[Senate Hearing 109-879]
[From the U.S. Government Publishing Office]
S. Hrg. 109-879
U.S.-INTERNATIONAL CLIMATE CHANGE APPROACH: A CLEAN TECHNOLOGY SOLUTION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC
POLICY, EXPORT AND TRADE PROMOTION
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
NOVEMBER 14, 2005
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
NORM COLEMAN, Minnesota JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
LISA MURKOWSKI, Alaska BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
------
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY, EXPORT AND TRADE
PROMOTION
CHUCK HAGEL, Nebraska, Chairman
LAMAR ALEXANDER, Tennessee PAUL S. SARBANES, Maryland
LISA MURKOWSKI, Alaska CHRISTOPHER J. DODD, Connecticut
MEL MARTINEZ, Florida JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio BARACK OBAMA, Illinois
C O N T E N T S
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Page
Alexander, Hon. Lamar, U.S. Senator from Tennessee............... 3
Claussen, Eileen, President, Pew Center on Global Climate Change. 47
Prepared statement........................................... 49
Connaughton, Hon. James L., Chairman, White House Council on
Environmental Quality.......................................... 3
Prepared statement........................................... 10
Dobriansky, Hon. Paula J., Ph.D., Under Secretary for Democracy
and Global Affairs, Department of State........................ 11
Prepared statement........................................... 14
Garman, Hon. David, Under Secretary for Energy, Science and
Environment, Department of Energy.............................. 19
Prepared statement........................................... 21
Hagel, Hon. Chuck, U.S. Senator from Nebraska.................... 1
APPENDIX
Additional Material Submitted for the Record
Biden, Hon. Joseph R., Jr., prepared statement................... 59
Chevron, prepared statement...................................... 60
Friedmann, Dr. S. Julio, prepared statement...................... 61
Montgomery, W. David, Ph.D., prepared statement.................. 65
U.S.-INTERNATIONAL CLIMATE CHANGE
APPROACH: A CLEAN TECHNOLOGY
SOLUTION
----------
MONDAY, NOVEMBER 14, 2005
U.S. Senate,
Subcommittee on International Economic Policy, Export and
Trade Promotion,
Committee on Foreign Relations,
Washington, D.C.
The subcommittee met, pursuant to notice, at 3:01 p.m. in
Room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel
presiding.
Present: Senators Hagel [presiding] and Alexander.
STATEMENT OF HON. CHUCK HAGEL,
U.S. SENATOR FROM NEBRASKA
Senator Hagel. Good afternoon. This past February the UN
Global Climate Treaty, known as the Kyoto Protocol, entered
into force, requiring more than 30 industrialized nations to
significantly reduce man-made greenhouse gas emissions by 2012.
As you are all aware, the United States is not a party to that
agreement. In July 1997 the Senate unanimously passed
Resolution 98, the Byrd-Hagel Resolution, which called on the
President not to sign any treaty or agreement in Kyoto unless
two conditions were met: first, the United States should not be
party to any legally binding obligations on greenhouse gas
emissions reductions unless developing country parties are also
required to meet similar standards; second, the President
should not sign any treaty that would result in serious harm to
the economy of the United States. The Kyoto Protocol did not
meet either of these conditions and President Clinton never
submitted it to the Senate for ratification.
Climate change remains a global challenge in need of a
global response. In February I proposed comprehensive
bipartisan climate change legislation which I believe will
contribute to new domestic and international consensus on
climate change and engage the United States in a leadership
role on climate change. This summer the Senate passed the
Energy Policy Act of 2005, has been signed into law by the
President. The bill included the major provisions of my climate
change legislation, which included the promotion and adoption
of technologies that reduce greenhouse gas intensity in the
U.S. and developing countries.
We are here today to discuss this new law and
implementation of these climate changes. Current international
approaches to global climate change tend to overlook the role
of developing countries as part of either the problem or the
solution. This makes little sense if the goal is to reduce
global emissions. China alone will soon become the world's
largest emitter of manmade greenhouse gasses. At the same time,
China and other developing countries still lag behind developed
countries in living standards and other quality of life
indicators. It is in the shared interest of the United States
and all industrialized nations therefore to help developing
countries maintain their economic growth while leapfrogging
over the highly polluting stages of development that we have
already passed through.
This new law elevates climate policy to a high priority on
the U.S. foreign policy agenda. It also seeks to promote the
export of and investment in technologies, practices, and
knowledge that will reduce greenhouse gas emissions around the
world. The law lowers trade barriers and supports exchanges,
training, and demonstration projects. These projects cover
everything from carbon sequestration and clean coal to low
emission vehicles and cogeneration.
The Department of State is designated as the lead agency,
with significant responsibilities for the U.S. Trade
Representative, the Department of Energy, USAID, OPIC, and
international financial institutions.
Achieving reductions in greenhouse gas emissions worldwide
is one of the important challenges of our time. America has an
opportunity and a responsibility for global climate policy
leadership. But this is a responsibility to be shared by all
nations.
I look forward to working with the Bush administration, the
private sector, public interest groups, as well as America's
friends and allies in implementing this achievable climate
change policy. By harnessing our many strengths, we can help
shape a worthy future for all people and build a better world.
Today's hearing will examine the framework of the
administration's approach to implementing international climate
change policy in the Energy Policy Act of 2005. In addition, we
are here to learn about the path forward on the Asia-Pacific
Partnership regarding climate change.
The first panel of witnesses today will include: Jim
Connaughton, Chairman of the Council on Environmental Quality;
Paula Dobriansky, Under Secretary of State for Global Affairs;
David Garman, Under Secretary of Energy for Energy, Science,
and Environment. The second panel will be Eileen Claussen,
President of the Pew Center on Global Climate Change. Ladies
and gentlemen, we thank you for your time today and we
appreciate very much your contributions. I would remind each of
you that your full text will be included in the record, so if
you care to give the entire text that is okay. If you would
like to give a summary version, that is acceptable as well.
We have just been joined by our colleague from the State of
Tennessee, Senator Alexander. Senator Alexander, do you have
any comments?
STATEMENT OF HON. LAMAR ALEXANDER,
U.S. SENATOR FROM TENNESSEE
Senator Alexander. I look forward to the testimony. I
congratulate Senator Hagel for his leadership on this in
forcing us to confront more clearly the issues that are
involved in climate change. My questions, after I hear the
testimony, will be oriented toward how we as a Congress can
encourage the innovation in technology that will help us, as
you have suggested in the legislation that you proposed and I
co-sponsored, that will help us have a larger amount of our new
energy from carbon-free or low-carbon, low-carbon sources.
I want to specifically--I will specifically be referring to
the work that the National Academy of Sciences has recently
done at the request of Senator Domenici and Senator Bingaman
and myself, which is to identify how we keep our advantage in
science and technology so that we are able to maintain our
standard of living, so we can keep our jobs and keep America on
top. As Dr. Chu, one of the panelists of the National Academy
said, a former Nobel prize-winning physicist, said: The most
important thing we can do is keep our advantage in science and
technology and the most important problem to solve is energy.
I look forward to the testimony and I have some specific
questions that I want to ask about to what extent the Congress
is interfering with or how can we better help the country and
the administration succeed in being more aggressive in seeking
new sources of clean carbon-free or low-carbon energy.
Senator Hagel. Senator Alexander, thank you.
Mr. Connaughton, we will begin with you. Good afternoon.
Thank you.
STATEMENT OF HON. JAMES L. CONNAUGHTON, CHAIRMAN, WHITE HOUSE
COUNCIL ON ENVIRONMENTAL QUALITY
Mr. Connaughton. Good afternoon, Mr. Chairman, and thank
you. I want to thank you and the members of the committee--
Senator Alexander, it is good to see you again--for the
constructive dialogue we have had over the last several years
on this important bundle of issues related to clean development
and climate change.
I thank you for inviting me to testify today on behalf of
the Bush administration to describe for you our vision for
addressing what really are interconnected challenges of
promoting economic growth and development, eradicating poverty,
of improving energy security, reducing harmful air pollution,
and tackling this long-term challenge of climate change.
In particular, Mr. Chairman, I want to congratulate you,
Senator Pryor, Senator Alexander, and your bipartisan co-
sponsors for your successful amendment to the Energy Policy Act
of 2005. The authority that it provides and the direction that
it gives will help us advance a broad, common ground agenda for
action domestically and internationally among both
industrialized and developing nations.
The key to success of your amendments to the Energy Policy
Act is a realistic understanding of the needs of the major
developing countries. Shortly before the G-8 meeting this year
in Gleneagles, Scotland, President Bush said: ``The best way to
help nations develop while limiting pollution and improving
public health is to promote technologies for generating energy
that are clean, affordable, and secure.'' Some have suggested
the best solution to environmental challenges and climate
change is to oppose development and put the world on an energy
diet. But at this moment about two billion people have no
access to any form of modern energy. Blocking that access would
condemn them to permanent poverty, disease, high infant
mortality, polluted water, and polluted air.
In the President's words, we are taking a better approach.
In the last 3 years the United States has launched a series of
initiatives to help developing countries adopt new energy
sources, from cleaner use of coal to hydrogen vehicles, to
solar and wind power, to the production of clean-burning
methane, and to less polluting power plants. We continue to
look for more opportunities to deepen our partnerships with
developing nations. The whole world benefits when developing
nations have the best and latest energy technologies.
Over the past 4 years the Bush administration has been
building the structure of a more constructive, practical, and
realistic approach to international action on clean development
and climate change. This strategy is producing real results and
it is centered around three essential aspects.
One is technology development, and you will hear a lot
about that from Under Secretary Garman today. The second is
about technology deployment, and I think Under Secretary
Dobriansky will have something to say about that. The third--
and this is the glue--is a better integration of our
development goals, our integration of our environmental
improvement goals related to pollution, our climate change
strategies for reducing greenhouse gasses, and the fundamental
of energy to promote economic growth.
At the domestic level the President has set a national goal
of reducing the greenhouse gas intensity of the U.S. economy by
18 percent by 2012. To help achieve that goal, we established
strong partnerships for action with the private sector,
including major partnerships among the most highly emitting
sectors in our economy, including programs at DOE as well as
programs at EPA. We have dozens of mandatory, voluntary, and
other incentive-based programs under way.
Importantly, this year's energy bill, nearly every major
provision of it will help advance and deploy many of the
President's priorities for cleaner, more efficient, and less
greenhouse gas-intensive energy systems. The energy bill
includes over $11 billion in incentives for the production of
wind, geothermal, and solar power, consumer tax credits for the
purchase of highly fuel efficient, hybrid and clean diesel
vehicles, and hopefully in the near future hydrogen vehicles,
incentives for clean coal technology, a new structure for
emission-free nuclear power, as well as incentives and
mandatory requirements related to the use of renewable
biofuels.
These new authorities will help us maintain the steady
progress we have made in recent years toward the President's
greenhouse gas intensity goal, and this is a good news story.
If you look at Chart No. 1 to my left, between 2000 and 2003
the United States managed to hold its net greenhouse gas
emissions nearly constant while growing our economy by nearly
$1.5 trillion. That is about the size of the entire economy of
China. At the same time, we increased our population by more
than 9.5 million people. That is about the size of the country
of Sweden.
This emission trend is the fifth best among major countries
during these 4 years. Now, if you add to that air pollution,
air pollution has been reduced in America by nearly 10 percent
in that same period. So we are on the right trajectory.
Preliminary estimates of CO2 for 2004 indicate a
possible increase of about 1.7 percent, though the final data
for 2004 will likely show offsetting emission reductions in the
more potent greenhouse gasses, such as methane. The total
should therefore be well below the 4.3 percent GDP growth that
we experienced last year. Not only does that put us well on
track to meeting the President's emission intensity goal, it
also is a firm example of the kind of approach, Mr. Chairman,
that you put into your amendment of a focus on intensity as the
most useful metric for understanding our performance.
Now let us turn to the international outlook. Data
collected by the Energy Information Administration reinforces
the importance of continued partnership among mature and
emerging economies on energy technology and deployment. Chart 2
here demonstrates that by 2010 carbon dioxide emissions from
emerging economies, such as China and India, will surpass those
from mature market economies like the United States.
The picture on air pollution is quite similar. Our air
pollution is declining; in the major emerging economies it is
increasing.
Just as we seek to reduce our own emission intensity, other
fast-growing economies of the world do have significant
opportunities to substantially reduce their own emission
intensity, as this next chart demonstrates, also produced by
the Energy Information Administration. If you look at countries
such as Russia, China, the Middle East, Eastern Europe, and
India, this is a projection of the kind of opportunities that
your legislation can help enable. The international cooperation
and investment that will come from your amendment to the energy
bill will help us achieve this kind of a projection of
progress.
Let me give you two examples, then, of the partnerships,
tangible ones, that will help us pull this off. First, last
year we created the multilateral Methane to Markets
Partnership, which focuses on the profitable--I underline the
word ``profitable''--deployment of existing technologies and
practices for the capture and use of the clean-burning fuel
methane, which is the main component of natural gas. We are
going to capture it and use it from landfills, from coal mines,
from animal waste management systems, and from leaky gas
production and distribution systems.
This innovative partnership has a goal of reducing the
carbon equivalent of 50 million metric tons by 2015. This
partnership alone would then account for about one-tenth of the
total emissions that the Kyoto Protocol countries would be
trying to achieve. At the same time, we would be reducing
methane, which is a potent air pollutant and also poses a
safety hazard. So we meet combined objectives through that.
That is why, with the good impetus of your legislation,
that we can build on this approach through the more recent and
much more consequential multilateral initiative, the Asia-
Pacific Partnership for Clean Development and Climate. The six
major nations in this partnership include Australia, China,
India, Japan, Korea, and the United States, which together
account for half of the world's economy, energy use, and
greenhouse gas emissions.
In announcing the Asia-Pacific Partnership on July 27,
2005, President Bush said that: ``This new results-oriented
partnership will allow our nations to develop and accelerate
deployment of cleaner, more efficient energy technologies to
meet our national pollution reduction, energy security, and
climate change goals in ways that reduce poverty and promote
economic development.''
With the chairman's permission, I would like to submit the
materials that accompanied the President's statement in the
announcement of that partnership, which includes a vision
statement that was crafted by all six countries.
Senator Hagel. It will be included in the record.
[The information previously referred to follows:]
[GRAPHIC] [TIFF OMITTED] T3730.001
[GRAPHIC] [TIFF OMITTED] T3730.002
[GRAPHIC] [TIFF OMITTED] T3730.003
Mr. Connaughton. When he signed the Energy Policy Act of
2005, the President praised the legislative authority that you
provided for the Asia-Pacific Partnership. As we approach the
formal launch of the partnership in Australia after the new
year, we hope to work with you, Mr. Chairman, Senator
Alexander, and the other members of the committee to ensure
that your legislation is effectively implemented and
appropriately funded.
I thank you for the opportunity to testify and I look
forward to our exchange.
[The prepared statement of Mr. Connaughton follows:]
Prepared Statement by Hon. James L. Connaughton, Chairman, White House
Council on Environmental Quality
Mr. Chairman, I want to thank you and the Members of this committee
for your leadership on clean development and climate change issues. And
I thank you for inviting me to testify today on the Bush
administration's vision for addressing the interconnected challenges of
economic growth and development, poverty eradication, energy security,
pollution reduction, and climate change.
I also want to congratulate you, Mr. Chairman, Senator Pryor, and
your bipartisan cosponsors, for your successful amendment to the Energy
Policy Act of 2005. The authority it provides will help us advance a
broad common ground for action domestically and internationally by both
industrialized and developing countries.
Shortly before the G-8 meeting this year in Gleneagles, Scotland,
President Bush said:
``The best way to help nations develop while limiting pollution
and improving public health is to promote technologies for
generating energy that are clean, affordable and secure. Some
have suggested the best solution to environmental challenges
and climate change is to oppose development and put the world
on an energy diet. But at this moment, about two billion people
have no access to any form of modern energy. Blocking that
access would condemn them to permanent poverty, disease, high
infant mortality, polluted water and polluted air.''
``We're taking a better approach. In the last 3 years, the
United States has launched a series of initiatives to help
developing countries adopt new energy sources, from cleaner use
of coal to hydrogen vehicles, to solar and wind power, to the
production of clean-burning methane, to less-polluting power
plants. And we continue to look for more opportunities to
deepen our partnerships with developing nations. The whole
world benefits when developing nations have the best and latest
energy technologies.''
Over the past 4 years, the Bush administration has been building
the structure of a more constructive, practical and realistic approach
to international action on clean development and climate change. In
February 2002, the President announced a comprehensive domestic and
international strategy for addressing the serious, long-term challenge
of global climate change. This strategy is producing real results.
The President set a national goal of reducing the greenhouse gas
intensity of the U.S. economy 18 percent by 2012. We established strong
partnerships for action with the private sector, including DOE's
Climate VISION program and EPA's Climate Leaders program. We have taken
the lead on transformational technology development initiatives such as
the Hydrogen Fuel Initiative to accelerate the future of an emissions-
free hydrogen transportation system, and FutureGen, which will
demonstrate the world's first coal-fueled power plant that will produce
almost no harmful air pollution or greenhouse gases.
And nearly every major provision of the broader Energy Bill enacted
this summer will help advance and deploy many of the President's
priorities for cleaner, more efficient, and less greenhouse gas
intensive energy systems, including over 11 billion dollars in
incentives for production of wind, geothermal and solar power, consumer
tax credits for highly fuel efficient hybrid and clean diesel vehicles,
clean coal technology, emissions-free nuclear power, and renewable bio-
fuels.
These new authorities will help us maintain the steady progress we
have made in recent years toward the President's greenhouse intensity
goal. [CHART 1], Between 2000 and 2003, the United States managed to
hold its net greenhouse gas emissions nearly constant, while growing
our economy by nearly 1.5 trillion dollars--almost the size of the
entire economy of China--and increasing our population by more than 9.5
million people--about the size of Sweden. This emission trend is the
fifth best among major countries during these 4 years. These reductions
come from desirable improvements in efficiency and deployment of
advanced energy technologies and practices, and continued structural
shifts in our economy to lower emitting industries, and an undesirable
shift of higher-emitting energy intensive industries to other countries
with significantly lower energy costs.
Preliminary estimates CO2 for 2004 indicate a possible
increase of 1.7 percent, though the final data for 2004 will likely
show offsetting emissions reductions in the more potent greenhouse
gases such as methane. The total should therefore be well below the 4.3
percent GDP growth we experienced last year, putting us well on track
to meeting the President's emission intensity goal.
As we seek to reduce our own emissions intensity, other fast
growing economies of the world have significant opportunities to
substantially reduce their emissions intensity. [CHART 2] The
international cooperation and investment that Title 16 of the Energy
Bill authorizes are essential to ongoing progress globally.
Undersecretary Garman will discuss the administration's leadership
in launching and revitalizing a series of international technology
development initiatives on issues ranging from hydrogen, to nuclear
power, to carbon capture and storage.
Undersecretary Dobriansky will highlight the bilateral clean energy
and climate agreements with 15 countries and regional organizations
accounting for nearly 80 percent of the world's greenhouse gas
emissions. And last year we created the multilateral Methane to Markets
Partnership, which focuses on the profitable deployment of existing
technologies and practices for the capture and use of this clean
burning fuel--the main component of natural gas--from landfills, coal
mines, animal waste management systems, and leaky gas production and
distribution systems. This innovative partnership seeks to reduce the
carbon equivalent of 50 million metric tons by 2015.
Data collected by the Energy Information Administration reinforces
the importance of continued partnership among mature and emerging
economies on energy technology development and deployment. [CHART 3] By
2010 carbon dioxide emissions from emerging economies, such as China
and India, will surpass those from mature market economies like the
United States.
That is why, this summer, we introduced our most recent, and even
more consequential, multilateral initiative, the Asia Pacific
Partnership for Clean Development and Climate. The six major nations in
this partnership--Australia, China, India, Japan, Korea, and the United
States--account for half of the world's economy, energy use, and
greenhouse gas emissions. In announcing the Asia Pacific Partnership on
July 27, 2005, President Bush said that:
``This new results-oriented partnership will allow our nations
to develop and accelerate deployment of cleaner, more efficient
energy technologies to meet national pollution reduction,
energy security, and climate change concerns in ways that
reduce poverty and promote economic development.''
When he signed the Energy Policy Act of 2005, the President praised
the legislative authority it provides for the Asia Pacific Partnership.
As we approach the formal launch of the Partnership in Australia after
the New Year, we hope to work with you, Mr. Chairman, to ensure that
your legislation is effectively implemented and appropriately funded.
I thank you for the opportunity to testify. I look forward to
responding to any questions you may have.
Senator Hagel. Mr. Connaughton, thank you.
Under Secretary Dobriansky, welcome.
STATEMENT OF HON. PAULA J. DOBRIANSKY, PH.D., UNDER SECRETARY
FOR DEMOCRACY AND GLOBAL AFFAIRS, DEPARTMENT OF STATE
Secretary Dobriansky. Thank you, Mr. Chairman, Senator
Alexander. I welcome this opportunity to describe some of the
Bush administration's international activities in the
development and commercialization of clean and efficient energy
technologies. I am particularly pleased to discuss Title XVI,
subtitle B, of the Energy Policy Act of 2005, which, like the
administration, emphasizes a practical, technology-based focus
on climate change, and also to outline our new Asia-Pacific
Partnership on Clean Development and Climate.
The administration's international engagement on climate
change centers on five fundamental ideas: First, a successful
international response to climate change requires developing
country participation on near-term efforts to slow the growth
in emissions and longer-term efforts to build capacity for
future cooperative actions.
Second, we should view climate change goals as part of a
broader development agenda--one that improves energy security,
promotes economic growth and development, reduces air
pollution, mitigates greenhouse gases, and eradicates poverty.
This message resonates with developing countries.
Third, technologies are key to meeting these objectives.
Fourth, international efforts should be pursued in a spirit
of collaboration and a sense of partnership.
Finally, we need to work collaboratively with the private
sector.
We are putting these ideas into practice. Since 2001, we
have established bilateral climate partnerships with 15
countries and regional organizations that, together with us,
comprise some 80 percent of global greenhouse gas emissions.
These partnerships serve as the umbrella for over 400
collaborative activities on science, technology and policy
issues.
We have also initiated and participate in a range of new
science and technology initiatives designed to meet climate and
clean development goals. For example, the Group on Earth
Observations has developed a plan for an intergovernmental,
comprehensive, coordinated and sustained Earth observation
system to improve environmental monitoring and forecasts, which
now has been approved by 58 countries and the European
Commission. Our international energy research and development
partnerships include GEN IV (the Generation IV Nuclear
Partnership), the Carbon Sequestration Leadership Forum, the
International Partnership for the Hydrogen Economy, and
International Thermonuclear Experimental Reactor, ITER, which
lend new international emphasis to strategic technologies that
can make a large contribution to our efforts to reduce
greenhouse gas intensity and diversify the global energy
portfolio.
The Methane to Markets Partnership focuses on advancing
cost-effective near-term recovery of methane, a potent
greenhouse gas, and its use as a clean energy source. As Jim
indicated, the partnership targets four major areas: methane
sources, landfills, underground coal mines, natural gas and oil
systems, and agricultural sources. With 17 partners, it
represents over 60 percent of global methane emissions.
In addition, during the 2002 World Summit on Sustainable
Development, the United States established many public-private
partnerships, including the Clean Energy Initiative. I want to
describe what this initiative entails. There are four programs:
the Global Village Energy Partnership, which is led by the
United States Agency for International Development, which seeks
to increase access to modern energy sources in developing
countries in a manner that enhances economic and social
development and reduces poverty; the Partnership for Clean
Indoor Air, led by the Environmental Protection Agency, which
addresses increased environmental health risks faced by more
than two billion people in the developing world who burn
traditional biomass fuel indoors; the Partnership for Clean
Fuels and Vehicles, also led by the Environmental Protection
Agency, will help reduce air pollution in developing countries
by promoting the elimination of lead in gasoline and
encouraging the adoption of cleaner vehicle technologies.
Efficient Energy for Sustainable Development, led by the
Department of Energy, aims to improve the productivity and
efficiency of energy systems.
Also at WSSD, the United Kingdom launched the Renewable
Energy and Energy Efficiency Partnership, which aims to
accelerate the marketplace for renewable energy and energy
efficiency. The United States joined this partnership in 2004.
Our approach puts climate change in the context of broader
development goals. During July's G-8 meetings, leaders agreed
to a plan of action on climate change, clean energy, and
sustainable development. The plan is based on over 50 specific
practical activities, mostly focused on technology development,
that put climate change goals in the context of other
development imperatives, including poverty eradication.
While building on these practical actions and multiple
benefit approaches, we announced in July the Asia-Pacific
Partnership for Clean Development and Climate to promote
greenhouse gas intensity reduction and other clean development
goals. The partnership reflects the extent to which we have
been able to arrive at commonly agreed upon approaches toward
climate change with a number of key countries. The six
countries that make up, currently make up this partnership--
Australia, China, India, Japan, Korea, and us--represent
approximately half of the world's economy, population, and
greenhouse gas emissions.
Mr. Chairman, in the spirit of the Hagel-Pryor amendment,
partners will work to create new investment opportunities,
build local capacity, and remove barriers to the introduction
of clean, more efficient technologies. This effort cannot
succeed without strong private sector involvement and we are
reaching out to them. The ministerial launch will take place in
January in Australia.
Finally, I would like to just discuss the Hagel-Pryor
amendment to the Energy Policy Act of 2005. The administration
welcomes this legislation. We believe that reducing greenhouse
gas intensity is the best metric for measuring progress in
climate change policy. We are now actively working to fulfill
the initial requirements of Title XVI, subtitle B, climate
change technology deployment in developing countries. We expect
to have a report to you in February that identifies the major
emitters of greenhouse gasses and provides a range of baseline
information to the Congress on progress on greenhouse gas
intensity reduction projects, obstacles to implementation, and
opportunities for greater advancement, and which will serve as
a basis for developing our strategy on these issues.
We have active collaboration already in many of these
countries, but in many cases that collaboration can be
considerably strengthened. We will work to ensure that our
international cooperation in this area is based on the
practical collaborative approach that we have developed with
our partners to date.
We expect the Asia-Pacific Partnership to be one of the key
means through which we implement our actions under the Energy
Policy Act. Our partners China, India, and Korea rank first,
second, and third respectively among fast-growing
industrializing economies in terms of 2003 carbon dioxide
emissions from the consumption and flaring of fossil fuels. The
partnership explicitly references greenhouse gas intensity
reduction among its clean development goals.
We also see that a range of existing programs can
contribute to these efforts and that we can strengthen these
programs and develop new strategies for achieving the
objectives of the title.
In conclusion, meeting the challenge of the expected future
growth in global energy demand and reducing greenhouse gas
emissions will require a transformation in the way the world
produces and consumes energy over the next generation and
beyond. It will require new ways of collaborating with our
partners to break through longstanding stalemates. This is why
we are leading global efforts to develop and deploy
transformational technologies for both the developed and
developing world.
I thank you for this opportunity to testify before the
subcommittee and look forward to responding to any questions
you may have. I am submitting a longer version of my testimony
for the record.
Thank you.
[The prepared statement of Dr. Dobriansky follows:]
Prepared Statement of Hon. Paula J. Dobriansky, Ph.D., Under Secretary
of State for Democracy and Global Affairs, Department of State
Mr. Chairman, members of the subcommittee, thank you for the
opportunity to appear before you today to address the ``U.S.-
International Climate Change Approach: A Clean Technology Solution.''
During this afternoon's testimony my colleagues and I will describe the
numerous activities that the Bush administration is taking to support
the multiple goals of improving energy security, promoting economic
growth and development, reducing air pollution, mitigating greenhouse
gases and eradicating poverty.
I am particularly pleased to discuss here today Title XVI, Subtitle
B of the Energy Policy Act of 2005--which is in keeping with the
administration's practical, technology-based focus to this issue--and
to outline our new Asia Pacific Partnership on Clean Development and
Climate.
In his June 2001 and February 2002 climate change policy speeches
President Bush highlighted the importance of international cooperation
in developing an effective and efficient response to the complex and
long-term challenge of climate change.\1\
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\1\http://www.whitehouse.gov / news / releases / 2001 / 06 /
20010611-2.html and http://www.white house.gov / news / releases / 2002
/02 / 20020214-5.html
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The administration's international engagement on climate change
issues centers on five key ideas, all of which extend from and build on
our own experience here in the United States. First, a successful
international response to climate change requires developing country
participation, which includes both near-term efforts to slow the growth
in emissions and longer-term efforts to build capacity for future
cooperation actions. Absent the participation of all major emitters,
including developing countries, the goal of stabilizing GHG
concentrations will remain elusive.
Second, we will make more progress on this issue over time if we
recognize that climate change goals fall within a broader development
agenda--one that promotes economic growth, reduces poverty, provides
access to modern sanitation and clean water, enhances agricultural
productivity, provides energy security, reduces pollution, and
mitigates greenhouse gas emissions. Countries do not look at individual
development goals in a vacuum, and approaches that effectively
integrate both near- and longer-term goals will yield more benefits
over time.
Third, technology is the glue that can bind these development
objectives together. By promoting the development and deployment of
cleaner and more efficient technologies, we can meet a range of diverse
development and climate objectives simultaneously.
Fourth, we need to pursue our international efforts in a spirit of
collaboration, not coercion, and with a true sense of partnership. This
is especially true in our relations with developing countries, which
have an imperative to grow their economies and provide for the welfare
of their citizens. Experience has shown these countries to be quite
skeptical of climate mitigation approaches that they think will divert
them from these fundamental goals. It is also true that many of the
largest greenhouse gas emitters are also among our most significant
trading partners. They have rapidly advancing--in many cases, world
class--industries and considerable technical wherewithal. We view
countries like China and India as responsible partners in our efforts.
Finally, we need to engage the private sector to be successful.
While the right kind of government-to-government collaboration can pave
the way for great progress, we will need to harness the ingenuity,
resources and vision of the private sector in developing and deploying
technology.
We are putting these ideas into practice. Since 2001, we have
established a range of partnerships that will address key aspects of
the climate challenge while also advancing other important
international objectives. We have established bilateral climate
partnerships with 15 countries and regional organizations that,
together with us, comprise some 80 percent of global greenhouse gas
emissions. These partnerships serve as the umbrella for over 400
collaborative activities undertaken by U.S. agencies and their partners
on science, technology and policy issues. Through these partnerships,
U.S. experts are working with Australia and New Zealand to strengthen
our capacity to monitor climate in the Pacific; with India to promote
local level pollution and energy solutions that will have greenhouse
gas intensity benefits; with Brazil to promote effective application of
renewable energy; with Japan and Korea to promote greater integration
of climate and energy strategies throughout Asia; and with China to
enhance technical capacity for climate-related decisionmaking.
In addition to our bilateral partnerships, we have initiated and
participate in a range of new technology initiatives designed to meet
climate and clean development goals. Let me briefly highlight a few of
the most significant partnerships:
Group on Earth Observations: \2\ On July 31, 2003, the United
States hosted 33 nations--including many developing nations--at the
inaugural Earth Observation Summit (EOS), out of which came a
commitment to establish an intergovernmental, comprehensive,
coordinated, and sustained Earth observation system. The climate
applications of the data collected by the system include the use of the
data to create better climate models, to improve our knowledge of the
behavior of carbon dioxide and aerosols in the atmosphere, and to
develop strategies for carbon sequestration.
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\2\ http: / / earthobservations.org /
The United States was instrumental in drafting a 10-year
implementation plan for a Global Earth Observation System of Systems,
which was approved by 55 nations and the European Commission at the 3rd
EOS summit in Brussels in February 2005. The United States also
released its contribution through the Strategic Plan for the U.S.
Integrated Earth Observing System in April 2005.\3\ The plan will help
coordinate a wide range of environmental monitoring platforms,
resources, and networks.
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\3\ http: / / iwgeo.ssc.nasa.gov / docs / EOCStrategic_Plan.pdf
International Energy Research and Development Partnerships: The
Generation IV Nuclear partnership,\4\ the Carbon Sequestration
Leadership Forum,\5\ the International Partnership for the Hydrogen
Economy,\6\ and ITER. \7\ In the last 4 years, the administration has
engaged in four partnerships that lend new international emphasis to
strategic technologies that can make a large contribution to our
efforts to reduce greenhouse gas intensity and diversify the global
energy portfolio. The State Department is working closely with DOE to
engage our partners, and all of these partnerships include key
developing countries as full partners in our efforts to advance these
important technologies--an important capacity building function that
will also serve to promote the growth of global markets.
---------------------------------------------------------------------------
\4\ http: / / www.nei.org / index.asp?catnum=3&catid=1215
\5\ http: / / www.cslforum.org /
\6\ http: / / www.iphe.net /
\7\ http: / / www.iter.org /
The Methane to Markets Partnership: \8\ This partnership,
launched in November of last year, focuses on advancing cost-effective,
near-term methane recovery and use as a clean energy source to enhance
economic growth, promote energy security, improve the environment, and
reduce greenhouse gases. At the recent session, the partnership
welcomed its 17th member, Ecuador, and now represents over 60 percent
of global methane emissions. This Partnership includes an extensive
project network comprised of 190 private sector, governmental and non-
governmental organizations. Methane to Markets currently targets four
major methane sources: landfills, underground coal mines, and natural
gas and oil systems, and animal waste management. By 2015, the
Partnership has the potential to deliver annual reductions in methane
emissions of up to 50 million metric tons of carbon equivalent or
recovery of 500 billion cubic feet of natural gas.
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\8\ http: / / www.epa.gov / methanetomarkets / and http: / /
www.methanetomarkets.org / . Founding Methane to Markets member
governments include the United States, Argentina, Australia, Brazil,
China, Colombia, India, Italy, Japan, Mexico, Nigeria, Russian
Federation, Ukraine, and the United Kingdom. The Republic of Korea
became the 15th member in June, 2005 Canada the 16th member in July
2005, and Ecuador the 17th member in November 2005.
World Summit on Sustainable Development Partnerships: \9\ The
United States has been at the forefront of efforts to move multilateral
bodies toward a practical, results-focused actions centered around
partnerships among governments, businesses and other organizations.
Among over 20 U.S.-initiated partnerships launched at the 2002 World
Summit on Sustainable Development (WSSD) held in Johannesburg, South
Africa, the United States established a ``Clean Energy Initiative.''
The Initiative consists of four market-oriented, performance-based
partnerships, including:
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\9\ http: / / www.sdp.gov / sdp / initiative / cei / 28304.htm
the Global Village Energy Partnership (GVEP),\10\ an
international partnership with over 700 public and private
sector partners with a leading role for the U.S. Agency for
International Development;
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\10\ http: / / www.sdp.gov / sdp / initiative / cei / 44949.htm
the Partnership for Clean Indoor Air,\11\ led by the
Environmental Protection Agency, addressing the increased
environmental health risk faced by more than 2 billion people
in the developing world who burn traditional biomass fuels
indoors for cooking and heating;
---------------------------------------------------------------------------
\11\ http: / / www.sdp.gov / sdp / initiative / cei / 29808.htm and
http: / / www.pciaonline.org /
the Partnership for Clean Fuels and Vehicles,\12\ led by the
Environmental Protection Agency, which will help to reduce air
pollution in developing countries by promoting the elimination
of lead in gasoline and encouraging the adoption of cleaner
vehicle technologies;
---------------------------------------------------------------------------
\12\ http: / / www.sdp.gov / sdp / initiative / cei / 29809.htm and
http: / / www.unep.org / pcfv / main / main.htm
Efficient Energy for Sustainable Development (EESD),\13\ led
by the Department of Energy, which aims to improve the
productivity and efficiency of energy systems, while reducing
pollution and waste, saving money and improving reliability
through less energy intensive products, more energy efficient
processes and production modernization.
---------------------------------------------------------------------------
\13\ http: / / www.sdp.gov / sdp / initiative / cei / 28304.htm
The United States is actively involved in other international
technology development and deployment partnerships as well, including
the Renewable Energy and Energy Efficiency Partnership, a WSSD
partnership initiated by the United Kingdom. As the world's largest
producer and consumer of renewable energy, and with more renewable
energy generation capacity than Germany, Denmark, Sweden, France,
Italy, and the United Kingdom combined, the United States is one of 17
partner countries in REEEP.
The United States continues to participate in the UN Framework
Convention on Climate Change. The Conference of the Parties (COP) to
the United Nations Framework Convention on Climate Change will hold its
11th Session in Montreal from November 28 to December 9, 2005. I will
head the U.S. delegation to this meeting. As the Kyoto Protocol entered
into force on February 16 of this year, the Montreal meeting will also
be the first ``meeting of the Parties'' (MOP) under that instrument, to
which the United States will be an observer. We will continue to
highlight the importance of collaborative partnerships developing and
deploying technologies to meet the long-term challenge of climate
change.
I am very pleased that a technology-focused approach that puts
climate change in the context of broader development goals is finding
favor in many parts of the world. In July, at the Group of Eight
Leaders meeting, President Bush and his counterparts agreed to a Plan
of Action on Climate Change, Clean Energy and Sustainable
Development.\14\ The Plan is based on over 50 specific, practical
activities--mostly focused on technology development--that put climate
change goals in the context of other development imperatives. I had the
opportunity to attend a follow-up Ministerial Dialogue on November 1
that included not only Group of Eight ministers, but also ministers
from 11 other key developing and developed countries. I was struck both
by the strong participation from ministries responsible for energy--
something that has sometimes been lacking in climate discussions--and
by the very practical nature of our discussions in this setting.
---------------------------------------------------------------------------
\14\ http: / / usinfo.state.gov / ei / img / assets / 4756 /
Post_Gleneagles_Communique.pdf
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asia-pacific partnership for clean development and climate\15\
---------------------------------------------------------------------------
\15\http: / / www.state.gov / s / d / rem / 50326.htm
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In keeping with the concept of practical actions and multiple
benefit approaches, I would like to turn now to the Asia-Pacific
Partnership for Clean Development and Climate. The Partnership is our
most recent effort to promote greenhouse gas intensity reduction and
other clean development goals, and we are quite excited about its
potential. Deputy Secretary of State Zoellick announced plans to create
the Asia-Pacific Partnership for Clean Development and Climate in July
2005. The Partnership will build on and deepen the already strong
relationships we have with our five Partners: Australia, China, India,
Japan, and the Republic of Korea. The six countries that currently make
up this Partnership represent about half of the world's economy,
population, and greenhouse gas emissions--which gives us a tremendous
opportunity to find practical approaches to address these issues with
our partners in a focused setting. We intend to use this opportunity to
ensure that the Partnership delivers real and significant results in
energy security, clean development, and greenhouse gas intensity
reduction.
The Partnership's vision statement has identified a broad range of
near- and long-term technologies and practices that are designed to
improve energy security, reduce pollution and address the long-term
challenge of climate change. The Partnership will focus on voluntary
practical measures to create new investment opportunities, build local
capacity, and remove barriers to the introduction of clean, more
efficient technologies. It is critically important to build on mutual
interests and provide incentives to tackle global challenges such as
climate change effectively.
We are united with our partners in recognizing that the ingenuity
and energy of the private sector is crucial to our success in
addressing these issues over time. This effort cannot succeed without
strong private sector involvement. Working closely with the Department
of Commerce and other agencies with export-oriented functions, we are
actively discussing ways of ensuring that the private sector is engaged
in a meaningful way in the Partnership at every stage of its work. We
expect the Ministerial launch to have strong participation from the
private sector.
Energy Policy Act of 2005
The administration welcomes the Hagel-Pryor amendment to the Energy
Policy Act of 2005, which we believe will lend considerable focus and
force to our efforts to address climate change. This legislation is
fully in line with the administration's view that reducing greenhouse
gas intensity is the best metric for measuring progress in climate
change policy. In 2002, President Bush committed the United States to a
comprehensive and innovative program of reducing greenhouse gas
intensity by 18 percent by 2012. It is estimated that meeting this
commitment will prevent the emission of more than 500 million tons of
carbon equivalent greenhouse gases.
The approach embedded in this legislation is that the answer to the
long-term challenge of climate change lies in promoting, rather than
impeding, economic growth, which can in turn fuel the kinds of
technology innovations and capital stock turnovers needed to deploy
cleaner, more efficient technologies. The legislation identifies the
need to work with the major developing nations to promote cleaner
technologies as they continue to work to deliver modern energy services
to their people.
We are now actively working to fulfill the initial requirements of
Title XVI, Subtitle B--Climate Change Technology Deployment in
Developing Countries. The bill requests that we identify the major
emitters of greenhouse gases, and provide a range of baseline
information to the Congress on progress on greenhouse gas intensity
reduction projects, obstacles to implementation, and opportunities for
greater advancement. We expect to have this report to you in February,
and we will use it as a basis for developing our strategy on these
issues. We have active collaboration already in many of these
countries, but in many cases that collaboration can be considerably
strengthened. In implementing the Act we want to ensure that our
cooperation with countries is based on the practical, collaborative
approach that we have developed with our partners to date. I look
forward to working with your staff and that of other interested
committees to ensure that we are taking a sensible and robust approach
as we move forward with implementation.
The bill also requires the Secretary of State to establish an
interagency working group, chaired by the Secretary, to coordinate
activities under the Subtitle. We have been actively working with other
agencies to ensure that this work is undertaken in a manner that
complements that of other administration efforts, including that of the
National Security Council's Policy Coordinating Committee and the Trade
Promotion Coordinating Committee. In addition, we expect to work
closely with our colleagues at the Department of Energy and other
agencies in their efforts to fulfill Subtitle A of this title.
We expect the Asia-Pacific Partnership to be one of the key means
through which we implement our actions under the Energy Policy Act. In
his statement at the signing ceremony for the Act, President Bush
highlighted the Partnership as an innovative program that is authorized
by the Act. The initiative targets the kind of fast-growing, middle-
income industrializing countries on which the Act asks us to focus.
China, India and Korea rank first, second, and third respectively among
fast-growing industrializing economies in 2003 carbon dioxide
emissions--the latest data available--from the consumption and flaring
of fossil fuels. In fact, depending on the data set used, these three
countries alone account for roughly half of the greenhouse gas
emissions among the 25 countries that we will focus on in implementing
the Title. The Partnership explicitly references greenhouse gas
intensity reduction among its clean development goals. We also see that
a range of existing programs can contribute to these efforts, and that
we can strengthen these programs and develop new strategies for
achieving the objectives of the Title.
Concluding Remarks
Mr. Chairman and Members of the committee, I hope that my testimony
this afternoon conveys the extent to which the United States is working
with our partners to reduce greenhouse gas intensity, promote energy
efficient technologies and advance climate science, while also placing
primary importance on supporting economic growth and prosperity.
Meeting the challenge of the expected future growth in global
energy demand and reducing greenhouse gas emissions will require a
transformation in the way the world produces and consumes energy over
the next generation and beyond. It will require new ways of
collaborating with our partners to break through long-standing
stalemates. This is why we are leading global efforts to develop and
deploy breakthrough technologies for both the developed and developing
world.
I thank you for this opportunity to testify before this committee.
I look forward to responding to any questions you may have.
______
Responses by Dr. Paula J. Dobriansky to Questions from
Senator Joseph R. Biden, Jr.
Question. The Canadian government is proposing, and other
governments' support, a decision by the Conference of the Parties to
the United Nations Framework Convention on Climate Change (UNFCCC) to
initiate a process under the UNFCCC to consider possible next steps in
addressing climate change. I understand the administration opposes
this.
Is this true? If so, why? Given the lead time between the Kyoto
Conference and the first reporting period under the Kyoto Protocol, on
what grounds would it be premature at this time to discuss a
replacement or follow-on post-2012 regime?
Answer. The United States is participating in the UN Climate Change
Conference, which will be the eleventh session of the Conference of the
Parties to the UN Framework Convention on Climate Change (COP 11) in
Montreal, Canada, from November 28 through December 9, 2005, as a Party
to the Framework Convention. The Conference will also serve as the
first Meeting of the Parties to the Kyoto Protocol.
The Conference is an opportunity for the U.S. to advance our
climate change policies through the Framework Convention. We will also
seek to protect U.S. interests as Parties to the Kyoto Protocol move
ahead on their agenda.
The United States and our partners around the world believe that
effective actions to meet energy needs, advance clean development and
address climate change require integrated solutions that achieve
sustainable development.
We are moving forward on a multitude of local, regional and global
energy, clean development and climate change initiatives that support
the broader goals of promoting economic growth, meeting the need for
greater energy resources for poverty eradication, enhancing social
conditions and protecting the environment.
The U.S. strategy is built around the following five key ideas.
First, a successful international response to climate change requires
developing country participation. Second, we believe that climate
change falls within a broader development agenda--one that promotes
economic growth, provides energy security and mitigates greenhouse
emissions. This is a primary objective of the Asia-Pacific Partnership
for Clean Development and Climate, announced by Deputy Secretary
Zoellick in July 2005. Third, promoting the development and deployment
of technology is key. Fourth, we need to pursue our international
efforts in a spirit of collaboration and a true sense of partnership.
Over the past 4 years, the Bush administration has pursued a
constructive, practical and realistic approach to international action
on clean development and climate change. Fifth, engaging the private
sector is critical to success. We have established strong partnerships
for action with the private sector, including the Department of
Energy's Climate VISION program and the Environmental Protection
Agency's Climate Leaders program.
Given the existing wide divergence of views by participating COP
members, progress would not be achieved through commencement of
negotiations. One size does not fit all. Developing countries have made
it clear they will not take on additional commitments to reduce
emissions while, at the same time, they want developed countries to
continue with a target-based approach. We are convinced that a post-
2012 process would encompass the same political dynamic that existed in
1997 during the climate change negotiations in Kyoto, Japan. Under
these circumstances, we are opposed to entering into negotiations on a
post-2012 regime.
Senator Hagel. It will be included for the record.
Secretary Dobriansky, thank you.
Under Secretary of Energy Garman.
STATEMENT OF HON. DAVID GARMAN, UNDER SECRETARY FOR ENERGY,
SCIENCE AND ENVIRONMENT, DEPARTMENT OF ENERGY
Secretary Garman. Thank you, Mr. Chairman. I will summarize
my testimony as well.
As a party to the United Nations Framework Convention on
Climate Change, the United States of course shares with many
countries its ultimate objective, the stabilization of
greenhouse gas concentrations in the atmosphere at a level that
prevents dangerous interference with the climate system. To
help meet that objective, President Bush has established a
robust and flexible climate change policy that harnesses the
power of markets, of technological innovation, maintains
economic growth, and encourages global participation.
To meet our ultimate goals while at the same time providing
energy for a growing world, we are going to have to develop new
and cost-effective transformational technologies. Of course,
the administration has been laying a strong technological
foundation to meet this challenge. Our initiatives, the
President's initiatives, include the President's Hydrogen Fuel
Initiative and the Freedom CAR program, carbon sequestration,
the FutureGen coal-fired zero emission power generation
project, the next generation nuclear energy program, and
fusion. Such efforts can put us on a path to ensuring access to
clean, affordable energy supplies while reducing greenhouse gas
emissions.
Complementing these domestic endeavors are a number of
multilateral collaborations that were initiated by the United
States: the Carbon Sequestration Leadership Forum, the
International Partnership for the Hydrogen Economy, the Gen IV
International Forum on Nuclear Power. All are vehicles for
international collaboration to advance these technologies. In
addition, the United States, as has been mentioned, has joined
the ITER project to help us realize the promise of fusion
energy. We believe that well-designed multilateral
collaborations such as these, which focus on achieving
practical results, can accelerate development and
commercialization of new technologies.
Central to meeting the challenge of climate change is the
participation of developing countries, which the Energy Policy
Act recognizes. The Energy Information Administration projects
that between 2015 and 2020 carbon dioxide emissions from
developing countries could surpass those from industrialized
countries. Moreover, if forecasts are accurate developing
countries will account for 69 percent of the total increase in
global carbon emissions from energy between 2001 to 2025.
The Bush administration believes that the most effective
way to engage developing countries is to focus, not solely on
climate change, but rather on a broader development agenda that
promotes economic growth, reduces poverty, promotes energy
security, reduces pollution, and mitigates greenhouse gas
emissions. Indeed, concern about meeting these fundamental
needs helps explain the reticence of developing countries to
take on Kyoto-style emissions caps that would stifle their
economic development.
An emissions intensity approach to limiting greenhouse gas
emissions, such as that endorsed in the Energy Policy Act, can
lead to greater engagement from the developing countries
because it encourages reductions without threatening economic
growth and development. This intensity approach is working well
here in the United States. In 2002, the President set an
ambitious goal, a national goal to reduce the greenhouse gas
intensity of the United States economy by 18 percent by 2012.
Recent data from the Energy Information Administration detailed
in my written testimony suggest that we are making substantial
headway in meeting that goal.
One of the biggest barriers to economic progress in
developing countries is the lack of access to affordable modern
energy services. Through its multi-agency Clean Energy
Initiative and the United Kingdom-led Renewable Energy and
Energy Efficient Partnership, the U.S. is working to mobilize
private sector investment and create self-sustaining markets
for financing energy efficiency, renewable and infrastructure
projects in developing countries.
The administration also believes that the international
climate change provisions of the Energy Policy Act are broadly
consistent with the Asia-Pacific Partnership for Clean
Development and Climate, which was announced in July by the
United States and five large Asian economies. Through this
partnership, we hope to create new investment opportunities to
build local capacity and remove barriers to the introduction of
clean, more efficient technologies. The APP is also designed to
help each country improve energy security, reduce pollution,
and address the long-term challenge of climate change.
In closing, the President is committed to reducing the
Nation's greenhouse gas emissions and we are taking action to
help meet that goal. Further, we believe that cooperation among
developed and developing countries must combine action on
greenhouse gasses with action to meet larger and other public
urgent needs for increased energy resources. We are fully
engaged internationally and will continue to lead multilateral
and bilateral climate change science and technology initiatives
and further cooperate with all Nations.
Thank you very much, Mr. Chairman. I will be happy to
answer any questions you have either today or in the future.
[The prepared statement of Mr. Garman follows:]
Prepared Statement of David Garman, Under Secretary for Energy Science
and Environment, Department of Energy
INTRODUCTION
Mr. Chairman and members of the subcommittee, thank you for the
opportunity to appear before you today to discuss ways in which the
administration is working internationally to address the challenge of
climate change. My testimony today will cover what the administration
is doing in the climate change technology area both domestically and
internationally, the international climate change provisions of the
Energy Policy Act of 2005 (EPAct2005), the importance of engaging
developing countries, and the Asia-Pacific Partnership for Clean
Development and Climate.
As a party to the United Nations Framework Convention on Climate
Change (UNFCCC), the United States shares with many countries its
ultimate objective: stabilization of greenhouse gas concentrations in
the atmosphere at a level that would prevent dangerous anthropogenic
interference with the climate system. In February 2002, President Bush
reaffirmed his administration's commitment to this central goal of the
Framework Convention.
Meeting the UNFCCC objective will require a sustained, long-term
commitment by all nations over many generations. To this end, the
President has established a robust and flexible climate change policy
that harnesses the power of markets and technological innovation,
maintains economic growth, and encourages global participation. Major
elements of this approach include implementing near-term policies and
measures to slow the growth in greenhouse gas emissions, advancing
climate change science, accelerating technology development, and
promoting international collaboration.
ACCELERATING DEVELOPMENT OF ``TRANSFORMATIONAL'' TECHNOLOGIES
Looking to the future, it is increasingly apparent that to provide
the energy necessary for continued economic growth and to reduce
greenhouse gas emissions, we will have to develop new cost-effective
``transformational'' technologies that alter fundamentally the way we
produce and use energy. By 2100, more than half of the world's energy
may have to come from low- or zero-emission technologies to attain the
UNFCCC goal.\1\
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\1\ See, for example, K. Caldeira, A.K. Jain, and M.I. Hoffert,
Science, 299, 2052-2054 (2003).
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The Bush administration is laying a strong technological foundation
to develop cost-effective and realistic mitigation options to meet
clean development and climate objectives. The administration's Climate
Change Technology Program (CCTP) was created to coordinate and
prioritize the Federal Government's approximately $3 billion annual
investment in climate-related technology research, development,
demonstration, and deployment (RDD&D), including voluntary
partnerships. We are pleased that EPAct2005 includes an authorization
for this program, which is the technology counterpart to the Climate
Change Science Program.
CCTP is assessing different technology options and their potential
contributions to reducing greenhouse gas emissions over the short, mid,
and long term. In August 2005, CCTP released its Vision and Framework
for Strategy and Planning. This document provides an overall strategy
to guide and strengthen our technical efforts to reduce emissions. In
September, CCTP released its draft Strategic Plan for public comment,
which builds on the guidance in the Vision and Framework. The Plan
articulates a vision of the role for advanced technology in addressing
climate change, defines a supporting mission for CCTP, establishes
strategic direction and guiding principles for Federal R&D agencies to
use in formulating research and development portfolio, outlines
approaches to attain CCTP's six strategic goals, and identifies a
series of next steps toward implementation.
CCTP's strategic vision has six complementary goals: (1) reducing
emissions from energy use and infrastructure; (2) reducing emissions
from energy supply; (3) capturing and sequestering CO2; (4)
reducing emissions of other greenhouse gases; (5) measuring and
monitoring emissions; and (6) bolstering the contributions of basic
science.
The administration continues strong investment in many strategic
technology areas. As the President's National Energy Policy requires,
efforts with respect to energy production and distribution focus on
ensuring environmental performance, as well as dependability and
affordability.
Energy Efficiency and Renewable Energy: Energy efficiency is the
single largest investment area under CCTP and it provides tremendous
short-term potential to reduce energy use and greenhouse gas emissions.
Renewable energy includes a range of different technologies that can
play an important role in reducing greenhouse gas emissions. The United
States invests considerable resources in wind, solar photovoltaics,
geothermal, and biomass technologies. Many of these technologies have
made considerable progress in price competitiveness, but there remains
a need to reduce manufacturing, operating, and maintenance costs of
many of these technologies.
Hydrogen: In his 2003 State of the Union address, President Bush
made a commitment to the development of a hydrogen economy, pledging
$1.2 billion over 5 years for his Hydrogen Fuel Initiative to develop
hydrogen fuel cell-powered vehicles. The transition to hydrogen as a
major energy carrier over the next few decades could transform the
nation's energy system and create opportunities to increase energy
security by making better use of diverse domestic energy sources for
hydrogen production and to reduce emissions of air pollutants and
greenhouse gases.
Carbon Sequestration: Carbon capture and sequestration is a
central element of CCTP's strategy because for the foreseeable future,
fossil fuels will continue to be an important source of energy. One
realistic approach is to find ways to capture and store the carbon
dioxide produced when these fuels are used. DOE's core Carbon
Sequestration Program emphasizes technologies that capture carbon
dioxide from large point sources and store it in geologic formations.
In 2003, DOE launched a nationwide network of seven Regional Carbon
Sequestration Partnerships, involving State agencies, universities, and
the private sector, to determine the best approaches for sequestration
in each geographic region represented and to examine regulatory and
infrastructure needs. Approaches being pursued include carbon capture
and geologic storage, and carbon sequestration in trees and soils.
``FutureGen'' Coal-Fired, Zero-Emissions Power Generation: The
FutureGen project--a 10-year, $1 billion government-industry cost-
shared effort to design, build, and operate the world's first near-zero
atmospheric emissions coal-fueled power plant--will employ the latest
technologies to generate electricity, produce hydrogen, and sequester
carbon dioxide from coal. Through this research, coal can remain part
of a diverse, secure energy portfolio well into the future.
Nuclear Fission and Fusion: The administration also is pursuing
next-generation nuclear energy as a zero-emissions energy supply
choice, and DOE's Generation IV Nuclear Energy Systems Initiative is
working on reactor designs that are safe, economical, secure, and able
to offer additional capabilities such as reducing nuclear waste and
producing, such as hydrogen. And though the technical hurdles are high,
the administration sees great potential in fusion as a future energy
source.
These initiatives and other technologies in the CCTP portfolio
could put us on a path to ensuring access to clean, affordable energy
supplies while dramatically reducing greenhouse gas emissions.
INNOVATIVE INTERNATIONAL PARTNERSHIPS
In addition to these domestic programs, the administration is
working internationally with a broad range of partners. We believe that
well-designed multilateral and bilateral collaborations focused on
achieving practical results can accelerate development and
commercialization of new technologies.
Under President Bush's leadership, the United States has brought
together key nations to tackle jointly some tough energy challenges we
face. These collaborations mirror the main strategic thrusts of our
domestic technology research programs, and they address a number of
complementary energy concerns, such as energy security, climate change,
and environmental protection.
International Partnership for the Hydrogen Economy (IPHE):
Recognizing the common interest in hydrogen research that many
countries share, the United States called for an international hydrogen
partnership in April 2003, and in November 2003, representatives from
16 governments gathered in Washington, D.C. to launch IPHE.\2\ IPHE
provides a vehicle to organize, coordinate, and leverage multinational
hydrogen research programs that advance the transition to a global
hydrogen economy. It reviews the progress of collaborative projects,
identifies promising directions for research, and provides technical
assessments for policy decisions. IPHE also will develop common
recommendations for internationally recognized standards and safety
protocols to speed market penetration of hydrogen technologies.
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\2\ Founding IPHE member governments include the United States,
Australia, Brazil, Canada, China, European Commission, France, Germany,
Iceland, India, Italy, Japan, Norway, Republic of Korea, Russia, and
the United Kingdom. In January 2005, New Zealand became the 17th
member.
Carbon Sequestration Leadership Forum (CSLF): CSLF is a U.S.
initiative that was established formally at a ministerial meeting held
in Washington, DC in June 2003.\3\ CSLF is a multilateral initiative
that provides a framework for international collaboration on
sequestration technologies. The Forum's main focus is assisting the
development of technologies to separate, capture, transport, and store
carbon dioxide safely over the long term, making carbon sequestration
technologies broadly available internationally, and addressing wider
issues, such as regulation and policy, relating to carbon capture and
storage. In addition to these activities, CSLF members are invited to
participate in the FutureGen clean coal project. There are 22 members
of the CSLF, including the United States, European Commission, China,
and India.
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\3\ CSLF member governments include the United States, Australia,
Brazil, Canada, China, Colombia, Denmark, European Commission, France,
Germany, Greece, India, Italy, Japan, Republic of Korea, Mexico,
Netherlands, Norway, Russia, Saudi Arabia, South Africa, and the United
Kingdom.
Generation IV International Forum (GIF): In 2002, nine countries
and Euratom joined together with the United States to charter GIF, and
multilateral collaboration to fulfill the objective of the Generation
IV Nuclear Energy Systems Initiative.\4\ GIF's goal is to develop a
fourth generation of advanced, economical, safe, and proliferation-
resistant nuclear systems that can be adopted commercially no later
than 2030. A technology roadmap developed by the GIF and the Department
of Energy's Nuclear Energy Research Advisory Committee in 2003
identified six technologies as candidates for future designs. Based on
the roadmap, GIF countries are jointly preparing a collaborative
research program to develop and demonstrate the projects.
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\4\ GIF member countries include the United States, Argentina,
Brazil, Canada, France, Japan, Republic of Korea, South Africa,
Switzerland, and the United Kingdom.
ITER: In January 2003, President Bush announced that the U.S. was
joining the negotiations for the construction and operation of the
international fusion experiment ITER.\5\ The negotiations are now
advancing rapidly and we hope to have a near-final agreement for both
Congress and the administration to review in early 2006.
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\5\ ITER member countries include the United States, China,
European Union, Japan, Russia, and the Republic of Korea.
Methane to Markets Partnership (M2M): In November of last year,
the United States and representatives from 13 countries\6\ launched
M2M, which is led on the U.S. side by EPA. M2M is an international
initiative that focuses on advancing cost-effective, near-term methane
recovery and use as a clean energy source to enhance economic growth,
promote energy security, improve the environment, and reduce greenhouse
gases. Since the launch, the Partnership has expanded to include 17
countries, representing over 60 percent of global methane emissions, as
well as almost 200 representatives from the private sector, financiers,
and non-governmental organizations. The Partnership now actively
supports near-term project development in four major methane sources:
landfills; underground coal mines; natural gas and oil systems; and
livestock waste management.
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\6\ M2M member governments include the United States, Argentina,
Australia, Brazil, Canada, China, Colombia, Ecuador, India, Italy,
Japan, Republic of Korea, Mexico, Nigeria, Russia, Ukraine, and the
United Kingdom.
Bilateral Activities: Since 2001, the United States has
established 15 climate partnerships with key countries and regional
organizations that, together with the United States, account for almost
80 percent of global greenhouse gas emissions.\7\ These partnerships
encompass over 400 individual activities, and joint projects have been
initiated in areas such as climate change research and science, climate
observation systems, clean and advanced energy technologies, carbon
capture, storage and sequestration, and policy approaches to reducing
greenhouse gas emissions.
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\7\ Partners include Australia, Brazil, Canada, China, Central
America (Belize, Costa Rica, El Salvador, Guatemala, Honduras,
Nicaragua, and Panama), European Union, Germany, India, Italy, Japan,
Mexico, New Zealand, Republic of Korea, Russian Federation, and South
Africa.
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MARKET DEVELOPMENT FOR COMMERCIALIZATION OF NEW TECHNOLOGIES
One of the biggest barriers to economic progress in developing
countries is lack of access to affordable, modern energy services, such
as electricity. Such services are instrumental to economic growth,
social development, and alleviation of poverty, and their availability
can amplify the impact of investments in public health, education,
sanitation, clean water, agriculture, and others. Nations that develop
strong, market-based institutions and the rule of law will be in the
best position to make the sustained investments necessary to provide
clean energy and adapt to climate change over the long term.
Therefore, an important objective of U.S. participation in many
international collaborations is to mobilize private sector investment
by supporting economic reforms and institutional capacity building in
the energy sector to strengthen markets and strengthen the rule of law
while promoting innovative financing that reduces risks and transaction
costs. These efforts are aimed at developing new policies and business
models to create self-sustaining markets for financing energy
efficiency, renewable, and infrastructure projects.
At the World Summit on Sustainable Development (WSSD) in
Johannesburg in 2002, the United States launched a Clean Energy
Initiative (CEI). CEI consists of four market-oriented, performance-
based partnerships: Global Village Energy Partnership, led by the U.S.
Agency for International Development; Partnership for Clean Indoor Air
and Partnership for Clean Fuels and Vehicles, led by EPA; and Efficient
Energy for Sustainable Development, led by DOE. The mission of CEI is
to bring together governments, international organizations, industry
and civil society in partnerships to alleviate poverty and spur
economic growth in the developing world by expanding access to and
modernizing energy services.
The United States is also one of 17 countries that participate in
the Renewable Energy and Energy Efficiency Partnership--REEEP. REEEP
was initiated by the United Kingdom as a WSSD partnership to assist
market development of renewable and energy efficiency systems. The
United States also actively participated in the Renewables 2004
conference sponsored by the German Government in June 2004 and
submitted five action items to provide specific technology plans and
cost targets for renewable energy technologies using solar, biomass,
wind, and geothermal resources.
INTERNATIONAL CLIMATE PROVISIONS OF EPACT2005
The international climate provisions of EPAct2005 recognize the
importance of developing countries in mitigating climate change.
Indeed, central to achieving the objective of the UNFCCC will be the
participation of developing countries.
In passing unanimously the Byrd-Hagel Resolution in 1997, the
Senate then made its views quite clear that any approach to climate
change must involve developing countries. However, under the terms of
the Kyoto Protocol to the UNFCCC, only industrialized, mature market
economies are required to reduce emissions. The emerging economies of
the developing world--including large emitting countries such as China
and India--can continue business as usual despite their rapidly growing
emissions.
Total carbon dioxide emissions from fossil fuel consumption from
the emerging economies soon will outstrip those from mature market
economies. Projections in the Energy Information Administration's (EIA)
International Energy Outlook 2005 suggest that by 2010, carbon dioxide
emissions from emerging economies could surpass those from the mature
market economies. According to EIA, in 2002, carbon dioxide emissions
from mature market economies were 49 percent of the world total while
emerging economies accounted for 39 percent and the transitional
economies of Eastern European / former Soviet Union (EE / FSU)
countries 13 percent. EIA projects that in 2025, mature market
economies will account for 39 percent of world carbon dioxide
emissions, emerging economies 50 percent, and the EE / FSU countries 11
percent. IEO 2005 projections also suggest that the emerging economies
and EE / FSU countries combined will account for 77 percent of the
total projected increase in global emissions from 2002 to 2025.
These EIA projections are consistent with recent projections from
the International Energy Agency. Its World Energy Outlook 2004 suggests
that well over two-thirds of the projected increase in energy-related
carbon dioxide emissions between now and 2030 will be from developing
countries.
The Bush administration believes that the most effective way to
engage developing countries is to focus not solely on climate change,
but rather on a broader development agenda that promotes economic
growth, reduces poverty, provides access to modern sanitation, enhances
agricultural productivity, provides energy security, reduces pollution,
and mitigates greenhouse gas emissions.
Developing countries made these needs clear at WSSD, and the
international community agreed, in the Johannesburg Plan of
Implementation, on the primacy of the development agenda over an agenda
exclusively focusing on decarbonizing economies. Given these
considerations, the reluctance of developing countries to take on
Kyoto-style emissions caps--which could nuke achieving economic and
social development goals much more difficult--is well founded.
An emissions intensity approach to limiting greenhouse gas
emissions can lead to greater engagement on climate change from
developing countries because it encourages reductions without
threatening economic growth and development. This is a clear advantage
over the Kyoto Protocol approach, which focuses on short-term
reductions.
This intensity approach is working here in the United States. In
2002, President Bush set an ambitious but achievable national goal to
reduce the greenhouse gas intensity of the U.S. economy by 18 percent
by 2012, which represents about a 30 percent increase in the rate of
improvement projected by EIA over this period. The administration
estimates that this commitment will achieve about 100 million metric
tons of reduced carbon-equivalent emissions in 2012, with more than 500
million metric tons of carbon-equivalent emissions in cumulative
savings over the decade.
To this end, the administration has developed an array of policy
measures, including financial incentives and voluntary programs. For
example, the Department of Energy's (DOE) Climate VISION program and
the Environmental Protection Agency's (EPA) Climate Leaders and
SmartWay Transport Partnership programs work in voluntary partnership
with industry to reduce emissions. The Department of Agriculture is
using its conservation programs to provide incentives to increase
carbon sequestration in soils and trees, and to reduce methane and
nitrous oxide emissions from crop and animal agricultural systems. DOE,
in partnership with EPA, USDA, and other Federal agencies, also is
pursuing many energy supply technologies with comparatively low or zero
carbon dioxide emissions profiles, such as solar, wind, geothermal,
bioenergy, and combined heat and power. The Bush administration also
has increased fuel economy standards for new light trucks and sport
utility vehicles by 1.5 miles per gallon over the next three model
years.
We expect these programs will make significant contributions toward
meeting the President's 18 percent 10-year goal, which represents an
average annual rate of about 2.0 percent. Recent data show we are
already making headway. The average annual reduction of greenhouse gas
emissions intensity from 1990 to 2003 was 1.9 percent. A June 2005 EIA
flash estimate of energy-related carbon dioxide emissions--which
account for over four-fifths of total greenhouse gas emissions--
suggests an improvement in carbon dioxide emissions intensity of 2.6
percent in 2004. This follows on the EIA's Emissions of Greenhouse
Gases in the United States 2003 report showing that the total U.S.
greenhouse gas emissions intensity was 2.3 percent lower in 2003 than
in 2002. Overall, then, the Nation appears to be ahead of schedule in
meeting the President's goal.
We believe that certain aspects of the international climate
provisions authorized under Title XVI Subtitle B of EPAct2005 are
broadly consistent with the administration's approach. Specifically,
the provisions call on DOE to lead an effort to identify technology
options that could reduce greenhouse gas emissions intensity and are
suitable for transfer to developing countries DOE also is authorized to
carry out fellowship and exchange programs under which officials from
developing countries can gain experience and knowledge of best
practices to reduce greenhouse gas emissions intensity in their
countries.
The Department is working with the Department of State and the U.S.
Agency for International Development on a framework to execute those
aspects of the international climate change provisions that it can
readily accomplish. The Department is currently evaluating provisions
authorizing demonstration projects for cleaner, more efficient
technologies. Conducting demonstration projects in developing countries
would likely raise issues and complexities involving legal, regulatory,
trade, intellectual property, and other questions. Also, without
complementary economic reforms in partner countries to strengthen
markets for cleaner technologies, their replication and deployment will
be inhibited.
ASIA-PACIFIC PARTNERSHIP FOR CLEAN DEVELOPMENT AND CLIMATE
The administration believes the international climate change
provisions of EPAct2005 are also consistent with the Asia-Pacific
Partnership for Clean Development and Climate, which was announced in
July by Deputy Secretary of State Robert Zoellick and his counterparts
representing five large economies--Australia, China, India, Japan, and
Korea.
Together, the six nations that make up the Partnership account for
about half of the world's greenhouse gas emissions and a significant
amount of total global economic output. So while the partnership
initially is at a manageable size, it nonetheless can have a
significant impact. Moreover, it is significant that among the partners
are countries with targets under the Kyoto Protocol, countries without
targets under the Kyoto Protocol, countries not party to the Kyoto
Protocol, and both industrialized and emerging economies.
The one characteristic all the countries have in common is a
willingness to take practical measures to address the complementary
challenges of energy security, clean development, and climate change.
The Partnership's focus will be activities to create new investment
opportunities, build local capacity, and remove barriers to the
introduction of clean, more efficient technologies. It is designed to
help each country meet nationally designed strategies for improving
energy security, reducing pollution, and addressing the long-term
challenge of climate change. The Partnership also will cooperate on
longer-term ``transformational'' energy technologies that can drive
economic growth while enabling significant reductions in greenhouse gas
intensities.
CLOSING OBSERVATIONS
The administration remains committed to the UNFCCC and to the
mutual goals of sustainable development and economic growth. The
President has an ambitious near-term goal to reduce the Nation's
greenhouse gas emissions intensity, and is taking many actions to help
meet that goal. We are investing billions of dollars on advancing
climate science and accelerating the development of advanced
technologies--such as hydrogen, carbon sequestration, advanced nuclear
reactors, and fusion energy--that have the potential to transform
energy systems. And we are fully engaged internationally and lead major
multilateral and bilateral climate change science and technology
initiatives, and will continue to co-operate with all nations.
The administration believes that co-operation among developed and
developing countries must combine action on greenhouse gases with
action to meet societal needs for increased energy resources to fuel
economic growth and reduce poverty, and to do so in a way that reduces
pollution, improves energy security, and avoids greenhouse gas
emissions.
Significant portions of the approach outlined in Title XVI Subtitle
B of EPAct2005 are conceptually in agreement with the approach adopted
by the administration on climate change, particularly in the emphasis
on technology, innovation and improving markets to support the
deployment of improved technologies. The framework set out in the
legislation avoids many of the very real problems with the emissions
cap approach of the Kyoto Protocol, and it complements many of the
administration's ongoing international initiatives described in this
testimony.
We appreciate the careful thought that has gone into EPAct2005, and
we stand ready to work with the Senate and this subcommittee to explore
these ideas further.
______
Responses by Hon. David Garman to Questions from
Senator Joseph R. Biden, Jr.
Question. In response to a question by Senator Hagel about the
Asia-Pacific Partnership, Mr. Garman responded: ``We realize that, for
instance, China or India might not quite be ready for an integrated,
gasified, combined-cycle coal plant, but updating a 1940s technology or
fifties technology to a 1970s or eighties technology coal plant would
be a very good thing and an efficiency boon for them. Those are plants
that we have a great deal of experience building. Our companies are
involved in that. And that is, in fact, the type of technology that is
being employed and deployed today in countries such as that. But we
want to ratchet that up.''
Is it the administration's intention to use the Asia-Pacific
Partnership to subsidize at taxpayer expense or otherwise promote the
deployment in developing countries of, among other things, out-of-date
1970s and eighties coal-burning technologies?
Answer. The point of the example cited above is that existing
technologies in widespread use in the United States, even those that
have been around for many years, could nonetheless dramatically improve
the efficiency of energy systems in India and China, and thus the
emissions profiles of those countries. The statement also notes that
``we want to ratchet that up,'' and the Asia-Pacific Partnership on
Clean Development and Climate aims to promote significant improvements
in clean energy technologies in these and other partnering countries by
helping them develop and commercialize even more advanced clean energy
technologies, such as today's Integrated Gasification Combined Cycle
(IGCC) technology.
Question. Are there other examples of out-of-date technologies the
administration intends to subsidize or otherwise promote through the
Asia-Pacific Partnership?
Answer. The intent of the Asia-Pacific Partnership is to promote
the cleanest energy technologies available that can be readily adopted
by the economies of Asia-Pacific Partnership countries.
Question. Is it not true that supporting construction of new
fluidized bed combustion power plants will irreversibly lock in new
higher GHG emissions for the life of each such plant, at the expense of
accelerating deployment of more advanced coal technology, such as IGCC,
that has higher efficiency and from which the greenhouse gases can
later be captured and stored underground?
Answer. Modern fluidized bed combustion power plants would lock in
higher greenhouse gas emissions only if they were less efficient than
existing plants, which would not be the case in countries such as China
and India. There is a great deal that can be done to improve the
efficiency of existing plants and to promote relatively new coal
technologies that exhibit far greater efficiency that existing plants.
Such steps can improve markedly the emissions profile of these two
countries almost immediately, not years from now. IGCC clearly has many
attributes that make it attractive vis-a-vis fluidized bed combustion,
but there are a number technical and market challenges that need to be
addressed before it can be readily commercialized in China and India,
not least of which is its cost premium. Nevertheless, we expect that in
the future IGCC can and will play a significant role. Indeed, IGCC will
be a key aspect of the Asia-Pacific Partnership's Clean Fossil Task
Force, one of eight task forces announced at the just completed Asia-
Pacific Partnership ministerial meeting. Through this task force, we
will be working with our partners on approaches to accelerating IGCC
penetration into the marketplace.
Question. I am concerned that by supporting export of equipment for
the outdated FBC plants, we may miss opportunities for U.S. firms to
capture lasting market leadership in technologies that have much
greater revenue potential over the long term. Please comment.
Answer. While in the short term, modern fluidized bed combustion
technology may represent a tremendous improvement over existing
technologies in use in some countries, we agree that over the long
term, it is important for the U.S. to have leadership in advanced
technologies, such as IGCC. The Department's Office of Fossil Energy
supports research, much of it in partnership with the private sector,
into an array of advanced clean coal technology options. Through this
kind of research, U.S. firms are and will remain well-poised to take
advantage of market opportunities in a variety of advanced clean coal
technologies.
Question. I am also concerned that, by locking in a baseline with
those higher emissions, that we will create further barriers to getting
China, India, and other large emitters ultimately to take on GHG
reduction commitments. Please comment.
Answer. It follows that the commercial adoption of technologies
that demonstrate improved efficiency over technologies currently in use
in China and India will reduce, not increase, the emissions baselines
of these countries below what they would have been otherwise.
Obviously, IGCC technology can have a big impact, and we will be
working through the Asia-Pacific Partnership on ways to accelerate the
use of this technology in these and other partnering countries.
There is a reason China, India, and other developing countries have
shown no inclination to take on binding emissions reduction
commitments. As my testimony noted, Kyoto-style emissions caps are
perceived rightly by many countries, industrialized and developing
alike, as barriers to economic growth. It is noteworthy, therefore,
that China, India, and Korea--three countries that have adopted the
Kyoto Protocol but have no emissions reduction obligations under it--
have joined with the United States, Australia, and Japan--which would
have obligations under the Kyoto Protocol--in the Asia-Pacific
Partnership, the purpose of which is to address energy security,
climate change, and other environmental challenges such as air
pollution in the context of economic growth. Promoting and maintaining
economic growth creates market conditions favorable to investing in
advanced technologies, such as IGCC, that can have even greater impacts
on greenhouse gas and pollutant emissions over time.
Question. Sen. Alexander raised the example of Shell's investment
in Australia in an IGCC / ICCS power plant intended to be in operation
by 2010. Please provide the market volume and market share by country
for low carbon energy supply technologies.
Answer. The Department does not keep a record of market volume and
market share by country for low carbon energy supply technologies and
therefore can not provide the committee with such information.
Question. Are you aware of other examples of investment in major
climate-friendly technologies occurring in other countries at higher
levels of investment than in the United States?
Answer. The Department does not track investments in climate-
friendly technologies occurring in other countries and therefore can
not provide the committee with this data.
Question. Please explain why the United States is not in the
position to prevail in aspect of the race to develop and deploy
climate-friendly technology.
Answer. The United States leads the world in the development of
climate-friendly technologies. The Bush administration is laying a
strong technological foundation to develop cost-effective and realistic
mitigation options to meet clean development and climate objectives.
The United States spends more on climate change technology development
and deployment than any other country. For Fiscal Year 2005, the
Federal Government invested nearly $3 billion in such programs. The
research conducted through the Climate Change Technology Program (CCTP)
is designed to help provide the marketplace with cost-effective options
that can reduce greenhouse gas emissions and thereby address long-term
climate change concerns. We are pleased that EPAct2005 includes an
authorization for this program.
In August 2005, DOE released the CCTP Vision and Framework for
Strategy and Planning and in September it released its draft Strategic
Plan for public comment, which builds on the guidance in the Vision and
Framework. These documents articulate a vision of the role for advanced
technology in addressing climate change, defines a supporting mission
for the multi-agency CCTP, establishes strategic direction and a
framework of guiding principles for Federal R&D agencies in formulating
a CCTP research and development portfolio, outlines approaches to
attain CCTP's six strategic goals, and identifies a series of next
steps toward implementation. Our approach recognizes the importance of
maintaining a broad and balanced R&D portfolio across a range of
technologies, but it also identifies a process for setting priorities
in strategic areas with great potential.
The administration's emphasis on international collaboration is
another way to accelerate technological progress. The U.S. has
initiated a number of multilateral technology collaborations, including
the Carbon Sequestration Leadership Forum, the International
Partnership for the Hydrogen Economy, the Generation IV International
Forum, and the Methane to Markets Partnership, and it rejoined the ITER
fusion project. The administration believes that well-designed
multilateral collaborations, by avoiding duplication and leveraging
resources, can accelerate development and commercialization of new
technologies. The Asia-Pacific Partnership, which was just launched
formally in Sydney, Australia, will be looking at ways to accelerate
the commercialization of advanced technologies that can help reduce
greenhouse gas emissions, contribute to energy security, and promote a
cleaner environment.
We believe that these and other efforts will ensure that the United
States maintains its leadership role in developing and commercializing
advanced energy technologies.
Question. What factors make Germany, Japan, and other countries
more successful than the U.S. in commercializing advanced energy
technology?
Answer. These countries are not more successful in commercializing
advanced energy technologies. However, in some cases, markets in these
countries experience increased demand for advanced energy technologies
because of government policies or inherent price differentials. For
example, generous subsidies (over $0.50 / kWH in the case of Germany)
and higher electricity prices in Japan and Germany encourage the
deployment of higher cost renewable energy in those markets. Our
approach is to lower the cost of these technologies through continued
research and development so they will be widely adopted in mainstream
energy markets.
Senator Hagel. Secretary Garman, thank you.
Because Senator Alexander has commitments on the floor of
the Senate shortly, I am going to ask Senator Alexander for
whatever questions he would like to ask, and take as much time
as you need.
Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman. That is very
generous of you. I will just ask one or two questions and hope
I can return.
First let me thank the administration witnesses for coming.
I believe that the energy bill that was passed in July
represented a real change in direction for the United States
Senate. Its entire focus almost was on shifting our attention
to the way to produce low-carbon and no-carbon energy in the
large amounts that we are going to need in the United States.
That is why it focused on conservation and efficiency. That is
why it focused on advanced nuclear power. That is why it
focused on coal gasification and carbon sequestration, the
other things that you have mentioned.
My concern is that I would like for it to have been more
aggressive. I think it is the right model, but I favor more
aggressive conservation and efficiency, more aggressive support
for advanced nuclear, more aggressive coal gasification and
carbon sequestration. That is why I voted along with the
majority of Senators for Senator Bingaman's resolution, which
basically recognized that there is a growing scientific
consensus that human activity is a substantial cause of
greenhouse gas accumulation on the atmosphere and mandatory
steps will be required to slow or stop the growth of greenhouse
gas emissions into the atmosphere.
In order to get my support and I think that of several
other Senators, Senator Bingaman took out that the mandatory
controls would have to be there in this session of Congress. I
am reluctant to vote for any such mandatory caps until I have a
clear picture of exactly how they would affect this big complex
economy of ours, and I do not think we know yet. Secondly, I
much prefer the Hagel approach, which is to innovate our way
out of this problem rather than cap our way out of the problem.
This leads me to my question. Of the several areas that you
discuss, the one I would like to focus on is coal gasification
and carbon sequestration. It seems to me that after advanced
nuclear technology, which exists today and produces 70 percent
of our carbon-free electricity, that waiting in the wings for
the next way to produce large amounts of carbon-free or low-
carbon technology is a combination of coal gasification and
carbon sequestration. It is actually preferred by many of the
large environmental organizations who are looking at the
worldwide consequences. They want us to do it early, not just
for ourselves, but because it would avoid the rest of the world
building all the conventional coal plants or as many
conventional coal plants. If they can build coal plants that
are cleaner, then our chance of having cleaner air and less
effect from global warming are greater in the United States.
On November 9th the President of Shell Oil told the Senate
Energy Committee, on which I serve, that Shell is working with
the Queensland government in Australia--several of you
mentioned Australia--on the feasibility of building an IGCC
power plant, coal gasification plant, with 85 percent of the
carbon dioxide sequestered underground. The goal is to have it
in operation by 2010. If I am not mistaken, our U.S. climate
change technology program has a goal of having commercial
plants with carbon capture and sequestration by 2015 or later.
That would give us a few years to work on this.
I do not want us to get into the position of leasing this
advanced technology from the rest of the world. I would like
for us to lead the world in terms of this. I especially wonder
therefore if we should not be putting more emphasis on coal
gasification, especially on industrial gasification, given the
high prices of other energies. There are a great many
industries around the country who are more interested in that.
I am looking for a way to break open the market and make coal
gasification with sequestration more of an option for us as we
deal with global warming.
How could we be more aggressive about that and what could
we in Congress do to encourage you to do that or get out of the
way of interfering with your doing that?
Mr. Connaughton. Senator Alexander, I will begin with your
last part of the question, which is the policy framework, and
then I will hand it off to Under Secretary Garman to talk to
you about the technology development aspects of that. I think I
need to begin, when I came into my job 4 years ago, almost 5
years ago, coal gasification was a project of the Energy
Department, not a project of the market. In fact, the best
indicator that there was not much interest in coal gasification
is the private market was not putting a lot of their own money
into it. They were following the good research work that was
going on at DOE.
So one of our challenges was how do we create a policy
environment that creates the incentive for the private sector
to invest and for our communities to request the use of this
technology in the marketplace. There were a few impediments.
First of all, it is really expensive to build a coal
gasification plant. If your choice is to build a natural gas
plant or a conventional clean coal plant, they are much less
costly enterprises. That is just a straight issue that we have
to confront.
But secondly, at the time, 5 years ago, there was great
uncertainty about the future of coal in power production. Most
of the investment was headed toward natural gas, with the
consequences that we are seeing today, which is huge natural
gas prices, in part because the utilities are using natural gas
when it should be reserved for our manufacturers and for our
consumers, especially those least able to afford their energy.
So we sat down and said, how do we create this certainty?
The phrase I like to use is you cannot have clean coal without
coal. You need a policy that creates a strong signal to the
market that we will continue to use coal as an energy source in
America and we want to use it cleanly. That is issue one and
that is getting your air pollution rules right.
Then issue two, you cannot get zero-emission coal without
clean coal. Your first step is to get the technology that
cleans up the conventional harmful air pollutants and then you
want to apply the technology that holds the greatest promise of
capturing the carbon. Certainly gasification is the leading
contender for that equation.
You also cannot scare people away from the technology. I
think your notion of waiting on carbon mandates is dead on
because if we put in place a carbon mandate and somebody is
thinking about spending a lot of money on a coal plant, well,
if we have not perfected the technology for capturing coal they
are not going to spend that money. They are going to move to
something other than coal. It is all about sequencing.
So that brings us full circle. As a result of the
President's clear new rules under the clean air interstate
rule, we have created a platform where we will cut the air
pollution from coal by about 70 percent. Because that framework
is based on a market-based framework about performance, we are
now seeing emerging a number of large technology providers
talking about going beyond the DOE research proposal and
building for themselves large conventional integrated
gasification combined cycle power plants.
We just had an announcement this summer that Bechtel, GE,
and one other--who am I leaving out--AEP, thank you. It was
AEP, Bechtel and GE have announced that they are pulling
together a commercial scale design for this technology and they
are going to seek approval. In fact, they are in a competition
right now for approval among a number of States. Cinergy, now
subsumed under Duke Power, is pursuing similar authorities, as
is the Southern Company. So we now have three of our major
coal-fired utilities who have put this technology that you seek
back on the table in a commercial setting where we can get
investment.
From that standpoint--and then I will turn it over to Under
Secretary Garman---
Senator Alexander. Mr. Connaughton, my question is why is
Shell making a deal in Queensland to have something open by
2010 and not in the United States? What about our conditions
here make it more attractive in Australia to do that?
Mr. Connaughton. I will hand off to Dave and then I will
pull back and add to that.
Secretary Garman. I am not precisely sure why Shell is
moving ahead in Queensland, to move ahead with a sequestration
project there. As Chairman Connaughton indicated, there are
several IGCC, integrated gas combined cycle, plants, actually
two in operation today in the United States and others that are
coming into being in the near future.
There is some basic science, though, that we need to do on
the sequestration side. Gasifying the coal is not the sum total
of the effort to make sure that the project is going to be a
success. We have to be sure that we can separate that carbon
dioxide from the flue stream cost effectively and geologically
sequester that carbon dioxide and have the confidence of both
the science community and the public that the carbon dioxide is
going to stay where we put it.
There is some fundamental science that has to be done. Now,
Australia is of course our partner in the Carbon Sequestration
Leadership Forum to undertake some of this pre-commercial
scientific research that does need to occur. But I think Jim
put it very well. The efforts to compete and to market this
technology are already well under way and I think the consensus
is that IGCC plants are the way to go, that, as you mentioned,
coal has to be a player and it will be a player. If we are
serious about carbon dioxide, we have to recognize the
developing countries with an extremely large amount of coal are
going to use coal and we should endeavor to develop those
technologies that let them do it in a near-zero carbon emission
framework.
We have substantially increased funding for carbon
sequestration work and coal gasification work in our budgets
and we take it as a very serious research activity that we have
under way.
Senator Alexander. I want to thank the witnesses for your
answers and excuse myself. I have to be on the floor right now.
I want to thank the chairman for his courtesy in letting me ask
the first question.
Senator Hagel. Senator Alexander, thank you.
Let me start with you, Chairman Connaughton. All three in
your testimony noted the Asia-Pacific Partnership on Clean
Development. How did that come about? What was the impetus to
bring that group together?
Mr. Connaughton. The partnership actually grew out of a
long series of international dialogues related not just to
climate change, but related to the partnerships that we had
developed, especially in the Asia region, in following up on
the World Summit on Sustainable Development, which was focused
on more the classic development issues such as reducing water
pollution and reducing air pollution and promoting agricultural
productivity, as well as emerging dialogues about our shared
concerns about energy security, because we are six countries
representing 50 percent of the economy, those economies are
driven by energy and we are competing on the world stage for
those sources.
We found ourselves dealing with each of these issues
individually and yet recognizing that you cannot treat them
apart. If you want a sensible path forward, we need to link our
government to government policy dialogues, our private sector
to private sector dialogues, and then our technology research
and development dialogues.
So we had a jam session, if you will, internally within the
administration to figure out how we could better consolidate
our efforts and make them more effective. Then we also
recognized the last 4 years was really about technology
development and the real imperative then emerged, now let us
get focused and even more serious about technology deployment.
Our conclusion internally was it is not enough to do
projects any more. We have technology development, we have
USAID and other, the banks, doing projects that prove some of
these highly efficient technologies, these low pollution
technologies. But we really need to figure out how to open up
markets.
We thought we would start small with a small number of
countries with a shared economic zone and see if we could
identify some key priority sectors where we can advance these
three goals of energy security, air pollution reduction, and
greenhouse gas reduction in a coherent way. So it was sort of
evolutionary. We reached out to them over the course of last
winter.
I must say, Mr. Chairman, that a lot of our dialogue was
predicated on the exchange that we had and some of the thinking
that you and Senator Pryor brought to the table, as well as
Senator Alexander. We worked hard to incorporate that into our
discussions internationally, and in fact in record time we
found common ground on a vision where there had been a struggle
for that in the years past. I think the time was particularly
ripe for that.
Senator Hagel. Thank you.
Any of the other witnesses want to add? Secretary
Dobriansky?
Secretary Dobriansky. Thank you. I would like to add to
that. Jim mentioned the original discussions, if you will, at
the World Summit on Sustainable Development. It became I think
very apparent coming out of those discussions and going to the
COP meeting in New Delhi there was a declaration that in fact
was issued which I think in many ways clearly and directly
enunciated that these issues are integrated and that there is a
vital need to try to work more closely on the advancement of
economic growth and on the advancement of energy security and
in particular the development of clean and efficient energy
technologies.
I would start back with the linkage and the discussions
that took place very broadly at that time among a wide variety
of countries. Then I would add to that by looking at over the
years leading up to just this past summer that it really became
even more apparent how crucial this integration in fact is and
how it is being very much accepted, not only by the developing
world and urged by the developing world, but I think even what
we saw in Gleneagles with the G-8 plan of action it also really
codified the importance of this integrative approach. In fact,
we see the Asia-Pacific Partnership, if you will, as linked to
those discussions.
Senator Hagel. Thank you.
What countries outside this partnership in your opinion
would be potential leapfrog countries to work with and ground
them with this new concept of technology and partnership?
Secretary Dobriansky. I will respond from this perspective.
I would rather not mention specific countries because, quite
frankly, there are quite a few that actually have expressed an
interest in the Asia-Pacific Partnership. But one of the things
that I can say to you is that I think, first of all, the
interest is very welcome. It comes from both other developing
and developed countries, those that also would fit in the
category of large emitters, and then thirdly those that are in
dire need as well of economic growth and a need for the opening
of markets.
But one of the things that we have thought about with the
launch in January is, in addition to the formal launch, to hold
a meeting with the diplomatic corps and particularly, not only
those that have directly and already expressed an interest in
coming into the partnership, but with others who might want to
know more, and to see where we go from there.
I do not know if you want to add further.
Mr. Connaughton. Yes, I just want to underline the
fundamental behind the partnership is looking for these
opportunities on a large scale to open up markets for
environmental goods and services that will promote efficiency,
reduce air pollution, and thereby reduce greenhouse gasses as
well. So when we look at candidate countries for real progress,
it actually turns on the fundamentals of development, too.
Clearly, the Millennium Challenge countries have been
identified by the President under the authority of the Congress
as countries that are really getting their acts together to get
the economic foundation and the human capacity foundation to
create the value chain and the markets for these kinds of
developments. They are also the more dynamic economies, so they
are the ones that we expect to see growth and investment at a
level that is quite substantial.
We are really talking about the countries where the private
sector sees a real opportunity to enhance the quality of life,
and that comes from the fundamentals, the fundamentals of
investing in people and stable economic institutions. It is
very difficult to make substantial progress in countries that
are not establishing those norms.
So I think we look at our new trading partners. They are
clearly in the realm of opening up trade, sharing technologies
and experiences, while protecting intellectual property rights
and providing a good stable foundation for those investments.
These are the kinds of countries that make the most sense. Of
course, you have the large ones, too. You know who they are. I
put the chart up earlier, and it is pretty clear where the
opportunities lie in that list that EIA put together for us.
From that we want to then select the countries where we
actually think our private sector stands a good chance of
working their way into their economy, and at the same time
these are countries that can come and invest here, because this
country will spend tens, actually into hundreds of billions of
dollars in the next couple decades on efficiency upgrades and
pollution reduction upgrades. That is a global market that some
of these countries can invest in and gain some experience in
and bring that home, bring that experience home. So it is a
two-way street is what we are trying to establish.
Senator Hagel. Thank you.
Secretary Garman, what key U.S. technologies are available
today for deployment with not only some of these partnership
countries, but other countries that may be at that stage that
Chairman Connaughton was talking about?
Secretary Garman. The technologies that come to mind is of
course underpinning the need for large amounts of dispatchable
baseload electricity for growing economies, and that would
include nuclear technology, which is important but
controversial in some realms, but also some of the more
advanced fossil technologies such as circulating fluidized bed
coal. We realize that, for instance, China or India might not
quite be ready for an integrated gasified combined cycle coal
plant, but updating a 1940s technology or fifties technology to
a 1970s or eighties technology coal plant would be a very good
thing and an efficiency boon for them. Those are plants that we
have a great deal of experience building. Our companies are
involved in that and that is in fact the type of technology
that is being employed and deployed today in countries such as
that. But we want to ratchet that up.
Senator Hagel. Chairman Connaughton? Thank you.
Mr. Connaughton. If I could add, we also are seeing a great
and nice emergence of wind in appropriate settings, although
around the world there is still a lot of resistance to the
siting of wind projects and that remains something that we
should work, dedicate ourselves much more to, because it is a
plague here in America and it is in other parts of the world as
well.
But I would also underline the interests in some of the
major economies in bio energy systems, that again require a lot
of work to figure out and make sure you have the total balance
right. But I did want to underline, I just returned from a
visit to China and they are now sending a clear, a clearer
regulatory signal and a clearer market signal toward the
application of the technologies that Under Secretary Garman
just described. They in their new plan are dedicating
themselves to desulfurizing, taking the sulfur out of, 46
percent of their existing coal-fired power plants. Some of
these are 40 years old. That is a big deal. They are going to
retire a couple hundred of small--they have these small, little
coal plants. They are just going to retire them, so they go to
a bigger baseload plant on which they can install pollution
control technology. Nearly every new plant, coal plant, they
build, they are going to--it is their now set policy that they
are going to desulfurize it and require the installation of
burners that have low nitrogen oxide emissions.
These are conventional technologies that we know how to do
well in America which, if deployed on the scale the Chinese
have publicly stated they are going to deploy it, will be
hugely consequential. How do we help them to implement that,
accelerate that, is the challenge that is before the
partnership. But we now have a clear goal.
I will add that they also want to do it while improving
their efficiency by 20 percent. They have a goal of a 20
percent efficiency improvement. Some of these technologies take
power to use them and so their investment in efficiency becomes
critical because they do not want running air pollution control
equipment to take away from the energy available to the people
they are trying to lift out of poverty.
It is really an exciting time for this kind of
international discussion because we are getting clearer goal-
setting by each of our countries.
Senator Hagel. Thank you.
Under Secretary Dobriansky, would you like to add anything?
Secretary Dobriansky. No.
Senator Hagel. Let me ask you, Madam Secretary, where do
you think the most cost-effective areas are in the world today
for implementing some of this technology?
Secretary Dobriansky. Clearly we are looking at those areas
where there is a market opportunity, that you do have an
ability for the private sector to engage and to be able to
invest. At the same time, I think what also is very crucial in
this area, and which I think is the underpinning of the Asia-
Pacific Partnership, for example, is the importance of building
capacity. So we are also looking at that aspect, in other words
the infrastructure and the capacity to actually be able to go
in and to help.
I also think what is crucial to this is relationships and
the breaking down of barriers as well. Those are some of the
kinds of criteria, if you will, and factors that we are looking
at. I think this means not only the engagement of some
countries that would not necessarily be categorized as
developing countries in the truest sense of the term, but those
which have an infrastructure where change is required and there
are opportunities for actual development and deployment of
technologies.
But then you have the other side, which is those countries
that really are lacking a complete capacity and have the
willingness to open themselves and to try to change. So there
is a type of a two-tiered approach. I know that in the process
of our looking at, for example, the 25 countries we have been
grappling with that issue in defining specific criteria of what
we look at, looking at also the question of greenhouse gas
emissions, CO2 emissions, looking at the factors I
have just mentioned, and we look very much forward to sitting
down with you and sharing some of our thoughts after we have
sifted through that.
Senator Hagel. Thank you.
Anyone else want to? Secretary Garman?
Secretary Garman. I just would not want--we have not
mentioned a lot about end use technologies and efficiency
technology and I would not want that to be construed as a
technological opportunity that we should miss. As an example,
last week I sat down, speaking of China, with 20 individuals
from around China from the Ministry of Buildings to talk about
something as simple and seemingly untechnical as insulation.
The Chinese built a lot of concrete buildings with no thermal
breaks or insulation whatsoever, and if we can employ very
simple, available technologies we can have tremendous impact
that involves not having them build more power plants, but
having them build fewer power plants, and that is in
everybody's interest.
Senator Hagel. Thank you.
Secretary Dobriansky, what are we doing through the State
Department to encourage these countries, developing countries,
to adopt these standards and invest in technologies and partner
with us?
Secretary Dobriansky. We have a range of programs, some of
which I have mentioned, that really tap into the private
sector, which we see as very crucial in the implementation of
these strategies. Public-private sector approaches are
absolutely crucial.
Secondly, one of the areas that I think we really need to
be looking at more closely are what are some of the financial
incentives that could be provided and what are some of the
barriers that could be broken down. Those are areas that we are
exploring and we hope to be able to come forward with some more
concrete information in those areas as to what we can
specifically do.
We think as part of the legislation that you have put forth
you quite rightly identify those areas as being crucial to move
forward with these technologies.
I also would highlight something that you featured and that
is exchanges. I think that it is not only about the financial
side, but it is also very much about the personal
relationships, the expertise that is in fact shared, the
information that is shared, which is also I think a very
crucial underpinning and component here in working together,
the whole importance of joint projects, that this is not just a
one-way street, it is a two-way street.
Senator Hagel. Would you say this is a high priority at the
State Department in achieving this objective?
Secretary Dobriansky. Absolutely, it is absolutely a high
priority in trying to achieve this objective. I think the
framework of your provisions really identify a number of
crucial areas that we feel underpins, if you will, some of the
current initiatives that we have, but as I also suggested in my
testimony, the need for us to go further in a number of areas
in collaboration with our partners.
But this is absolutely a priority for us. We think that
these kinds of steps will make a difference, a fundamental
difference in impact, not only in terms of economic growth, but
also in terms of addressing the issue of energy security and
climate change.
Senator Hagel. Thank you.
Anyone wish to comment?
Mr. Connaughton. Just on the priority point, this has come
together as we would have liked, but it has come together
largely because the President has put a lot of his own personal
initiative into this with the other leaders in the partnership,
as he did in the context of what was a substantively successful
G-8 outcome in working very closely with Prime Minister Blair,
who has been extremely thoughtful on these issues, in trying to
find that common ground.
I would also note that Secretary Rice herself is personally
engaged on a regular basis with respect to this. This actually
grows out of some of her own efforts and thinking right after
the last election as we were trying to shape the agenda going
forward on how, again, how we advance our broader development
objectives in a way that envelops this initiative.
The other thing I would add, Senator, is we talk about
identifying the countries. Perhaps one part of the question
really needs to be identifying the opportunities. The best
opportunities still are the ones that make the most money, as
opposed to cost the most money. I can assure you that as we do
some of our road mapping in the power generation sector and a
few other sectors I could think about, there are clear near-
term opportunities with appropriate national policies to be
sure that investments in efficiency, for example, occur for
some of the end use opportunities that Under Secretary Garman
said would occur.
The second, which is clearly the case in countries like
India and China, when you ask them their top priorities in the
environment, they nearly universally say it is reducing water
pollution and cleaning their air. So if you can quantify public
health benefits, which we are very good at doing in America, we
can share that analytical work.
The addition to GDP by making real improvements in air
pollution reduction and water pollution reduction are enormous
in these countries. Just the math is still coming forward.
Then of course, in a political sense this energy security
issue is a big motivator for action. So the more we swim with
the current of these high priorities, the more that we can
obtain in the area of greenhouse gas reduction as well.
[Room lights fade out, then return.]
Senator Hagel. We may have an energy issue here.
Secretary Dobriansky. In the dark, may I just add?
Senator Hagel. Secretary Dobriansky, in the dark.
Secretary Dobriansky. I wanted to underscore the top
leadership at the State Department, Secretary Rice, sees this
as a priority. She personally is engaged in it, and also with
regard to the Asia-Pacific Partnership Deputy Secretary
Zoellick also has been very engaged. He in fact announced it in
ASEAN over the summer. So we have a very strong and robust
support of our top leadership in this.
Senator Hagel. Thank you.
You each mentioned this to some extent, but I would like to
hear from the three of you specifically where you think in your
particular areas of responsibility with your portfolios are the
biggest barriers to greater use of these technologies and
technological solutions with these countries. Start with you,
Chairman Connaughton.
Mr. Connaughton. First of all, obstacles to trade. We still
have very significant tariffs and we still have inconsistent
rules of the road when it comes to the provision of these goods
and services, and we still have a huge issue with intellectual
property rights. These are advanced technologies. They are very
effective. They can be mass produced. But if there is not a
protection of the original intellectual property creating these
technologies the people who have them are not going to be
deploying them. So this is fundamental.
The other barrier from my perspective in terms of what I am
going to be working hard on is what I call the peer-to-peer
barrier. We have a lot of government-to-government dialogues. A
subset of our technology vendors talk to each other
internationally. But what is missing are the CEO level, manager
level exchanges, because largely where we need to make progress
are big domestic-based industries, such as power generation.
There is not a reason for our CEOs to sit down with their
equivalent counterparts in China and India on a regular basis
and exchange their own best ideas for financing, for how you
manage these outcomes, for which range of technologies is
delivering the goods.
That kind of exchange we can do a lot more of and actually
that is a fairly low-cost taxpayer exchange to stand up and the
dividends could be enormous in terms of inspiring innovation
and investment opportunity.
I guess I will stop there and turn it over to Under
Secretary Garman.
Senator Hagel. Secretary Garman?
Secretary Garman. One of the issues that comes up quite
frequently is an innovative novel technology that looks very
good on paper, say a cellulosic biorefinery that could turn
wheat straw and corn stover into fuel, but because one has not
been built a banker is unlikely to finance that first of a kind
technology. Sometimes there is a regulatory uncertainty in a
country. Before the passage of the energy bill, for instance,
there was new nuclear power--the new regulatory regime that is
in place by the Nuclear Regulatory Commission has never been
test driven, as it were, and again people are very apprehensive
about committing multibillion dollar investments against a rate
of return that is not going to happen for many years into the
future when there is uncertainty.
That financeability issue looms in instances both in this
country and around the world. Sometimes it is just a simple
lack of information. I am surprised at the number of times
where, through the convening power of government, we sometimes
inadvertently bring together partners that find that they have
a mutual self-interest, a financial interest, in doing
something together. This has constantly surprised me. Maybe
these two have seen it before, but it is one of the things that
I have learned in my brief tenure, is that government does have
a convening power and when ministers meet to discuss these
kinds of opportunities the private sector watches and listens
and quite often they invest.
Senator Hagel. Thank you.
Secretary Dobriansky?
Secretary Dobriansky. I too would have identified, as Jim
started off with, from the international standpoint, definitely
international--intellectual, excuse me, property rights; trade
barriers. Two others that I think to add to the mix that can
come into play here are laws, the legal aspects of dealing with
technologies and having to grapple with that internationally,
because the laws of one country are different from the laws of
another country and how you sift through that.
Then the third area is in some countries, particularly
those that are very sizable, when you have Federal structures
versus local structures, and how one also gets through that;
that certain decisions are made at a Federal level, but how it
gets translated to the local level, and which you can actually
develop capacity-building. Those would be some additional ones
I would add.
Senator Hagel. Thank you.
Chairman Connaughton.
Mr. Connaughton. Let me actually give you two examples to
make this a little more tangible. In the Methane to Markets
context, we have identified at least one, probably a couple of
countries that historically have state-owned coal reserves and
you can get a lease from the state to take the coal and you
share the economic profit with the government for taking the
coal. But the legal regime required you to treat the methane
from coal mining as a waste to be managed and you could not get
a legal right to capture the methane and sell it.
Just a simple, sort of outdated law because they did not--
because the methane used to be thought of as a safety hazard
and a waste. Just by working with the country to fix that law
and create the same legal regime for the methane as for the
coal, all of a sudden can unleash a multi-billion dollar
capital investment without any further work by the government.
That is a very tangible one.
Senator Hagel. Before you go to the next one, how are we
doing that, working with the government of a foreign country to
deal with a law like that? Take me through generally the
process?
Mr. Connaughton. Well, let us start with the starting
point. We are doing methane based on 10 years of enormous
success by the U.S. Environmental Protection Agency of doing
what Dave described, which is linking people who know how to
handle methane with the people that are accidentally or
intentionally releasing it. USEPA created this methane,
domestic methane partnership to get them to talk to each other
about the opportunity for capturing the methane.
Then from that we have a pretty good legal regime in
America, whether it is on public lands or in privately owned
lands, where we have an enforceable contract right to get a
lease and it is enforceable in court so your contract is
protected. What we would do, for example, with the countries I
am talking about, we would sit down with them at their
government-to-government level and say: The private sector has
identified this as a major legal impediment and if you make a
relatively simple change in your law--and we sit down and we
describe it for them, what it would be--then we have capital
investors who have been looking at this for some time. We show
them real money sitting on the table.
That is a good incentive for them to update their legal
regime, and that is where the government to government piece is
important. Some of the countries we deal with, our private
sector has a hard time accessing some of these government
dialogues, but we can achieve that.
Then as soon as the change in law occurs, then it is
important for our Commerce Department to get engaged, for our
Energy Department to get engaged, and our multilateral
development financing banks to get engaged and say, hey, a new
market has just been created, and get that word out, because,
believe me, sometimes--what I just told you about China, very
few people in America know even now, the fact that they are
going to install, spend huge amounts of money installing
pollution control equipment. Most of our people in America do
not know that yet. We can help get that word out.
This is very roll up your sleeve kind of stuff. It is not
grand work. It is the work in the weeds that can make the
difference.
Senator Hagel. Is that your office that would initiate that
government-to-government conversation as you have just
described?
Mr. Connaughton. My office helped pull together the high-
level leaders' commitment to this framework in the Asia-Pacific
Partnership, for example, that we are going to unfold. We then
hand that off to State, working with DOE and Commerce, and then
we are going to have work plans. What happens then is we get
the leaders to get a better--more clarity on the priorities for
each of their countries. So I can help facilitate that. Then
once their agencies and our agencies get a clearer direction of
where they are going, then my function at that point is to
monitor that and report to the boss, report to the President,
as to where we are seeing the best opportunities.
Our goal is to mass produce the outcome, and especially
deliver more for the U.S. taxpayer dollar, because again, as I
indicated, projects are good, demonstration projects are good,
mass-produced markets are even better. That is where under the
leadership of Secretary Rice and certainly Secretary Bodman,
who knows a lot about business--I think it is designing those
dialogues in a way that is results-oriented, is where our real
challenge lies. We have not done a lot of that in the years
past. That is what we need to do a lot more of.
Senator Hagel. Thank you. Did you have another example that
you wanted to share with the committee?
Mr. Connaughton. I think Dave said the information piece
and let me offer this example. Many of our new opportunities,
especially in the energy area, are cross-sectoral. It used to
be you had the energy providers. These are the guys who knew
how to take a pot of water and light a fire under it and
produce an electron. It is hundreds years old technology. And
they rarely talked to their counterparts in the petrochemical
sector, they rarely talked to their counterparts in the
agriculture sector.
Then meanwhile the chemical sector, for example, invested
gasification and they have been using it for decades on a small
scale in chemical plants. It is just there was never the cross-
sectoral dialogue to say, hey, we have this chemical sector
technology that would actually be perfect for a future of coal.
It is these cross-sectoral pieces that I think the
government can play a very important role in seeing because we
operate horizontally, whereas many of these sectors operate
vertically.
The same is true on human capacity. We have electrical
workers who work in power plants. We have a different set of
workers who train to work in chemical plants. If we want to do
something like coal gasification we actually need cross-
sectoral training of our work force so that those who work in
chemical plants can now work in power plants. This is, by the
way, a great new opportunity for labor, for American labor, but
it does require a rethinking of the structure of training and
what we expect of these work forces to provide these cross-
sectoral opportunities.
So it is the day-to-day worker, it is the manager, and it
is the finance people that we need to start talking to each
other across sector. Big challenge, but a huge opportunity.
Senator Hagel. Thank you.
Secretary Dobriansky. I was just going to add before, Jim
mentioned the overall structure as relevant to the Asia-Pacific
Partnership in terms of the U.S. Government. We have had quite
a bit of diplomatic engagement with these other partners. They
have either been in the context of international fora on the
sidelines or, for that matter, also at the UNGA meeting. We
have had a number of opportunities at my level.
We also have a working level, too, with all of the
countries involved. I would also want to underscore the fact
that we have, as I mentioned in my testimony, bilaterals with
some 15 countries and regional organizations. That too has I
think really afforded a great opportunity, not only to focus on
a broad range of programs and projects, but many of them are
linked to and associated with not only Asia Pacific, but many
of the other initiatives that we have mentioned here: methane
for example, renewables, energy R and D, climate monitoring,
and so forth.
Senator Hagel. Thank you.
Let me go back to a point that a couple of you made in your
opening remarks on measurement by gas, greenhouse gas
intensity, that greenhouse gas intensity approach that not all
countries have subscribed to. Do you see a movement toward that
measurement, toward that being incorporated, integrated into
their climate change policy?
Let us start with you, Chairman Connaughton.
Mr. Connaughton. Yes, Mr. Chairman. All the measures are
important, so let me start there. We need to know our absolute
emissions. That is fundamental. We need to know our emissions
per capita because it gives us a good sense of how much each
individual is using and consuming.
By the way, when I say emissions I include greenhouse
gasses, but I am also very personally worried, as others should
be, about air pollution. We need to know that, too. What the
intensity metric, though, does is it ensures that your progress
is mostly based on the kind of desired outcomes you want.
Let me sort of unpack that a little bit. What intensity--
because it compares your emission per unit of growth, it is a
clearer signal of investments in efficiency and productivity,
and those are the kinds of investments we prefer to see. It
does not credit as much reductions that come, for example, by
putting people out of work, because you get economic loss
associated with that and so you do not get rewarded by
achieving your goals by putting people out of work. It does not
recognize moving economic activity and polluting or emitting
activity from your country to another country, because not only
is that sort of bad economically and therefore it subtracts
from this metric, but from an environmental perspective if you
have merely shifted your air pollution or your greenhouse gas
emission to another country you have not done anything to
advance the environmental outcome either. So it softens that.
It is not a complete answer to it, but it softens that as a
metric.
It also is a good indicator of a diversifying economy
because you are getting--if I look at the metric I put up
before, Mr. Chairman, this flattening of greenhouse gasses that
we just experienced in the last 4 years, they were the result
of desirable improvements of efficiency and the deployment of
advanced energy technologies.
It is the intensity improvement that I am even more
interested in than the fact that we are flat, because we have
this much more efficient and productive economy. Also we have
continual structural shifts. We are adding new elements to our
economy that do not use very much energy, and that is good for
our overall security. Those are the kinds of outcomes that we
prefer to favor.
It is interesting because we are now at the point where all
the Asia-Pacific Partnership countries have embraced intensity.
Even our counterparts in Europe, Prime Minister Blair and
others, have included intensity as an important way of looking
at our progress in understanding where we are making the
greatest gains.
I would note the final piece to the advantage of intensity
is we have a growing population and so we have to account for
the fact that growing population is carrying an even greater
economic load as well as creating economic opportunity. There
are other parts of the world where they are experiencing a
decline in population. So again, the intensity metric helps
work some of those out of the equation so we have a clearer
sense of where we are getting investment, real investment in
technology and efficiency and productivity.
Senator Hagel. Madam Secretary?
Secretary Dobriansky. I would have picked out the fact that
the Asia-Pacific Partnership, that a fundamental aspect of it
is embracement of the greenhouse gas intensity approach.
Secondly, I would cite the fact that many developing countries
have for quite some time especially expressed interest in it,
because again it is the desire and the need to advance
economically and at the same time to be environmentally
responsible and also to look at ways of providing for it
citizens and providing opportunities for investment.
I go back to the discussion in the COP in Delhi in 2002.
There was a very active discussion about the greenhouse gas
intensity metric and what it exactly affords for developing
countries, so starting with that backdrop.
Senator Hagel. Thank you.
Secretary Garman, would you care to add anything?
Secretary Garman. No.
Senator Hagel. Secretary Garman, let me ask you a couple of
questions. We covered one of these to some extent, technologies
that would be available, specifically technologies at our
national laboratories. Maybe you could give us a little
inventory of those technologies, where we could actually apply
those or they are being queued up to apply to these
partnerships.
Secretary Garman. I am very excited about future
opportunities through the work that has been unfolding at the
Department of Energy national labs. They are quite voluminous.
In fact, we have a technology opportunity, if you will, book--
it is actually a little thicker than this one [indicating]--
that goes through individual technologies that are out there.
Let me mention just a few.
I think we are on the threshold of tremendous advancement
in solar technology due to the pending commercialization of new
deposition technologies that make thin film solar an extremely
attractive option in many, many areas of the world, to make it
a low-cost player that can fit into the developing world very
nicely. This is a market opportunity for the United States that
I think if it pans out would be extremely exciting. That is
just one example and there are literally hundreds.
As a consequence, I am often mindful of the fact that we
have some 800 million vehicles on the road consuming ever-
increasing amounts of oil, compounding the geopolitical problem
of oil, while at the same time emitting more and more
greenhouse gasses into the atmosphere--230 million vehicles in
the United States alone. As a consequence of the President's
Hydrogen Fuel Initiative, we are bringing down the cost of fuel
cell technology and increasing the durability substantially, to
the point where we can envision a much simpler vehicle that
provides all of the attributes of today's vehicles affordably,
but with no greenhouse gas emissions and requiring no oil at
all for fuel. That would be a tremendous breakthrough around
the world.
Contrast that with the business as usual approach of
Beijing adding a thousand new cars per day to its roads and it
strikes me there are two kinds of people in the world, those
who have cars and those who want cars. We have to deal with the
transportation and oil issue, and again because of the
President's initiative I think we have some exciting times
ahead on that one as well.
But if I could provide for the committee the compendium of
our technologies under our U.S. climate change technology
program that we are looking at. They are quite expansive,
several hundred, and it may be too voluminous to include in the
hearing record, but it is quite impressive.
Senator Hagel. We would appreciate that list and it would
be included in the hearing. Thank you.
[The information previously referred to follows:]
List Provided by the Climate Change Technology Program\1\
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\1\ In September 2005, the Climate Change Technology Program
(CCTP) issued an updated compendium of technology profiles and ongoing
research and development at participating Federal agencies. The report,
entitled Technology Options for the Near and Long Term, is quite
lengthy. What follows is a list, organized by CCTP strategic goal, of
technology research areas highlighted in the report. Those interested
in learning more about these technologies are invited to view the full
report, which is available on the CCTP website at
www.climatetechnology.gov.
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CCTP TECHNOLOGY OPTIONS FOR THE NEAR AND LONG TERM
Reducing Emissions From Energy End Use and Infrastructure
Transportation
Light Vehicles--Hybrid, Fuel Cell, and Alternative-Fuel Vehicles
Heavy Vehicles
Fuels for Advanced Combustion Engines
Intelligent Transportation Systems Infrastructure
Aviation
Transit Buses--Urban-Duty Cycle, Heavy Vehicles
Buildings
Building Equipment, Appliances, and Lighting
Building Envelope (Insulation, Walls, Roof)
Whole Building Integration
Urban Heat Island Technologies
Infrastructure
High-Temperature Superconductivity
Transmission and Distribution Technologies
Distributed Generation and Combined Heat and Power
Energy Storage
Sensors, Controls, and Communications
Power Electronics
Industry
Energy Conversion and Utilization
Resource Recovery and Utilization
Industrial Process Efficiency
Enabling Technologies for Industrial Processes
Reducing Emissions From Energy Supply
Low Emissions Fossil-Based Fuels and Power
Coproduction / Hydrogen
Advanced Power Systems
Distributed Generation / Fuel Cells
Hydrogen
Hydrogen Production From Nuclear Fission and Fusion
Hydrogen Systems Technology Validation
Hydrogen Production and Distribution Using Electricity and Fossil
/ Alternative Energy
Hydrogen Storage
Hydrogen Use
Hydrogen Infrastructure Safety
Renewable Energy and Fuels
Wind Energy
Solar Photovoltaic Power
Solar Heating and Lighting
Concentrating Solar Power
Biochemical Conversion of Biomass
Thermochemical Conversion of Biomass
Biomass Residues
Energy Crops
Photoconversion
Advanced Hydropower
Geothermal Energy
Nuclear Fission
Research Under the Generation IV Nuclear Energy Systems
Initiative
Research on Nuclear Power Plant Technologies for Near-Term
Deployment
Advanced Fuel Cycle Initiative
Nuclear Fusion
Fusion Energy
Capturing and Sequestering Carbon Dioxide
Geologic Sequestration
CO2 Capture and Separation
CO2 Storage in Geologic Formations
Novel Sequestration Systems
Terrestrial Sequestration
Land Management
Cropland Management and Precision Agriculture
Converting Croplands to Reserves and Buffers
Advanced Forest and Wood Products Management
Grazing Management
Restoration of Degraded Rangelands
Wetland Restoration, Management, and Carbon Sequestration
Carbon Sequestration on Reclaimed Mined Lands
Biotechnology
Biotechnology and Soil Carbon
Improved Measurement and Monitoring
Terrestrial Sensors, Measurements, and Modeling
Measuring and Monitoring Systems for Forests
Ocean Sequestration
Ocean Sequestration--Direct Injection
Ocean Sequestration--Iron Fertilization
Reducing Potential for Climate Effects of Non-CO2 Greenhouse
Gases
Methane Emissions From Energy and Waste
Anaerobic and Aerobic Bioreactor Landfills
Conversion of Landfill Gas to Alternative Uses
Electricity Generation Technologies for Landfill Gas
Advances in Coal Mine Ventilation Air Systems
Advances in Coal Mine Methane Recovery Systems
Measurement and Monitoring Technology for Natural Gas Systems
Methane and Nitrous Oxide Emissions from Agriculture
Advanced Agricultural Systems for NO2 Emission
Reduction
Methane Reduction Options for Manure Management
Advanced Agricultural Systems for Enteric Emissions Reduction
Emissions of High Global Warming Potential Gases
Semiconductor Industry: Abatement Technologies
Semiconductor Industry: Substitutes for High GWP Gases
Semiconductors and Magnesium: Recovery and Recycle
Aluminum Industry: Perfluorocarbon Emissions
Electric Power Systems and Magnesium: Substitutes for SF 6
Supermarket Refrigeration: Hydrofluorocarbon Emissions
Nitrous Oxide Emissions From Combustion and Industrial Sources
Nitrous Oxide Abatement Technologies for Nitric Acid Production
Nitrous Oxide Abatement Technologies for Transportation
Emissions of Tropospheric Ozone Precursors and Black Carbon
Abatement Technologies for Emissions of Tropospheric Ozone
Precursors and Black Carbon
Enhancing Capabilities To Measure and Monitor Emissions
Hierarchical MM Observation System
MM for Energy Efficiency
MM for Geologic Carbon Sequestration
MM for Terrestrial Carbon Sequestration
MM for Ocean Carbon Sequestration
MM for Other GHG
Senator Hagel. Let me go back to the solar example. Can you
give us any kind of a time frame on when that is going to be
relevant to the marketplace?
Secretary Garman. It is conceivable in the next 5 to 10
years you could see the first of these products, these new
products. Basically what they are--it is a thin film product
that just can be produced similar to today's thin film
products, but at a much lower cost. That is the key. Thin film
photovoltaics today cost anywhere from 25 to 30 cents per
kilowatt hour and that makes it a nonstarter except for in a
few high electricity cost countries like Japan. But if you can
make that 10 cent or even 5 cent per kilowatt hour peak flowing
electricity, that makes it a huge market opportunity all around
the world.
Senator Hagel. Thank you.
Chairman Connaughton, would you like to add anything to
this?
Mr. Connaughton. I just want to echo the fact that I think
we are on the threshold. These things happen every generation
or so and what I have seen in the last several years has been
an uptick in this activity. But the most important signal I
have been looking for has been the private sector venture
investment, and that is increasing. It was very low 4 years or
5 years ago.
I think it was the President's State of the Union on
hydrogen and then followed by the EU, the President of the EU
and Prime Minister Koizumi making similar announcements in the
same basic cycle, that has unleased a whole effort that goes
beyond hydrogen in terms of interest in the energy sector.
I think it is also driven by the fact that there is a
hopeful aspiration for growth around the world. So when you
have the private sector, especially our venture capitalists,
the guys who are doing some risk-taking, it is a good sign when
they are investing because what they are really seeing is, they
are saying, you know what, there will be greater economic
growth, more people will be coming out of poverty around the
world, and we want to be part of that investment. That is a
very positive sign, too.
Right now it is going under the radar screen, but just
watch in the next coming years. These breakthroughs are really
quite something and they are backed by private sector support.
Senator Hagel. Thank you.
Secretary Dobriansky, anything for you?
Secretary Dobriansky. No.
Senator Hagel. Well, we have kept you here for an hour and
a half and that means that you have not been productive for an
hour and a half to the American taxpayer, and we apologize to
the taxpayers for this, but we know that you will not go home
before midnight tonight to catch up. We are grateful for the
good work that you are doing and your colleagues. Please extend
our best wishes and thanks to your colleagues.
I think Secretary Garman's point about being at an exciting
time, all three of you have noted that we have a long way to
go, but I think we have broken through here. Like always, it
will be the private sector and technology and innovation and
leadership that will drive this. I too am encouraged with not
just what I heard today, but the kind of progress that we are
making. So even though we have a long way to go, thank you all
very much.
If we have additional questions from any of my colleagues,
we will keep the record open for a couple of days, if you would
respond to those questions. And any additional information you
would want to submit for the record, we would allow that as
well. Thank you very much.
[Pause.]
Senator Hagel. Secretary Claussen, welcome. We are glad
that you are here. When you say ``Secretary Claussen,'' those
who are observing this hearing should note that you are not a
secretary in the current government, but in a past government
you were Assistant Secretary of State, and we are once again
very grateful for your willingness to come before the Senate
Foreign Relations Committee and offer some important thoughts
in your present capacity as President of the Pew Center on
Global Climate Change.
You have been a leader on this issue for many years. You
know exactly what you are talking about and have very definite
opinions and perspectives. We are always grateful to receive
those, and we are pleased again that you have taken the time to
come before the committee. So please provide your testimony,
and if you would care to abbreviate it or read it all, either
way. Then we will have an opportunity to exchange thoughts.
Ms. Claussen. Thank you.
STATEMENT OF EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL
CLIMATE CHANGE
Ms. Claussen. Thank you very much, Mr. Chairman. If I may,
I would just like to summarize a few key points from my written
statement.
The Hagel climate provisions of the energy bill go to a
very important issue, how best to develop and deploy climate-
friendly technologies urgently and on a global scale. Standards
of living and energy demand are expected to rise dramatically
in the developing world over the next few decades. China
expects to build 544 gigawatts of new coal capacity over the
next 25 years and the city of Shanghai--and these are just
examples--predicts a quadrupling of cars and trucks by 2020.
If we are going to address the climate change problem, the
huge growth in energy demand in developing countries must be as
climate-friendly as possible. We believe the Hagel provisions,
if implemented properly, can help achieve that outcome. First,
we would urge that assistance provided to developing countries
be tailored to their specific needs. Rather than seeing
climate-friendly technology deployment as an exercise in
funding demonstration projects or increasing technology
exports, our goal should be to integrate climate-friendly
activities into national strategies for economic growth,
poverty reduction, and sustainable development. This is the
only way they will make a lasting difference, that is by
becoming a part of the recipient country's own economic plans
and programs.
Second, the Hagel provisions, like the many technology
initiatives launched before it, can only be effective to the
extent that they are adequately funded and managed. Time and
again in the past we have launched initiatives to much fanfare,
but then provided inadequate funding and failed to manage them
as a coherent whole. It would be a shame if the same happened
to the Hagel program.
More important than any of this, though, is the need to
establish a fair and effective international framework to
engage all major emitting countries in the effort against
climate change. We do not believe that technology initiatives
in and of themselves will make a significant difference and we
do not believe that an international framework necessarily
means putting countries on an energy diet. A greenhouse gas
emissions diet, yes; an energy diet, no.
But in order for countries to undertake and sustain
ambitious efforts to limit or reduce greenhouse gas emissions,
they need to be confident that other countries, and in
particular their major trading partners, are also contributing
their fair share to the overall effort. We need therefore some
form of mutual assurance and some certainty. This is best
accomplished in a common framework within which countries can
take on commitments commensurate with their responsibilities
and capabilities and appropriate to their national
circumstances. Technology cooperation should be a part, but
only one part, of such a global framework.
Through an initiative called the Climate Dialogue at
Pocantico, the Pew Center has engaged with policymakers and
stakeholders from around the world to look at options for
creating such a framework. Dialogue members who participated in
their personal capacities included policymakers from Australia,
Brazil, Canada, China, Germany, Japan, Mexico, the United
Kingdom, and the U.S. Senate, senior executives from Alcoa, BP,
Dupont, Eskom of South Africa, Exelon, Rio Tinto, and Toyota,
and experts from the Pew Center, India's Energy and Resources
Institute, and the World Economic Forum.
The final report of the dialogue will be released tomorrow,
actually in this room, with Senators Lugar and Biden and will
be presented to government ministers at the upcoming climate
change negotiations in Montreal.
We believe we have come up with some ideas for a path
forward. Now what we need is for the United States to be
constructively engaged in negotiating a framework, based
perhaps on some of the ideas we will be suggesting. The climate
negotiations taking place next month in Montreal would be an
excellent place to start that engagement and we know that
nearly every country there would welcome U.S. leadership.
Unfortunately, we understand that the administration is
opposing efforts by other countries to initiate a process to
begin considering next steps under the framework convention. We
believe it is essential that such a process go forward. So my
final recommendation would be for the Senate to revisit and
update the 1997 Byrd-Hagel resolution, advise the executive
branch to work with other nations both under the framework
convention and in other international fora with the aim of
securing U.S. participation in agreements consistent with the
following four objectives:
First, to advance and protect the economic and national
security interests of the United States;
Second, to establish mitigation commitments by all
countries that are major emitters of greenhouse gasses;
Third, to establish flexible international mechanisms to
minimize the cost of efforts by participating countries;
And fourth, to achieve a significant long-term reduction in
global greenhouse gas emissions.
Doing that, if it leads to constructive U.S. engagement in
the development of an international climate policy framework,
is far and away the most important thing the Senate could do to
create a positive context for implementation of the Hagel
provisions.
Thank you very much.
[The prepared statement of Ms. Claussen follows:]
Prepared Statement by Hon. Eileen Claussen,
Pew Center on Global Climate Change
Mr. Chairman and members of the subcommittee, thank you for the
opportunity to testify on climate change technology deployment in
developing countries, and, in particular, on the implementation of
Section 1611 of the Energy Policy Act of 2005, authored by the
chairman. My name is Eileen Claussen, and I am the President of the Pew
Center on Global Climate Change.
The Pew Center on Global Climate Change is a non-profit, non-
partisan and independent organization dedicated to providing credible
information, straight answers and innovative solutions in the effort to
address global climate change.\1\ Forty-one major companies in the Pew
Center's Business Environmental Leadership Council (BELC), most
included in the Fortune 500, work with the Center to educate the public
on the risks, challenges and solutions to climate change.
---------------------------------------------------------------------------
\1\ For more on the Pew Center, see www.pewclimate.org.
---------------------------------------------------------------------------
Global climate change is real and likely caused mostly by human
activities. While uncertainties remain, they cannot be used as an
excuse for inaction. To quote the National Academy of Sciences, in a
statement signed by the academies of 10 other nations, as well: ``The
scientific understanding of climate change is now sufficiently clear to
justify nations taking prompt action. It is vital that all nations
identify cost-effective steps that they can take now, to contribute to
substantial and long-term reduction in net global greenhouse gas
emissions.''
The Pew Center believes there are three things we in the United
States must do to reduce the real and growing risks posed by global
climate change: First, we must enact and implement a comprehensive
national program to progressively and significantly reduce U.S.
emissions of greenhouse gas emissions in a manner that contributes to
sustained economic growth. While I am happy to elaborate on this point,
that is not my intent today. Second, we must strengthen our efforts to
develop and deploy climate-friendly technologies and to diffuse those
technologies on a global scale. That is the primary thrust of Section
1611. And third, the United States must work with other countries to
establish an international framework that engages all the major
greenhouse gas-emitting nations in a fair and effective long-term
effort to protect our global climate. I would like to return to this
point later in my testimony. First, though, let me discuss the
specifics of Sen. Hagel's law and its implementation.
We must strengthen efforts to develop and deploy climate-friendly
technologies on a global scale, and to do so quickly. Standards of
living are expected to rise in developing countries over the next few
decades, and, as they do, energy demand will rise. China, for example,
expects to build 544 gigawatts of new coal capacity between 2003 and
2030, far more than current coal capacity in the United States. If
these plants are not designed and operated to capture their carbon
dioxide emissions, we could well lock ourselves into a level of climate
change no one would want. Similarly, Shanghai predicts a quadrupling of
cars and trucks by 2020, and car sales in Delhi have risen 10 percent
per year since the mid-1970s. If we are going to address the climate
change problem, the huge growth in energy demand in developing
countries has to be as climate-friendly as possible.
Section 1611 is intended to address that challenge. The provision
requires the Department of State to identify the top 25 energy users
among developing countries, describing among other things the
quantities and types of energy they use, and the greenhouse gas
intensity of their energy, manufacturing, agricultural and
transportation sectors. The provision also requires the development of
a technology strategic plan, and authorizes at least 10 demonstration
projects to promote the adoption of technologies and practices that
reduce greenhouse gas intensity in developing countries. Finally, the
provision requires an identification of potential barriers to the
export and adoption of climate-friendly technologies. All of these are
useful activities.
The State Department is still at the early stages of implementing
Section 1611. I believe the first deadline they face is production of
the report on the 25 countries, due in February. Given this early
stage, I would like to offer a few suggestions.
First, we should tailor the assistance provided to developing
countries to their needs. The reality is that the highest priority for
most developing countries is economic growth and development. Rather
than viewing climate-friendly technology deployment solely as an
exercise in increasing exports or funding demonstration projects, our
objective should be to integrate climate-friendly activities into
national strategies for economic growth, poverty reduction, and
sustainable development. For instance, energy policies and plans are
critical to achieving economic and development objectives. Making
climate change one of the drivers of energy policy, as the United
Kingdom has done, will move us toward meeting our goal of a stable
climate. We should help developing countries build their capacity to
assess clean energy options and establish policy frameworks that will
favor such options even after our funding assistance is gone.
We also should support and promote efforts by the largest
developing countries to identify specific goals for limiting their
emissions of greenhouse gases--recognizing that their goals may vary in
form, content and timing. One way to do that would be to require that
the largest developing countries, in agreeing to receive assistance
under this provision, establish goals consistent with their development
strategies, and periodically report progress toward meeting them.
Second, we would recommend tracking progress under Section 1611 not
only in terms of greenhouse gas intensity, but in terms of actual
greenhouse gas emissions. Measuring intensity is useful in that it
allows us to distinguish a change in emissions that results from a
genuine improvement in practices and technology from a change due to
reduced production. Intensity reduction, however, is not a surrogate
for emission reduction, and our objective of achieving a stable climate
must entail actual emission reductions. We therefore should be tracking
our progress in those terms, as well.
Third, like the many technology initiatives launched before it,
Section 1611 can only be effective if it is adequately funded and
managed, and implemented with some urgency. Section 1611 joins an
already large crowd of climate-friendly technology initiatives. In
addition to the programs with a largely international focus--the
Methane-to-Markets Partnership, the Carbon Sequestration Leadership
Forum, and the Partnership for a Hydrogen Economy--several other
programs are intended to advance the climate-friendly technologies we
would want deployed in developing countries, including: Climate VISION,
Climate Leaders, Climate Challenge, Clean Cities, the Hydrogen Fuel
Initiative, SmartWay Transport Partnership, FreedomCAR, Energy STAR,
Generation IV Nuclear Initiative, Vision 21, 21st Century Truck,
Nuclear Power 2010, ITER22, FutureGen, Future Fuel Cells, Industries of
the Future, and Turbines of Tomorrow.
While it is difficult to tell exactly how much has been budgeted
for each of these programs, according to the administration's Federal
Climate Change Expenditures Report to Congress (March 2005), the total
fiscal year 2005 budget authority for all initiatives that have direct
relevance to climate, as well as programs that benefit the climate
indirectly (like grants to help low-income people weatherize their
homes), amounts to about $5.2 billion.
Related to this is the challenge of implementing so many
initiatives on a timely basis. Because it is far easier to explain to
the press and public the launch of an initiative than to explain the
boring details of its implementation, the political rewards of
launching initiatives greatly outweigh those of implementation. The
tendency of every recent administration has been, accordingly, to
launch initiatives to much fanfare, but then provide them inadequate
funding and management attention. Moreover, it would be an enormous
challenge for any administration to manage such a collection of
initiatives as a coherent whole or with any real urgency.
It would be a shame if 3 years from now, in another oversight
hearing, we learned that Section 1611 had became one of several
disjointed, underfunded and indifferently implemented initiatives. We
simply can not afford to lose the time.
Fourth, an international technology deployment program, such as
that established under Section 1611, can only be effective if
complemented by an international framework that engages all major
emitting countries in the effort against climate change. Therefore,
most critical of all is the third challenge I identified at the outset:
establishing a fair and effective international framework to engage all
major emitting countries in the effort against climate change.
Through an initiative called the Climate Dialogue at Pocantico,\2\
the Pew Center has engaged with policymakers and stakeholders from
around the world in a wide-ranging examination of specific options for
advancing the international climate effort. The Pocantico dialogue was
convened by the Pew Center to provide an opportunity for informal
discussions among 25 participants from government, business, and civil
society. Dialogue members, who participated in their personal
capacities, included policymakers from Argentina, Australia, Brazil,
Canada, China, Germany, Japan, Malta, Mexico, Tuvalu, the United
Kingdom, and the United States; senior executives from Alcoa, BP,
DuPont, Eskom (South Africa), Exelon, Rio Tinto, and Toyota; and
experts from the Pew Center, The Energy and Resources Institute
(India), and the World Economic Forum. The final report of the Dialogue
will be released tomorrow in this hearing room with Senators Lugar and
Biden, and presented to government Ministers at the upcoming climate
change negotiations in Montreal.
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\2\ The Climate Dialogue at Pocantico is a series of off-line
discussions among 25 senior policymakers, business leaders, and NGOs
from 15 countries exploring options for next steps in the international
climate effort. The dialogue provides an off-line opportunity for
participants to consider specific options with the objective of
identifying a set of options to be recommended for consideration by the
broader policy community. Participants in the dialogue include
policymakers from Australia, Brazil, Canada, China, Germany, Japan,
Mexico, the United States and the United Kingdom; senior executives
from Alcoa, BP, DuPont, Exelon, Rio Tinto, and Toyota; and NGO
representatives from India and Switzerland. Recommendations from the
dialogue, which concludes this fall, will be presented at numerous
international fora. For more on the Dialogue, see http: / /
www.pewclimate.org / pocantico.cfm.
---------------------------------------------------------------------------
I would like to share with you some of the insights and
observations emerging from this ongoing dialogue.
First, there is no getting around national interest. Climate change
is a collective challenge. However, the political reality is that
nations will join in meeting this collective challenge only if they
perceive it to be in their national interests. A multilateral framework
must therefore recognize and accommodate the very real and significant
differences among nations. The key here is flexibility. We need a
framework flexible enough to allow different countries to undertake the
different types of strategies best suited to their national
circumstances. To accommodate different types of strategies, we must
allow for different types of commitments. For instance, a quantified
emissions limit may be appropriate for some countries, while for others
some form of non-quantified policy commitment may be more feasible and
effective. Also, commitments could apply economy-wide, or they could be
structured around specific sectors.
There are many possibilities and the time to begin considering them
is right now. In its present form, the Kyoto Protocol commitments
expire after 2012. In Montreal, governments will consider initiating a
formal process to consider next steps in the international climate
effort. Under the terms of the Protocol, Kyoto parties must begin
consideration of new commitments this year. There is broad
international support for simultaneously initiating a parallel process
to consider next steps under the Framework Convention, to which the
United States is a party. Other countries would very much welcome the
United States' engagement. Most have come to accept that the United
States will never be a party to the Kyoto Protocol. And they understand
that a truly effective international approach--one with the full
engagement of the United States and the major developing countries--
will require moving beyond Kyoto. It is our understanding that the
administration opposes any decision to consider next steps under the
Convention, maintaining that it is premature to discuss post-2012
options. Quite to the contrary, it is essential that we begin now, with
the United States fully and constructively engaged.
Toward that end, we believe the most powerful step the Senate could
take to reestablish U.S. leadership on this vital global issue would be
to revisit and update the sense of the Senate on the future of the
international climate effort. As we all know, Senate Resolution 98 of
the One Hundred Fifth Congress--the Byrd-Hagel resolution--has had a
profound influence on the climate debate here and abroad. As the
international climate effort enters a new stage, a new Senate
resolution can again shape the debate. It can help ensure that the
United States is at the table and define the terms of U.S. engagement;
and, in so doing, it can help achieve the best possible outcome.
As you will recall, the Senate in June approved a resolution
sponsored by Senator Bingaman recognizing the need for mandatory steps
to limit and reduce U.S. greenhouse gas emissions. This was an
important statement. However, we believe it represents only half the
equation. While meant to encourage comparable efforts by key trading
partners, the resolution provides no guidance on the terms of an
equitable climate agreement. Standing on its own, it might even be
interpreted as supporting unilateral mandatory action by the United
States.
Given all this, we would strongly encourage the Foreign Relations
Committee to consider, and to report to the full Senate, a resolution
advising the Executive Branch to work with other nations, both under
the Framework Convention and in other international fora, with the aim
of securing U.S. participation in agreements consistent with the
following four objectives:
First, to advance and protect the economic and national security
interests of the United States. Potential climate change impacts such
as chronic drought, famine, mass migration, and abrupt climatic shifts
may trigger regional instabilities and pose a growing threat to our
national security interests. Addressing climate change, on the other
hand, can greatly strengthen U.S. security by reducing our reliance on
energy imports. Sea-level rise and other climate impacts pose a direct
economic threat as well, to U.S. communities and to U.S. businesses. On
the other hand, our response to climate change, if not well conceived,
could pose a different sort of economic burden. It is imperative that
we both avoid the economic consequences of climate change, and minimize
the costs of addressing climate change.
Second, to establish mitigation commitments by all countries that
are major emitters of greenhouse gases. Ideally, a global challenge
such as climate change should be met with a fully global response. What
is most critical at this stage, however, is getting the largest
emitters on board. Twenty-five countries account for 83 percent of
global greenhouse gas emissions. Seventeen of them are also among the
world's most populous countries, and 22 are among those with the
highest GDPs. To be truly effective, these major emitters must be part
of the solution. While we cannot expect all these countries to act in
the same way, or necessarily in the same timeframe, we believe that all
must commit to take action.
Third, to establish flexible international mechanisms to minimize
the cost of efforts by participating countries. The United States has
led the world in demonstrating that well-designed market-based
approaches can achieve the greatest environmental benefit at the lowest
cost. U.S. negotiators fought rightly and successfully to build market
mechanisms into the Kyoto architecture. U.S. economic and business
interests will be best served by an international climate strategy that
uses emissions trading and other mechanisms to ensure that our efforts
are as cost-effective as possible.
And, fourth, to achieve a significant long-term reduction in global
greenhouse gas emissions. Our initial efforts to address climate
change, both domestically and internationally, can be at best first
steps. But in taking these steps, we must remain cognizant of our
ultimate objective--stabilizing the global climate--and we should craft
policies and agreements robust enough to drive and sustain the long-
term efforts needed to achieve it.
We believe these four principles form a solid foundation for
constructive U.S. engagement and urge that they be incorporated in a
new Sense of the Senate resolution.
In closing, the most important thing Sen. Hagel has done in writing
Section 1611 of the Energy Policy Act of 2005, and that the
subcommittee has done in holding this hearing, is to join the question
of how best to address climate change. As Senator Hagel has said,
``Achieving reductions in greenhouse gas emissions is one of the
important challenges of our time.'' And: ``We all agree on the need for
a clean environment and stable climate. The debate is about solutions.
The question we face is not whether we should take action, but what
kind of action we should take.''
I thank and commend Sen. Hagel for placing these issues before you,
and thank the subcommittee for the opportunity to testify. The Pew
Center looks forward to working with the committee and Sen. Hagel on
the implementation of Section 1611 and on the development, enactment
and implementation of any future climate change legislation.
Senator Hagel. President Claussen, thank you as always for
your comments and your entire statement will be included in the
record.
I am going to bounce around a little bit on some questions
based on your testimony and some things that you did not
specifically mention, but are in your statement, and then also
based on some of the things that the previous witnesses
mentioned. First, Kyoto's cap-and-trade system. In your
opinion, is it working for the European countries?
Ms. Claussen. Let me put it this way. I think it is much
harder than most of them thought it would be to actually
implement the targets they negotiated. But I do think it has
spurred a lot of activity, a lot of which is really positive in
terms of reducing greenhouse gas emissions. So has it been
helpful in educating people and getting them on the right path?
I think the answer is yes. Is it going to fulfill the dreams of
many of those that signed? Probably not.
Senator Hagel. Meaning that many will not meet their
targets?
Ms. Claussen. I think many will not meet their targets. Not
all, but many.
Senator Hagel. Do you believe a cap-and-trade system is
necessary to force new technologies onto the market?
Ms. Claussen. No. I think a cap-and-trade system is one
approach that can work quite effectively, but I think it is not
the only approach, and it is certainly my vision that we need
some different paths forward, of which that could be one, and
that could be chosen by some countries, but I think we need
others as well.
Senator Hagel. You sat and carefully listened, as I noted,
to the testimony of the first panel, and they referenced some
of these areas, in particular Secretary Garman. How do you
respond to what you heard? Do you think that is too far out? Is
it too much on the periphery? Were you encouraged by what you
heard? Give me your thoughts on that?
Ms. Claussen. I think we are at--this is something that Jim
Connaughton said at the end. I think we are at a point where
many in the private sector are starting to think very seriously
about long-term strategies that move us toward climate-friendly
greenhouse gas technologies. So I think that is right.
I think what he thinks spurred that development is maybe
helpful, but I think not what actually did. If I look at what
has changed in the world that would result in that kind of
activity, I think it is much more likely to be implementation
of Kyoto, warts and all, the efforts in California and along
the West Coast of the United States, the efforts in the
Northeast and the Mid-Atlantic, where they are developing and
will soon announce their cap-and-trade system there, lots of
other activities at the State level, 21 States with renewable
requirements. I think that activity is really what is spurring
the change in the private sector, more investment in climate-
friendly technologies.
But I do think it is happening. I do agree with that. I
just see different reasons for it.
Senator Hagel. Would you generally say you agree with what
you heard as the objectives of this administration from the
three representatives of the administration?
Ms. Claussen. On the assumption that what we are all after
is a world where emissions are reduced pretty substantially in
the next 50 or so years, I think the answer is yes. I just do
not think you can get there only by a push. I think you need a
pull to get the technologies into the market as well, and some
kind of certainty and some kind of policy that is more than the
current administration seems to be interested in.
Senator Hagel. But if we are seeing a significant increase
in the potential and the technologies coming on line, then what
additionally would that do, mandates or caps or government
regulation?
Ms. Claussen. What it would do? I think it would move the
technologies much faster in the development stage and much,
much faster in the deployment and diffusion stage, which is I
think what we need to do. I think we need to get moving faster
than just a little bit of push. Again, I think your provisions
will be very helpful. I just think they need to be complemented
with something that helps get those technologies into the
marketplace.
Senator Hagel. Thank you.
You mentioned international dialogue and how you think
maybe something could come out of that. Would you expand on
that a little bit?
Ms. Claussen. Well, I do not want to expand too much
because I do not want to talk about what we are going to
announce tomorrow. But I will give you a little----
Senator Hagel. What you can.
Ms. Claussen [continuing]. A little flavor. In the course
of this dialogue--and I think the fact that we had such a
diverse group of people around the table and they actually
reached a consensus was pretty good. We agreed on a set of
elements that we think are really important. We talked about
adaptation and we talked about long-term targets, but when we
started to focus on mitigation we thought that there were four
elements that were really important.
One of them is technology. One of them is targets and
trading. One of them was sectoral approaches and one of them
was what we called policy-based approaches. We looked at that
sort of range of elements because we think some may be more
appealing to some countries than others, and what we are really
interested in in the long term is getting everybody on the
right path. So we are looking at something that is sort of
maximum flexibility with real results.
That is why when you asked me about targets and trading,
yes, I think it is important and I think it is a path that many
will want to go down, but I think there are other ones as well.
Senator Hagel. Let me ask you a question I asked Secretary
Dobriansky, about geographically, regionally in the world,
areas where you think we have the most significant opportunity
for cost-effective development of these technologies.
Ms. Claussen. Let me put it a slightly different way.
Twenty-five countries are responsible for 83 percent of global
greenhouse gas emissions. These countries are also among the
most populous and they are also the countries with the largest
GDPs. But on the other hand, per capita emissions range by a
factor of 14 and per capita incomes within that group by a
factor of 18.
So while they are the countries that absolutely have to be
at the table and we feel very strongly that all of that group
needs to be at the table, we do need to have some kind of a
flexible approach that allows each of those countries to do
what is in their national interest, but that is also moving us
on the right path on greenhouse gas emissions. I would look at
it in terms of sort of major emitters, major economies, the
people who have to be at the table.
Senator Hagel. You mentioned your idea about revisiting the
Byrd-Hagel amendment, if I understood your point, to
essentially update it.
Ms. Claussen. Yes.
Senator Hagel. And you mentioned four specific areas. Would
you care to embroider on any of that or expand on that point?
Ms. Claussen. Yes. Our interest is in doing some of the
things that you have in the Byrd-Hagel resolution, but instead
of putting them in sort of a negative context, what you should
not do, we think they should be put in a positive context of
what the U.S. Government should do. I think it is really
important for the U.S. Government to be engaged in this and I
think it is important for our private sector, too, to see the
U.S. at the table shaping the solutions.
I think many, many in the private sector would feel that
our views, our analysis, the way we look at these things, is
really important and should be a part of the process if we are
going to have an outcome with which we can live. I think it is
really important to urge engagement, and so I would sort of see
this--I understand the context for the Byrd-Hagel, but I think
the context is different now and it is really important for the
U.S. to be at the table, at the table with ideas and at the
table with solutions.
Senator Hagel. You do not think what you heard in the last
hour and a half from three senior administration officials
talking about at the table, technologies, engagement, not only
what some of the legislation I sponsored that is now law, but
even beyond that, you do not feel that is enough?
Ms. Claussen. I do not, because I think most other
countries, while they will participate in all of these
initiatives that the last three witnesses talked about, and I
think many of them have the potential to be effective, so I am
not trying to sort of denigrate what contribution they can
make, I think most countries are interested in a policy
framework, not just a technology framework.
As far as I understand--and I may be wrong here, but I do
not think so--the U.S. has essentially said they do not want to
participate in discussions about the future in a policy sense.
I think that is a mistake because I think the world needs both
mutual assurance and certainty, and I think you have to do that
in some kind of a policy framework, and I think the U.S. should
participate.
Senator Hagel. Thank you.
Staying with your three colleagues here for a moment, let
me give you an opportunity to respond to anything that you care
to respond to that you heard while they were at the table.
Ms. Claussen. I talk to them all the time and we agree on a
fair number of things. I think the vision does not go where it
needs to go if we are really going to address this, because I
think we have to start with a much greater sense of urgency,
not to do things that are bad for economic growth. That is not
our interest at all. But I think we can do things that are good
for economic growth that also result in much greater, much
sooner reductions in greenhouse gas emissions.
It is interesting when you look at the companies that have
taken on targets, and there are probably 35 or 38 of them. Many
of them have targets that are much more stringent than, let us
say, the U.S. Kyoto target. Thirteen of them have already met
the targets and not one of them has spent money doing it,
because they found efficiency opportunities that would result
in reductions in greenhouse gas emissions.
I do not want not to take those while we can take them,
while we are developing the technologies that would be good in
a decade or two decades. I agree with that. We do need some
long-term technologies, but why would we not take opportunities
that exist right now to put us on the right path? I just do not
see the administration sort of moving in that direction. I see
them focused on the long term. I do not want to see us miss
opportunities in the short term.
Senator Hagel. You were here for the exchange, the question
that Senator Alexander asked the panel about why would Shell
invest in the Australian project with the time line as it is
versus a time line here. Do you know anything about that?
Ms. Claussen. I do not know any of the specifics about
that, but I do know that the private sector is really
interested in advancing the technology, and I see them
marketing a lot of technologies abroad because they feel that
the policy climate is more certain abroad, whether it is in a
Kyoto country or a country that is more committed to long-term
emissions reductions.
If you talk to the CEO of General Electric, for example,
who has just started to really focus in a major way on
greenhouse gas-reducing technology, he views a lot of his
markets abroad rather than here because he does not think we
are at the same stage in our policy development and
implementation. He is very much focused on abroad, and of
course he wants to sell his technology, but it is interesting
that he sees the markets there, not here. I think he should be
seeing them here as well.
Senator Hagel. But you do not know anything about----
Ms. Claussen. I do not know the specifics of the Shell.
Senator Hagel [continuing]. Why they would make that
decision?
Ms. Claussen. No, I do not. But I am happy to try to find
out and maybe answer it for you.
Senator Hagel. I will tell Senator Alexander that you will
take that assignment on.
Ms. Claussen. Absolutely, we will look into it.
Senator Hagel. He will be very pleased about that. As you
know, he is very engaged in this overall issue and very
knowledgeable.
Ms. Claussen. Yes. Coal is, on a scale, coal and
transportation are the two things we really need to focus on,
because we are going to burn a lot of coal and China and India
and Australia are going to burn a lot of coal and we have to
find a way to do it with capture and sequestration.
Senator Hagel. For a long time to come.
Ms. Claussen. Yes, for a long time to come.
Senator Hagel. We are going to vote shortly, so I will
adjourn our committee hearing. But let me also say, as I did to
the first panel, that we may have additional questions, if that
is acceptable to you----
Ms. Claussen. Absolutely.
Senator Hagel [continuing]. If you would agree to answer
those. And we will get those to you in the next 2 days if we
have some members that would require that. If not, your full
testimony of course will be included in the record. Again, I
personally appreciate all of the time that we have had over the
years to exchange views on this issue and your continued
leadership. Thank you very, very much.
Ms. Claussen. Thank you very much.
Senator Hagel. The committee is adjourned.
[Whereupon, at 4:53 p.m., the subcommittee was adjourned.]
A P P E N D I X
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Prepared Statement by Senator Joseph R. Biden, Jr.
I am pleased that with this hearing today Senator Hagel, with the
support of Chairman Lugar, will continue the dialogue on the issue of
global climate change in the Senate Foreign Relations Committee.
Since the United States signed the United Nations Framework
Convention on Climate Change in 1992, the persuasiveness of the
science, the sophistication of our climate models, and the measurable
evidence of climate change and its effects have grown every year. Those
effects mean that this is not just an environmental issue. The
dislocations caused by climate change will shift growing seasons, water
resources, habitats, and other fundamental building blocks of economic,
social, and political arrangements around the world. With those shifts
will come political conflict, migrating populations, the spread of
disease--threats to international stability.
The challenge to find cleaner, more efficient sources of energy
also offers us one of the great opportunities of this new century. By
moving us toward greater energy independence, lowering our energy
costs, and promoting new products and markets, a well-designed climate
policy can create jobs and enhance economic growth. Senator Hagel's
legislation--The Climate Change Technology Deployment in Developing
Countries Act of 2005, incorporated into the Energy Bill and now part
of our national policy--shows us one way we can employ constructive
climate policy to promote the goals of economic development abroad and
innovation here at home.
Here in the Senate, we have inched closer in recent years to
recognizing the need for a bipartisan domestic mitigation program,
marked by the recent adoption of Senator Bingaman's Sense of the Senate
Resolution calling on the United States to undertake a program of
binding domestic greenhouse gas emission targets. However, that kind of
program will make the most sense as part of an international agreement
that can establish the coordination--and the trust--needed for
effective, shared commitment to reducing human impact on our climate.
This is a global challenge, and it will require an international
response.
Unfortunately, the United States, the largest current per capita
source, and the largest historical source of greenhouse gases, has
retreated to the sidelines of international efforts to meet this global
problem. We have taken ourselves out of the game.
The Kyoto Protocol that now guides international climate change
efforts has major flaws. Most obviously and fatally, it lacks the
participation of the United States, and of the key emerging industrial
giants such as China, India, Mexico, and Brazil. But instead of leading
efforts to make international efforts more comprehensive, more
realistic, and ultimately more effective, the United States is largely
absent from the search for a global solution.
We must begin the debate on a post-Kyoto regime to guide
international efforts. We must return to the table, and help to lead
the way toward a post-Kyoto agreement. Time is not on our side. In our
hearing room tomorrow, Senator Lugar and I will welcome a report by the
Pew Center on Global Climate Change that can help us begin that debate.
Eileen Claussen, the President of the Pew Center, is with us today.
Senator Hagel is right to identify new technology as one of the
keys to mitigating climate change. His legislation promotes technology
transfer as a potentially profitable and effective way for us to engage
with developing countries. But with expanding populations, economic
growth, and more intense energy use in those developing nations, there
is much more to be done. Greenhouse gas intensity--the focus of his
legislation--is a measure of energy efficiency. Our goal, however, must
be ultimately to affect overall greenhouse gas concentrations in the
atmosphere. That is our nation's commitment under the Framework
Convention on Climate Change.
I hope we can build on Senator Hagel's initiative to fashion a
robust international strategy to confront the issue of global warming,
and to the restore the United States to the leadership role in that
effort that is our duty and our historical responsibility. In recent
years the Foreign Relations Committee has twice, with its unanimous
endorsement of Resolutions on climate change negotiations, declared its
support for renewed U.S. participation and leadership in the search for
a global solution to this global problem. I hope our committee and the
full Senate can once again take up a new Resolution, to restate the
Senate's interest in renewed action on the international front.
__________
Prepared Statement by Chevron
Chevron appreciates the opportunity to submit testimony for the
record supporting the implementation of Title XVI of the Energy Policy
Act of 2005. This important section of the Energy Policy Act originates
from S. 883, ``The Climate Change Technology Deployment in Developing
Countries Act of 2005.''
Title XVI, specifically Subtitle B, charges the Secretaries of
State, Energy, and Commerce and the U.S. Trade Representative to carry
out activities that promote the adoption of technologies to address
greenhouse gas intensity in developing countries while at the same time
promoting economic development. The provisions advance projects by the
appropriate government agencies using bilateral agreements, identifying
and negotiating removal of trade barriers, developing strategic plans,
and providing overall coordination to transfer technology to developing
countries. In addition, it requires that an inventory be developed of
those technologies which could be transferred and used by developing
countries as well as establishing demonstration projects.
Title XVI is consistent with broader policy efforts which recognize
globalization, and initiatives such as this one are important in our
interdependent world. Specifically, we believe there are many positive
provisions that would facilitate the use of technology overseas to
address climate change concerns as well as help with economic
development. Private sector resources and ingenuity need to be
harnessed in a coordinated fashion and implementation of Title XVI
furthers that effort. However, it should be noted that some
technologies are currently available while others may be viable longer
term and that this distinction needs to be made in considering which
technologies to transfer.
As one of the leaders in the energy industry in technology
development and deployment, Chevron believes that technology is key to
addressing many of the world's problems, including energy and
environmental issues. We are involved in developing and commercializing
a whole host of advanced clean energy and fuel technologies, many of
which address climate change concerns. For example, our subsidiary
Chevron Energy Solutions (CES) is one of the largest energy service
companies in the nation. CES works successfully with both the public
and private sectors to install a range of energy efficiency
technologies and renewable energy sources (such as solar and biomass)
as well as stationary fuel cells. For example, CES is working with the
U.S. Postal Service throughout the Northern California area on several
projects involving solar systems, energy efficient lighting systems,
energy management systems and other energy efficiency upgrades that is
expected to reduce electricity purchases by $1.2 million annually and
reduce greenhouse gas emissions by about 6,600 tons annually. In early
2004, CES was awarded contracts from the U.S. Department of Defense and
the U.S. Department of Energy to engineer and install facility
improvements at three military bases. The improvements are guaranteed
to save U.S. taxpayers at least $150 million and expected to reduce
greenhouse gas emissions by about 1.5 million tons.
We are also actively involved with numerous international projects
on carbon sequestration and associated promising technologies. Geologic
sequestration may be the best option for reliable storage of carbon.
The Gorgon Project in Western Australia, in which Chevron and its
partners are developing large natural gas reservoirs, would be the
largest carbon sequestration project in the world. We are also
participants in a number of major carbon sequestration projects
globally, including using CO2 for enhanced oil recovery such
as in Weyburn, Canada. We are active stakeholders in the international
Carbon Sequestration Leadership Forum, an initiative developed by the
State Department and the Department of Energy for carbon sequestration
technology development. The Forum includes developing country
participants, such as China and India.
In terms of longer term technologies, Chevron Technology Ventures
(CTV) is involved with a host of research and development activities on
advanced energy technology to address the challenges facing hydrogen as
a fuel for the future. As part of these efforts, CTV was awarded a
Department of Energy cost-share contract under the government's
``Controlled Hydrogen Fleet and Infrastructure Demonstration and
Validation Project.'' CTV, in collaboration with Hyundai Motor Co. and
UTC Fuel Cells, intends to build up to six energy demonstration
stations over the next 5 years.
At the UN Conference of Parties, organized international meetings
as part of the UN Framework Convention on Climate Change proceedings to
negotiate the Kyoto Protocol, developing countries have continually
asked for assistance with technology transfer from developed countries.
The U.S. should lead this effort with other developed countries. This
would help address climate change concerns while promoting economic
development here and abroad as technology is deployed. We believe that
Title XVI will facilitate in providing the opportunity to share the
strength of the U.S. private sector and assist developing countries.
We appreciate the opportunity to submit testimony for the record,
and look forward to working with the Congress and the administration to
implement these important provisions of the Energy Policy Act of 2005.
__________
Prepared Statement of Dr. S. Julio Friedmann, Director, Carbon
Management Program, Lawrence Livermore National Lab
UNDERGROUND COAL GASIFICATION IN THE USA AND ABROAD
1. Technology Overview of Underground Coal Gasification
Currently, the U.S. faces substantial challenges in providing large
volume supplies in energy at a reasonable cost. Paired with that
challenge is the increasing recognition of a human influence on global
climate and increased concern about large potential risks associated
with greenhouse gas emissions such as CO2, methane, and
NOX. Because CO2 has a long residence time in the
atmosphere, current choices in energy technology in the U.S. and other
countries will affect future generations in terms of climate change
risk.
Underground Coal Gasification (UCG) is a gasification process
carried on in non-mined and unmineable coal seams. Using injection and
production wells drilled from the surface, it converts coal in situ
into product gas (syngas) that can be used for many energy
applications. The process has produced commercial quantities of gas for
chemical processes and power generation; at one site in Uzbekistan, UCG
has produced syngas without interruption for over 46 years.
During the UCG process, as in conventional gasification methods,
coal in the ground reacts with an oxidant, and part of the released
sensible heat is used in coal drying, pyrolysis and the endothermic
reactions that reduce the combustion products. The resulting mixture is
UCG gas (syngas). The UCG syngas can be used for power generation in an
Integrated Gasification Combined Cycle (IGCC) configuration or as a
supplement and substitute fuel in the existing coal-fired and natural
gas power plants. The syngas can be also used for chemical syntheses
resulting in manufacturing of synthetic liquid fuels (diesel and jet
fuel), synthetic natural gas, ammonia-based fertilizers etc.
UCG can be applied to coal deposits that are not amenable to
conventional mining methods. It is estimated that UCG can nearly triple
coal resources available to conventional mining. It has been
demonstrated that UCG can be performed with extremely limited
environmental impacts, much less than conventional mining and
combustion. The main environmental concern is the possibility of
contaminating ground water; however, it has been shown in a field
program in Australia that groundwater can be effectively protected.
Importantly, UCG has technical advantages that allow for low-cost
carbon sequestration and decarbonization of emissions, permitting
substantial reductions in greenhouse gas emissions.
2. Economic Advantages to UCG
UCG can be applied to coal and lignite deposits across the United
States. It has been estimated that in the USA, there is 1.6 trillion
tonnes of unmineable coal that is recoverable by UCG. This technology
can be readily deployed today to at very competitive costs for a
variety of reasons:
1. Reduced capital expense: Unlike traditional surface gasification
facilities (e.g., Integrated Gasification Combined Cycle plants or
IGCC's), there is no need to purchase gasifiers or build ash and slag
management facilities. Due to syngas stream continuity, there is also
no need for gasifier redundancy.
2. Reduce operating expense: Unlike conventional plants, there is
no need to purchase, transport, store, or prepare coal. There is no
need to re-brick the gasifier linings. Due to syngas stream continuity,
plans have high capacity factors comparable to pulverized coal or
natural gas plants, reducing down time.
3. Reduced environmental management costs: Due to the gasification
environment underground, UCG facilities produce no SOX or
NOX. Particulate streams are half of their surface
equivalents, and there is no production of ash. Roughly \1/2\ of the
mercury is generated compared to traditional plants. These present
reductions in operational and capital costs, as well as increased ease
of regulatory compliance and reduced environmental impacts.
4. Fuel supply certainty: Because the supply of UCG syngas is local
and continuous, operators are not faced with risks in terms of changes
in fuel availability or supply costs. There is no risk of supply
disruption, providing clear advantages in secure fuel supplies.
For these reasons, there is renewed interest in this technology,
with commercial demonstrations proceeding in 6 countries, including the
U.S. While the local costs will vary, conservative estimates suggest a
minimum 25 percent cost and price reduction compared to conventional
coal power, with reasonable expectations of a 50 percent cost reduction
based on projects in Australia, Canada, and Uzbekistan.
3. UCG for the U.S. Energy Market
UCG can be technology can be readily deployed today to produce the
following important high-value energy products and very competitive
costs:
1. Synthetic natural gas
2. High-efficiency electricity through an IGCC configuration
3. Liquid fuels (e.g., Fischer-Tropsch liquids, diesel fuel,
methanol)
4. Hydrogen
The technology can be deployed to produce synthetic natural gas
(SNG) in the process similar to the one used at Dakota Gasification
Company in North Dakota. Ergo Exergy internal estimate of cost of SNG
produced in North Dakota based on UCG can be in the range of $2.10-
$2.50 / million BTU. This application could be duplicated in the coal
basins of Illinois, Appalachia, the southeastern U.S., and the central
and northern Rocky Mountains.
UCG can be applied to generate electricity in IGCC configuration. A
wide range of gas turbines can be used for UCG-IGCC applications. The
power block efficiency reaches 55 percent, while the overall efficiency
of the UCG-IGCC process can reach 43 percent. A UCG-IGCC power plant
will generate electricity at a much lower cost than existing or
proposed fossil fuel power plants (above). Importantly, there is no
energy penalty for operation at high altitudes (e.g., above 3000'): the
weight of the rock and water overburden produces a stream of syngas
that is naturally high in pressure.
UCG can be used to produce syngas suitable for manufacturing of
liquid automotive and aviation fuels via Fischer-Tropsch synthesis (a
gas-to-liquid or GTL technology). The use of UCG technology would
create an opportunity to deploy GTL plants in the areas where
conventional mining and traditional GTL technologies are not feasible.
It has been estimated that UCG-GTL can produce diesel fuel at the cost
as low as $20.00 / bbl, and a new UCG coal-to-liquids project has begun
in Australia to provide 24,000 bbl / day of liquid fuel.
UCG shows the potential for producing hydrogen at a low cost,
comparable with that targeted by the U.S. DOE ``Hydrogen from Coal''
program. The high-pressure of the subterranean stream makes pressure
swing adsorption and water-gas shift reactions easier and cheaper to
execute. Based on multiple estimates, it appears that the cost of
hydrogen from UCG syngas is roughly \2/3\ that of other fossil fuel
supplies and \1/6\th that of electrolysis. This process has a
substantial additional advantage; it would create a pure CO2
stream in an environment conducive to CO2 sequestration.
Two new commercial projects are under current consideration in the
U.S. The first is in Wyoming and is based on a resource of
approximately 14 billion ton held by a private developer in Powder
River Basin. The likely end products targeted include SNG and synthetic
diesel fuel suitable for secure military fuel supplies. The other
project is planned in North Dakota with SNG as proposed end product.
There are several other UCG projects under consideration in the U.S. at
the moment. It is worth noting that Ergo Exergy is engaged in these
efforts as a technology provider, and is currently discussing a formal
relationship with LLNL.
4. The History of UCG in the USA
Research and Development in UCG has been conducted since mid-1940s.
It became especially active during the energy crisis starting in 1973.
Before winding down in early 1990s, the program had produced 33 field
trials conducted by DOE, the National Laboratories, and several
industry entities. The $350 million program has been a technical and
environmental success but had not reached commercialization, in part
due to the dramatic drop in oil and natural gas prices in the mid-
1980s.
5. UCG and Carbon Dioxide Management
In the interest of greenhouse gas emission reduction,
CO2 sequestration (also called carbon capture and storage)
has emerged as a key technology pathway. UCG provides inherent
synergies to CO2 separation and geological sequestration.
The high-pressure stream of UCG syngas provides extra energy that can
be used to separate out CO2 at extremely low costs. This
only partly reduces the CO2 flux, but at a very low cost. In
an IGCC configuration, CO2 emissions of the plant can be
reduced to a level 55 percent less than those of a supercritical coal-
fired plant and 25 percent less than the emissions of NG CC. The
calculated incremental operating and capital cost of CO2
separation would be small, resulting in a wholesale price for
electricity below today's levels.
Underground coal seams are naturally located with saline aquifers
and depleted oil and gas fields. As such, CO2 can be
sequestered in the same location as the UCG facility, making
transportation costs zero and removing the need for new CO2
pipelines. It also appears that some of the CO2 may be
stored within the cavity created by the gasification.
Importantly, partial CO2 removal is necessary for liquid
fuel and synthetic natural gas applications. By taking advantage of the
high-pressure streams, this separation can occur nationwide at low
costs relative to equivalent surface gasification facilities. This
application can also help the U.S. develop expertise in CO2
storage that could be used in many industrial and power generation
sectors, helping place the U.S. on a pathway to substantial greenhouse
gas reductions. Given the spatial distribution of potential UCG sites
in the U.S., partial separation of CO2 would be consistent
with the current DOE goals of the Regional Carbon Sequestration
Partnerships. Similarly, hydrogen from UCG requires 100 percent
decarbonization and CO2 separation. The storage of
CO2 from hydrogen production would be consistent with the
goals of the DOE's Carbon Sequestration and Hydrogen Production
programs.
6. Other Environmental Benefits of UCG
Surface production and combustion of coal can create environmental
problems. These include atmospheric pollutants such as SOX,
NOX, and mercury, solid wastes such as fly ash or slags, and
direct environmental concerns such as surface mining, mountaintop
removal mining, and acid-mine drainage. UCG faces none of these issues.
1. No SOX is produced: Sulfur in the coals is converted
to H2S or COS, which are easily gettered and converted to
solid form.
2. No NOX is produced: The gasification reaction takes
place underground at relatively low temperatures, so no NOX
is generated.
3. No ash is produced: All ash remains underground.
4. Reduced mercury and particulate streams: roughly \1/2\ the
equivalent flux reaches the surface, and are readily managed there
using conventional approaches.
5. Reduced plant footprint: The lack of ash management, coal
storage, and surface gasifiers reduce plant size and operational
complexity.
6. Reduced environmental footprint: The only surface expression of
syngas production is well heads and connecting pipelines. There is no
surface mining.
These advantages provide the opportunities for lower capital cost,
improved regulatory compliance, substantial emissions reduction of
criteria pollutants, and reduced surface footprint and legacy.
7. UCG and Environmental Concerns
Two potential environmental consequences of UCG should be
considered: groundwater quality, and subsidence. Subsidence of the land
surface does occur due to production and operation. However, the total
effect is comparable to or less than the effects of conventional
underground mining or oil and gas production.
Groundwater quality concerns are more substantial, but are by no
means overwhelming. Out of the 33 UCG trials in the U.S., only 2 have
resulted in environmental issues like groundwater contamination. Both
trials involved serious operator error that resulted in contamination
and do not reflect the environmental credentials of the technology
itself. In addition, those sites were extremely shallow, in fresh water
aquifers, and interbedded with highly permeable strata; in other words,
the sites themselves were high-risk locations. It should be said that
no UCG effort overseas, including the 46-year project in Uzbekistan,
shows any evidence of environmental contamination.
To help demonstrate the efficacy and environmental integrity of
UCG, additional and early due diligence should be considered in future
deployments. For example, the Chinchilla project in Australia monitored
groundwater with 19 wells. That effort was led by Australia's EPA and
executed through a transparent third party. After 4 years of syngas
production, the groundwater quality had actually improved. Other
technologies to monitor the burn, monitor water quality, and to
simulate potential environmental effects could be applied as needed.
Public-private partnerships may provide a mechanism for such due
diligence; for example, Lawrence Livermore National Laboratory (LLNL)
and Ergo Exergy have agreed to co-operate on new UCG projects in the
U.S. to ensure that the state-of-the-art environmental practices are
employed. Regardless, the risks of groundwater contamination appear
limited and manageable through appropriate planning, oversight, and
technology application.
8. UCG and World Energy Market
Current energy market can be characterized by the following general
features:
1. Rapidly growing energy demand
2. Depleting resources of natural gas
3. High prices of oil and natural gas
4. Growing concerns about global warming
5. Inability of renewable energy to replace the use of fossil fuel
6. Relative abundance of coal, especially deep and low grade coal
7. Continuous suspicion toward environmental credits of coal
8. Likelihood of expanded coal conversion in developing countries,
especially China and India
In that context, there has been expanded and renewed interest in
this technology worldwide. One company, a Canadian technology company
(Ergo Exergy) is currently providing UCG ignition and management
technology to several commercial projects worldwide, namely Australia,
India, South Africa, New Zealand, Canada. These projects include IGCC
power generation, conventional natural gas combined cycle electric
plants, production of liquid transportation fuels, and carbon capture
and storage (CCS).
Due to the low cost and environmental benefits, UCG hold particular
promise for developing countries with large coal reserves, including
China, India, and Indonesia. In the case of India and China, UCG could
provide substantial environmental benefit in the form of reduced
particulate, NOX, and sulfur emissions. It would allow both
nations to exploit their high-ash coals using advanced conversion
technologies like IGCC generation. Finally, it would minimize the risk
of mining deaths, degradation of the surface environment, and provide a
low-cost option for CO2 sequestration.
9. UCG and Energy Security
Due to the ability to generate electricity, natural gas
substitutes, liquid fuels, and hydrogen from coal at low cost, UCG has
clear benefits regarding secure domestic fuel supplies. Naturally, UCG
provides on technology pathway to secure production of domestic liquid
fuels for military supplies, similar to the goals of the TED and JBUFF
programs within the Dept. of Defense. In addition, the accelerated
adoption of UCG in developing countries could reduce future demands on
liquid fuels and extend the current international reserves of oil and
natural gas. Both could substantially reduce the risks to supply
disruptions faced by the U.S. while enhancing stability and economic
growth in rapidly growing nations of interest.
RELATED REFERENCES
BHP Billiton (2002) Case Study B20--Electricity production using
underground coal gasification, Newcastle, Australia, July 2002.
Blinderman, M.S. (2005) The Exergy Underground Coal Gasification
Technology and Its Application in Commercial Clean Coal Projects,
Second International Conference on Clean Coal Technologies for our
Future, 10-12 May 2005, Castiadas (Cagliari), Sardinia, Italy.
Blinderman, M.S. and Anderson (2004) Underground Coal Gasification:
Efficiency and CO2 emissions, Proceedings of ASME POWER
2004, Baltimore.
Blinderman, M.S. and Fidler (2003) Groundwater at the Underground Coal
Gasification Site at Chinchilla, Australia, Proceedings of the
International Conference ``Water and Mining 2003'', Brisbane.
Blinderman, M.S. and Jones, R.M. (2002) The Chinchilla IGCC project to
Date: Underground Coal Gasification and Environment, Proceedings of
the 2002 Gasification Technology Conference, San Francisco.
Blinderman, M.S. and Maev, S.I. (2003) The Exergy Underground Coal
Gasification: Canadian Perspective, proceedings of ``Combustion
Canada 2003'', Vancouver.
Blinderman, M.S., et al. (2004) The application of underground coal
gasification in South Africa, Proceedings of the 10th South African
Conference on Coal Science and Technology, Fossil Fuel Foundation
Indaba 2004, Pretoria.
DTI (2005) Review of the Feasibility of Underground Coal Gasification
in the UK, Cleaner Fossil Fuels Program, DTI, London.
Green, M., and Sage, P. (2004), Carbon Emission Reduction with High
Pressure Underground Coal Gasification, Greenhouse Gas Technology
Conference 7, Vancouver.
Hill, V.L. et al., Underground coal gasification: Its potential for
long-term supply of SNG, 10th Underground Coal Gasification
Symposium, February 1984.
Rant, Z. (1955) Vrednost in Obrasunavanje Energije, Stojniski Vestnik,
v. 1, p 4-7.
U.S. DOE (2004) Hydrogen from Coal Program, RD&D Plan.
U.S. DOE (2005) Carbon Sequestration Technology Roadmap, Office of
Fossil Energy, Washington, DC, http: / / www.netl.doe.gov /
coalpower / sequestration / pubs / SequestrationRoadmap3-13-
03amfinal.pdf
__________
Prepared Statement of W. David Montgomery, Ph.D., Vice President,
CRA International
Mr. Chairman and members of the subcommittee:
Thank you for your invitation to submit testimony in today's
hearing. I am David Montgomery, and I am Vice President of CRA
International, \1\ where I am co-leader of the global Energy and
Environment Practice. This testimony is a statement of my own research
and opinions, and does not represent a position of CRA International.
---------------------------------------------------------------------------
\1\ On May 6, 2005 the official name of my employer was changed
from Charles River Associates, Incorporated to CRA International.
---------------------------------------------------------------------------
I am particularly pleased by this opportunity to submit testimony
on provisions of the Energy Policy Act of 2005 (EPACT 2005) that deal
with technology transfer and the role of developing countries in
climate change. I believe, based on studies that I and others have
conducted over the past few years, that these provisions represent the
most important step to advance global climate policy taken by the U.S.
Congress. It is critical that they be implemented effectively. This
testimony is organized in three parts. The first section discusses the
opportunities that exist for cost-effective emission reductions in
developing countries, and the role of technology transfer and foreign
direct investment in taking up these opportunities. The second part of
my testimony provides the reasons why these opportunities exist, and
the critical importance of a policy designed to attack the root causes
of both poverty and high CO2 emissions, which in both cases
are found in economic institutions. Fundamental reform of economic
institutions is required before any attempts to reduce the greenhouse
gas intensity of developing economies can succeed, and that reform can
be expected on its own to stimulate greater foreign investment and
technology transfer. The final section of my testimony reviews the
specific provisions of EPACT 2005, and includes both comments on how
they appropriately address the key opportunities and suggestions on
possible ways in which they could be made more effective.
My overall conclusion is that these provisions represent a
significant step forward, that would enable the United States to take
the lead in international discussions of what should follow or replace
the Kyoto Protocol. Although other countries are not willing to admit
the failure of the Kyoto Protocol publicly, there are very promising
signs of interest in the ideas embodied in EPACT 2005: the use of
technology, the role of developing countries, and discussions among
``large emitters.'' I therefore believe that this is a time when the
United States can be effective in changing the direction of
international negotiations away from the cap and trade approach
embodied in the Kyoto Protocol toward a more technology and growth
oriented approach to the climate problem. These program provides the
foundation for that leadership.
I. OPPORTUNITY
I will make three points in regard to the opportunities that exist
in developing countries.
1. Globally, the best opportunities for near-term, cost-effective
reductions in greenhouse gas emissions are in China, India, and other
developing countries
2. Developing countries are only interested in approaches to
reducing their greenhouse gas emissions that will enhance opportunities
for economic growth
3. Policies that stimulate greater technology transfer and
investment in developing countries have the potential to achieve both
economic growth and climate policy goals.
Greenhouse gas emissions are driven by population, income and
technology. This fundamental relationship is described in an equation
known as the ``Kaya Identity.'' \2\ It states that
---------------------------------------------------------------------------
\2\ Y. Kaya, ``Impact of Carbon Dioxide Emission Control on GNP
Growth: Interpretation of Proposed Scenarios.'' Paper presented to the
IPCC Energy and Industry Subgroup, Response Strategies Working Group,
Paris, 1990.
[GRAPHIC] [TIFF OMITTED] T3730.004
The first two terms of this equation show that growth in total
income comes from population growth and growth in per capita income.
Technology appears in this equation in the third term, which describes
CO2 per dollar of income. The legitimate aspiration of poor
countries is to keep per capita income increasing. Population is a
separate and divisive issue--and in any event is not likely to be
responsive to policies in the short run. Since per capita income growth
and population growth are off the table, this leaves technology--
CO2 / ($)--as the feasible object for change.
Technology is critically important because emissions per dollar of
income are far larger in developing countries than in the United States
or other industrial countries. This is both a challenge and an
opportunity. It is a challenge because it is the high emissions
intensity--and relatively slow or non-existent improvement in emissions
intensity--that is behind the high rate of growth in developing country
emissions.
Opportunities exist because the technology of energy use in
developing countries embodies far higher emissions per dollar of output
than does technology used in the United States; this is true of new
investment in countries like China and India as well as their installed
base (See Figure 1). The technology embodied in the installed base of
capital equipment in China produces emissions at about 4 times the rate
of technology in use in the United States. China's emissions intensity
is improving rapidly, but even so its new investment embodies
technology with twice the emissions intensity of new investment in the
United States. India is making almost no improvement in its emissions
intensity, with the installed base and new investment having very
similar emissions intensity. India's new investment also embodies
technology with twice the emissions intensity of new investment in the
United States.
The United States is a good benchmark of technology that is
economic at today's energy prices, without any additional incentives or
regulations that would lead to adoption of more costly technologies for
the purpose of reducing greenhouse gas emissions. Japan's emissions
intensity is about half that of the United States, so that Japanese
technology provides a benchmark for more aggressive efforts to reduce
energy use.
[GRAPHIC] [TIFF OMITTED] T3730.005
Priorities for Economic Growth
Developing countries have made it clear that their highest
priorities are dealing with poverty, disease, famine, unemployment and
violent conflict,\3\ and that sustained economic growth is a
prerequisite for dealing with these problems. Therefore, developing
countries have also made it clear that they will not accept caps on
their greenhouse emissions and have no interest in becoming part of a
global emission trading system--at least on terms acceptable to the
industrial countries. They see these approaches to climate change
policy as threatening their ability to grow and deal with their more
pressing problems. Therefore, only approaches to climate policy that
combine greater economic growth with reductions in emissions intensity
have any chance of attracting the interest of developing countries.
---------------------------------------------------------------------------
\3\ The World Summit on Sustainable Development (WSSD) reaffirms
the need to have balanced economic development, social development and
environmental protection. It also reaffirms poverty eradication and
preservation of the environment as the overarching objectives of
sustainable development (United Nations 2002).
---------------------------------------------------------------------------
The Importance of Technology Transfer
Technologies that offer lower CO2 intensity have largely
been developed in the industrial countries. Therefore technology
transfer, which occurs largely through foreign direct investment, is
required to replace carbon-intensive technology.
Technology transfer and increased investment have the potential for
achieving large reductions in emissions. The potential from bringing
the emissions intensity of developing countries up to that currently
associated with new investment in the United States is comparable to
what could be achieved by the Kyoto Protocol (See Table 1). These are
near term opportunities, from changing the nature of current investment
and accelerating replacement of the existing capital stock. Moreover,
if achieved through transfer of economic technologies it is possible
that these emission reductions will be accompanied by economic benefits
for the countries involved.
Table 1.--Greenhouse Gas Emission Reductions Achievable Through
Technology Transfer and Increased Investment
------------------------------------------------------------------------
To 2012 To 2017
(MMTCE) (MMTCE)
------------------------------------------------------------------------
Adopt U.S. technology for new investment in China 2600 5200
and India..........................................
Adopt U.S. technology with accelerated replacement 4200 7700
in China and India.................................
Adopt continuously improving technology with 5000 9800
accelerated replacement in China and India.........
EU under Kyoto Protocol (without hot air)........... 600 1400
All Annex B countries under Kyoto Protocol 2800 7300
(including U.S. and hot air).......................
------------------------------------------------------------------------
The potential emission reductions estimated in Table 1 are derived
from a study my colleagues and I performed using a model of economic
growth based on the idea of ``embodied technical progress.'' In the
first case, we assumed that in 2005 new investment in China and India
immediately moves to the level of technology observed in the United
States, and calculate the resulting reduction in cumulative carbon
emissions through 2012 and 2017. This is the technology transfer case.
In the second case, we assume that policies to stimulate foreign direct
investment accelerate the replacement of the oldest capital with new
equipment, giving even larger savings. In the third case, we assume
that the new technology continues to improve over time, as it will if
policies to stimulate R&D into less emissions-intensive technologies
are also put in place. It can be seen that even the least aggressive of
these policies has potential for emissions reductions as large as
possible if all countries (including the U.S.) achieved exactly the
emission reductions required to meet their Kyoto Protocol targets.
It is also important to note that given the large difference
between emission intensities of China and India and the U.S., and the
relatively small remaining distance between the U.S. and Japan, most of
the emission reductions achievable through technology transfer can be
achieved be moving from current to U.S. technology. Going beyond this
in the next decade or so, by pushing developing countries to adopt
technology not currently economic even in the United States, entails
rapidly increasing costs and smaller emission reductions.\4\
---------------------------------------------------------------------------
\4\ The potential for emissions reduction through technology
transfer is discussed in P. Bernstein, W. David Montgomery and S. D.
Tuladhar, ``Potential for Reducing Carbon Emissions from Non-Annex B
Countries Through Changes in Technology.'' Accepted for publication,
Energy Economics. 2005.
---------------------------------------------------------------------------
II. CAUSES OF HIGH CARBON INTENSITY AND EFFECTIVE REMEDIES \5\
---------------------------------------------------------------------------
\5\ This section is based on W. David Montgomery and Roger Bate.
``Beyond Kyoto: Real Solutions to Greenhouse Emissions from Developing
Countries.'' AEI Environmental Policy Outlook, July 1, 2004.
---------------------------------------------------------------------------
In a highly developed economy such as the United States,
characterized by efficient markets, pricing relatively undistorted by
government policies or government-owned enterprises, free trade and
free flows of capital, and strong legal institutions and protection of
property rights, it is likely that there are few opportunities to
improve carbon intensity without causing reductions in economic
performance and income per capita. If technologies offering such
opportunities exist, market forces and individual economic interest
will lead to their adoption. This is not the case in many developing
countries, which have economic systems characterized by a lack of
incentives for efficient energy use, due to institutional and market
failures, and an investment climate that discourages foreign investment
and technology transfer. Remedying these institutional and market
failures offers the prospect of reconciling economic growth and
emissions reduction.
Economic Freedom and Emissions Intensity
The modern literature on economic development emphasizes the role
of legal, market and governmental institutions in economic development.
The concept of ``economic freedom'' summarizes a wide variety of
conditions that are found to be conducive to individual initiative and
economic growth.\6\ Indices of economic freedom are based on
comprehensive surveys of conditions around the world. The broad indices
of economic freedom include specific institutional problems that can
lead to high carbon intensity:
---------------------------------------------------------------------------
\6\ Economic Freedom of the World (EFW) index is published by The
Frasier Institute (http: / / www.freetheworld.com / release.html) and
measures the degree to which a country is supportive of economic
freedom. The EFW summary index is constructed from five different
policy areas: (i) size of government; (ii) legal structure and
protection of property rights; (iii) access to sound money; (iv)
international exchange; and (v) regulation. Index of Economic Freedom
is published by the Heritage Foundation / Wall Street Journal (http: /
/ www.heritage.org / research / features / index / ) and reports 10
broad measures of economic freedom for 161 countries.
Pricing systems that make energy-efficient technologies less
---------------------------------------------------------------------------
cost-effective
Distorted internal pricing mechanisms and lack of markets
Subsidies administered through State-run enterprises
Internal policies that make markets inhospitable to foreign
investment with world class technology, including
Corruption
Excessive bureaucracy and burdensome regulation
Weak contract law and protection of property rights
Lack of protection for intellectual property
Trade and regulatory policies that protect inefficient
domestic firms and industries
Lack of infrastructure, education and skills required for
technology
Lack of these components of economic freedom is clearly associated
with high levels of energy use per dollar of GDP. Figure 2 plots scores
on the Economic Freedom of the World Index compiled by the Frasier
Institute against energy use per dollar of GDP, measured at market
exchange rates.
[GRAPHIC] [TIFF OMITTED] T3730.006
Energy intensity is used as a measure because it is directly
connected to greenhouse gas emissions from energy use. For example,
three of the countries with the relatively poor scores on economic
freedom, Russia, China and India, have high energy use and carbon
emissions per dollar of GDP. At the other end of the scale, countries
like S. Korea, Singapore and Namibia, with relatively free economies
have much lower carbon intensities, similar to that of the United
States.
The curved line represents the results of a statistical analysis of
the association, which shows that about one-third of the variation in
energy intensity is explained by differences in scores on economic
freedom. This is an unusually clear relationship for this type of
cross-sectional data. Studies by the developers of the index also show
the economic freedom index to be very closely associated with per
capita income and rates of economic growth.
Figure 2 also reveals that there are other factors at work, and
examining institutions in more detail reveals that each country has a
significantly different collection of institutional issues. This
suggests strongly that effective policies need to be designed through a
bilateral process, and tailored to remedy the specific institutional
conditions in each country.
Design of Policies That Can Be Effective and Engage Developing
Countries
Recognizing that high emissions intensity is closely associated
with fundamental market and institutional failures leads to possible
solutions that can reconcile developing countries' legitimate desires
for growth in income with reductions in greenhouse gas emissions
intensity. To achieve these dual purposes, it is necessary to start
with market and institutional failures directly.
The difference in technology that accounts for the difference in
emissions intensity between developing countries and the U.S. will not
be eliminated without substantially greater technology transfer. That
technology transfer occurs largely through the mechanism of foreign
direct investment, as multinational companies bring with them the
technology they have developed and use in their current markets. The
combination of technology transfer and FDI is one of the strongest
engines of growth. But increasing technology transfer and FDI to
countries with poor scores on economic freedom requires removing
current defects in their investment climate.
Without remedies for the fundamental institutional problems that
underlie poor scores for economic freedom, the continuation of two
unfortunate current conditions can be expected:
A hostile economic environment in developing countries will
prevent the technology that is introduced through demonstration
projects from spreading throughout the economy
Emission caps will remain costly because, without new technology,
emission reductions will require diverting resources that could
otherwise be used for growth
If remedies are found for fundamental institutional problems, two
kinds of results can be expected:
There will be much better prospects for demonstration projects
for economic technologies to lead to spillover effects
The root causes of both poverty and high carbon intensity will be
addressed together
The actions required to create fundamental institutional reform
must take place within the developing countries themselves, and be
designed and carried out by their governments, businesses and citizens.
But there is a role for the United States in helping to identify the
needed reforms, to provide direct, near-term incentives to carry out
the reforms that will be in the long-term interest of the target
country, and to encourage greater flows of investment into developing
countries that undertake the process of reform. This suggests that the
four components of an effective policy to help move developing
countries toward institutions more conducive to economic growth and
lower carbon emissions are:
1. identification of critical market imperfections and
institutional failures
2. agreement on a plan to address them
3. actions by the United States
4. actions by the country involved
I am impressed by the programs established by EPACT 2005 because
they provide a framework in which these steps can take place.
The Key Role of Institutional Change Is Widely Recognized
A focus on economic freedom fundamental institutional reform is
consistent with the current mainstream in development economics, and is
supported by analysis from development agencies, the World Bank, and
even the much-maligned Intergovernmental Panel on Climate Change
(IPCC).
The World Bank has placed a high priority on institutional reform.
For example, a recent survey of the investment climate in India
sponsored by the bank identified deficiencies in the investment climate
whose correction was necessary for economic growth. All these
deficiencies involved aspects of economic freedom. They included
Corruption, connected to
Arbitrary and burdensome regulation covering every aspect of
economic life, administered by a large and unaccountable bureaucracy
Inadequate infrastructure due to economic policies and failed
government-owned enterprises
This World Bank report provides just the kinds of information
needed to develop the programs and projects authorized by EPACT 2005.
The U.S. Agency for International Development has also recognized
the central role of institutional change in achieving economic growth.
Its policies put high priority on market reform, and the agency has
commissioned significant work on the nature and possibility of
institutional change.\8\
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\8\ In particular, the AID ``Forum Series on the Role of
Institutions in Promoting Economic Growth'' has addressed many of the
issues I have discussed. See ``USAID FORUM Series Problem Statement''
by Fred Witthans, USAID, available at http: / / www.usaid.gov /
our_work / economic_growth_and_trade / eg / forum_series / prob-
statement.pdf. USAID's overall development goal to stimulate economic
growth, promote democracy, good governance, and social transition is
based on nine principles rooted in the need for fundamental reform--
Ownership, Capacity-Building, Sustainability, Selectivity, Assessment,
Results, Partnership, Flexibility, and Accountability (Nine Principles
of Development and Reconstruction, USAID, February 2005).
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The IPCC has also studied the process of technology transfer in
some detail, and its report is instructive in both its contributions
and its mistakes.\9\ The IPCC report on technology transfer makes a
valuable contribution by identifying many of the deficiencies in
economic freedom and the investment climate as being specific obstacles
to technology transfer, and recommends policy actions by developing
countries to remedy them. These actions include:
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\9\ IPCC, Methodological and Technological Issues in Technology
Transfer, A Special Report of Working Group III of the
Intergovernmental Panel on Climate Change, 1999.
Deregulation of the investment regime, and free movement of
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private capital
Foreign exchange convertibility and liberalisation of exchange
restrictions
Removal of restrictions on repatriation of profits and of capital
Reduction of risk of expropriation (especially in hidden form
such as abrogation of power purchase agreements)
Reduction of the role of the public sector in directly productive
sectors, through privatisation of state enterprises and overall
reduction of the share of state enterprises in total investment, by
opening up the public utility sector and other public monopolies to
private sector participation and foreign investment
Provisions for the settlement of disputes ranging from direct
negotiation among the disputing parties to third party arbitration
Removal of mandated local ownership requirements
Promotion of the development of domestic institutional investors
to assuage public fears about excessive foreign presence and to reduce
the vulnerability of domestic capital markets to foreign investor
herding. The presence of domestic institutional investors also
reassures foreign investors about the host country's respect for
corporate governance and property rights.
Reform of opaque regulations that leave much administrative
discretion and scope for corruption which discourages investment flows.
Mobilisation of domestic resources through the gradual reduction
of environmentally damaging subsidies.\10\
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\10\ Ibid.
Unfortunately, the IPCC study buries its frequently wise
recommendations about fundamental economic reforms in technical
summaries, while focusing the policy summaries on descriptions of
advanced technologies and on how to convince developing countries to
adopt ``environmentally sustainable technologies'' that are so costly
that even in developed countries they would only be chosen with heavy
subsidies or strict regulations.
India Provides a Case Study of Problems and Potential Solutions
I have applied these ideas in a study of the potential for emission
reduction through fundamental economic reform in India.\11\ This study
provides the context for some of the comments I will make, and an
example for how some of the studies and projects might be carried out
in practice.
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\11\ W. David Montgomery and Sugandha D. Tuladhar ``Impact of
Economic Liberalization on GHG Emission Trends in India.'' Climate
Policy Center, May 2005.
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I mentioned earlier that the World Bank conducted a study of the
investment climate in India, identifying corruption, arbitrary
regulation, and lack of infrastructure as the key problems. These
problems have direct implications for energy use. First, the prevalence
of corruption and arbitrary regulation, combined with a legal system
that provides no confidence in enforcement of contracts, leads to a
lack of technology transfer through FDI. The unreliability of the
Indian power grid leads a majority of businesses to maintain
capabilities for on-site generation, a highly inefficient source of
power. Excessive energy use is also promoted by the fact that
electricity is free in three states to certain segments of the economy,
and pilferage of electricity is excessive high in many others. Finally,
pervasive protection of domestic industries with outmoded technology
reduces the competitive incentive to adopt new technology or use
resources efficiently.
Examples of potential solutions applicable to India may help in
thinking about how EPACT 2005 could be implemented. Actions that could
be productive in India include:
Reform of regulation in key sectors (power, steel)
Anti-corruption activities
Legal reform to create confidence that contracts are enforceable
Creation of competitive power generation market to attract
foreign investment
Use of official development assistance to provide income
supplements to soften opposition to pricing of electricity at market
levels
III. PROVISIONS OF EPACT 2005
EPACT 2005 amended Title VII of PL 101-240 by adding a new Part C
dealing with technology deployment in developing countries. Thus the
new provisions correspond to sections of the amended Act, beginning
(after definitions) with Section 732.
Sec. 732. Reduction of greenhouse gas intensity
The Department of State is designated as the lead agency. This
section tasks the Secretary of State to develop a set of reports and
co-ordinate projects, and states a focus and priorities for the
projects. Reports are to be made on the top 25 energy users among
developing countries, and to include information on their energy use,
greenhouse gas emissions by sector, progress on greenhouse gas
reduction projects, potential for projects to reduce greenhouse gas
intensity, and obstacles to further reductions.
This is the right place to start, and the right content. First, to
identify the potential for reductions in greenhouse gas intensity it is
necessary to compare technology in use in each country to that in use
in industrial countries, and in particular to compare the technology
embodied in new investment in the developing country to that embodied
in new investment in the same industry in industrial countries. This
provides the starting point for improving the type of calculation I
have offered of the potential for reducing emissions. This information
on technology by sector should also be used to establish a baseline, so
that any technology that offers improved emissions intensity over the
baseline technologies would be eligible for assistance and support in
demonstration projects. One minor revision would be to ask for reports
on the top 25 countries in terms of greenhouse gas emissions, since in
some developing countries methane emissions from agriculture are
extremely important and might be missed with an exclusive concentration
on emissions from energy.
In order to design effective actions for institutional reform, it
is also necessary to develop a clear understanding of the types of
institutional and market failure that apply in each sector, so that the
removal of these obstacles can be addressed specifically. I am pleased
to see that EPACT 2005 specifically mentions ``promoting the rule of
law, property rights, contract protection, and economic freedom,'' and
``increasing capacity, infrastructure, and training'' as the focus for
carrying out projects. Reports should also include this type of
information.
I strongly recommend that the Secretary of State conduct these
studies in consultation with the target countries, multilateral lending
institutions, and business groups. It is very important that the
developing countries themselves recognize and buy into the diagnosis of
their key institutional problems, since the critical need is for change
in those institutions. Independent research and academic institutions
within developing countries have an important role to play in such
studies, as well as governments. Multilateral institutions such as the
World Bank can aid in studies, and a World Bank study of the investment
climate in India could serve as a model for one of the studies needed
to identify the most critical reforms.\12\ Finally, multi-national
corporations operating in each developing country also have important
information and perspectives that should be included.
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\12\ India: Investment Climate Assessment 2004: Improving
Manufacturing Competitiveness Finance and Private Sector Development
Unit, South Asia Region, The World Bank
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In co-ordination with U.S. AID, the World Bank, and other
institutions, the Secretary of State is directed to provide assistance
for projects to reduce emissions intensity, including projects to
leverage funds through bilateral agreements, to increase private
investment, and to expedite deployment of technology. Although it makes
sense to focus efforts on the largest emitters, it would be unfortunate
if poorer and smaller countries, in which the potential impacts of much
smaller investments might be dramatic, were excluded from eligibility
for assistance.
I believe that bilateral agreements and co-ordination with these
institutions are the best way to proceed, and recommend that the
bilateral approach and co-ordination begin at the stage of studies.
This would facilitate a process of understanding a specific country's
problems and identifying the most productive uses of official
development assistance. For example, after bilateral consultations that
lead to studies of baseline technology and institutional issues in a
country, the next step could be for the United States and the target
country to agree on specific targets for change. These could include:
The critical institutional changes required to facilitate
technology transfer, foreign investment and correct incentives
The industries and sectors with greatest problems and
opportunities
The beneficiaries of the current system, whose potential
opposition to reform needs to be addressed
The next steps could be to identify the most productive uses of
ODA, including:
Capacity building projects
Funding for income supplements or other measures to ameliorate
opposition to change
Specific demonstration projects
Rewards for successful institutional reform
The final task in bilateral negotiations could be to codify an
agreement, including:
Roles for the U.S., multilateral organizations and the developing
country
Objectives
Time scales
Procedures to review process and provide consequences for
deviations from the agreement
Sec. 733. Technology Inventory for Developing Countries
The Secretaries of State and Energy shall conduct an inventory of
greenhouse gas reducing technologies suitable for transfer, deployment,
and commercialization. They will produce a report on the technologies
and obstacles to the deployment of the technologies. Benchmarking
technologies is a critical step that will provide a bridge from ``what
is in place'' to ``what should be in place.'' So, I believe it would be
wise to tie this report more closely to the previous section, on
country studies, and the subsequent section on projects. First,
obstacles to technology transfer can possibly be identified
generically--I certainly have been guilty in this testimony of doing
so--but they will in fact vary across countries. Therefore,
identification of obstacles to deployment would logically take place in
the conduct of country studies as I discussed above.
To be most useful in guiding other mandated activities, the
technology inventory should start with the baseline technologies
identified in the Secretary of State's reports on the 25 largest
emitters. In discussing Sec. 732 I recommended that the 25 large
emitters reports should identify the technologies being adopted in new
investment in the subject country. The technology inventory should
include any technology that offers better greenhouse gas intensity than
that of the baseline. Most of the potential reduction in emissions in
countries that I have studied comes from bringing their baseline
technology up to the level of technology embodied in new investment in
the United States. Going further, to more advanced technologies that
would improve U.S. emissions intensity if adopted here, provides only a
small additional improvement and entail higher costs.
In other words, I strongly urge the administration to keep this
technology inventory from becoming another listing of pie in the sky
technologies. Too many studies of this type are already on the
shelf.\13\ Therefore, I also recommend that the technology inventory
have substantial private sector involvement, to help it to focus on
technologies that are currently economic as demonstrated by their
adoption in the US or other countries.
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\13\ H.D. Jacoby, ``The Uses and Misuses of Technology Development
as a Component of Climate Policy.'' Climate Change Policy (1996), pp.
151-169
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Keeping this focus is very important to marry development and
climate goals. The most cost-effective improvements in energy intensity
will come from introduction of technologies not now in use in
developing countries that are nevertheless economic at market-
determined energy prices.
Sec. 734. Trade Related Barriers to Export of Greenhouse Gas Reducing
Technologies
The USTR is required to identify barriers to export of greenhouse
gas reducing technologies and negotiate for their removal. With my
revision to the definition of greenhouse gas reducing technologies to
include any technology with better emissions intensity than the
established country baseline, I believe this is a potentially effective
and critical provision. It provides clear and direct instructions to
trade negotiators, but I would add the suggestion that they need to go
beyond the types of barriers normally discussed in the context of WTO
rules. All disincentives to foreign investment and technology transfer
are relevant if the general purpose of improving technology transfer is
kept in mind. Thus, the USTR should include intellectual property
issues, the general burden of regulation and corruption, and protection
of industries using inefficient techniques as well as tariffs, quotas,
or preferences for domestic suppliers and fuels.
Sec. 735. Technology Export Initiative
An interagency working group is established to
Promote greenhouse gas reducing technology exports
Identify priority countries to be targets for exports, based on
Sec. 732 reports
Identify barriers to those exports
Learn best practices in export promotion
This provision fits quite well with the studies and strategy
outlined in sections 732-734. To my mind, those sections largely
address issues of how to identify and motivate actions that need to be
undertaken by the governments of developing countries, who are
ultimately responsible for making the needed reforms. Section 735 looks
to what the United States can do, by developing policies to encourage
from our side greater involvement on the part of multinational
companies in technology transfer. Again, I repeat the caution that
greenhouse gas reducing technology should include all technologies that
improve on the established baseline technology for a given country.
Sec. 736. Technology demonstration projects
This section states eligibility and selection criteria for
countries to be provided assistance, and mentions types of projects
that are eligible for funding.
This section turns normal project funding on its head, in a very
appropriate way. It authorizes funding for demonstration projects,
which is frequently attractive to recipients but rarely produces change
or growth outside the project itself, in a way that makes the funding a
carrot to bring about increases in economic freedom. This is a creative
and highly desirable approach.
In this regard, eligibility criteria are good, but the use of
projects as a carrot would be more effective if eligibility were
focused on those aspects of economic freedom in which change will
produce the largest benefits in terms of facilitating FDI and
technology transfer. My case study of India, for example, focuses on
just two or three of the multiple institutional problems, such as
removing distortions in incentives to use energy and reducing
corruption and regulation that discourages foreign investment. This
suggests using an assessment of economic freedom as part of the
decision about who will win a demonstration project, rather than as an
absolute screen for eligibility. This provides a more modulated
incentive to make appropriate changes.
IV. OVERALL ASSESSMENT
EPACT 2005 provides a very solid foundation for achieving emissions
reductions in developing countries, and a way forward in international
negotiations under the Framework Convention on Climate Change. It
addresses directly the causes of high emissions per dollar of output in
developing countries, and provides a framework under which the
necessary bilateral and multilateral negotiations could take place. I
see the bill as being fully within the spirit of President Bush's
commitment ``to seek and support the growth of democratic movements and
institutions in every nation and culture,'' by supporting economic
freedoms that can improve both material wellbeing and environmental
performance. It clearly carries out the President's statement at his
April 28, 2005 press conference that ``we must help growing energy
consumers overseas, like China and India, apply new technologies to use
energy more efficiently and reduce global demand of fossil fuels.''
A continued focus on free markets is critical to making all the
rest succeed. This approach is consistent with modern development
economics and thinking within aid agencies, that project funding cannot
make a permanent difference unless it is accompanied by fundamental
institutional change.
I believe that EPACT 2005 can be the basis for a new approach to
international negotiations on climate change, focusing on involvement
of developing countries, development and transfer of technology, and
discussions among the largest emitters. Senior officials from Japan,
Italy and Australia have all endorsed these ideas as the basis for a
new approach, and the staff of the International Energy Agency is
attempting to educate its member states on the subject.\14\ Thus I
believe that this is a time when the U.S. can be effective in changing
the direction of international negotiations away from the cap and trade
approach embodied in the Kyoto Protocol toward a more technology and
growth oriented approach to the climate problem.
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\14\ Corrado Clini, Director, Italian Ministry for the Environment,
``Energy and Emissions: The Challenge of Climate Change,'' Venice,
Italy, June 10, 2004; ``Perspectives and Actions to Construct a Future
Sustainable Framework on Climate Change'', Global Environmental
Subcommittee, Environmental Committee, Industrial Structure Council
(METI, Japan) July 2003; Brian Fisher, Kate Wolfenden, Anna Matysek,
Melanie Ford and Vivek Tulpule, ``Alternatives to the Kyoto Protocol: A
New Climate Policy Framework?'' Australian Bureau of Agricultural and
Resource Economics (ABARE) 2005; Fatih Birol, Head, Economics Division,
International Energy Agency, at the International Energy Workshop,
Paris June 2004.
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Finally, I suggest that the hardest thing in thinking about
policies addressing global poverty, oppression and environmental
progress is to avoid making the best the enemy of the good. Technology
is a critical issue because there is no economic possibility of
stabilizing greenhouse gas concentrations without R&D to create
technology not available today. In the long term, this technology is
required to turn around developing country emissions, just as it is
required to turn around emissions from the industrial world. In the
long run, new technology for developing countries is clearly
critical.\15\ R&D to create this technology is therefore also critical,
and the technology that is economically successful may be different in
the global South than in the global North.
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\15\ M. I. Hoffert et al., ``Advanced Technology Paths to Global
Climate Stability: Energy for a Greenhouse Planet'' Science, Vol. 298,
Nov. 1, 2002, p. 981-7 note that within the next 50 years, the world
will require 15-30 TW of carbon-free energy to meet stabilization
targets of 550 to 350 ppm, which is more than double the approximately
12 TW of energy consumed today (85 percent of which is fossil-fueled).
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But right now the huge opportunity is replacing technology now
being used in the global South with technology now being used in the
global North. Therefore, I would broaden the definition of greenhouse
gas reducing technologies to include anything that improves carbon and
energy intensity over the current baseline for new investment in a
country.
It is also important to keep the focus on the most critical market
reforms needed to accomplish greater technology transfer and
improvements in carbon intensity. Going against my own preferences for
promoting all forms of freedom throughout the world, I would focus the
administration's efforts on reforming those country and sector specific
aspects of economic freedom that inhibit the adoption of energy-
efficient technologies and practices identified in the process of
identifying the technology gap. Identification of deficiencies in
institutions and economic freedom in each country should be a key first
step, and done in cooperation with multi-lateral institutions, aid
recipients, cognizant multinational businesses and the U.S. Government.
In conclusion, it is my opinion that the provisions dealing with
technology transfer and developing countries in EPACT 2005 provide a
comprehensive approach to improving the emissions intensity of
developing countries, by creating a process that starts with
identification of opportunities and goes on to develop and implement
effective instruments for bringing about change.