
obtain:

   The underlying environmental problem occurs over a large 
        area, rather than being highly localized.
   A large number of sources are responsible for the problem.
   The cost of reducing emissions varies from source to source.
   Emissions can be consistently and accurately measured.

    All of these criteria are met in the case of climate change. First, 
the underlying problem occurs over the largest possible area--the 
entire planet. From the standpoint of warming impacts there is no local 
component to greenhouse gas emissions--their effects on the atmosphere 
are the same wherever they occur. Second, emissions of greenhouse gases 
from different sources vary widely, as do the opportunities and costs 
for reducing those emissions. Finally, it is not difficult to 
accurately track and report the vast majority of emissions of carbon 
dioxide, the most important anthropogenic pollutant implicated in 
global warming. Carbon dioxide emissions accounted for nearly 85 
percent of the overall U.S. greenhouse gas emissions inventory in 2003; 
of these emissions, nearly all (98 percent) were energy related--that 
is, they resulted from the combustion of fossil fuels like coal, oil, 
and natural gas. Unlike other energy-related pollutant emissions, which 
can vary widely depending on combustion conditions, the type of 
pollution control equipment in place (if any), and a host of other 
parameters, carbon dioxide emissions are a straightforward function of 
the carbon content inherent in the fuel being consumed and can be 
calculated simply and precisely long before combustion actually occurs. 
This feature means that the requirement to hold emissions permits 
(otherwise known as ``point-of-regulation'') can occur anywhere along 
the fuel production, distribution, and consumption supply chain. It 
also means that the great majority of regulated entities do not need to 
install new emissions monitoring equipment, they need simply keep track 
of the type and amount of fuel for which they are responsible within 
the emission trading program.\1\
---------------------------------------------------------------------------
    \1\ Emissions of other greenhouse gases, notably methane, nitrous 
oxide, HFCs, PFCs, and SF6, can be more difficult to track and 
document, but these emissions account for a much smaller share of the 
overall inventory. In the case of methane and nitrous oxide, the next 
most important greenhouse gases in the United States, methodologies for 
estimating emissions from a variety of sources have been developed and 
refined over several years and can be used where direct measurement of 
emissions may not be feasible.
---------------------------------------------------------------------------
    Question 2. You seem to agree that the most important long-term 
feature of any climate policy is the impact it will have on investment 
in R&D and the development of new, carbon-free technologies in both the 
private and public sectors. What do you believe are the best policies 
for pursuing needed R&D? Should these R&D initiatives be primarily tax-
payer funded, government R&D programs, or should we pursue policies to 
provide incentives for private sector R&D?
    Answer. As I stressed in my testimony, the National Commission on 
Energy Policy strongly believes that a combination of public and 
private sector R&D is crucial to develop the new technologies that will 
be needed to effectively reduce not just U.S., but global, greenhouse 
gas emissions over the coming decades. We further believe that the best 
and most effective means for stimulating technology investment is to 
combine a market signal for reducing emissions with increased public 
funding and performance-oriented government incentives aimed at 
developing and commercializing low-and non-carbon energy alternatives. 
In our proposal, a cost-capped emission trading program provides the 
crucial market signal by creating real economic incentives for the 
private sector to avoid emissions and invest in climate-friendly 
technologies. This market signal is complemented by increased funding 
for both government and private-sector efforts to develop longer-term 
technologies, such as carbon sequestration, large-scale renewables, or 
advanced nuclear, that would otherwise remain uneconomic in the face of 
the relatively modest carbon price implicit in our emissions trading 
proposal.
    As to the question of whether public funding should be primarily 
directed toward government R&D versus private-sector R&D, the 
Commission believes that both sectors have important assets and 
expertise and that both must play a significant role in advancing new 
technologies. The final chapter of our report contains a detailed 
discussion of the specific stages of energy-technology innovation and 
of the different and complementary roles of the public and private 
sectors in moving new technologies through these stages, which include 
applied research, development, demonstration, early deployment, and 
widespread deployment. Typically, government institutions play a larger 
role in the early stages of that progression (fundamental and applied 
research), while private-sector actors play an increasingly dominant 
role in the latter stages (that is, from development and demonstration 
through deployment). The following paragraph from our report captures 
our basic view of how best to leverage a combination of private and 
public sector R&D efforts:

          ``Complementarity of public-sector investments and incentives 
        with the private sector's efforts means that the publicly 
        supported efforts should be focused precisely on those 
        ingredients of a societally optimal energy research, 
        development, demonstration, and early deployment 
        (ERD3) portfolio that industry would not be 
        supporting on its own--avoiding the error of paying industry 
        with public funds to do what it would otherwise be doing with 
        its own money. Complementarity also means exploiting the 
        complementary technology-innovation capacities of industry and 
        publicly funded national laboratories and academic research 
        centers. In many cases this should entail actual partnerships, 
        in which industry's role will naturally increase as the 
        innovation process in any particular case proceeds . . . 
        specifically, as a technology moves from applied research 
        through development, demonstration, and early deployment, the 
        insights about commercial products and the marketplace that are 
        industry's fort become increasingly indispensable to success.'' 
        (National Commission on Energy Policy, Ending the Energy 
        Stalemate: A Bipartisan Strategy to Meet America's Energy 
        Challenges, December 2004, p. 100)

    Question 3. Roughly how large an R&D investment do you believe is 
needed at this time, given that radically new technologies will be 
required in the future to address climate change? Are current energy 
R&D funding levels adequate, or do you think additional resources are 
required?
    Answer. Among the Commission's most important findings was the 
finding that current energy-related R&D investment by both the public 
and private sectors falls far short of what is needed to successfully 
address climate change and meet the other critical energy challenges we 
face in the next century. In fact, energy is by far the least R&D 
intensive high-technology sector in the U.S. economy at present. Even 
as total energy sales in the United States rose from $500 billion per 
year in 1990 to about $700 billion per year today, private-sector 
investment in energy R&D investment fell by roughly half, from about $4 
billion per year in 1990 to about $2 billion per year at present. 
Federal investment in energy R&D, meanwhile, has averaged well under $3 
billion per year since the late 1980s--it rebounded slightly in the 
early 2000s after reaching a low of less than $2 billion per year in 
1998, but remains (in constant 2000 dollars) far below the nearly $6.4 
billion level of investment reached in the late 1970s. Moreover, the 
portion of overall federal appropriations devoted to applied energy-
technology RD&D in the FY2004 budget came to only about $1.8 billion 
(compared to $6.08 billion in FY1978). Overall, combined private-sector 
and federal funding for energy R&D amounts to less than 1 percent of 
energy sales, a level of investment that is far below the average for 
other high-technology industries.
    Deciding how much energy R&D investment is ``enough'' is, of 
course, difficult, since the answer depends not only on the level of 
expenditure being considered, but on the difficulty of the challenges 
being addressed and the effectiveness of the R&D efforts being mounted 
to address those challenges. Nevertheless, as we point out in our 
report, every study in recent years that has attempted to look 
comprehensively at this question has concluded that current efforts in 
both the public and private sectors are not commensurate in scope, 
scale or direction with the challenges, the opportunities, and the 
stakes at hand. To remedy this shortfall, the Commission recommended 
roughly doubling annual direct federal expenditures on energy research, 
development, and demonstration. Specifically, our recommendations 
included:

   Revising the energy-relevant provisions of the tax code to 
        substantially increase private-sector incentives to invest in 
        energy research, development, demonstration, and early 
        deployment (ERD3).
   Doubling annual direct federal expenditures on energy 
        research, development, and demonstration over the period from 
        2005-2010 (corrected for inflation)--with increases emphasizing 
        public-private partnerships, international cooperation, and 
        energy technologies offering high potential leverage against 
        multiple challenges.
   Creating a serious and systematic ``early deployment'' 
        component to complement the increased research, development, 
        and demonstration activity with effective, accountable, and 
        performance-oriented approaches to accelerating the attainment 
        of market competitiveness by the most promising technologies 
        that successfully pass the demonstration phase.
   Expanding by at least three-fold, within the above-
        recommended increases in federal ERD3 efforts, the 
        government's activities promoting and participating in 
        international cooperation in this domain.
   Strengthening the organization and management of the federal 
        governments ERD3 activities through continuation and 
        expansion of the efforts already underway in the Department of 
        Energy (DOE) to improve communication, coordination, portfolio 
        analysis, and peer review in DOE's ERD3 programs and 
        pursuing increased coherence and self-restraint in the 
        Congressional ``earmarking'' process for ERD3 
        appropriations.

    A further point, which I also stressed in my testimony, is that the 
Commission felt it very important to ensure that additional public 
spending on energy R&D would not add to the current burden on the U.S. 
Treasury or compound our mounting national debt. Accordingly, we 
recommend that any new public investments in energy R&D be funded 
through the new revenues raised by auctioning a small portion (maximum 
of 10 percent) of the emissions permits allocated under our recommended 
greenhouse gas trading program and through sales of additional permits 
under that program via the safety valve mechanism. Further details and 
discussion concerning the Commission's energy-technology incentive and 
R&D recommendations can be found in our full report.
    Question 4. What are the advantages and disadvantages of using 
intensity-based emission targets?
    Answer. The chief advantage of an intensity-based approach is that 
it creates an environmental target that is flexible and responsive to 
economic conditions. As such, the very formulation of the target makes 
explicit the notion that our goal in the first decade of program 
implementation is only to slow, not stop, current growth in national 
greenhouse gas emissions and to improve the efficiency of the American 
economy by reducing its energy intensity: This is a goal that is 
broadly supported by both political parties and by the American public 
(it is worth noting that the Bush Administration's voluntary greenhouse 
gas reduction target is also expressed in intensity terms). By 
contrast, setting a fixed emissions target tends to arouse concerns 
that a policy to limit greenhouse gas emissions will necessarily limit 
future economic growth. The choice of an intensity-based target, 
together with a safety-valve mechanism to limit the economic cost of 
implementing overall reductions, results in a policy that, according to 
an independent analysis by the federal Energy Information 
Administration, would have no material effect on ``the overall growth 
rate of the economy between 2003 and 2025, in terms of both real GDP 
and potential GDP.'' \2\
---------------------------------------------------------------------------
    \2\ As noted in my testimony, the LIA analysis specifically found 
that the cumulative effect of the Commission's recommended greenhouse 
gas emission trading program would be to reduce overall predicted GDP 
growth between 2005 and 2025 from 80.8 percent to 80.6 percent, or a 
difference of 0.2 percent.
---------------------------------------------------------------------------
    Another key advantage of an intensity-based approach is that it is 
more amenable to developing country participation. Developing countries 
are especially sensitive to the concern that limiting greenhouse gas 
emissions will limit growth. By supporting the use of intensity metrics 
in greenhouse gas management regimes that naturally accommodate 
emissions growth, the United States would be designing a framework that 
is more likely to encourage developing country participation.
    Finally, a related advantage of an intensity-based approach is 
where it sets the bar for future policy debate. A fixed target is 
inflexible by design, politically contentious to iterate, and prone to 
over-determined conclusions about the success or failure of the 
policies used to achieve it. In contrast, negotiations based on 
intensity goals are about the rate of decline and offer greater 
opportunities for fine-tuning and adjustment. As such, this approach 
may prove more robust and resilient than the alternative approach of 
setting absolute goals based on historic emissions levels.
    However, it should be noted that, the very attributes that make an 
intensity approach well suited for the initial decades a carbon 
management program may eventually need to be reconsidered if a global 
scientific and political consensus forms around a desired absolute 
emissions target. As the global effort to address climate change 
matures, it may eventually become reasonable to place less emphasis on 
providing economic certainty (through mechanisms such as the safety 
valve and the intensity target) while placing more emphasis on 
achieving and maintaining a fixed environmental outcome. For just this 
reason and because it is inherently impossible to prejudge developments 
that might affect policy deliberations decades into the future, the 
Commission has not attempted to articulate detailed recommendations for 
how its proposed policy would evolve beyond the 2020-2025 timeframe. In 
the meantime, however, we believe that our proposed approach achieves 
an appropriate balancing of the need for economic versus environmental 
certainty and that the advantages of setting emissions targets on an 
intensity basis outweigh the disadvantages of using this approach.
    Question 5. What are your views on setting up a trust fund with the 
proceeds from a cap and trade program and using the revenue to fund 
investment in low emission energy technologies?
    Answer. As noted above and in my earlier testimony, the Commission 
strongly recommends that additional public investment in low-and non-
carbon energy technologies should be funded by the auction of a portion 
of permits or allowances under its proposed emission trading program, 
together with revenues generated by the sale of additional permits or 
allowances through the safety valve mechanism. Because significant 
global reductions in greenhouse gases will eventually require the 
development and large-scale deployment of new technologies, these 
investments are absolutely critical if we are to achieve long-term 
success in dealing with climate change while simultaneously ensuring 
continued access to reliable and affordable energy supplies. The 
Commission considered the relative merits of ``on-budget'' and ``off-
budget'' funding strategies. In light of Congress' historic reluctance 
to support ``off-budget'' funding mechanisms and the challenges 
inherent in creating a new institution, the Commission focused its 
recommendations on opportunities to build upon recent successful 
efforts to improve the effectiveness of existing government technology 
programs. While recognizing that Congress alone is responsible for 
appropriations, the Commission believes that the practice of non-
competitive earmarks has in some cases undermined the effectiveness of 
public funds spent on energy technology innovation and believes that 
greater efforts are needed to ensure that earmarks are consistent with 
the strategic objectives of the programs affected.

      Responses of Jason S. Grumet to Questions From Senator Akaka

    Question 1. My question has to do with sequestration of carbon. Did 
your Commission look at various ways to enhance sequestration of 
carbon--that is, taking carbon out of the earth's biosphere by a number 
of means including storing it in oceans and increasing plant biomass? 
Did the Commission see this as a viable means to reduce carbon? How did 
the Commission see it as participating in the overall market?
    Answer. The Commission believes that geologic sequestration is a 
promising strategy for reducing the climate impacts associated with 
future use of traditional energy resources, most notably coal. In 
particular, we looked at geologic carbon sequestration in combination 
with the development and deployment of advanced integrated gasification 
and combined cycle (IGCC) coal-fired electricity production. Potential 
repositories for geologic carbon sequestration include depleted oil and 
gas fields, unmineable deep coal seams, or deep saline formations. In 
general, we are optimistic about the potential role for geologic carbon 
sequestration as part of an array of strategies for mitigating climate 
change risks in the future. This optimism is based on the size of 
potential geologic repositories in the United States, which, according 
to current estimates, could theoretically hold hundreds of years worth 
of current U.S. emissions and on the fact that all aspects of the 
technology required for carbon capture and sequestration are developed 
and in use today, primarily to support the use of carbon dioxide 
injection for oil recovery. Further investment is required, however, to 
reduce costs and to demonstrate and deploy these technologies on the 
scale needed for meaningful capture and sequestration in the context of 
a larger greenhouse gas management strategy. The Commission's 
recommendations therefore include $3 billion in public support over ten 
years for the commercial-scale demonstration of geologic carbon storage 
at a variety of sites around the country, both in conjunction with coal 
IGCC plants and as stand-alone sites.
    While our analysis focuses primarily upon geologic sequestration, 
the Commission recognizes the important role that biological 
sequestration must also play in long-term carbon management strategies 
and believes that there are a variety of opportunities for agriculture 
and forestry industries to profit as the sellers of reduction credits 
under a market-based emissions trading program. One biological 
sequestration strategy that the Commission devoted considerable 
attention to is the opportunity to accelerate commercial scale 
production of ethanol from cellulosic biomass. We believe that this 
technology is particularly attractive due to the combined benefits 
cellulosic ethanol offers for climate change mitigation and improved 
oil security. The Commission did not look closely at deep-ocean 
sequestration strategies.
    Question 2. Clearly the participation of developing countries in a 
global carbon reduction effort is necessary to make a difference on 
global greenhouse gases. How does the Commission see that link or 
challenge working--between developed nations that have adopted carbon 
controls, and either leading or pushing countries such as China and 
India to adopt similar emissions controls? What does the Commission see 
as the best way to ensure those changes?
    Answer. The Commission wholeheartedly agrees that the problem of 
climate change requires a global response and cannot be meaningfully 
addressed on a long-term basis without full participation by all major 
emitting nations, including developing nations such as China, India, 
and Brazil. We believe the best way to elicit an equitable and 
effective global response is for the United States to return to a 
position of international leadership on this issue by taking an initial 
step domestically, while designing that initial step so that it 
explicitly links future U.S. action to limit greenhouse gas emissions 
to comparable efforts by other developed and developing nations to 
achieve their own emissions reductions. Thus, our proposal for a 
mandatory, economy-wide U.S. greenhouse gas emissions trading program 
is intentionally phased and carefully designed to protect our economy 
from competitive disadvantage if other nations fail to limit their 
emissions. It also contains an important provision for periodic five-
year reviews of the U.S. program which would enable Congress to assess 
progress by other countries as part of a determination of how domestic 
efforts should evolve. Specifically, the Commission recommends that if:

          ``other countries with significant emissions and/or trade 
        with the United States do not take comparable action to limit 
        emissions by 2015, five years from the commencement of the U.S. 
        program, further increases in the safety valve price should be 
        immediately suspended. Depending on international progress, the 
        United States could also opt not to introduce a more ambitious 
        target rate of emissions intensity improvement in 2020 and make 
        other adjustments to its domestic program; conversely it could 
        decide to move forward more aggressively in the second decade 
        of program implementation than the Commission is proposing.'' 
        (National Commission on Energy Policy, Ending the Energy 
        Stalemate: A Bipartisan Strategy to Meet America's Energy 
        Challenges, December 2004, p. 25)

    By explicitly linking future U.S. actions to international 
progress, the Commission hopes to create a ``push'' for developing 
country involvement in climate mitigation efforts. That push should be 
combined with positive incentives aimed at ``leading'' other countries 
toward participation. Accordingly, we recommend that the United States 
continue and expand its current bilateral negotiations with nations 
such as China, India, and Brazil while also providing incentives to 
promote technology transfer and to encourage U.S. companies and 
organizations to form international partnerships for implementing clean 
energy projects in developing nations.
    Finally, it is important to recognize that a number of countries 
are already taking steps to limit greenhouse gas emissions. This 
includes not only our major trading partners in the developed world, 
many of whom (including the European Union, Japan, and Canada) have 
adopted the Kyoto Protocol and begun efforts to implement their 
obligations under Kyoto, but also several key developing nations that 
have begun reducing their emissions below forecast levels as they 
pursue enhanced energy security, energy efficiency, conventional 
pollution control, and market reform. These developments are 
encouraging and provide grounds for optimism U.S. efforts to address 
our own contribution to the climate problem would prompt an 
international response more likely to exceed our expectations than to 
disappoint them.
    Responses of Jason S. Grumet to Questions From Senator Feinstein
    Question 1. Under the National Commission on Energy Policy's 
proposal, what happens when a covered entity uses the safety valve 
rather than lowering emissions? What is done to ensure that emissions 
are actually reduced?
    Answer. Differing opinions about the pace of technological progress 
make it impossible to confidently predict both the costs and benefits 
of mandatory greenhouse gas reduction efforts. Through inclusion of a 
``safety-valve'' mechanism to cap program costs, the Commission is 
expressing a preference for cost-certainty over emissions certainty in 
the initial stages of a carbon management regime. Ultimately, 
addressing the threat of climate change will require global agreement 
about an ecologically sustainable emission limit and an equitable 
sharing of reduction burdens. Achieving the long-term environmental 
objective will likely require that fixed emission limits eventually 
replace cost-based policies. However, the Commission strongly believes 
that reducing uncertainty about near-term economic impacts is crucial 
to creating a consensus for timely action.
    A cap and trade program with a safety valve will function exactly 
like a traditional cap and trade regime until and unless technology 
fails to progress as desired. Under a traditional cap approach, slower 
than desired technological progress results in higher than anticipated 
program costs. Through inclusion of the safety-valve compliance 
mechanism, a failure of technology to progress as the desired rate will 
cause firms to purchase additional emission permits from the government 
at a set price leading to lower than anticipated emission benefits. The 
Commission and the Energy Information Administration have each analyzed 
the projected impacts of the Commission's climate program under a range 
of technology assumptions. Both conclude that under relatively 
optimistic technology assumptions, the safety-valve will not be 
triggered and full program benefits will be achieved. Conversely, under 
more pessimistic technology assumptions, firms will take advantage of 
the safety valve compliance option resulting in roughly half of the 
emission benefits. Advocates for mandatory climate action generally 
tend toward technology optimism arguing that main economic models fail 
to capture a range of cost-effective compliance options. If correct, 
the safety-valve will simply have served to allay the anxieties and 
speeded adoption of a meaningful reduction program. If incorrect, the 
safety-valve will serve its intended purpose of achieving all available 
emissions reductions up to, but not beyond, the point where overall 
costs to the economy are deemed acceptable by policymakers.
    The Commission has proposed a price--starting at $7 per metric ton 
of carbon-dioxide-equivalent in 2010 and escalating in nominal terms by 
5 percent per year thereafter--that is high enough, in our judgment, to 
achieve substantial emissions reductions and generate a meaningful 
market signal for encouraging investment in low-and non-carbon 
alternatives, but not so high as to materially impact the U.S. economy 
or undermine the competitiveness of U.S. firms in international 
markets.
    Question 2. Under the Commission's proposal, a company could pay 
the $7/ton fee instead of reducing the greenhouse gases. So, in the 
end, is there really a firm cap on emissions?
    Answer. There is no firm cap on emissions in the Commission 
proposal.
    There is no debate over the fact that a carbon program with a $7 
per ton CO2 cost cap sends a weaker market signal than a 
program in which limits must be achieved regardless of economic impact. 
However, it is worth noting that most greenhouse gas cap-and-trade 
proposals to date have included a variety of so-called ``flexibility 
mechanisms'' that would, in practice, also allow domestic emissions to 
rise above the stated cap. Since the costs associated with achieving a 
fixed level of emissions reduction cannot be known in advance, cost 
arguments are impossible to adjudicate to the satisfaction of all 
stakeholders and will likely continue to stymie efforts to reach 
political consensus. Hence our Commission believes that the more 
meaningful comparison may be between the timely adoption of a cost-
capped mandatory program and the continuation of business as usual in 
which domestic carbon emissions can be vented into the atmosphere at no 
cost. From ecological, economic and political perspectives the 
Commission believes that speeding the adoption of a robust policy 
architecture to address the long-term challenge of climate change is 
more important than achieving a precise level of near-term emission 
reductions.
    Question 3. What policy solutions do you recommend to correct for 
this so we can still make environmental progress?
    Answer. We regard the safety valve feature as a key virtue of our 
proposal and do not believe it requires ``correction.'' Proposals, 
which may set strict caps and look more aggressive on paper, won't 
result in progress if they never succeed in garnering the political 
support needed to implement them. Congress has repeatedly gone on 
record in support of action on climate only if such action does not 
damage the U.S. economy or undermine U.S. competitiveness. We believe 
our proposal meets that test, while still achieving substantial 
reductions below the emissions trajectory projected absent policy 
intervention. Specifically, modeling analyses conducted using 
conservative assumptions about technology innovation indicate that our 
proposal will produce 540 million metric tons of carbon-dioxide-
equivalent greenhouse gas reductions in 2020, a 6 percent reduction 
below business-as-usual projections. Under more optimistic technology 
assumptions, estimated reductions in 2020 could roughly double to 
approximately 1 billion metric tons.
    While our proposal certainly achieves progress in slowing emissions 
growth over the first decade of program implementation, its more 
important contribution over the long run is likely to reside in the 
market signal it creates for avoiding future emissions. Only when 
greenhouse gas reductions have a concrete value will the tremendous 
ingenuity and investment potential of the American economy be brought 
to bear in developing and deploying the new technologies needed to 
achieve more substantial emissions reductions in the future--not only 
in the United States, but worldwide.
    The initial market signal created by the Commission's proposal--at 
$7 per metric ton of carbon dioxide--is admittedly modest. As I noted 
in my testimony, we selected this figure because our analysis of the 
available literature suggested it roughly corresponds to the mid-point 
of current estimates of the expected harm that can be attributed, based 
on present scientific understanding, to a ton of greenhouse gas 
emissions. Perhaps more importantly, at $7 per ton the safety valve 
price was sufficiently low as to minimize the immediate burden on 
consumers and business and avoid forcing the premature retirement of 
long-lived capital assets (such as power plants) that were constructed 
before climate concerns figured in the investment decisions of most 
energy companies, while still creating a meaningful market signal for 
avoiding future emissions. Certainly a stronger initial signal would 
produce a stronger initial response, but it would also be more costly 
to the economy. Finally, it is important to emphasize that the market 
signal under the Commission's proposal grows steadily stronger over 
time as the nominal safety valve price increases by 5 percent per year. 
This gradual but measurable progression in the stringency of the 
program gives businesses the planning certainty they need to make wise 
long-run investments that will minimize the costs of achieving 
greenhouse gas emissions reductions over time.
    In sum, as I noted in the previous response, the decision about 
where to set the safety valve price is ultimately a political one. 
Ultimately it is probably less important what specific price is chosen 
than that we get started. The Commission believes its proposal--by 
removing cost uncertainty as a basis for inaction--offers the best 
chance we have right now to do just that.
    Question 4. Has anyone looked at the cost of inaction--in other 
words, what the impact will be to the economy to not curb emissions? 
I'm thinking specifically of costs related to:

   health care due to dirtier air,
   insurance costs due to more intense storms,
   government emergency relief services,
   the costs of alternative sources of water in the west as the 
        snowpack decreases,
   the costs of protecting homes, businesses and highways from 
        rising sea levels,
   farm payments due to decreased agriculture output,
   and what the potential impact all of those increased costs 
        will have on economic growth.

    Answer. In the early stages of its deliberations, the Commission 
reviewed the available literature on potential costs associated with 
future climate change, including costs associated with many of the 
categories of possible impact listed in the question. Some of this 
material is available in a separate compendium of research that the 
Commission compiled as part of its final report and that we would be 
happy to make available to the Committee. The short answer to the 
question is that inaction will almost certainly impose costs on our 
economy and there is good reason to believe that these costs could be 
quite large. The difficulty, of course, is in quantifying these costs 
given the numerous uncertainties that are involved; the complexity of 
various feedback mechanisms, not only within the climate system but in 
the natural and human systems that are intimately affected by climate; 
and the inherent difficulty of assigning a specific value to things 
like species diversity and ecosystem preservation. Not surprisingly, 
analyses that have attempted to derive cost estimates for the likely 
impacts of climate change have therefore produced a wide range of 
results.
    In fact, as is often the case with important environmental issues, 
it is even harder to agree on the cost of inaction than it is to agree 
on the cost of taking steps to mitigate the problem. For this reason, 
Commission members agreed that it would be unproductive to become 
bogged down in either side of the cost debate. A much simpler 
conclusion: that the overwhelming weight of scientific evidence points 
to the risk, if not the certainty, of potentially significant adverse 
harms and that cautious steps are warranted at this time to begin 
reducing that risk, provided an adequate basis for consensus within our 
own very diverse group and should, in our view, provide an adequate 
basis for action by Congress. In fact, we believe a modest and gradual 
approach such as we have proposed, because it is inherently flexible 
and can be fine-tuned as better information becomes available, is 
precisely the best response in a situation where uncertainties abound 
on both sides of the impact versus mitigation cost-debate. The key is 
to start now, because by doing so we effectively buy time to make 
adjustments if climate change and the consequences it unleashes turn 
out to be worse than expected. By contrast, each additional year of 
political stalemate and inaction simply limits our options and 
increases the risk that we'll eventually realize we should have done 
more, but realize it only when it is already too late.
     Responses of Jason S. Grumet to Questions From Senator Salazar
    Question 1. Mr. Grumet, thank you for your participation today and 
for your work on the National Commission on Energy Policy. The NCEP 
proposal would have a very modest effect on the economy. Furthermore, 
your climate change proposal takes great pains to ensure no one source 
of energy is put in an unfavorable position compared to others.
    Now, this is very important to me, because as you know coal is a 
large part of the Colorado economy, and in fact it is a large part of 
America's energy future.
    Can you explain how the NCEP climate change proposal will prevent 
coal from being adversely affected?
    Answer. Commission members recognize the extremely important role 
that coal plays in the nation's and the world's energy mix and took 
care to develop policy recommendations that offer, in our view, the 
best odds of ensuring a continued and significant role for coal in the 
future. Our approach is two-fold. On the one hand, the near-term policy 
we have proposed for slowing growth in U.S. greenhouse emissions is 
designed--both in terms of the target it sets, the cost certainty it 
provides, and the very gradual way in which it progresses--to minimize 
adverse impacts on coal and give the industry an opportunity to adjust 
successfully to emerging climate constraints. As a second, critical 
policy complement to this program, our recommendations provide for 
substantial public investment in helping the coal industry to develop 
and deploy a next generation of technologies that are compatible with 
the need to limit greenhouse gas emissions and address a number of 
other coal-related environmental concerns.
    With respect to the Commission's climate change proposal, we looked 
specifically at the impacts of our greenhouse gas trading program on 
the coal industry. As one would expect, the effects of the proposal on 
coal use and coal prices would be somewhat more significant than the 
effects on other, less carbon-intensive fossil fuels like natural gas 
and oil. Nevertheless, under our proposal projected coal consumption in 
2020 is reduced by only 9 percent relative to the business-as-usual 
forecast and overall coal use still rises by 16 percent compared to 
current (2004) consumption. In fact, modeling indicates that our 
proposal will cause the additional retirement of just 700 megawatts of 
existing coal-fired generating capacity (approximately equivalent to 
one medium-large power plant)--again relative to base-case 
projections--between now and 2020.
    While early efforts to limit greenhouse gas emissions need not and, 
in the Commission's view, should not create undue hardship for the coal 
industry, it is clear that the industry will need to evolve to improve 
its competitiveness in an increasingly carbon-constrained world. The 
key is to develop coal technologies that are compatible with the need 
to reduce greenhouse gas emissions and that also address other public 
health and environmental concerns currently associated with 
conventional pulverized coal plants. The Commission sees great promise 
for achieving these objectives through integrated gasification and 
combined cycle (IGCC) coal technology, which--besides having lower 
pollutant emissions of all kinds--can open the door to economic carbon 
capture and storage. In fact, we believe the future of coal and the 
long-term success of future greenhouse gas mitigation efforts may hinge 
to a large extent on whether IGCC technology can be successfully 
commercialized and deployed over the next twenty years. Our complete 
report includes a detailed description of the potential of this 
technology, including its potential as a means for someday producing 
clean low-carbon liquid fuels suitable for use in the transportation 
sector, as well as a discussion of the financial and technological 
challenges that must be overcome to give coal IGCC a chance to prove 
itself in the marketplace. To help overcome these obstacles we propose 
a substantial increase in federal support for IGCC and other promising 
advanced coal technologies. Specifically, the Commission recommends 
that the federal government:

   Provide up to $4 billion over ten years to support the early 
        deployment of roughly 10 gigawatts of sequestration-ready IGCC 
        plants.
   Provide support for the commercial-scale demonstration of 
        geologic carbon storage at a variety of sites with an 
        investment of $3 billion over ten years.

    In sum, the Commission firmly believes that the best future for 
coal lies not in continued paralysis on the issue of climate change, 
but in carefully designed policies that both effectively reduce climate 
risks and do so in a manner that helps the industry adapt and even 
thrive. That the United Mine Workers of America, an organization which 
we consulted frequently and extensively throughout our deliberations, 
has expressed support for the Commission's report and recommendations 
provides considerable grounds for optimism that it is possible to do 
both.
    Question 2. Why is the NCEP proposal so modest?
    Answer. As I noted in my testimony and in several of the foregoing 
responses, the Commission recognized from the outset that progress on 
climate change was not going to be possible in this country unless 
Congress and the public could be convinced of two things: first, that 
reducing greenhouse gas emissions could be achieved without harming the 
U.S. economy or putting U.S. businesses at a competitive disadvantage 
and second, that all countries with major emissions would soon join the 
United States in doing their fair share to implement reductions. The 
modesty of our proposal reflects an appreciation for the importance of 
these constraints. It also reflects an appreciation of the extent to 
which significant uncertainty on all sides of the climate debate, but 
most notably with respect to the consequences of current emissions 
trends and the costs and benefits of mitigation, argues for a gradual 
and flexible approach. Commission members are well aware that the 
emissions reductions required on a worldwide basis to stabilize 
atmospheric concentrations of greenhouse gases far exceed the level of 
reduction that would be achieved by the policies we have proposed for 
implementation over the next 10 to 20 years. As such we have never 
advertised our recommendations as a ``solution'' for climate change. 
Our goal, rather, was to design an approach that would allow the United 
States to take an initial step domestically while simultaneously 
establishing a robust policy architecture that could evolve over time 
to reflect changes in scientific understanding, technology development, 
and prospects for collaboration with other nations. Or as we put it in 
our report:

          ``[T]his proposal should be understood as an initial domestic 
        step in the long-term effort to first slow, then stop, and 
        ultimately reverse current emission trends. In its structure 
        and stringency, the Commission's proposal is designed to 
        encourage the timely initiation of what will necessarily be a 
        phased process. The Commission believes that this approach is 
        more pragmatic and ultimately more effective than years of 
        further legislative stalemate in pursuit of a more aggressive 
        initial goal.'' (National Commission on Energy Policy, Ending 
        the Energy Stalemate: A Bipartisan Strategy to Meet America's 
        Energy Challenges, December 2004, p. 19)

                                ------                                


   Responses of Howard Gruenspecht to Questions From Senator Bingaman

    Question 1. The U.S. spends a significant amount of money 
on R&D into non-carbon and low-carbon technologies. How does 
this amount compare to our overall economy, our total spending 
on energy, and our total greenhouse gas emissions? Are other 
countries spending comparable amounts based on their size and 
emission levels?
    Answer. The most recent year for which data are available 
for all of the domestic parameters requested above is 2003. For 
fiscal year 2003, Federal spending for programs in the Climate 
Change Technology Program was $2,555 million. For calendar year 
2003, U.S. gross domestic product was $11,004 billion, energy 
expenditures were $751.7 billion, and total net greenhouse gas 
emissions were 6,072.2 million metric tons CO2 
equivalent. Therefore, Federal spending on climate-change 
technologies was 0.023 cents per dollar of GDP, 0.34 cents per 
dollar of energy expenditure, and 42.1 cents per ton of 
CO2 Eq. Reliable data on government expenditures for 
climate change-related technologies are not readily available 
for other countries.
    Question 2. Roughly how large an R&D investment do you 
believe is needed at this time, given that radically new 
technologies will be required in the future to address climate 
change? Are current energy R&D funding levels adequate, or do 
you think additional resources are required?
    Answer. In 2005, the Federal Government plans to invest 
nearly $2 billion in climate change science and nearly $3 
billion in climate change technology research, development, and 
deployment, including voluntary partnerships. Funding for these 
activities is adequate.
    Question 3. In the EIA's analysis of the NCEP climate 
change proposal, was it important to know where in the energy 
system the point of regulation would be located? How was the 
point of regulation handled for the purposes of your analysis? 
Please describe what impact the point of regulation has on 
overall program effectiveness and discuss what bearing it has 
on your analysis.
    Answer. The cost and effectiveness of any regulations 
depend partially on how they are implemented. ETA's analysis 
does not include the implementation costs (i.e., monitoring, 
verification, and management costs) of the NCEP cap-and-trade 
proposal for either the public or private sector, primarily 
because the implementation processes to be used are generally 
unspecified in the NCEP report. The actual costs of the NCEP 
proposal could be higher if the implementation process hinders 
the development of a fully functioning and efficient market for 
permits.
    The NCEP climate proposal, a cap-and-trade system with a 
safety-valve price on GHG permits, is loosely modeled after the 
power plant SO2 cap-and-trade program created in the 
Clean Air Act Amendments of 1990. This program generally has 
very low transactions costs. However, the NCEP proposal is more 
complex and difficult to manage because of the larger number of 
entities potentially affected. In EIA's analysis, a permit fee, 
based on the carbon content of the fuel, is reflected in the 
fuel cost at the point of consumption and all affected 
consumers are assumed to directly participate in the permit 
transactions. From an implementation perspective, however, it 
is impractical to expect many of the residential, commercial, 
and small industrial end-users to actually trade in permits. It 
is far more likely that the permit purchases and transactions 
would be regulated, managed and monitored at major emitters and 
major distribution points (marketers and distributors) in the 
energy market.
    Question 4. In the ETA's analysis of the NCEP climate 
change proposal, was it important to know whether, how, and to 
what extent emission allowances would be allocated? How was 
allowance allocation handled for the purposes of your analysis? 
Please describe what impact the allowance allocation scheme has 
on overall program effectiveness and discuss what bearing it 
has on your analysis.
    Answer. EIA's analysis assumed that the tradable permits 
allocated to the Federal Government (5 percent of the total 
between 2010 and 2012, then rising to 10 percent in 2022 and 
thereafter as specified in the NCEP recommendations) were 
publicly auctioned. The government also receives the safety 
value price for all permits that are purchased in excess of the 
emissions target for the cap-and-trade program. All other 
permits are allocated to emitters in proportion to their 
historical emissions.
    EIA calculates that the projected cumulative discounted 
Federal revenue equals the cumulative discounted expenditures 
in 2022. Beyond 2022 any excess revenues collected are assumed 
to flow to the U.S. Treasury. Although EIA did not consider 
alternative allocation schemes, if the percent of tradable 
permits allocated to the Federal Government were higher, more 
revenues would flow to the U.S. Treasury and the point of 
``fiscal neutrality'' would occur sooner.
    ETA's analysis assumes that emission permits that are 
allocated to emitters are ``grandfathered'' based on historical 
utilization. A different allocation of permits would generally 
not affect the efficiency of the program, but it would change 
it's distributional impacts.
    Question 5. Please reflect on the recent analysis you 
conducted for Senator Inhofe on the impacts of higher natural 
gas prices--among other things--on the NCEP's climate change 
proposal. Was the safety valve effective in keeping overall 
program costs down when confronted with the higher costs in 
this sensitivity case?
    Answer. Senator Inhofe requested that EIA prepare 
sensitivity runs based on the full National Commission on 
Energy Policy (NCEP), Cap-Trade (with safety valve), and No-
Safety (greenhouse gas cap and trade policy without safety 
valve) cases from our report using the natural gas price and 
availability assumptions in the Annual Energy Outlook 2005 
(AEO2005) ``restricted natural gas supply'' case, and assuming 
25 and 50 percent fewer non-carbon dioxide emission reductions 
were available for purchase at a given greenhouse gas permit 
price.
    We prepared three groups of four model simulations. Each 
group includes the comparable case from the earlier analysis of 
the NCEP proposals done at the request of Senator Bingaman, 
along with three sensitivity cases as stipulated by Senator 
Inhofe above.
    We found that the alternative assumptions about natural gas 
supplies and the availability of non-CO2 greenhouse 
gas emissions reductions have fairly small effects on the 
estimated incremental impacts of the NCEP's recommendations. 
The higher natural gas prices that result from the AEO2005 
restricted natural gas supply assumptions tend to lower overall 
energy demand and make non-fossil fuels like renewables and 
nuclear more attractive, even without the NCEP's recommended 
appliance and building efficiency standards, technology 
incentives, and greenhouse gas cap and trade programs. As a 
result, the incremental costs of complying with the NCEP 
recommendations are generally lower with these alternative 
assumptions even though the absolute level of economic 
performance, both with and without the cap-and-trade program, 
is adversely impacted by the reduced availability of natural 
gas in the restricted supply scenarios.
    The assumptions about the availability of reductions in the 
emissions of non-CO2 greenhouse gases are only 
important when the NCEP's recommended greenhouse allowance 
price safety valve is not in effect. When the safety valve is 
in effect, the emissions reductions coming from non-
CO2 gases are lower with the alternative 
availability assumptions, but there is little impact on energy 
markets because the greenhouse gas allowance price is capped, 
limiting the impact of the NCEP's cap-andtrade proposal.

   Responses of Howard Gruenspecht to Questions From Senator Corzine

    Question 1. I understand that your estimate of the economic 
impact of the NCEP proposal is that it would change our GDP in 
2020 by a very minimal amount.
    Answer. In 2000 dollars, real GDP in the NCEP case is 
expected to be $10 billion lower (0.1 percent) in 2010 and $35 
billion lower (0.2 percent) in 2020 relative to the reference 
case. Consumption of goods and services per household falls by 
approximately $66 (0.1 percent) in 2010 and $273 (0.3 percent) 
in 2020. The consumer price index (CPI) rises by 0.2 percent in 
2010 and by 0.4 percent in 2020. The inflation rate, as 
measured by the growth rate of CPI, increases by about 0.2 
percent point in 2010 and by less than 0.1 percent point in 
2020. The implementation of higher CAFE standards raises the 
average price of new light-duty vehicles by approximately four 
percent, with a decrease in sales of approximately four 
percent.
    If only the cap-and-trade system is put in place (the Cap-
Trade case), real GDP is expected to be $9 billion lower (0.1 
percent) in 2010 and $17 billion lower (0.1 percent) in 2020 
relative to the reference case. Consumption of goods and 
services per household falls by approximately $45 (0.1 percent) 
in 2010 and $78 (0.1 percent) in 2020. The consumer price index 
(CPI) rises by 0.2 percent in 2010 and by 0.5 percent in 2020. 
The inflation rate, as measured by the growth rate of CPI, 
increases by about 0.2 percent point in 2010 and by less than 
0.1 percent point in 2020.
    The relative size of these estimated impacts is, of course, 
in the eye of the beholder.
    Question 2. Given the urgency of the global warming 
problem, what more can we do, beyond the NCEP proposal without, 
in the words of the Sense of the Senate resolution that we 
adopted last month, ``significantly harming'' the U.S. economy?
    Answer. The Energy Information Administration (EIA), 
consistent with its statutory mission, does not develop or 
advocate any particular energy policy or environmental 
policies. One key way to minimize the impact on the economy of 
policies Congress or the Administration might wish to implement 
is to provide sufficient lead time to allow the various parts 
of the economy--consumers, business, and government--to change 
practices on a gradual steady basis rather than abruptly. 
Prospects for a smooth adjustment to policy changes are also 
enhanced when affected parties have the expectation that the 
newly implemented policies will be long-lived in order to have 
a lasting effect on behavior.

    Response of Howard Gruenspecht to Question From Senator Salazar

    Question 1. Dr. Gruenspecht, in April 2005, the Energy 
Information Administration (ETA) released a report analyzing 
the policy recommendations contained within the 2004 National 
Commission on Energy Policy (NCEP) report entitled, ``Ending 
the Energy Stalemate: A Bipartisan Strategy to Meet America's 
Energy Challenges.'' Since this analysis was published, the 
U.S. Senate passed a ``Sense of the Senate'' resolution calling 
for mandatory limits and incentives to slow, stop, and reverse 
the growth of greenhouse gas emissions in a manner and at a 
pace that will not significantly harm the economy and will 
encourage comparable actions by other countries.
    In order to evaluate the full range of potential policies 
that would be compatible with the resolution, I request that 
the EIA build on its analysis to date by running a number of 
additional intensity target and safety valve scenarios. I note 
that EIA has been able to respond quickly to other Senators' 
analytical requests following the April report, and I request a 
similarly prompt response to this letter.
    The analysis in the April 2005 report included a greenhouse 
gas (GHG) emissions intensity reduction program with a GHG 
intensity improvement of 2.4 percent per year between 2010 and 
2019 and 2.8 percent per year between 2020 and 2025, and with a 
safety-valve permit price starting at $7 per metric ton 
CO2 equivalent in 2010 nominal dollars and 
increasing by 5 percent annually up to $14.55 in 2025.
    I request an additional analysis that evaluates a range of 
intensity improvements and safety-valve combinations. This 
analysis should include additional intensityimprovement/safety-
valve combinations with intensity improvements ranging from 2.6 
to 4.0 percent per year and safety valve values ranging from 
$10 to $35 (in 2010 nominal dollars, rising five percent per 
year). The purpose of this analysis would be to draw out the 
impacts of alternative policies. The different combinations run 
should allow policy makers to evaluate the impact of changing 
the safety valve price through this range given the base case 
intensity improvement (2.4 percent through 2020 and 2.8 percent 
thereafter), and to evaluate the impact of increasing the 
intensity improvement through this range in combination with 
various safety valve prices. Each of these combinations should 
be analyzed under both the base case and high technology 
assumptions.
    This report should include estimates of the same 
environmental and economic indicators from the previous report, 
including but not limited to supply estimates (by fuel), GHG 
emissions, GDP and employment.
    I request that you complete these analyses and report them 
to me and other members of this Committee by December 1, 2005.
    Answer. EIA has met with Dr. John Plumb of your staff to 
discuss an approach to addressing this request.

     Response of Howard Gruenspecht to Question From Senator Akaka

    Question 1. The EIA analysis shows that three of the 
National Commission on Energy Policy's proposals will have the 
greatest effect on energy demand, use, and consumption in the 
U.S.--the cap and trade program, the increase in automobile 
fuel efficiency standards, and the new building and appliance 
efficiency standards. As far as economic impacts go, your 
testimony indicates that although costly, the changes will not 
affect average economic growth rates for the 2003 to 2025 time 
frame.
    It appears from your analysis that fuel economy standards 
for transportation are essential for the rest of the cap-and-
trade policy. They drive down demand and offset the cost of 
permits for the cap-and-trade system. Would you agree that to 
be successful, the carbon emissions from the transportation 
sector must be included in any cap-and-trade control policy?
    Answer. It is generally true that the least costly approach 
to meeting any national greenhouse gas emissions intensity 
target is to include as many of the energy consuming sectors as 
possible in the cap-and-trade system, including the 
transportation sector. For any specific emissions target, the 
more expansive the market to which a GHG cap-and-trade policy 
applies, the less costly such a policy is to implement.
    Transportation fuel consumption produces approximately one 
third of all combustion-related carbon dioxide emissions. In 
that sense, the transportation market is an important sector to 
incorporate in any carbon dioxide emission control strategy. 
There are three ways to reduce carbon dioxide emissions in the 
transportation sector: (a) through a capand-trade system which 
adds to the cost of using fossil fuels based on the carbon 
dioxide emitted, (b) through the use of standards (i.e., 
Corporate Average Fuel Economy (CAFE)), or (c) a combination of 
standards and a cap-and-trade system.
    EIA studies have shown that carbon dioxide permit prices 
that are comparable to those under the NCEP cap-and-trade 
program would have negligible impacts on transportation fuel 
consumption. The result suggests that the transportation sector 
is not expected to be a major source of low cost GHG 
reductions. The NCEP permit price cap of $8.50 per ton carbon 
dioxide translates into an increase of about $0.08 per gallon 
in the delivered gasoline price. Carbon dioxide permit prices 
would need to rise to much higher levels to significantly 
affect consumer choices for light duty vehicles and fuel 
consumption. Light duty vehicle purchase patterns have only 
recently begun to shift in response to the increase in fuel 
prices. It is useful to note that an increase of 1 dollar per 
gallon of gasoline corresponds to a carbon dioxide permit fee 
of over $110 per ton carbon dioxide or $400 per ton carbon.
    Fuel economy standards are a more direct way to limit 
petroleum fuel use, a goal that is related to, but distinct 
from, the goal of GHG reduction. However, consumer purchase 
patterns have shown that at prices under $2 per gallon, 
consumers value horsepower, safety and size more than 
efficiency. Fuel economy standards that override consumer 
preferences could engender a significant welfare cost.

  Responses of Howard Gruenspecht to Questions From Senator Feinstein

    Question 1. Could you explain the correlation between the 
level of emissions and the ``safety valve'' in the National 
Commission on Energy Policy's proposal? Specifically, how would 
the emissions level change over time at various levels of the 
price cap?
    Does the price cap of $7 per ton lead to a stopping and 
reversal of emissions growth? Did you analyze alternative 
safety valve prices?
    For example, what happens if we increase the price to $15, 
which is the level of the Canadian price cap?
    What happens if we increase it to $30, roughly the level 
that emissions allowances are trading for in the European Union 
this week?
    Answer. The greenhouse gas intensity target proposed by the 
NCEP implies an annual greenhouse gas (GHG) emissions target 
into the future. All energy users bear the cost of holding 
emissions permits equal to their greenhouse gas emissions in 
each year. Using a cap-andtrade system, a market-clearing 
emissions permit price is developed at which the energy market 
would take sufficient action to limit emissions to meet the 
desired GHG target. Since banking of permits is permitted in 
the NCEP proposal, some energy consumers may ``over-comply'' in 
earlier periods when cost is relatively low so that they can 
use the allowances later or sell them to others with a higher 
implicit compliance cost. As it does, the permit price rises 
until it reaches the safety valve price. When the permit price 
exceeds the safety valve price, some buyers will purchase 
permits from the Government at the safety-valve price rather 
than undertake costlier actions to reduce emissions. ETA's 
analysis projects that the NCEP cap-and-trade proposal would 
slow but not stop the growth of greenhouse gas emissions. ETA 
projects that a safety valve price of $7 per ton would not stop 
or reverse emissions growth in the United States for the 2010 
to 2025 period.
    EIA analyzed one additional case as a sensitivity to 
determine what allowance prices would be necessary to reach the 
GHG emissions targets through 2025 as prescribed by the NCEP 
report. The allowance price required to reach the NCEP 
emissions target, which itself allows for some growth in 
emissions even without consideration of the ``safety value'' 
feature, was about $15 per metric ton of carbon dioxide 
equivalent in 2015 and $35 per ton in 2025. The necessary 
permit prices to reach the NCEP emissions targets are generally 
higher when the cap-and-trade program is implemented without 
the other NCEP policies or if reductions in non-energy-related 
GHG emissions prove to be more costly than suggested by the 
EPA-provided abatement curves used in ETA's study.
    Question 2. Under the National Commission on Energy 
Policy's proposal, what happens when a covered entity uses the 
safety valve rather than lowering emissions? What is done to 
ensure that emissions are actually reduced?
    Answer. When a covered entity purchases permits from the 
Federal Government instead of making changes to its use of 
energy, the actual emission levels will exceed the NCEP 
targets. Implicitly, the target is being relaxed in order to 
avoid the need for higher-cost abatement actions.
    Question 3. Under the Commission's proposal, a company 
could pay the $7/ton fee instead of reducing the greenhouse 
gases. So, in the end, is there really a firm cap on emissions?
    Answer. Under the safety valve provision specified in the 
NCEP cap-and-trade proposal, there is no absolute cap on 
greenhouse gas emissions. However, when the permit price rises 
to the safety valve level, fossil fuel users and other GHG 
emitters continue to receive a price signal to reduce their 
emissions relative to the level of economic activity.
    Question 4. What policy options do you recommend to correct 
this [safety valve issue] so we can still make environmental 
progress?
    Answer. Because the Administration does not support the 
NCEP proposal, DOE is not in a position to offer policy 
recommendations for improving it.
    Question 5. Has anyone looked at the cost of inaction--in other 
words, what the impact will be to the economy to not curb emissions? 
I'm thinking specifically of costs related to:

   health care due to dirtier air,
   insurance costs due to more intense storms,
   government emergency relief services,
   the costs of alternative sources of water in the west as the 
        snow pack decreases,
   the costs of protecting homes, businesses and highways from 
        rising sea levels,
   farm payments due to decreased agriculture output,
   and what the potential impact all of those increased costs 
        will have on economic growth.

    Answer. Consistent with its statutory mission and expertise, EIA 
provides only estimates of the economic and energy sector impacts of 
imposing energy-related environmental policies, such as those 
considered in the NCEP proposal, an analysis is requested by Congress 
or the Administration. Some of the issues raised in your question have 
been addressed in the scientific literature and in various assessment 
reports.

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

                              University of Ottawa,
                                        Faculty of Science,
                            Ottawa, Ontario, Canada, July 18, 2005.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I respectfully request that the attached 
articles be entered into the committee record.* I conduct research on 
past climates in the Arctic, and feel the results of my group's work is 
of relevance to your hearing.
---------------------------------------------------------------------------
    * Retained in committee files.
---------------------------------------------------------------------------
    The enclosed research publication documents our discovery of new 
evidence for past warm periods in the Arctic. The material we use is a 
newly discovered mineral deposit found in permafrost regions, and which 
grew some 10,000 years ago. It is similar to cave deposits that have 
been extensively used to reconstruct past temperatures in continental 
settings. However, this material is formed by bacterial colonies that 
grow under conditions of climatic improvement. It shows that the 
average summertime temperature at that time was several degrees warmer 
than today.
    The relevance of this work, as well as other studies that document 
a warm early Holocene climate in the Arctic, is that it emphasizes that 
climate change is both natural and dramatic. Further, the fauna and 
flora of the Arctic survived these very warm periods, and will 
certainly survive the natural climate warming that we have observed 
over the past century.
    I am fully in favor of decreased emissions in order to improve air 
quality and to reduce energy demands. However, Kyoto and any similar 
treaty that would target CO2 on the basis of curtailing 
global warming is fundamentally flawed. CO2 is a very, very 
minor greenhouse gas that has never been shown to have an impact on 
climate. Energy and emissions policies to be adopted by the U.S.A and 
other countries must be based on factual science. We are not affecting 
climate, nor can we control climate. It is driven by solar activity, 
and amplified by water vapor. CO2 is a nutrient for plants.
    I hope that this may help with your committee's good work,
            Sincerely,
                                                 Ian Clark,
                 Professor, Isotope Hydrology and Paleoclimatology.
[Enclosures.]
                                 ______
                                 
                                    University of Virginia,
                                 Charlottesville, VA July 19, 2005.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Senator Domenici: Along with this letter, I am sending you an 
article from the refereed scientific literature entitled ``Revised 21st 
Century Temperature Projections,'' authored by myself and three 
colleagues at the University of Virginia.*
    The article demonstrates that likely temperature changes in this 
century are going to be near the low end of projections made by the 
United Nations' Intergovernmental Panel on Climate Change (IPCC). This 
substantially reduces the prospect of disastrous climate change and 
increases the time horizon for development of new energy technologies. 
The IPCC projections are largely warmer because of unrealistic 
assumptions about carbon dioxide increases, and their assumption that 
the mathematical form of the large family of climate models, which 
represents scientific consensus, is wrong. These models share a common 
characteristic: warming, once initiated by human activity, tends to 
take place at a constant rate.
    I ask that you place this letter and the following article in the 
record as material relevant to the Energy and Natural Resources 
Committee hearing on July 21, 2005.
            Sincerely,
                                       Patrick J. Michaels,
                               Professor of Environmental Sciences.
[Enclosure.]
                                 ______
                                 
                                   Oregon State University,
                                  Corvallis, Oregon, July 19, 2005.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Senator Domenici: I would like to submit the two attached 
articles for inclusion in the public record for the hearing on Arctic 
climate on Thursday, July 21. One article is a review of the recent 
Arctic Climate Impact Assessment and the second an overview on trends 
in Arctic sea ice.
    By way of introduction, please allow me to state that I have been 
active in meteorology and climatology since 1971 and have been 
recognized by the American Meteorological Society as a Certified 
Consulting Meteorologist. Since 1989 I have served as State 
Climatologist for Oregon, and I was a two-term President of the 
American Association of State Climatologists. My qualifications to 
comment on climate studies are very strong.
    The views expressed in the attached articles are my own and do not 
necessarily represent the policy of the State of Oregon nor my 
employer, Oregon State University.
            Sincerely,
                                          George H. Taylor,
                                Certfiied Consulting Meteorologist.
[Enclosures.]
                                 ______
                                 
 The Arctic Climate Impact Assessment--Does it Represent a Significant 
            Breakthrough in our Understanding of the Arctic?

    Recently the Arctic Climate Impact Assessment (ACIA) report was 
released by the Arctic Council. The report documents significant 
ecosystem response to surface temperature warming trends that occurred 
in some areas since the mid-19th century and in the last thirty years. 
Among the conclusions of the report are:

   Annual average temperature in the Arctic has increased at 
        almost twice the rate of the rest of the world.
   Winter temperatures in Alaska and western Canada have 
        increased about 3-4 deg C over the past half century, with 
        larger increase projected in the next 100 years.
   There has been widespread melting of sea ice and glaciers. 
        The average extent of sea-ice cover has declined by 15-20% over 
        the past 30 years.
   There has been increased precipitation, shorter and warmer 
        winters, and decreases in snow cover.
   The area of the Greenland Ice Sheet that experiences some 
        melting has increased about 16% since 1979.

    These are just a few of dozens of conclusions, some of which 
involve effects plant and animal populations, others which describe 
consequences to humans (some beneficial, but most detrimental). Because 
the ACIA is so lengthy, I have not yet had a chance to thoroughly 
examine it. But based on a review of the Executive Summary (26 pages in 
length) and Conclusions (29 pages), I have been able to compare the 
ACIA statements with the conclusions of scientists studying the Arctic, 
from peer-reviewed journal publications. One of these days I'll get 
through the much longer Overview Report and perhaps update this 
analysis.
    Is the ACIA a breakthrough climate assessment? Does it faithfully 
capture the essence of climate change in the Arctic? Or is it just 
another doom-and-gloom report from the international climate community? 
Following is an examination of climate behavior in the Arctic over the 
last couple centuries (and earlier).

                        ARCTIC AIR TEMPERATURES

    Naurzbaev, et al. (2002) created a proxy temperature data set 
spanning nearly 2,500 years for the Taimyr Peninsula of northern 
Russia, all of which is poleward of 70N. The authors studied tree 
rings-widths of living and deceased larch trees. They reported that 
``the warmest periods over the last two millennia in this region were 
clearly in the third, tenth to twelfth and during the twentieth 
centuries.'' The first two, they claim, were warmer than those of the 
last century. Twentieth century temperatures appeared to peak around 
1940.
    Chylek, et al. (2004) analyzed Greenland air temperatures over the 
last 100 years. At coastal stations, ``summer temperatures, which are 
most relevant to Greenland ice sheet melting rates, do not show any 
persistent increase during the last fifty years.'' The peak coastal 
temperatures occurred in the 1930s, followed by significant cooling, 
followed by warming; but current temperatures ``are about 1 C below 
their 1940 values.'' In the highest elevations of Greenland's ice 
sheet, ``the summer average temperature has decreased at the rate of 
2.2 C per decade since the beginning of the measurements in 1987.''
    The warm period in the first half of the 20th century, prior to the 
big increases in greenhouse gases, saw very rapid warming--even though 
CO2, reputed by many to be the most significant driver of 
temperature change, rose very little. In fact, during the decade of the 
1920s at the coastal stations, ``average annual temperature rose 
between 2 and 4 C [and by as much as 6 C in the winter] in less than 
ten years.'' The authors conclude that conclude that ``since there was 
no significant increase in the atmospheric greenhouse gas concentration 
during that time, the Greenland warming of the 1920s demonstrates that 
a large and rapid temperature increase can occur over Greenland, and 
perhaps in other regions of the Arctic, due to internal climate 
variability such as the NAMINAO [Northern Annular Mode/North Atlantic 
Oscillation], without a significant anthropogenic influence.'' Further, 
``the NAO may play a crucial role in determining local Greenland 
climate during the 21st century, resulting in a local climate that may 
defy the global climate change.'' Contrary to the ACIA statements, 
CO2 increases would seem to have little or no effect on 
Greenland climate.
    The instrumental record demonstrates a consistent trend as well. 
Polyakov, et al. (2002, 2003b) studied a large area in the Arctic and 
created a history of temperature from 1875. They report that 
temperature peaked in the late 1930s, with 1937 the warmest single 
year. Since that time, there was a cooling, then a recent warming, but 
current temperatures have yet to reach the levels observed 65 years 
ago.
    I decided to create some temperature plots myself. Using data from 
the Global Historical Climate Network (GHCN) data base, I created 
graphs displaying annual average temperatures for all stations north of 
70N. Figure 1* shows trends from 1970 through 2003, a period with 
significant warming--about 1.5 C in 33 years, the equivalent of 4.5 C 
per century, which fits right in with the ACIA's projections.
---------------------------------------------------------------------------
    * Figures 1-4 have been retained in committee files.
---------------------------------------------------------------------------
    Now take a look at Figure 2, showing the trend from 1934 to 2003. 
Significant cooling occurred through about 1964, followed by a leveling 
off and then a slow rise, but temperatures remain cooler than they were 
in the 1930s.
    Finally, in Figure 3 we see the entire period, back to 1880. 
Overall, there is about a 2 C warming, but this is because the record 
starts with a very cold period and ends on a warm one.
    Fitting a linear trend (as shown) to such an oscillatory time 
series strikes one as highly inappropriate!
    These results are nearly the same as those of Polyakov, et al. 
(2002).
    Conclusion: while temperatures appear to have warmed in the last 40 
years, a longer viewpoint shows much warmer temperatures in the 1930s 
and 1940s, apparently even warmer than those today.

                         SEA ICE IN THE ARCTIC

    Grumet et al. (2001) created a record of sea ice conditions in the 
Baffin Bay region of the Canadian Arctic going back 1,000 years. They 
concluded that the 11th through 14th centuries saw reduced sea ice, but 
that ice extent was greater over the next six centuries. The last 
century has shown that ``sea-ice conditions in the Baffin Bay/Labrador 
Sea region, at least during the last 50 years, are within `Little Ice 
Age' variability,'' despite several periods of warmer temperatures. The 
authors added an interesting statement, as well, stating that the sea 
ice cover history of the Arctic ``can be viewed out of context because 
their brevity does not account for interdecadal variability, nor are 
the records sufficiently long to clearly establish a climate trend.''
    For an area in the Greenland Sea, Comiso et al. (2001), used 
satellite images to assess the size and character of the Odden ice 
tongue, a 1,300 km long feature, from 1979 to 1998. They were also able 
to infer its character back to the early 1920s using temperature 
measurements. The authors stated that there has been no statistically 
significant change in any of the parameters studied over the past 20 
years. However, the proxy record several decades further into the past 
reveals that the ice tongue was ``a relatively smaller feature several 
decades ago,'' apparently as a result of warmer temperatures.
    Omstedt and Chen (2001) identified a proxy record of the annual 
maximum coverage of Baltic sea from 1720 through 1997. They stated that 
there was a sharp decline in sea ice in about 1877. There was also 
greater variability in sea ice extent in the first 150 years of the 
record, which was colder, than in the warmer period of the last 100 
years.
    Jevrejeva (2001) reported on a longer Baltic sea ice data set from 
1529 to 1990 for the port of Riga, Latvia. The time series included 
four climate eras: (1) 1530-1640, with warming accompanied by earlier 
ice break-up (by 9 days/century); (2) 1640-1770, a cooler period with 
later ice break-up (5 days/century); (3) 1770-1920, with warming and a 
tendency toward earlier ice break-up (15 days/century); and (4) 1920-
1990, a cooling period with later ice breakup (by 12 days/century).
    Conclusion: Arctic sea ice has undergone significant changes in the 
last 1,000 years, even before the mid-20th century ``greenhouse 
enhancement.'' Current conditions appear to be well within historical 
variability.

                            OCEAN CONDITIONS

    Polyakov, et al. (2003a) were anxious to assess reports of 
``extraordinary change in the Arctic Ocean observed in recent decades'' 
made by various parties. To investigate these claims, they used 
temperature and salinity measurements in made winter in the central 
Arctic Ocean near Russia in 1973-79. They also employed 40 years of 
summer and winter observations in the Laptev Sea.
    The authors concluded that earlier reports of rapid Arctic warming 
``considerably underestimates variability.'' Their new analyses ``place 
strong constraints on our ability to define long-term means, and hence 
the magnitudes of [air and sea temperature] anomalies computed using 
synoptic measurements from the 1990s referenced to means from [earlier] 
climatologies.''
    Conclusion: ocean temperature histories, like those of air 
temperature and sea ice, display marked variability. We are in danger 
of oversimplifying the historical trends and misrepresenting the future 
if we simply assume ``the Arctic Ocean is warming up and will continue 
to do so.''

                               DISCUSSION

    Oddly, the ACIA does a very poor job of documenting its sources of 
information. For such an ambitious document (it is hundreds of pages 
long, with stunning graphics and a very professional appearance) its 
science consists primarily of blanket statements without any sort of 
reference or citation. Were any of the references listed above 
considered by the ACIA team. It appears doubtful.
    The ACIA appears to be guilty of selective use of data. Many of the 
trends described in the document begin in the 1960s or 1970s--cool 
decades in much of the world--and end in the warmer 1990s or early 
2000s. So, for example, temperatures have warmed in the last 40 years, 
and the implication, ``if present trends continue,'' is that massive 
warming will occur in the next century. Yet data are readily available 
for the 1930s and early 1940s, when temperatures were comparable to 
(and probably higher than) those observed today. It would appear 
prudent to use the longest reliable record for assessing trends.
    It is also inadvisable to employ the use of linear trends to 
represent time series which are cyclical in nature. The character of a 
trend line in a data set like the one shown in Figure 3 is largely a 
function of the starting and ending points selected.

                              CONCLUSIONS

    Recently National Geographic devoted an issue to ``Global 
Warming.'' Reading the ACIA brought back memories of the NG 
publication, and brought to mind the overall comment I made upon 
reviewing it: slick and beautiful but very one-sided. That pretty much 
sums up my feelings about the ACIA, based on what I have seen so far: 
nice graphics but bad science.
                                 ______
                                 
                        Trends in Arctic Sea Ice

    According to the Arctic Climate Impact Assessment, published in 
2004 and 2005, there has been widespread melting of sea ice and 
glaciers in the Arctic in recent decades; the average extent of sea-ice 
cover has declined by 15-20% over the past 30 years.
    According to Environmental News Service (February 1, 2005), 
``Global warming will hit the Arctic harder and faster than the rest of 
the world and could cause the extinction of polar bears and other 
Arctic wildlife within 20 years, conservationists warn. `If we don't 
act immediately the Arctic will soon become unrecognizable,' said Tonje 
Folkestad, climate change officer with WWF's International Arctic 
Program.''
    Many scientists, and a large number of journalists, have made 
similar claims. Below is an overview of Arctic climate science, based 
on reviews of scientific journal publications, which shows a very 
different picture.

                       SEA ICE IN THE SUB-ARCTIC

    Grumet et al. (2001) created a record of sea ice conditions in the 
Baffin Bay region of the Canadian Arctic going back 1,000 years. They 
concluded that the 11th through 14th centuries saw reduced sea ice, but 
that ice extent was greater over the next six centuries. The last 
century has shown that ``sea-ice conditions in the Baffin Bay/Labrador 
Sea region, at least during the last 50 years, are within `Little Ice 
Age' variability,'' despite several periods of warmer temperatures. The 
authors added an interesting statement, as well, stating that the sea 
ice cover history of the Arctic ``can be viewed out of context because 
their brevity does not account for interdecadal variability, nor are 
the records sufficiently long to clearly establish a climate trend.''
    For an area in the Greenland Sea, Comiso et al. (2001), used 
satellite images to assess the size and character of the Odden ice 
tongue, a 1,300 km long feature, from 1979 to 1998. They were also able 
to infer its character back to the early 1920s using temperature 
measurements. The authors stated that there has been no statistically 
significant change in any of the parameters studied over the past 20 
years. However, the proxy record several decades further into the past 
reveals that the ice tongue was ``a relatively smaller feature several 
decades ago,'' apparently as a result of warmer temperatures.
    Omstedt and Chen (2001) identified a proxy record of the annual 
maximum coverage of Baltic sea from 1720 through 1997. They stated that 
there was a sharp decline in sea ice in about 1877. There was also 
greater variability in sea ice extent in the first 150 years of the 
record, which was colder, than in the warmer period of the last 100 
years.
    Jevrejeva (2001) reported on a longer Baltic sea ice data set from 
1529 to 1990 for the port of Riga, Latvia. The time series included 
four climate eras: (1) 1530-1640, with warming accompanied by earlier 
ice break-up (by 9 days/century); (2) 1640-1770, a cooler period with 
later ice break-up (5 days/century); (3) 1770-1920, with warming and a 
tendency toward earlier ice break-up (15 days/century); and (4) 1920-
1990, a cooling period with later ice breakup (by 12 days/century).

                            MOVING POLEWARD

    Laxon, et al. (2003) were motivated by a ``mismatch between the 
observed variability and that predicted by models.'' Unfortunately, the 
``sparseness of sea ice thickness observations'' in the Arctic means 
that the ``regional and interannual variability of sea ice thickness is 
entirely based on models of the Arctic.'' They found high-frequency 
interannual variability which runs counter to what the models say. In 
conclusion, ``Until models properly reproduce the observed high-
frequency, and thermodynamically driven, variability in sea ice 
thickness, simulations of both recent, and future, changes in Arctic 
ice cover will be open to question.''
    Polyakov, et al. (2002) studied sea ice cover over the Kara, 
Laptev, East Siberian and Chukchi Seas north of Russia. Sea ice cover 
trends were ``smaller than expected'' and ``do not support the 
hypothesized polar amplification of global warming.'' In a later 
report, Polyakov et al. (2003b) stated that ``long-term ice thickness 
and extent trends are small and generally not statistically 
significant''; in fact, ``over the entire Siberian marginal-ice zone 
the century-long trend is only 0.5% per decade,'' or 5% per century.''
    A number of researchers have suggested that inflows of Atlantic 
water into the Arctic profoundly affect temperatures and sea ice trends 
in the latter ocean. Polyakov, et al. (2004) are among these. The first 
sentence of their paper states ``Exchanges between the Arctic and North 
Atlantic Ocean have a profound influence on the circulation and 
thermodynamics of each basin.'' The authors attributed most of the 
variability to multidecadal variations on time scales of 50-80 years, 
with warm periods in the 1930s-40s and in recent decades, and cool 
periods in the 1960s-70s and early in the 20th century. These are 
associated with changes in ice extent and thickness (as well as air and 
sea temperature and ocean salinity). The most likely causative factor 
involves changes in atmospheric circulation, including but not limited 
to the Arctic Oscillation.
    It is tempting to employ satellite data to estimate sea ice trends 
(see, for example, Parkinson, et al., 1999; and Parkinson, 2000). 
Granted, satellites are marvelous tools for such surveys, but their 
data sets are limited to only the last several decades. According to 
Schmith and Hansen (2003), trend studies of Arctic sea ice conditions 
``should be regarded with some care'' since the period of satellite 
observations coincided with but one phase of a clear multidecadal 
oscillation. Studying observations for the period 1820-2000, the 
researchers used ice observations to estimate ice export in waters off 
Greenland. One parameter which shows multidecadal variability is the 
correlation between ice export and the North Atlantic Oscillation 
(NAO); see trends below. In recent decades there has been a strong 
correlation between the two, as there was in the 1930s-40s. During the 
1960s-70s and from about 1870-1920 there were much lower correlations. 
This ``casts doubt on the hypothesis of enhanced greenhouse effect 
being the cause'' for recent NAO-sea ice correlations, according to 
Schmith and Hansen (2003).*
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    * All graphs have been retained in committee files.
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    Rigor, et al. (2002) suggest that the Arctic Oscillation (AO) 
affects surface air temperatures and sea ice thickness over the Arctic 
in a profound way. Ice thickness responds primarily to surface winds 
changes caused by the AO, whose long-term trends are shown below.
    Parkinson (2000) seems to have identified decadal or longer trends 
as well. The analysis described in that paper divided the Arctic into 
nine regions. In seven of the nine the sign of the trend ``reversed 
from the 1979-1990 period to the 1990-1999 period,'' which is another 
reason to be cautious when evaluating relatively short data sets.
    Holloway and Sou (2002) used data from ``the atmosphere, rivers and 
ocean along with dynamics expressed in an ocean-ice-snow model.'' The 
authors warn against using any linear trend longer than 50 years due to 
multidecadal variability, which included ``increasing volume to the 
mid-1960s, decadal variability without significant trend from the mid-
1960s to the mid-1980s, then a loss of volume from the mid-1980s to the 
mid-1990s. They also suggest that changes in wind patterns play a large 
role in ice thickness changes and that ``Arctic sea ice volume has 
decreased more slowly than was hitherto reported.'' In fact, ``the 
volume estimated in 2000 is close to the volume estimated in 1950.''

                        INTERDECADAL VARIABILITY

    Again and again we see terms ``decadal,'' interdecadal'' or 
``multi-decadal'' in describing Arctic sea ice conditions. You have 
seen the similarity of the NAO and AO and can view the long-term 
variability. Note that in the NAO and AO charts that 1970 (a starting 
point for many of the time series being mentioned) occurred at a time 
of minimum NAO and AO value.
    Now consider a data set from the WARM part of the world, the 
Pacific Decadal Oscillation (PDO). Below annual values of the PDO. In 
the following chart I have plotted the NAO, AO and PDO together, with 
19-year smoothing to show long-term trends. The final chart shows 
surface air temperature in the Arctic, from Polyakov, et al. (2002), 
showing striking multidecadal variations.

                           WHAT THIS TELLS US

    If we want to understand variability of Arctic sea ice (and, for 
that matter, sea and air temperature) we should take our eyes off 
greenhouse gases, at least for a moment, and study multidecadal 
phenomena. We should also avoid the temptation of taking the last 20-30 
years of data, computing a trend, and assuming that that trend will 
continue for 50-100 years. History tells us that long-term linear 
trends will not occur. In the words of Santayana, ``Those who cannot 
remember the past are condemned to repeat it.'' Or make bad forecasts.
                               __________
  Statement of Glenn Kelly, Executive Director, Alliance for Climate 
                      Strategies, Washington, D.C.

    Mr. Chairman and Members of the Committee, the Alliance for Climate 
Strategies (ACS) appreciates the opportunity to submit the following 
statement for the record regarding the actions our member industries 
are taking to address climate and emissions issues.
              alliance for climate strategies description
    ACS is a broad-based advocacy coalition of industry sectors created 
to:

   Exemplify the principle that voluntary actions are an 
        effective means of reducing greenhouse gas (GHG) emissions.
   Demonstrate that the ingenuity and technological expertise 
        of American industry can achieve meaningful reductions in GHG 
        emissions.

    Membership in the Alliance includes the following eight trade 
associations:

   American Chemistry Council.
   American Forest & Paper Association.
   American Petroleum Institute.
   American Road & Transportation Builders Association.
   Edison Electric Institute.
   Nuclear Energy Institute.
   National Mining Association.
   National Rural Electric Cooperative Association.

    ACS members believe that a ``do nothing'' option clearly seems 
imprudent, especially when common-sense, cost-effective strategies are 
available that will support technology development and deployment while 
creating jobs and sustaining economic growth. Members of ACS also 
believe that the costs and consequences of a mandatory cap-and-trade 
program will severely impact every state and congressional district in 
the nation by raising household consumer costs and reducing job 
opportunities while doing little if anything to address the global 
nature of the climate issue.
    Our statement will address the following four topics:

   Carbon Dioxide Emissions Trends (U.S. and Abroad).
   GHG Measuring and Reporting.
   Ongoing Voluntary Initiatives and Investment.
   Technology Research, Development & Deployment.

    There often is a misperception that due to the general opposition 
to mandatory GHG emissions reduction caps, industry is doing nothing on 
the issue. Nothing could be farther from the truth. U.S. industries, in 
fact, have a well established and successful record of voluntary GHG 
management initiatives that is strong today and continues to grow. 
Government strategies and policies that provide investment stimulus to 
develop and deploy existing and new low-carbon and zero-carbon 
technologies will help to continue and expand this successful record of 
voluntary initiatives.

           CARBON DIOXIDE EMISSIONS TRENDS (U.S. AND ABROAD)

    The Energy Information Administration (ETA) reports that carbon 
dioxide (CO2) accounts for approximately 85 percent of U.S. 
GHG emissions. The remainder includes the GHGs methane, nitrous oxide, 
hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. While all 
of these are important, it is easy to see why the focus is on 
CO2; on a global warming potential basis it accounts for 
almost 85 percent of total U.S. GHG emissions. Because more than 95 
percent of the CO2 emissions come from energy, energy 
quickly becomes the focus for many people.
    Looking at energy-related CO2 emissions in round 
numbers, about one-third comes from transportation, a little less than 
one-third comes from industry, and a little more than one-third comes 
from residential and commercial sectors combined. These sector numbers 
include allocated electricity emissions. Roughly three-fourths of 
residential and commercial emissions are associated with electricity, 
while in the industrial sector, less than 40 percent is associated with 
electricity.
    Looking at trends over 1990-2003 (see chart* above), U.S. GDP grew 
about 3 percent per year, but overall energy-related CO2 
emissions grew only 1.1 percent per year. CO2 emissions from 
the residential and commercial sectors grew about 2 percent per year, 
while transportation grew less than 1.5 percent per year. But the big 
message here is that industrial CO2 emissions from energy 
actually declined--that is, without mandatory GHG programs, industrial 
sector emissions were lower in 2003 than they were in 1990.
---------------------------------------------------------------------------
    * All charts have been retained in committee files.
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    Turning to global trends, a couple of key realities are evident. 
First, following a substantial drop in Eastern Europe/Former Soviet 
Union emissions with the collapse of the former Soviet Union just after 
1990, emissions trends are now clearly upward in those countries. 
Second, developing country emissions were about 40 percent below those 
of industrialized countries in 1990 but by 2020 are projected to be 
more than 10 percent above developed country emissions. Third, driven 
largely by efforts by China and India to improve their citizens' 
standard of living, between 2000 and 2020 developing country 
CO2 emissions are projected to increase by 71 percent, but 
developed country emissions increase by only 23 percent. Addressing 
global GHG emissions without involving the developing countries is 
really an exercise in futility.
    Looking more closely at the E.U. major 15 countries, the chart 
below illustrates the report of the European Environmental Agency (EEA) 
evaluating whether the E.U.-15 countries are on track to meet their 
Kyoto Protocol commitments for 2008-2012. In the chart, the green-
colored bars are positive and the red-colored bars are negative. Only 
the U.K. and Sweden are ``green,'' and the remainder of this graphic is 
``red,'' meaning the EEA concludes that these countries are not on 
track to meet their burden-sharing targets.
    Clearly, many of the E.U.-15 countries are way above the emission 
trends required to meet their targets. Additionally, the E.U. Emissions 
Trading System went into operation on January 1, 2005--even though some 
of the basic plans were yet to be completed--to say nothing of the 
institutions needed to administer the trading system. The message here 
is capping and actually reducing GHG emissions is a serious and 
difficult challenge in any country. Western Europe is having difficulty 
meeting its Kyoto Protocol commitments, and actions that have been too 
difficult to adopt thus far may well be required. And circumstances in 
the U.S. are far different from those in Europe. EIA projects West 
European population growth to amount to less than 10 million over 2000-
2020. Contrast that with the U.S.--where population is projected to 
increase by about 60 million people by 2020--and one can quickly see 
the challenges that lie before us.
    Based on data from ETA's International Energy Outlook 2004, the 
U.S. is making strong progress on reducing the carbon intensity of 
economic activity. Intensity reductions in Germany and the U.K. exceed 
those in the U.S., but Germany benefited from shutting down highly 
inefficient East German factories with reunification, and the U.K. had 
massive reductions in coal use by switching to natural gas. But U.S. 
reductions in the ratio of carbon (from energy) to GDP exceed those of 
the other Western European countries as well as Japan and Canada--all 
of whom have ratified the Kyoto Protocol. (See chart below.)
    While the Europeans are struggling with their Kyoto Protocol 
requirements, some in the U.S. advocate GHG emissions caps. Proposals 
from Senators McCain and Lieberman and from Senator Bingaman are two 
such examples. One issue often overlooked is the sheer size of some of 
these cap and trade proposals.
    Some invoke the success of the sulfur dioxide (SO2 or 
acid rain) program as an argument for using GHG emission allowances. 
However, there are huge differences between the SO2 program 
and the programs envisioned under current cap and trade proposals. 
First, there are commercially available end-of-the-stack control 
technologies for SO2, but not for CO2--at least 
until carbon capture and geologic storage becomes cost effective. 
Second, the SO2 program covers only a single industry, while 
GHG cap and trade proposals would impact the entire U.S. economy. 
Third, the SO2 program has about 9 million tons of 
allowances, while the McCain-Lieberman bill, as one example, has almost 
6 billion tons of allowances, plus a complicated and uncertain number 
of ``offsets.'' Fourth, the acid rain program had a market value of 
allowances of about $1.5 billion in 2003. But in 2010, ``issued 
allowances'' under the McCain-Lieberman bill would have a market value 
of $80-$115 billion, according to the EIA. By 2025, such a program 
would have a market value of $245-$278 billion. The magnitude of a 
McCain-Lieberman proposal is not often appreciated. A comparison of the 
acid rain program is noted in the following chart:
    That is a quick overview of global GHG emission trends, what 
industry has accomplished over the past decade, and the real-world 
difficulties posed by mandatory programs. We would like to turn now to 
a discussion of voluntary reporting and measurement.

                      GHG MEASURING AND REPORTING

    We would like to make it clear that U.S. industry is taking 
significant steps to measure and report emissions voluntarily, and we 
would like to highlight to the Committee some of the activities that 
ACS members are undertaking as participants in the Climate VISION 
program of the Department of Energy (DOE) (see below).
    The first step in addressing emissions is learning to measure 
emissions accurately. Industrial processes are highly varied--ranging 
from complex systems to single units--and they use different types of 
fuels in different ways. Converting fuel usage to emissions requires 
careful collection and organization of data and selection of correct 
conversion factors. Industry is aggressively working to address these 
issues.
    The first step in calculating emissions is adoption of a protocol. 
This is a plan or general outline of what type of data will be 
collected and how it will be combined. The second step--and probably 
the most important--requires developing methods that are specific to 
each industry. This involves identifying operations, establishing 
accounting boundaries, collecting data, and finding emissions factors. 
For diverse industries with varying operations, each of these steps is 
critical and must be carefully tested to assure that the method is 
accurate and that data collection is feasible. Once the method is 
established, spreadsheets can be created to facilitate the actual 
calculation.
    We call the Committee's attention to an example from the oil and 
gas industry that shows how critical the methodology is in calculating 
emissions (see chart below).
    This chart shows the variation that can occur in estimating 
emissions. Looking from left to right across the graph, API compared 
the methane emissions from an on-shore oil production facility using 
its Compendium and methods developed by Latin American Oil and Gas 
Industry (ARPEL), the Environmental Protection Agency (EIIP), the 
European exploration and production industry (E&P Forum), the Canadian 
industry (CAAP), and the United Nations Intergovernmental Panel on 
Climate Change (IPCC).
    The results show that the various methods produced estimates of 
methane emissions that vary by more than fivefold. This clearly shows 
the variability in calculating emissions, especially emissions from 
non-combustion sources (the solid area on the bar chart). API is 
working to get its Compendium adopted as a single, comprehensive and 
consistent method for estimating GHG emissions from oil and gas 
facilities worldwide.
    The forest products industry represents a different operating 
situation. At pulp and paper mills more than 90 percent of emissions 
come from stationary combustion of fossil fuels; thus, the emission 
factors proposed by the IPCC were a good starting point. In early 2001, 
the pulp and paper industry, working with its international 
counterparts, began a project to develop a global methodology for 
estimating GHG emissions. The resulting industry-specific calculation 
tools were based on protocols developed by World Resource Institute 
(WRI) and World Business Council on Sustainable Development (WBCSD) and 
were subsequently peer reviewed and adopted as the WRI/WBCSD pulp and 
paper mill module. The complete tools include a step-by-step 
description of the process and a spreadsheet to make the calculation 
process easy. The forest products industry also developed a similar 
tool for wood products facilities. This tool is also undergoing the 
WRI/WBCSD review process. Other industries--cement, aluminum, iron and 
steel, and mining--are creating similar modules based on the WRI/WBCSD 
protocol.
    Finally, utilities currently report virtually all of their GHG 
emissions to the EPA under the Clean Air Act. Utilities that purchase 
fuel to generate electricity use a fairly consistent process. Thus, 
``continuous emissions monitors'' applied to the stacks and estimated 
fuel-use data can be used to calculate CO2 emissions. Using 
this approach, it is estimated that utilities are reporting 99.9 
percent or more of their emissions to EPA. This information is 
published annually at the sector level by the EPA.
    Starting in 1994, the power sector was one of the first to begin 
reporting of voluntary efforts under the Energy Policy Act of 1992 
section 1605(b) program to the EIA. In 2003, the sector had reported 
about 261 million tons of CO2-equivalent emission reductions 
from direct emission reductions, avoided emissions and sequestration. 
The level of reported reductions by utilities has increased almost 
every year since the program began. Power sector members plan to 
continue reporting their GHG emission reduction activities under the 
1605(b) program. Other industries will be reporting emission reductions 
as part of their Climate VISION commitment.

               ONGOING VOLUNTARY INITIATIVES & INVESTMENT

    We would also like to highlight the voluntary programs and 
initiatives that member associations of ACS are undertaking as part of 
the Climate VISION program.
    In 2002, President Bush challenged the nation to reduce its GHG 
emissions intensity 18 percent by 2012 through voluntary actions. As 
part of the President's strategy, he created the Climate VISION 
(Voluntary Innovative Sector Initiatives: Opportunities Now) program, 
housed at DOE. Under the program, industries--working with various 
federal agencies--commit to voluntarily reduce their GHG emission 
intensities. To date, 14 industry associations, representing more than 
90 percent of U.S. industrial GHG emissions, have announced voluntary 
pledges and programs.
    One of the most important tools for achieving the intensity 
reduction goal will be company activities. Some of these activities 
will occur through individual company initiatives, such as those under 
the EPA Climate Leaders program, and others through industry-wide 
initiatives, such as PowerTree Carbon Company. PowerTree Carbon Company 
is an initiative sponsored by 25 U.S. power companies--including 
investor-owned utilities and cooperatives--to plant trees in critical 
habitats in the Lower Mississippi River Valley to manage 
CO2.
    Yet another element of company activities will be the use of 
numeric goals to drive internal actions. The Climate Leaders website 
contains a partial listing of such actions.
    Late last year, the power sector signed a memorandum of 
understanding (MOU) with DOE to achieve the equivalent of a 3-5 percent 
reduction in its carbon intensity by 2012. Actions under a work plan 
will include achieving credible, verifiable reductions in carbon 
intensity or offsets of GHGs through a range of individual company 
actions, industry-wide initiatives and cross-sector efforts. EEI 
members, for example, will work with their counterparts in the other 
power sector trade associations to help achieve this voluntary numeric 
goal.
    In addition, NRECA and the Department of Agriculture earlier signed 
an MOU to identify and advance technologies that will help achieve the 
national goal. Initially NRECA is working with its members and the 
Agriculture Department to eliminate technical and market barriers to 
the use of low-emission renewable energy, such as agricultural waste-
to-electricity, through the use of systems approaches and the 
development of decision-support tools.
    Other ACS members have similar agreements, such as:
American Forest & Paper Association
    AF&PA members plan to reduce their emissions intensity by 12 
percent by 2012 through:

   Developing new, energy-efficient technologies that use 
        renewables and biomass energy and that, if fully 
        commercialized, could make the forest products industry energy-
        self sufficient.
   Increasing paper recovery for recycling, which avoids GHG 
        emissions by keeping paper out of landfills.
   Enhancing carbon storage in forests, which remove 
        CO2 from the atmosphere and store it for long 
        periods of time.
   Enhancing carbon storage in wood and paper products, which 
        continue the process of withholding carbon from the atmosphere.
American Petroleum Institute

   100 percent participation in Natural Gas Star and combined 
        heat and power programs.
   10 percent improvement in aggregate refinery energy 
        efficiency over 2002-2012.
   Develop GHG management plans.
National Mining Association
   Reductions through research under DOE-NMA Industry of the 
        Future program.
   Calculate industry efforts to sequester carbon on reclaimed 
        mine lands.
   Develop voluntary reporting methodology.
   Additional reductions from coal mine methane recovery where 
        feasible.

    Industry has responded to the Climate VISION challenge. ACS members 
are taking actions that will result in real and substantial GHG 
reductions now, not in the future--and without the need for mandatory 
actions. Furthermore, industry is taking significant steps to measure 
and report emissions voluntarily, and we wanted to take this 
opportunity to tell you about some of the things that we, as members of 
Climate VISION, are doing.

             TECHNOLOGY RESEARCH, DEVELOPMENT & DEPLOYMENT

    All energy resources along with efficiency and conservation will be 
needed to meet our nation's growing demand for energy and electricity. 
It is important that we develop and put into commercial operation 
technologies that will allow us to use these resources with as low an 
emissions profile as possible.
    One way that will allow our economy to grow with lower emissions is 
to continue to develop ways to use energy more efficiently. In the last 
20 years, we have reduced the amount of energy we need for each dollar 
of GDP by 40 percent. This trend will continue on a nationwide basis, 
but to be more specific:
    Many of the industries that are associated with ACS are working 
with DOE in a program called Industries of the Future, in which they 
are jointly funding research to make their operations more efficient. 
These projects are short term--they will have an impact in the next few 
years.
    Cogeneration--a process where the waste heat that is produced when 
making electricity is captured and used--is a relatively new example of 
efficiency in action. And that is just the tip of the iceberg. It is 
only good business to produce more with less energy, and all industry 
is working toward that goal.
    Some technologies, such as nuclear power and renewable 
technologies, have no carbon emissions, and it is important that public 
policies support, not constrain, their increased use.
    Wind, solar and biomass are the most promising of the renewable 
technologies, and technological advancements are lowering the cost of 
these every year. The amount of electricity generated from wind power, 
although still small, has doubled since 2000. The use of solar and 
biomass is also increasing.
    Now just a few words about nuclear power--our largest source of 
non-carbon-emitting electricity generation. The U.S. has 103 operating 
nuclear plants producing close to 20 percent of our electricity. In the 
absence of nuclear power, U.S. electric sector carbon emissions would 
be almost 30 percent higher, according to calculations by the Nuclear 
Energy Institute (based on data from EIA). Given the volume of carbon 
emissions prevented by nuclear power plants, it is clear that the U.S. 
cannot have a plausible long-term climate program without a growing 
contribution from nuclear power.
    The electric power industry is moving forward with a program that 
will lead to construction of new nuclear plants in the U.S., and there 
is significant progress on that score. The licensing process has been 
overhauled, and the Nuclear Regulatory Commission is reviewing several 
new standardized designs. Three companies have submitted applications 
for early site permits, and two consortia are preparing applications 
for construction and operating licenses. And the Tennessee Valley 
Authority is leading a third consortium, evaluating the feasibility of 
building new nuclear plants at its Bellefonte site in Alabama. If all 
goes well, the nuclear industry will have units under construction by 
2010 with significant numbers of new nuclear plants built during the 
next decade.
    But, as mentioned previously, we need all forms of energy to meet 
future demands, and this means that we will continue to use all fossil 
fuels--coal, oil and natural gas--well into the future. Although we are 
working to minimize emissions from fossil fuel use, we also have to 
look at ways to capture and permanently store--or sequester--
CO2 emissions. In some instances, this can be done directly 
as the energy is used. In other cases, where CO2 cannot be 
directly captured, we have to look at ways to offset emissions, for 
example, through the capture of CO2 from the air and then 
storage of this CO2 in forests, plants or grasses. This is 
terrestrial sequestration; in the short term, this is probably the best 
way to capture and store CO2. Many of our companies have 
terrestrial sequestration programs that are on the ground and working 
now. The forest products industry is working to increase research on 
forest sequestration and has established the Forest Carbon Consortium 
to promote research on the potential of managed forests to store carbon 
and produce energy.
    Storage of carbon in plant life is not the only way to go. Carbon 
can be stored in geologic formations on land and in the ocean. A number 
of companies in the industries represented by ACS members are part of 
the joint industry-government Regional Carbon Sequestration 
Partnerships that were started about two years ago with the goal of 
determining the most suitable technologies, regulations and 
infrastructure for carbon capture, storage and sequestration in each 
region of the country.
    Internationally, our government formed the Carbon Sequestration 
Leadership Forum, which brings governments and industry from all over 
the world to share information and conduct joint research in order to 
find ways to sequester carbon more efficiently and cost effectively. 
ACS members are involved in this initiative.
    Finally, DOE has initiated a joint government-industry research 
program to find safe ways to store carbon in geologic repositories. The 
Electric Power Research Institute (EPRI)--a research arm of the 
electric utility industry--has a pilot-scale test center for 
CO2 capture and containment. EPRI has developed site-
selection criteria for CO2 sequestration, and is in the 
process of selecting a site to test long-term underground 
CO2 storage.
    We are also working on projects that will result in lower emissions 
when we use fossil fuels--in particular, coal and petroleum products. 
These projects are both short and long term. The Clean Coal Technology 
Industry-DOE partnership is well established--it started in 1986 to 
address SO2 and nitrogen oxide issues. Over time, the 
program has evolved, and technologies, such as integrated gasification 
combined cycle (IGCC), have been developed to use our vast coal 
resource more cleanly--with lower emissions and more efficiency. This 
means lower CO2 emissions for each unit of electricity 
produced. Many of these are new or very near-term technologies. These 
are important, as coal provides more than 50 percent of the electricity 
used in our country now and is expected to maintain this share in the 
future.
    Industry is also working on research that will have benefits in the 
long term. For example, a number of coal and utility companies are 
involved with DOE in a project called FutureGen, which is an initiative 
to build the world's first zero-emissions coal-fired power plant. This 
will be a commercial scale IGCC plant that produces electricity and 
hydrogen. The CO2 will be captured and sequestered. This is 
an important part of the Administration's effort to move our economy--
over the long term--to a hydrogen-based economy. Hydrogen will be made 
from many fuels, including coal and natural gas.
    There are a number of transportation initiatives that will result 
in reduced emissions over time. In the short term, the CO2 
diesel project that is just beginning will test the capability of using 
biofuels in large-scale mining operations in Nevada and Indiana. 
Utilities are working with DOE to develop and test a commercial hybrid 
work truck that will mean lower CO2 emissions, and the 
automobile industry is an active participant in the Freedom Car 
project.
    These examples are illustrative of the many research projects that 
are ongoing to develop technologies that will result in lower emissions 
in both the short and long term.

                              CONCLUSIONS

    The often-stated claim that the U.S. industrial sector is not 
responsive to concerns about GHG emissions and climate change is 
unfounded. Indeed, the U.S. industrial sector, largely represented by 
ACS, is working to address emissions concerns through a variety of 
means--voluntary initiatives, government partnerships, and technology 
research, development and deployment. ACS members are proud of the 
achievements to date that are outlined above and look forward to more 
positive progress. No other sector of the U.S. economy can claim this 
level of progress.
    Thank you, Mr. Chairman and Members of the Committee, for the 
opportunity to submit this statement. ACS and member companies stand 
ready to assist your efforts to address this important policy issue.
                               __________
            Statement of the Georgia Institute of Technology
              hurricanes are getting stronger, study says

    Atlanta (September 15, 2005)--The number of Category 4 and 5 
hurricanes worldwide has nearly doubled over the past 35 years, even 
though the total number of hurricanes has dropped since the 1990s, 
according to a study by researchers at the Georgia Institute of 
Technology and the National Center for Atmospheric Research (NCAR). The 
shift occurred as global sea surface temperatures have increased over 
the same period. The research will appear in the September 16 issue of 
the journal Science, published by the AAAS, the science society, the 
world's largest general scientific organization.
    Peter Webster, professor at Georgia Tech's School of Earth and 
Atmospheric Sciences, along with NCAR's Greg Holland and Tech's Judith 
Curry and Hai-Ru Chang, studied the number, duration and intensity of 
hurricanes (also known as typhoons or tropical cyclones) that have 
occurred worldwide from 1970 to 2004. The study was supported by the 
National Science Foundation (NSF).
    ``What we found was rather astonishing,'' said Webster. ``In the 
1970's, there was an average of about 10 Category 4 and 5 hurricanes 
per year globally. Since 1990, the number of Category 4 and 5 
hurricanes has almost doubled, averaging 18 per year globally.''
    Category 4 hurricanes have sustained winds from 131 to 155 miles 
per hour; Category 5 systems, such as Hurricane Katrina at its peak 
over the Gulf of Mexico, feature winds of 156 mph or more.
    ``This long period of sustained intensity change provides an 
excellent basis for further work to understand and predict the 
potential responses of tropical cyclones to changing environmental 
conditions'', said NCAR's Holland.
    ``Category 4 and 5 storms are also making up a larger share of the 
total number of hurricanes,'' said Curry, chair of the School of Earth 
and Atmospheric Sciences at Georgia Tech and co-author of the study. 
``Category 4 and 5 hurricanes made up about 20 percent of all 
hurricanes in the 1970's, but over the last decade they account for 
about 35 percent of these storms.''
    The largest increases in the number of intense hurricanes occurred 
in the North Pacific, Southwest Pacific and the North and South Indian 
Oceans, with slightly smaller increases in the North Atlantic Ocean.
    All this is happening as sea-surface temperatures are rising across 
the globe-anywhere from around one-half to one degree Fahrenheit, 
depending on the region, for hurricane seasons since the 1970's.
    Research suggests that rising sea surface temperatures could mean 
more storms of the same intensity of Hurricane Katrina.
    ``Our work is consistent with the concept that there is a 
relationship between increasing sea surface temperature and hurricane 
intensity,'' said Webster. ``However, it's not a simple relationship. 
In fact, it's difficult to explain why the total number of hurricanes 
and their longevity has decreased during the last decade, when sea 
surface temperatures have risen the most.''
    ``NCAR is now embarking on a focused series of computer experiments 
capable of resolving thunderstorms and the details of tropical 
cyclones,'' said Holland. ``The results will help explain the observed 
intensity changes and extend them to realistic climate change 
scenarios.''
    The only region that is experiencing more hurricanes overall is the 
North Atlantic, where they have become more numerous and longer-
lasting, especially since 1995. The North Atlantic has averaged eight 
to nine hurricanes per year in the last decade, compared to the six to 
seven per year before the increase. Category 4 and 5 hurricanes in the 
North Atlantic have increased at an even faster clip: from 16 in the 
period of 1975-89 to 25 in the period of 1990-2004, a rise of 56 
percent.
    A study published in July in the journal Nature came to a similar 
conclusion. Focusing on North Atlantic and North Pacific hurricanes, 
Kerry Emanuel (Massachusetts Institute of Technology) found an increase 
in their duration and power, although it used a different measurement 
to determine a storm's power.
    But whether all of this is due to human-induced global warming is 
still uncertain, said Webster. ``We need a longer data record of 
hurricane statistics, and we need to understand more about the role 
hurricanes play in regulating the heat balance and circulation in the 
atmosphere and oceans.''
    ``Basic physical reasoning and climate model simulations and 
projections motivated this study,'' said Jay Fein, director of NSF's 
climate and large scale dynamics program, which funded the research. 
``These results will stimulate further research into the complex 
natural and anthropogenic processes influencing these tropical cyclone 
trends and characteristics.''
    Webster is currently attempting to determine the basic role of 
hurricanes in the climate of the planet. ``The thing they do more than 
anything is cool the oceans by evaporating the water and then 
redistributing the oceans' tropical heat to higher latitudes,'' he 
said.
    ``But we don't know a lot about how evaporation from the oceans' 
surface works when the winds get up to around 100 miles per hour, as 
they do in hurricanes,'' said Webster, who adds that this physical 
understanding will be crucial to connecting trends in hurricane 
intensity to overall climate change.
    ``If we can understand why the world sees about 85 named storms a 
year and not, for example, 200 or 25, then we might be able to say that 
what we're seeing is consistent with what we'd expect in a global 
warming scenario. Without this understanding, a forecast of the number 
and intensity of tropical storms in a future warmer world would be 
merely statistical extrapolation.''

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