[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
              CLIMATE CHANGE: STATE AND LOCAL PERSPECTIVES

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 15, 2007

                               __________

                           Serial No. 110-20


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


                     U.S. GOVERNMENT PRINTING OFFICE
37-423 PDF                 WASHINGTON DC:  2008
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001


                    COMMITTEE ON ENERGY AND COMMERCE

    JOHN D. DINGELL, Michigan,       JOE BARTON, Texas
             Chairman                    Ranking Member
HENRY A. WAXMAN, California          RALPH M. HALL, Texas
EDWARD J. MARKEY, Massachusetts      J. DENNIS HASTERT, Illinois
RICK BOUCHER, Virginia               FRED UPTON, Michigan
EDOLPHUS TOWNS, New York             CLIFF STEARNS, Florida
FRANK PALLONE, Jr., New Jersey       NATHAN DEAL, Georgia
BART GORDON, Tennessee               ED WHITFIELD, Kentucky
BOBBY L. RUSH, Illinois              BARBARA CUBIN, Wyoming
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                HEATHER WILSON, New Mexico
ELIOT L. ENGEL, New York             JOHN B. SHADEGG, Arizona
ALBERT R. WYNN, Maryland             CHARLES W. ``CHIP'' PICKERING, 
GENE GREEN, Texas                        Mississippi
DIANA DeGETTE, Colorado              VITO FOSSELLA, New York
    Vice Chairman                    STEVE BUYER, Indiana
LOIS CAPPS, California               GEORGE RADANOVICH, California
MIKE DOYLE, Pennsylvania             JOSEPH R. PITTS, Pennsylvania
JANE HARMAN, California              MARY BONO, California
TOM ALLEN, Maine                     GREG WALDEN, Oregon
JAN SCHAKOWSKY, Illinois             LEE TERRY, Nebraska
HILDA L. SOLIS, California           MIKE FERGUSON, New Jersey
CHARLES A. GONZALEZ, Texas           MIKE ROGERS, Michigan
JAY INSLEE, Washington               SUE WILKINS MYRICK, North Carolina
TAMMY BALDWIN, Wisconsin             JOHN SULLIVAN, Oklahoma
MIKE ROSS, Arkansas                  TIM MURPHY, Pennsylvania
DARLENE HOOLEY, Oregon               MICHAEL C. BURGESS, Texas
ANTHONY D. WEINER, New York          MARSHA BLACKBURN, Tennessee       
JIM MATHESON, Utah                   
G.K. BUTTERFIELD, North Carolina     
CHARLIE MELANCON, Louisiana          
JOHN BARROW, Georgia                 
BARON P. HILL, Indiana               
                                     
_________________________________________________________________

                           Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
   Bud Albright, Minority Staff 
             Director

                                  (ii)
                 Subcommittee on Energy and Air Quality

                    RICK BOUCHER, Virginia, Chairman
G.K. BUTTERFIELD, North Carolina,    J. DENNIS HASTERT, Illinois
    Vice Chairman                         Ranking Member
CHARLIE MELANCON, Louisiana          RALPH M. HALL, Texas
JOHN BARROW, Georgia                 FRED UPTON, Michigan
HENRY A. WAXMAN, California          ED WHITFIELD, Kentucky
EDWARD J. MARKEY, Massachusetts      JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             JOHN B. SHADEGG, Arizona
MIKE DOYLE, Pennsylvania             CHARLES W. ``CHIP'' PICKERING, 
JANE HARMAN, California                  Mississippi
TOM ALLEN, Maine                     STEVE BUYER, Indiana
CHARLES A. GONZALEZ, Texas           MARY BONO, California
JAY INSLEE, Washington               GREG WALDEN, Oregon
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah                   JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    offico)
                                 ------                                

                           Professional Staff

                     Sue D. Sheridan, Chief Counsel
                       Lorie J. Schmidt, Counsel
                  David J. McCarthy, Minority Counsel
                  Chris A. Treanor, Legislative Clerk
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Rick Boucher, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     2
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     4
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     5
Hon. G.K., Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     6
Hon. J. Dennis Hastert, a Representative in Congress from the 
  State of Illinois, opening statement...........................     7
Hon. Sue Wilkins Myrick, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     8
Hon. Tammy Baldwin, a Representative in Congress from the State 
  of Wisconsin, opening statement................................     9
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    10
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, prepared statement.............................    11

                               Witnesses

Patrick McCrory, mayor, city of Charlotte, NC....................    12
    Prepared statement...........................................    51
Linda Adams, secretary, California Environmental Protection 
  Agency, Sacramento, CA.........................................    13
    Prepared statement...........................................    30
Lisa P. Jackson, commissioner, New Jersey Department of 
  Environmental Protection, Trenton, NJ..........................    15
    Prepared statement...........................................    45
 Ron Curry, cabinet secretary, State of New Mexico Environment 
  Department, Santa Fe, NM.......................................    17
    Prepared statement...........................................    38
Julie Caruthers Parsley, commissioner, Public Utility Commission 
  of Texas, Austin, TX...........................................    18
    Prepared statement...........................................    61
    Answers to submitted questions...............................    71

                           Submitted Material

Shirley Franklin, mayor, city of Atlanta, GA, letter of March 15, 
  2007 to Messrs. Boucher and Hastert, submitted by Mr. Barrow...    76
Greg Nickels, mayor, city of Seattle, WA, letter of December 6, 
  2006, submitted by Mr. Inslee..................................    78
Tom Cochran, executive director, the United States Conference of 
  Mayors, letter of March 14, 2007 to the subcommittee, submitted 
  by Mr. Boucher.................................................    79
``Our Changing Climate. Assessing the Risks to California''......    83
California Climate Action Team Report to Governor Schwarzenegger 
  and the California Legislature, submitted by Linda Adams.......    99


              CLIMATE CHANGE: STATE AND LOCAL PERSPECTIVES

                              ----------                              


                        THURSDAY, MARCH 15, 2007

              House of Representatives,    
                     Subcommittee on Energy
                                   and Air Quality,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 11:15 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Rick 
Boucher, chairman, presiding.
    Members present: Representatives Butterfield, Barrow, 
Inslee, Baldwin, Ross, Dingell, Hastert, Shimkus, Shadegg, 
Myrick, and Barton.
    Also present: Representative Wilson.
    Staff present: Sue Sheridan, Bruce Harris, Lorie Schmidt, 
Chris Treanor, David McCarthy, Thomas Hassenboehler, Kurt 
Bilas, and Peter Kielty.

  OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Boucher. The subcommittee will come to order. This 
morning our climate change hearing focuses on the activities of 
State and local governments that have been active in addressing 
greenhouse gas emissions.
    California has enacted legislation setting mandatory 
greenhouse gas reduction requirements targeting the achievement 
of 1990 emission levels by the year 2020. California has also 
undertaken other steps including a low carbon fuel standard, a 
greenhouse gas registry and a motor vehicle standard.
    Five western States have recently formed the Western 
Climate Action Initiative through which they have committed to 
set a joint greenhouse gas emissions reduction goal that would 
be achieved through implementation of a market-based program. 
Ten northeastern States have joined or expressed their 
intention to join the Regional Greenhouse Gas Initiative, which 
will limit carbon dioxide emissions from electricity-generating 
facilities through implementation of a cap-and-trade program.
    Local governments are also taking actions with regard to 
the goal of reducing emissions. These activities include 
improving government vehicle efficiency through the use of 
hybrids, switching to light-emitting diodes for traffic 
signals, changing local building codes, developing alternative 
fuel infrastructures and capping methane gas from landfills. 
More than 415 mayors in communities representing more than 60 
million Americans in all 50 States have signed the United 
States Mayors Climate Protection Agreement under which they 
agree to reduce community-wide greenhouse gas emissions by the 
year 2012 to at least 7 percent below 1990 levels.
    Today's witnesses will describe these various greenhouse 
gas reduction strategies and the policy considerations that led 
to their adoption. The information to be presented this morning 
will enable this committee to learn from the experience of 
State and local governments and we will very much welcome the 
suggestions from our witnesses today about appropriate 
directions for United States policy on the critical subject of 
climate change.
    Pursuant to the rules of the committee, members may now 
make opening statements, and any member who elects to waive his 
or her opening statement will have the time allotted for that 
opening statement assigned to that period during which that 
member may propound questions to our witnesses today.
    We also welcome to our subcommittee today Mrs. Wilson from 
New Mexico who, while not a member of the subcommittee, is a 
member of the full committee and we are very glad to have her 
participation in our subcommittee meeting.
    At this time I am pleased to call on the ranking Republican 
member of the Energy and Commerce Committee, the gentleman from 
Texas, Mr. Barton, for a 5-minute statement. Mr. Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Chairman. As you know, we have a 
subcommittee hearing on spyware that is in progress so I am 
going to have to give an opening statement upstairs and 
hopefully maybe come back to this. So I am not being impolite 
if I have to run off.
    I am not at all convinced that we have to rush to 
legislative action on this issue, as you well know, but I am 
very supportive of you and Chairman Dingell building a fact-
based record on the issue and very supportive of the 
cooperative effort in which you are holding these hearings in 
terms of arranging for witnesses. So we are supportive of the 
process. I am still skeptical there needs to be a legislative 
solution.
    It is important that we hear the input from our State and 
local witnesses on the impact of some actions that we might 
consider taking in Washington with respect to climate change. 
This is an important issue and our State and local governments 
are going to be where the rubber really meets the road.
    Some of the States and regions have decided to move toward 
some sort of a carbon cap-and-trade scheme. I think that is 
ill-advised at this point in time and would oppose such a 
mandatory regulatory scheme if it were to be enacted or 
attempted to be enacted here in Washington. I am glad to see 
this week Speaker Pelosi has indicated that any bill on climate 
change considered this year doesn't necessary have to include a 
mandatory cap-and-trade scheme. I think that is a move in the 
right direction in terms of actually getting a legislative 
solution.
    There are many other ideas on how we can lessen carbon 
intensity, and if we can do it in a cost-effective and a timely 
fashion, myself and I am sure many other members of the 
minority are open to some of those ideas. Hopefully our 
panelists today will have some ideas in that regard.
    This hearing has several important issues that it is going 
to raise. First and foremost is the cost of these programs, 
whatever they are, in terms of implementation at the State and 
local level. Also, what is the cost going to be in jobs? What 
is going to be the cost in economic growth? I am told that a 
representative from the California legislature said last fall 
at a conference that California's recent global warming bill, 
A.B. 32, only had two legislative requirements: No. 1, that it 
cause pain, and No. 2, that it change behavior. We have a 
representative from California here today and we will be able 
to ask that witness if that is a true statement. I am curious 
to find out, if it is a true statement, exactly how much pain 
the California legislature feels it has to inflict on their 
constituents in the name of global warming. I would like to 
know what life-altering changes their constituents are expected 
to make so that we can be politically correct on global 
warming.
    The second issue that I want to get some input on today is, 
what are the actual environmental benefits, not perceived but 
actual, when you keep in mind that H\2\0 water vapor is 95 
percent of all greenhouse gases, that CO\2\, carbon dioxide, is 
4 percent of greenhouse gases, and that the man-made portion of 
CO\2\ is 0.001 percent, one-thousandth of 1 percent of the 
atmosphere, you begin to question exactly how much benefit 
there is going to be if we have some sort of a mandatory CO\2\ 
sequestration program. If you are only managing one-thousandth 
of 1 percent of anything, it is hard to affect the 99.99 
percent of the rest of the item that you are trying to manage.
    The third issue is cost-effectiveness: what is the long-
term prospect of some of these mandatory programs? If we only 
have State and regional programs and you have got a worldwide 
problem, exactly how effective are they going to be? China is 
adding one 500-megawatt coal-fired power plant every week. 
Every week. China will soon surpass the United States as the 
single largest emitter of man-made greenhouse gases. It really 
doesn't make much difference what we do in the United States if 
China is going to continue to add these coal-fired power plants 
every week on an ad infinitum basis into the future.
    When we look at what Europe has done to try to implement 
the Kyoto Protocol, we found out that they have had some 
success in raising electricity prices. In Germany alone, the 
wholesale price of electricity has gone up 40 percent because 
of what they have had to do to implement Kyoto. Forty percent. 
In our hearing last week about the new technologies for carbon 
sequestration, the minimum cost increase was 25 percent, and 
one of the witnesses said there would be 100 percent cost 
increase if we implemented CO\2\-friendly coal-fired technology 
immediately. Now, to be fair, Mr. Boucher pointed out that as 
we come up the learning curve, the cost of some of those 
technologies will go down.
    But my main point is, if we do things in the United States 
that cost us jobs and the only effect is to send those jobs to 
China or India, we are really not doing our constituents much 
of a favor. Our most abundant and lowest energy cost source 
right now for electricity generation is coal. It is the 
cheapest by an order of magnitude of about 80 percent. We 
simply must find a way to use our coal resources that are 
environmentally friendly and also cost-effective.
    With that, Mr. Chairman, I want to yield back the balance 
of my time but I do look forward to this hearing. I hope I can 
come back after going upstairs.
    Mr. Boucher. Thank you very much, Mr. Barton.
    The gentleman from Michigan, Mr. Dingell, the chairman of 
the full committee, is recognized for 5 minutes.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you for recognizing me 
and I thank you and commend you for calling this hearing on 
State and local perspectives on climate change.
    I want to begin by thanking all of our witnesses for making 
the trip to Washington to testify today.
    To Mr. Curry, I would observe it is our hope that you will 
give our best regards to Governor Richardson, who is not only a 
good friend of mine but also who served with extraordinary 
distinction on this committee and has always made us proud that 
he is one of our graduates.
    Now, over the past few years, many State and local 
governments have spent considerable time and effort in looking 
at the issue of climate change and developing programs to 
reduce greenhouse gas emissions. The pace of their activity is 
increasing. Today we will hear from leaders in this area.
    This hearing is important for two reasons. First, our 
system of governance. The State and local governments serve as 
laboratories for developing and testing novel approaches to 
emerging problems. This hearing gives us an opportunity to 
benefit from the work done and the lessons learned by State and 
local governments. For example, the State of California has 
taken a new approach to reducing carbon emissions from fuel 
from motor vehicles. Rather than adopting a biofuel mandate, 
California has announced a new low carbon fuel standard 
designed to reduce the fuel's life cycle carbon emissions. I 
think it would be useful to understand both the benefits and 
the drawbacks of this program.
    Second, when the States act independently of the Federal 
Government, these actions can create a regulatory patchwork 
that unnecessarily creates inefficiencies and hinders economic 
growth. Other Federal environmental statutes have been driven 
at least in good part by concerns raised by multiple State 
regulations all addressing the same problem, and I would note 
that one of the reasons for the Constitution was the 
multiplication of State regulations and impairments to commerce 
amongst the States in those early days.
    In these cases, we look to action to address the problem 
nationally as a way of leveling the playing field across the 
country and reducing inefficiencies and burdens on interstate 
commerce. For example, California, New Jersey and New Mexico 
are all part of regional greenhouse gas initiatives that are 
intended to cap emissions in participating States. I am 
interested in hearing whether there are concerns that such 
regional approaches can put their businesses at a competitive 
disadvantage compared to businesses in other States or concerns 
that multiple State programs will make life unnecessarily 
complicated for companies that operate in multiple States.
    I am pleased that Mayor McCrory is here today. The 
involvement of our mayors on climate change is quite 
interesting, given the global rather than local nature of the 
problem. More than 400 mayors representing over 60 million 
citizens across the country have signed a pledge to reduce 
greenhouse gas emissions, demonstrating widespread concern 
amongst our citizens regarding climate change. I look forward 
to hearing what local governments are doing to address this 
problem.
    As we have heard over the course of climate change 
hearings, there is no single silver bullet that will do the 
job. There is no easy way out of the problems we confront. It 
is clear that climate change must be addressed through a broad 
array of actions at all levels of government. I look forward to 
hearing more about the actions of State and local governments, 
what they are doing and are contemplating undertaking.
     I would also like to close with a word directed to my 
colleagues. I know some of my colleagues here wish we were not 
addressing climate change and I know others are moving more 
slowly. There are a number of reasons why we need to address 
climate change at the Federal level. Today's hearing focuses on 
just one of those reasons. States are making it quite clear 
they will act to address climate change, and therefore the 
Federal Government must act in appropriate ways.
    Mr. Chairman, I again commend you. I thank you for your 
recognition and I commend our panel for being present with us 
today. Thank you.
    Mr. Boucher. Thank you very much, Chairman Dingell.
    The gentleman from Illinois, Mr. Shimkus, is recognized for 
3 minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman.
    I want to welcome the panelists. It is going to be an 
interesting discussion and debate I think because of the cap-
and-trade positions of some of the States. The ranking member's 
position is pretty compelling because I think you will probably 
call upon us to do something nationally, and our position is, 
at least some of us who are somewhat skeptical but open because 
of our chairman is that if you call for us to do something 
nationally and we can't get anything internationally done, it 
is really the same debate. If we don't have States moving in 
the same direction you are moving, then you are 
disenfranchised. If we can't get the world to move in our 
direction, then we are going to be disadvantaged and I just 
want to throw that out as part of the reason why some of us are 
concerned.
     Our first hearing told us that a cap-and-trade system in 
Germany raised wholesale electric prices 40 percent, so again, 
that is the bottom line what we are talking about, jobs and the 
economy. China is building, as the ranking member said, 
equivalent of a 500-megawatt coal-fired power plant each week, 
and if we don't have an ability to affect that, what are we 
killing ourselves for.
    Also, the addressing of individual State's problems of site 
transmission lines. If we want to move to renewable clean 
power, States have to help us site transmission lines and there 
is going to be huge problems in the New England area if they 
don't move and address this. Now, we helped in the energy bill 
with the transmission legislation which I think has empowered 
Texas and some of the wind power issues that they are going to 
be discussing but this is a more comprehensive debate and that 
is why I appreciate Chairman Boucher because he does understand 
the comprehensive nature of this debate.
    Finally, there will be things I pick on California for but 
I do want to talk about something positive. I am from Illinois, 
but believe it or not, I have been working with the Port of 
Long Beach and in the Port of Los Angeles and they want to 
expand their ability to do the job that they do so well by 
moving to 5,300 LNG trucks, 5,300 clean diesel trucks, 
primarily run on biodiesel--there is the Illinois connection--
and they are doing this to be able to expand their capacity 
without having a cap-and-trade system. So they have got to meet 
the stringent requirements of California, especially in that 
area, and they are going to do it through fuels, through 
innovation without any additional regulations. That is where a 
lot of us are coming from on our side to make sure that we 
don't lose our ability to be competitive in this world and many 
of us fear that if we aren't careful, there is going to be 
great price increases and job loses.
    With that, Mr. Chairman, I yield back.
    Mr. Boucher. Thank you very much, Mr. Shimkus.
    The gentleman from North Carolina, Mr. Butterfield, is 
recognized for 3 minutes.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Mr. Chairman, I too want to thank you for 
convening this hearing today. You promised us several weeks ago 
when we began this Congress that you would bring forward the 
brightest and best witnesses that we could possibly get and I 
thank them for coming forward today to participate in this very 
important hearing.
    I particularly want to welcome the mayor of the largest 
city in my State, Mayor McCrory. Thank you so very much for 
coming.
    This is an important issue. I think we can all agree on 
that. We certainly have a substantial disagreement about how we 
are going to deal with climate change but it is absolutely an 
important issue and we need to develop our policies not within 
the Beltway only but we need to get input from our State and 
local governments.
    I look forward to your testimony today. What you have to 
say to us is very, very important. Thank you for coming.
    I yield back.
    Mr. Boucher. Thank you very much.
    At this time I am pleased to recognize the ranking 
Republican member of our Energy and Air Quality Subcommittee, 
the gentleman from Illinois, Mr. Hastert, for a 5-minute 
statement.

 OPENING STATEMENT OF HON. J. DENNIS HASTERT, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Hastert. Thank you, Mr. Chairman, and Mr. Chairman, 
thank you for holding this hearing today on State and local 
perspectives of climate change.
    States are laboratories for democracy. It will be 
interesting to learn what State and local jurisdictions are 
doing with regard to the climate change issue. The number of 
hearings that we are holding attest to the fact that the 
subject of climate change is very complex and important. The 
different paths followed by State and local jurisdictions can 
help us understand which policies may work best or not at all. 
Some of the States here today are moving towards a cap-and-
trade program for CO\2\. While it appears that we were 
precipitously moving in that direction as well, many of the 
witnesses we have heard from earlier hearings extolled the 
virtues of a cap-and-trade program. Speaker Pelosi has taken 
that option off the schedule for now. I agree that we should 
not be doing a bill to create a CO\2\ cap-and-trade system in 
only a few months. Such significant changes in policy should be 
carefully considered by this committee even before being 
attempted.
    As we learned a few weeks ago, compliance costs associated 
with the Kyoto cap-and-trade scheme drove up wholesale 
electricity prices in Germany about 40 percent. I am concerned 
that a cap-and-trade scheme will make electricity in the United 
States similarly more expensive. I am worried that the locals 
proposing or considering a cap-and-trade system are just those 
areas with already high electricity prices and severe 
reliability concerns.
    California has some of the highest electricity prices in 
the country and well-known market reliability problems. It is 
consistently on the Federal Energy Regulatory Commission's 
watch list for summer power problems yet it has the strictest 
global warming law of any State in the Nation. Similarly, New 
England has high electric prices and chronic reliability 
problems and yet it is contemplating a cap-and-trade system. In 
both these areas, it is notoriously difficult to site new 
generation and transmission. Localized efforts to cap carbon do 
not even make it any easier or more economic to solve these 
critical problems. As a matter of fact, in New England, the 
effort to put in the wind energy, which is a very green energy, 
was stopped by many of the people who didn't want it in the 
Cape Cod area, in fact, just the opposite.
    Abundant and affordable power supply is the key to our 
economic growth. I want to hear from some of our witnesses 
today how they can solve their electricity pricing and 
reliability problems and encourage robust economic growth. I am 
concerned that some of these State and local plans while well 
intentioned may lead to unintended consequences. Increased 
energy efficiency, the use of more renewable energy including 
more ethanol and taking advantage of technological advantages 
that allow us to better utilize our abundant supply of coal are 
all things that I can and do support. We need to be careful, 
however, when we consider any energy policy that we do not 
stifle economic growth. The Energy Policy Act of 2005 took the 
balanced approach that I just have described. I believe we 
should build on the recent progress that we have made and look 
for additional ways to accelerate our progress down the road to 
energy security.
    I look forward to the testimony today. I hope to learn from 
the States and local experience, and I thank you, Mr. Chairman. 
I yield back.
    Mr. Boucher. Thank you very much, Mr. Hastert.
    Mr. Barrow from Georgia is recognized for 3 minutes.
    Mr. Barrow. Thank you, Mr. Chairman. In lieu of an opening 
statement, I ask unanimous consent to submit for the record the 
statement of my good friend, the mayor of Atlanta, the 
Honorable Shirley Franklin.
    Mr. Boucher. Without objection, that will be received for 
the record.
    Mr. Barrow. Ms. Franklin endorsed the mayors' agreement 
almost two years ago. On a truly personal note, I am pleased to 
report that my even better friend, the Honorable Otis Johnson, 
the mayor of my hometown, Savannah, Georgia, informs us that 
the city of Savannah, their council will be endorsing the 
agreement in the next month or so.
    With that, I yield back. Thank you.
    Mr. Boucher. Thank you, Mr. Barrow. We will interpret that 
as a waiver of your opening statement and add additional 
minutes to your time for questioning.
    The gentlelady from Charlotte, Mrs. Myrick, is recognized 
for 3 minutes.

 OPENING STATEMENT OF HON. SUE WILKINS MYRICK, A REPRESENTATIVE 
          IN CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mrs. Myrick. Thank you, Mr. Chairman, for holding the 
hearing and I want to welcome our mayor from Charlotte as my 
colleague has done and thank him for being here.
    This is a real challenging issue that all of us face and 
something that we are going to have to do together. No one 
entity can do it by themselves, and our concern, very frankly, 
is that we do have cooperation in finding out what the real 
story is and how we move forward and not move forward so fast 
from the standpoint that we make mistakes. Up here in 
Washington we tend to do that periodically and that can be very 
detrimental to our States and local governments and we have 
seen that in the past. As a former mayor--I am Pat's 
predecessor--we have been dealing with these issues for a long, 
long time so I am very interested in hearing all of our panel's 
comments and concerns and anything you can share with us that 
helps to make our job a little easier, and I thank all of you 
for being here.
    I yield back.
    Mr. Boucher. Thank you very much, Mrs. Myrick. The 
gentlelady from Wisconsin, Ms. Baldwin, is recognized for 3 
minutes.

 OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Ms. Baldwin. Thank you, Mr. Chairman. I am pleased that we 
are recognizing States and localities for actions they have 
taken to address climate change. Many of the communities 
represented here today have enacted policies or programs that 
will reduce their overall greenhouse gas emissions while also 
benefiting their local economies and residents. Their actions 
demonstrate that it is possible for us to create meaningful, 
coordinated and economy-wide climate change policies at the 
national level that will help us reverse global climate change 
trends and also lead us in the right direction toward reducing 
our dependence on foreign oil.
    I have in the past proudly mentioned my home State of 
Wisconsin because of its long leadership in environmental 
stewardship. Our former Senator and Governor, Gaylord Nelson, 
envisioned a world where our pristine oceans and lakes are 
protected, where our air is clean to breathe and our planet 
preserved for future generations to enjoy. His efforts in 
organizing a nationwide grassroots demonstration on behalf of 
the environment led to the creation of Earth Day and triggered 
congressional action on some of our most treasured 
environmental laws: the Clean Air and Water Acts and the Safe 
Drinking Water Act.
    With his vision in mind, last year Wisconsin passed a 
renewable portfolio standard that establishes renewable energy 
and energy efficiency standards. As a result of this action, by 
2015 Wisconsin will avoid 5.5 million tons of greenhouse gas 
pollution. Our State has also adopted a climate change action 
plan which serves as a guide for how we plan to reduce our 
greenhouse gas emissions over the coming years. Among our 
targets is to increase production of cleaner fuels such as 
ethanol and biofuels. Wisconsin will soon be producing almost 
400 million gallons of ethanol annually and we are on the right 
course to become one of the first States with cellulosic 
ethanol production from wood pulp.
    Mr. Chairman, in Wisconsin it is clear that Gaylord 
Nelson's legacy continues on. We are committed to protecting 
and respecting our environment and natural resources but the 
actions like those of the communities represented by our 
witnesses here today cannot be the only steps taken to address 
global climate change. Rather, they must serve as models for 
national action because now is the time for Federal leadership 
in this arena.
    I look forward to hearing from our witnesses today about 
how we can learn from initiatives in your communities and 
States to create the sound policy that will address the 
challenges of climate change at the national level.
    Thank you, Mr. Chairman. I yield back my remaining 14 
seconds.
    Mr. Boucher. Thank you very much, Ms. Baldwin.
    The gentleman from Arizona, Mr. Shadegg, is recognized for 
3 minutes.
    Mr. Shadegg. I thank the gentleman for holding this 
hearing. I am anxious to get to the witnesses' testimony and 
therefore I will waive.
    Mr. Boucher. Thank you, Mr. Shadegg.
    The gentleman from Washington State, Mr. Inslee, is 
recognized for 5 minutes.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you.
    I want to show my appreciation for the local leadership 
that has been moving across this country to deal with climate 
change. It is very inspiring and we hope to emulate some of 
your work.
    I want to put in the record a letter from Mayor Greg 
Nickels, who has been instrumental in helping mayors across the 
country move forward on climate change. I appreciate his work.
    I want to take issue, because I feel compelled to, on a 
couple of statistics that my friend, Joe Barton from Texas, 
spread out about global warming. Of course, they are accurate 
because Mr. Barton is almost always accurate on statistical 
information but they are largely irrelevant, and one of the 
statistics that we have heard him talk a lot about is that 
carbon dioxide, anthropomorphic carbon dioxide, is a fairly 
small percentage of the total atmosphere and it is also 
certainly well less than half of the global warming gases, and 
that is an interesting but irrelevant statistic for this 
reason. Actually there are two reasons. One, we have had for 
eons global warming gases that have swathed our planet and kept 
it habitable, and that is water vapor, a certain amount of 
carbon dioxide, megatons of gases which are not caused by 
humans, but those have always been in balance. They go into the 
atmosphere and they come out of the atmosphere. CO\2\ has gone 
into the atmosphere and then come out. It has been in balance. 
Water vapor has gone into the atmosphere through evaporation; 
it has come out through rain and snow and sleet. It has been in 
balance. These things have been in balance for eons. What is 
now not in balance is carbon dioxide and methane that we are 
adding to the atmosphere, and that is 100 percent of the gases 
that are out of balance are caused by you and I, the 
anthropomorphic gases.
    So when you hear my friend Joe Barton talk about it being 1 
percent or some infinitesimal amount of gases, it may be a 
small percent of the total gases but it is 100 percent of the 
gases that are now killing the planet Earth and that is why is 
sort of like a donut. Your diet may be in balance with what you 
eat for years but when you start eating extra donuts, the 100 
pounds you may gain is what is killing you, and that is what is 
happening to the planet Earth right now.
    Second, he points out accurately that man-made CO\2\ is a 
very small percentage of the total gases in the atmosphere but 
when you take some arsenic, it is a very small percentage of 
your total volume of your body mass but if that is what kills 
you, you should be concerned about it. So I want people not to 
be misled about small statistics, these are small numbers, 
except for the number that almost 100 percent of the gases that 
are out of balance right now are caused by human activity and 
that is why we are here today.
    So I just want to express thanks to cities and States 
moving forward and look forward to hearing from you. Thank you.
    Mr. Boucher. Thank you, Mr. Inslee.
    The gentlewoman from New Mexico, Mrs. Wilson, is recognized 
for 3 minutes.
    Mrs. Wilson. Thank you, Mr. Chairman.
    I just wanted to welcome Ron Curry here to the committee 
and look forward to his testimony, and I will waive an opening 
statement in lieu of questions.
    Mr. Boucher. Thank you very much, Ms. Wilson. Any other 
statments for the record will be accepted at this time.
    [The prepared statement of Mr. Burgess follows:]

  Prepared Statement of Hon. Michael C. Burgess, a Representative in 
                    Congress from the State of Texas

    Thank you, Mr. Chairman for holding this hearing.
    And I'd like to thank the panel for taking time out of 
their extremely busy schedules to appear before us today.
    Some States and regions are moving towards a cap-and-trade 
scheme for greenhouse gases. Some, like Texas, are not. 
California is working on a system now after its law was passed 
last year.
    Yet, Texas has surpassed California as the U.S. leader in 
renewable energy. In 2005, the State Legislature increased the 
State Renewable Portfolio Standard from 2,880 MW to 5,880 MW of 
installed renewable generation by 2015, with an even more 
aggressive target of 10,000 MW by 2025.
    I applaud the Texas State legislature for establishing 
these ambitious goals, as well as the Public Utility Commission 
of Texas, represented here today by Commissioner Julie 
Caruthers Parsley, for setting policies that encourage the use 
of renewable energy.
    Whether it be global warming, peak oil, high prices, or 
instability in the Middle East, signs point to a day when we 
need to have energy sources that are not hydrocarbon-based. And 
some signs may suggest sooner rather than later.
    As technology continues to improve, I anticipate that 
renewable sources will take on an even greater importance in 
reducing our dependence on foreign energy and reducing 
emissions of all kinds. I am heartened by reports of new solar 
panels, for example, that operate in low-light conditions.
    I strongly support the use of renewable energy and believe 
that where it can be installed, it should be. I am, however, 
concerned about adopting a Federal mandatory Renewable 
Electricity Standard requirement when individual States, such 
as Texas and others represented here today, have already made 
significant improvement in this area on their own.
    I look forward to hearing from Commissioner Parsley about 
how Texas has been able to achieve such success, so we might 
have the benefit of Texas' expertise in this matter.
    I also look forward to hearing from our witnesses about 
State and local initiatives, including zoning and planning, 
that encourage efficiency and conservation.

    Mr. Boucher. At this time we welcome our panel of 
witnesses, and I am pleased to briefly introduce each of them.
    The Honorable Patrick McCrory is the mayor of the city of 
Charlotte, NC, a city that I would note that I visit 
frequently, if only at the airport. I will be there later 
today, as a matter of fact, and I always enjoy it. The 
Honorable Linda Adams is secretary of the California 
Environmental Protection Agency. The Honorable Lisa Jackson is 
the commissioner of the New Jersey Department of Environmental 
Protection. The Honorable Run Curry is the secretary of the New 
Mexico Environmental Department. The Honorable Julie Caruthers 
Parsley is a commissioner of the Public Utility Commission for 
the State of Texas, and we want to say welcome to each of our 
witnesses.
    Without objection, your prepared written statement will be 
made a part of our record. I am also going to ask unanimous 
consent to insert in the record a letter addressed to the 
subcommittee from the U.S. Conference of Mayors, and without 
objection, that will be admitted into the record.
    We would welcome the oral statements of our witnesses and 
ask that you limit your statements to approximately 5 minutes.
    Mr. McCrory, we will be happy to begin with you.

       STATEMENT OF PATRICK MCCRORY, MAYOR, CHARLOTTE, NC

    Mr. McCrory. Thank you, Mr. Chairman. I encourage you to 
get off the plane and get out of the airport the next time you 
come through Charlotte, and spend some money too.
    Sue, it is great working with you. I was a young 32-year-
old city council member when Sue was the mayor 18 years ago of 
Charlotte, North Carolina. I hate to rub that in, Sue, but it 
has been a long time.
    I want to give you a brief perspective of what it is like 
to be a mayor and dealing with the balance that you were just 
talking about on all sides of the aisle. In fact, I told you a 
story in my testimony about having the difficult task with my 
brothers and sisters of cleaning out a drawer in my parents' 
house. I have lost both my parents this past decade and my mom 
just this past year. And in cleaning out the drawer, I found a 
1962 political brochure that my dad used in a city council race 
in Worthington, Ohio, and in the brochure it said the 
following: ``We must walk the fine line between the growth and 
the preservation of values which brought many of us here. In 
this way we can be certain that new families and desirable 
industry will continue to be attracted to Worthington.'' Well, 
40-some years later you can replace Worthington with Charlotte 
or Columbus or any city represented in this dais because we are 
trying to walk that fine line between protecting our values and 
our environment along with continuing the economic vitality 
where we can put food on the plates of the families in each of 
our cities, and that is the fine line that mayors are working 
on across the Nation.
    I must say as mayor of the city of Charlotte for the past 
12 years, walking that fine line doesn't mean you step on toes. 
I have stepped on toes on people on both the right and the left 
of the political spectrum. On the right, right now I have 
people wholly against my mass transit plan for the next 30 or 
40 years who believe that we should only build roads and that 
will solve our transportation and environmental problems. I am 
a firm believer that we have a mass transit and a land use plan 
for the next 25 to 35 years to prepare for growth in the 
future. I also implemented tree ordinances, the most aggressive 
tree ordinances in the Nation, for both residential and 
commercial properties and we are looking at other properties of 
industrial zoning. We are also looking at sidewalk ordinances. 
I passed my first year as mayor one of the most aggressive 
sidewalk ordinances where you have to have pedestrian-friendly 
access and connectivity. I had to implement several vetoes to 
get this implemented in the city.
    However, also on the left I have stepped on some toes. I 
have people on the left who want to implement mass transit 
everywhere, even where it doesn't work, out of fairness and I 
fight those efforts also. I want to make sure our money is 
spent in the right place and at the right time. I also have had 
people on the left who fight liability efforts to decrease the 
liability of people investing in Brownfields and I also have 
people on the left, despite the issue of global warming and 
climate change, never even mention the word nuclear power or 
clean coal. It is nowhere in their vocabulary and it is not a 
part of their discussion, and we have got to move people to the 
center to find this balance between energy needs, job needs 
with environmental needs and that is what I am intending to do 
as mayor of Charlotte, North Carolina.
    Why cities are so important? For example, our growth is 
increasing by 49 percent during this next 15 years. It is 
increasing by 80 percent automobiles during that same period of 
time. I have to look at what our air quality will be for the 
next generation, especially during hot summer days in July and 
August in Charlotte, North Carolina.
    Now, what are we doing? We are implementing the tree 
ordinances, we are implementing buffer requirements, we are 
implementing bike lanes, pedestrian-friendly access. We have 
got the business community involved in Clean Air Works, a 
voluntary program where the business community not just in 
Charlotte but the entire region which crosses city boundaries, 
State boundaries, community boundaries to get them involved, 
especially during high-ozone days. We are also implementing 
things with regional governments to make sure we have 
consistent land use policies so we don't have developers 
leapfrog regulations which encourage sprawl. That has a major 
impact on the environmental policies that we are implementing 
in cities. By the way, we are also implementing nuclear power 
in our region, which is very positive on our area. I have two 
nuclear power plants within 20 miles of Charlotte, million-
dollar lots right next door. I wish I would have invested in 
them 20 years ago and I did not. But we are very, very proud of 
our clean energy and nuclear power.
    The U.S. Conference of Mayors is also working on this, and 
I work with my fellow mayors like Shirley Franklin and the 
mayor of Seattle in 10 points in which we are looking at block 
grants, which can encourage cities to implement good 
environmental policies and energy policies as opposed to just 
having a stick approach in that effort.
    I look forward to discussing more of these efforts in 
detail. My dad was right: We all must balance our efforts 
between a viable economy and also a clean environment. Thank 
you very much.
    [The prepared statement of Mr. McCrory appears at the 
conclusion of the hearing.]
    Mr. Butterfield [presiding]. Thank you, Mr. Mayor, for your 
testimony.
    At this time the Chair recognizes Secretary Adams, for 5 
minutes.

 STATEMENT OF LINDA ADAMS, SECRETARY, CALIFORNIA ENVIRONMENTAL 
               PROTECTION AGENCY, SACRAMENTO, CA

    Ms. Adams. Good morning, Mr. Chairman, and members of the 
committee.
    I am Linda Adams, California's secretary for Environmental 
Protection. On behalf of Governor Schwarzenegger, thank you for 
inviting me to testify today. Today I will describe 
California's process for developing our climate initiatives and 
explain the various programs we have in place or are developing 
to meet our climate goals.
    First I want to commend the committee for this series of 
hearings on climate change. Climate change is one of the most 
pressing environmental and economic issues of our time. If 
unaddressed, the consequences are frightening. Addressing 
climate change is no small task but the first step is political 
leadership. That is why I am thankful that this committee and 
Congress as a whole is addressing this issue in a very serious 
manner.
    California's climate initiatives began with a similar act 
of political leadership. In June 2005, Governor Schwarzenegger 
announced he signed an executive order laying out his goals for 
addressing climate change. He committed California to reduce 
its greenhouse gas emissions to 1990 levels by the year 2020. 
He also established a Climate Action Team, which I chair, 
consisting of cabinet-level decision makers from the various 
State agencies that have authority to reduce greenhouse gas 
emissions from their respective jurisdictions. Last March the 
Climate Action Team released a blueprint report for how 
California could reach the 2020 goal. I would like to submit a 
copy of the executive summary of this report into the report, 
and it has been delivered to the committee. The report made a 
series of high-level recommendations including, one, to develop 
a multi-sector market-based system to reduce greenhouse gas 
emissions in a cost-effective manner that both protect economic 
growth and encourages innovation; two, mandate emissions 
reporting from the largest sectors; three, conduct an economic 
analysis to inform policymakers on the most cost-effective 
measures to reduce greenhouse gas emissions; four, accelerate 
regulatory measures such as the renewable energy portfolio and 
energy efficiency standards; and last, educate the public to 
ensure that all citizens understand the significance of climate 
change and steps they can step to mitigate it. The report also 
laid out over 40 specific strategies that could be employed to 
reach our goal.
    The purpose of this exercise was not to commit California 
to each strategy but to demonstrate that a combination of 
strategies could be implemented to achieve these goals. The 
report included a series of scenario analyses of the potential 
impacts of climate change on California. These research 
documents were collected from some of California's most 
renowned climate scientists. In July 2006, these analyses were 
summarized in another important document, which I would also 
like to submit to the record and that report has also been 
delivered.
    Mr. Butterfield. Without objection, it will be received.
    Ms. Adams. Thank you.
    That document called ``Our Changing Climate'' highlights 
the various effects of climate change on California including a 
potential loss of 70 to 90 percent of the Sierra Nevada snow 
pack, which serves as our largest free water storage reservoir. 
Sea level rise affecting the livability and economy of coastal 
areas; saltwater intrusion into the California Bay-Delta, which 
supplies drinking water to 23 million Californians; heat waves 
that worsen air pollution and jeopardize public health; and 
significant damage to California's valuable agriculture 
industry. This report demonstrates that there is a heavy toll 
to pay economically, environmentally and socially if we do not 
address climate change.
    The California legislature responded to the Governor's 
goals by passing A.B. 32, the Global Warming Solution Act. That 
bill gave my California Air Resources Board broad authority to 
reduce greenhouse gas emissions from significant sources. The 
bill allows a market-based approach and calls for enforceable 
caps to be in place by 2020. The Governor signed the bill in 
September 2006 and we immediately began implementation. In 
October the Governor issued an executive order calling on the 
Air Resources Board to develop a multi-sector market-based 
compliance system that could permit trading between the 
European Union and the Northeast Regional Greenhouse Gas 
Initiative and others. It also called on me to create a market 
advisory committee of national and international experts to 
advise on the design of a market system. I announced that 
membership in December and they have met twice already.
    Mr. Chairman, I am worried that I am running out of time.
    Mr. Butterfield. Yes, your time has expired. We have a copy 
of your written testimony, I believe. Yes. Would you like to 
make a final statement?
    Ms. Adams. Yes. The final statement is that as Congress 
considers legislation to address global warming, I would 
recommend that you consider several key principles. One, to set 
an overall cap on emissions; two, to design a system that 
allows all sectors of the economy to participate; three, allow 
for market mechanisms that encourage new technology; four, 
invest in scientific research; five, promote public education; 
and six, remain open to new ideas.
    [The prepared statement of Ms. Adams appears at the 
conclusion of the hearing.]
    Mr. Butterfield. Thank you. Thank you very much.
    Commissioner Jackson, you are recognized for 5 minutes.

    STATEMENT OF LISA P. JACKSON, COMMISSIONER, NEW JERSEY 
      DEPARTMENT OF ENVIRONMENTAL PROTECTION, TRENTON, NJ

    Ms. Jackson. Thank you. Good morning, Mr. Chairman, and 
members of the committee. My name is Lisa Jackson. I run the 
New Jersey Department of Environmental Protection. On behalf of 
Governor Jon S. Corzine, I would like to thank this committee 
for taking the steps necessary to begin tackling this issue of 
climate change. Governor Corzine has said often that it is not 
only an economic issue, it is one that is absolutely imperative 
to the preservation of our planet for our children and 
grandchildren.
    The economic impacts of global warming, I know we will talk 
about the economic impacts of some of the fixes but the 
economic impacts of global warming for our State, like many of 
my colleagues here, could be quite dramatic. We are talking 
about impacts to the environment, the economy and public 
safety. New Jersey has 127 miles of coastline. It has a vibrant 
and active port and a vibrant and active agricultural sector in 
addition to the tourism that comes with our wonderful 
coastline.
    In response to the challenges of global warming, just a few 
weeks ago Governor Corzine recently issued an executive order 
that set statewide targets for stabilizing New Jersey's 
greenhouse gas emissions at 1990 levels by 2020. Further, his 
order looks long term by setting a standard of reduction of 80 
percent from current levels by the year 2050.
    I think it is important to recognize, as many of you have, 
that New Jersey is not the only State that is moving forward 
with global warming targets and challenges and solutions. In 
fact, many States have already moved in that direction.
    I am here to speak a bit about the Regional Greenhouse Gas 
Initiative that nine and soon 10 States in the Northeast have 
embraced to deal with greenhouse gas emissions from the 
electricity generation sector in our State. I note that a 
number of the RGGI States are represented on your subcommittee 
and we certainly want to thank each and every one of them from 
New Jersey for the hard work that they have put in to make the 
Regional Greenhouse Gas Initiative as successful as it is doing 
so far as we move toward implementation. Additional States, 
clearly California, Arizona, New Mexico, Washington and 
Illinois, have also all set aggressive greenhouse gas targets. 
RGGI is the first ever cap-and-trade program addressing CO\2\ 
in the United States. The proposed program will require 
electric power generators in participating States to reduce 
carbon dioxide emissions. Reductions targeted are to stay at 
approximately current levels through 2014 and then to reduce 
emissions 10 percent below current levels by 2018. That is 
actually a 16 percent reduction from business as usual 
projections. We also intend to auction up to 100 percent of New 
Jersey's allowances under RGGI to support consumer benefits. 
Revenue from the auction of these allowances will be used to 
support energy efficiency and clean energy technology across 
sectors and help to reduce the impact to electricity 
ratepayers.
    While I am here today to talk to you and answer any 
questions that the subcommittee may have about RGGI and I am 
happy to do that, I would be remiss if I did not take the 
opportunity to reiterate Governor Corzine's strong call for 
Federal action to set minimum requirements on the issue of 
climate change and greenhouse gases. As a former CEO, Governor 
Corzine is certainly not interested in pursuing a path that 
would lead our State or our people to a place where we are not 
economically competitive. On the contrary, he believes very 
firmly and strongly that stepping up to address climate change 
now is an economic opportunity, that technological advances in 
the past in our country have lead to great economic innovations 
and economic success, and he believes that by moving forward 
quickly now, New Jersey will be poised to address what will be 
one of the greatest technological challenges of our era.
    For that reason, I would ask today that this Congress 
redouble efforts to come up with strong national laws that 
regulate greenhouse gas emissions, and attached to my testimony 
that has already been submitted are principles that we, the 
RGGI States, have talked about and discussed as necessary for 
that kind of regulation including the fact that it be based on 
strong science-based reductions on the order of 80 percent is 
what our scientists say we need in order to address this issue, 
that it be portfolio-based, that it include energy efficiency 
and CAFE standards, and that it acknowledge the fact that State 
action is fundamental to moving forward and that those actions 
in the States not be preempted by weak Federal regulations.
    In closing, I would like to say that New Jersey, like many 
other States and jurisdictions here, is a great example of 
innovation and I look forward to answering any questions you 
may have.
    [The prepared statement of Ms. Jackson appears at the 
conclusion of the hearing.]
    Mr. Butterfield. Thank you.
    Secretary Curry, you are recognized for 5 minutes.

STATEMENT OF RON CURRY, CABINET SECRETARY, STATE OF NEW MEXICO 
              ENVIRONMENT DEPARTMENT, SANTA FE, NM

    Mr. Curry. Thank you, Mr. Chairman, and thank you for 
inviting us from New Mexico to be here today.
    I am Ron Curry. I am cabinet secretary for the State of New 
Mexico Environment Department and I bring you best wishes from 
Governor Richardson, who is a happy graduate from this 
committee.
    The Governor has exerted strong leadership in this area 
since he came into office in 2003. New Mexico is a State that 
is a lot about water. We are concerned about our snow pack and 
our water supply in New Mexico because we are in the desert 
Southwest. We believe that Governor Richardson has given strong 
leadership in protecting our water supplies through the efforts 
that we are making through climate change initiatives within 
New Mexico.
    We also believe, and the Governor has made it very clear, 
that we don't want to do anything that harms our economy in New 
Mexico. Quite the contrary, we believe that good climate change 
measures will improve the economy in New Mexico and the United 
States.
    Governor Richardson has focused on four specific points as 
we have gone through the climate change initiatives. One, in 
the summer of 2005, Governor Richardson issued an executive 
order setting tough greenhouse gas emission reduction targets 
in New Mexico, and this was done as a result of the Climate 
Change Advisory Group, which was a diverse group of 40 people 
in New Mexico that was made up of business folks, made up of 
people from government, made up of environmental advocates and 
it was a completely diverse group including oil and gas and 
dairies and out of that came recommendations for climate change 
action in New Mexico. There were 69 recommendations. Sixty-
seven of those recommendations out of this 40-member diverse 
group were unanimous, and I think that is a tribute to the 
Governor's leadership and making people understand how 
important climate change initiatives are to helping New Mexico 
not only environmentally but with the economy.
    In New Mexico, the No. 1 source of greenhouse gas emissions 
is power production while the No. 2 source is production and 
processing in the oil and gas sector. Those two industries 
account nearly two-third of the greenhouse gas emissions 
produced in the State. The Governor has led on this issue as 
well. Last week, Governor Richardson signed legislation 
increasing the State's renewable portfolio standard for the 10 
percent renewable energy required in 2011 to 15 percent by 2015 
and 20 percent in 2020. The Governor also signed a bill 
creating the Renewable Energy Transmission Authority, a quasi-
governmental agency that will facilitate the transmission of 
renewable energy within the State and to the markets outside of 
New Mexico.
    New Mexico was the first State under the leadership of 
Governor Richardson to join the Chicago Climate Exchange. 
Chicago Climate Exchange is a market-based voluntary cap-and-
trade market and New Mexico joined the ranks of duPont and Ford 
and other private sector companies that have joined the Chicago 
Climate Exchange. We are a proud member, we are the first 
State, and we are participating to make sure that in New Mexico 
the Government itself, which is the participating member, 
reduces our greenhouse gas emissions. As a member of CCX, New 
Mexico is committed to reduce greenhouse gas emissions 
associated with State operations by 6 percent by 2010.
    Also as been mentioned, we are a member of the Western 
Regional Climate Action Initiative, and in the action of strong 
national climate program, New Mexico is also pushing for 
market-based solutions at the regional level. On February 26, 
2007, Governor Richardson signed a memorandum of understanding 
with the Governors of California, Arizona, Washington and 
Oregon creating the Western Regional Climate Active Initiative. 
This is a major collaborative effort by the western States.
    We encourage Congress to learn from States like New Mexico 
when implementing programs to reduce greenhouse gas emissions. 
Over the last 30 years of the Clean Air Act, the States have 
proven themselves as the laboratory for innovation in air 
pollution control. We ask most importantly that Congress enact 
a program with mandatory market-based greenhouse gas emission 
limits that slow, stop and reverse the growth of these 
emissions. These emission caps and such a program should result 
in reductions equal to the targets set by Governor Richardson.
    We look forward to answering any questions you have and we 
look forward to continuing to work at the State level and at 
the regional level to solve this very serious problem.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Curry appears at the 
conclusion of the hearing.]
    Mr. Butterfield. Thank you, Mr. Mayor.
    Commissioner Parsley, 5 minutes.

  STATEMENT OF JULIE CARUTHERS PARSLEY, COMMISSIONER, PUBLIC 
            UTILITY COMMISSION OF TEXAS, AUSTIN, TX

    Ms. Parsley. Thank you, Mr. Chairman and members. Thank you 
for having us here today, and I have a slightly different 
perspective than the other witnesses today. The issue of 
climate change and what Texas will do about it is a legislative 
issue that they are struggling with even as we speak, just as 
you are, so that is something they are dealing with in Austin 
right now. But what I am here to tell you about is what we have 
done with renewable energy in Texas and I have some 
recommendations for how it could actually be implemented in 
other areas.
    [Slide shown.]
    Just to begin, this next slide is just to show you real 
quickly, because I will be talking about ERCOT and then out of 
ERCOT areas. I know you know this already but just as a 
reminder, there are three interconnections in the United 
States. Texas is the only State in all three interconnections. 
El Paso is in the western interconnect, the panhandle and 
northeast Texas are in the eastern interconnect and we have 85 
percent of the load in Texas in ERCOT, which is a wholly 
intrastate interconnection. Next slide.
    [Slide shown.]
    The Texas Legislature passed a Renewable Portfolio Standard 
for Texas. It started out in 1999 at 2,880 megawatts by 2009 
and we had surpassed that by 2005. So in 2005 they increased 
that goal to 5,880 in 2015. Last year we surpassed California 
as the U.S. leader for renewable energy and actually Texas has 
the world's largest wind farm that just opened up outside of 
Sweetwater at 735 megawatts. Next slide.
    [Slide shown.]
    What has made this a successful program are really three 
major factors. The first is robust markets for renewable 
energy, the second is a very significant transmission 
investment, and three, positive economic incentives for the 
generators of that energy. Next slide.
    [Slide shown.]
    Robust markets for renewable energy--when you have a 
willing buyer and a willing seller, you don't really cap your 
growth. You can sell as much as somebody is willing to buy and 
you can buy as much as somebody is willing to sell. And having 
actual competitive markets in Texas has facilitated this. If 
you otherwise have a renewable portfolio standard where you 
just require integrated utilities to buy a certain percentage 
of their capacity from renewable sources, then that tends to 
act more as a cap. So that is one of the reasons we have been 
able to exceed our standards, I believe, is because we do have 
willing buyers and willing sellers. In fact, earlier this week 
a coalition of environmental and renewable power generator sent 
Chairman Kelliher at the FERC a letter arguing that robust 
wholesale markets were necessary to really promote renewable 
energy, and I found that very interesting as well. Next slide.
    [Slide shown.]
    We always hear in Texas about the high retail electricity 
prices on the retail side and this chart is really just to show 
you how our electricity prices track the natural gas prices. 
Seventy-three percent of our generation in ERCOT is natural gas 
generated, and you can see the big spike in 2005. That was 
during the hurricanes. Prices have come back down and mitigated 
somewhat but our prices are quite more expensive than the other 
areas because we do not have the kind of coal-burning 
facilities other States do. Even in Texas, the out of ERCOT 
areas where there is 70 percent coal in those areas, the prices 
are much lower. Next slide.
    [Slide shown.]
    The second element, and this is a very important element, 
is that we have had a very significant transmission investment 
in ERCOT. We have a socialized rate for transmission costs. If 
we build the transmission, the costs are all uplifted and 
spread to all the ratepayers. In this way it has avoided people 
complaining about cross-subsidization for one program over 
another and has just allowed us to build what we need to build. 
In fact, in the next few years we will have $5.3 billion worth 
of transmission investment in the rolled-in rate and that 
equates to 7,500 new miles of transmission. So that has been a 
very important thing. If you can't move the renewable energy 
from the generation source to the load, there is not much sense 
in having renewable energy.
    One thing that we have also done is, we have a proceeding 
to designate corridors in Texas and that is something that--
next slide.
    [Slide shown.]
    I would like to suggest as a recommendation. I am beginning 
to run out of time, so I would like to just say positive 
economic incentives that have really led to this as well are 
our Renewable Portfolio Standards but the Federal production 
tax credit, we have been told by the renewable generators, is 
actually even more important than that. That is something they 
count on and something that has really incented that activity. 
Next slide.
    [Slide shown.]
    The recommendations that I would make that we have seen 
that worked in Texas, and can work elsewhere, are significant 
transmission investment which I think might be able to be done 
under the transmission corridor power that was given to the 
Department of Energy, also renewable transmission corridors and 
possibly socializing those costs, though allowing for regional 
flexibility. For instance, New Mexico has a renewable program 
that works very well for them. We have a program that works 
very well for us. There may be other regions that have the 
same.
    So with that, I will close and answer any questions.
    [The prepared statement of Ms. Parsley appears at the 
conclusion of the hearing.]
    Mr. Butterfield. Thank you for your testimony.
    I want to thank all of you. Most all of you stayed right on 
target with your time and I thank you so very much.
    It is now time for questions from the members of the 
committee. The Chair will yield to himself 5 minutes for the 
purpose of asking questions.
    Mr. Mayor, thank you again for coming. Thank you for your 
leadership in Charlotte. Your reputation precedes you, and I 
thank you very much. But Mr. Mayor, given the global nature of 
climate change, it is not United States climate change, it is 
global climate change, could you explain to us why you and the 
other mayors across the country are taking local actions to 
address this important issue?
    Mr. McCrory. Well, I think local action, grassroots action 
can maybe have as much impact on the total environment as any 
Federal action because at the local level we are making the 
major land use decisions that determine where growth goes 
regarding sprawl, regarding where industry is placed and how 
much we are reliant on the automobile. Many of these things are 
actually outside the jurisdiction of the Federal Government so 
we feel very strongly that what we do in our airports, what we 
do in our Government buildings, what we do in our land 
development can have a major impact on not just the national 
environment but the global environment, and I hope that spreads 
not just to cities like Charlotte or Seattle or Chicago but 
also spreads to Singapore and cities in Asia and Europe and 
across the world.
    Mr. Butterfield. When the mayors take their official action 
and take their positions on this issue and other issues, what 
forum do you use to do that? Is it a poll? Is it a convention? 
What is the methodology?
    Mr. McCrory. We actually go through two separate 
committees, and one thing I am recognizing which maybe was a 
mistake, I used to be chairman of both the energy and 
environment committee and I think to help spread out the 
chairmanships and things and get more mayors involved, we 
separated the energy and environment committee so we have 
lengthy discussions on both the energy and environment 
committee and that is where we get the details on what types of 
resolutions we would like to pass. We share ideas and I might 
add, we steal each other's ideas also.
    Mr. Butterfield. Let me address this question to the 
distinguished secretary from New Mexico, Mr. Curry. Mr. Curry, 
you testified that your Governor has entered into an agreement 
with four other western Governors to establish a cap-and-trade 
program for greenhouse gases. Could you provide us with more 
information on that such as what sectors within your economy 
might be covered and what cap levels and timing may be under 
consideration?
    Mr. Curry. Mr. Chairman, yes, we will be glad to supply you 
with all of that. I think one of the most important parts of 
that collaboration is the fact that we have many things in 
common and we are going to set our guidelines and our mandates 
based on those commonalities. Obviously in New Mexico we don't 
have an ocean like California does yet and we on the other 
hand, because of the working relationship that Governor 
Richardson has with Governor Schwarzenegger and the other 
Governors, we are going to be working trying to recognize the 
differences between the States and setting the timelines 
accordingly, and I think what we are going to see out of that 
is those five States being the leaders in the country because 
of that type of cooperation.
    Mr. Butterfield. Secretary Adams, let me again thank you 
for coming and ask you, if the Federal Government were to adopt 
a cap-and-trade program for greenhouse gas emissions, how would 
that affect the regional program that New Jersey is involved 
in? Do you believe that the regional programs would survive?
    Ms. Adams. Thank you, Mr. Chairman. We will be working with 
not only the western States but the RGGI States on designing a 
trading program. California's program is required to take 
effect January 1, 2012. I have a market advisory committee made 
up of experts from around the world who really envision an 
international market. I do have members from the RGGI States on 
that committee. We are a little bit at risk being potentially 
ahead of the Federal Government but we hope that we would be a 
leader in helping to design a market and----
    Mr. Butterfield. Your original program would continue? You 
wouldn't abandon your original program?
    Ms. Adams. Absolutely we would not abandon. We hope that we 
could--we are actually working with 30 other States on a multi-
State registry so we are hoping that we could actually help 
Congress and the Federal Government design a market.
    Mr. Butterfield. Commissioner Jackson, let me ask you to 
take a stab at that if would in the last 15 seconds.
    Ms. Jackson. I would have to agree with Secretary Adams. We 
are moving forward with rules that will be out this year and I 
think we hope that the Federal Government will come in behind 
us with rules that reflect the laboratory and experimentation 
that we are doing in the States.
    Mr. Butterfield. Thank you. The Chair's time has expired. 
Thank you. Thank you very much.
    At this time the Chair recognizes the gentleman from 
Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. Before I start my 
time, I want to also recognize two alumni we have got hiding 
behind Ms. Jackson, Rick Kessler, who was formerly of the 
committee, and we have Dan Scopek, who used to be on Doug Ose's 
staff in California. So I think it is always good staff that 
helps good elected and appointed officials and we appreciate 
you all coming back.
    Mr. Butterfield. Mr. Shimkus, I cannot help but to observe 
that we have a good, diverse panel today as compared to the 
panel yesterday when we had five men, all representing the 
automobile industry. All right. You have 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. I have got a lot of 
things I want to talk about so I will try to go brief, and if 
you can keep your answers simple at first, and you may not know 
the answer, but mayor, is your State a net importer or exporter 
of power? Do you know? You have two nuclear plants so it is 
probably safe to say in your area you are a net exporter.
    Mr. McCrory. I would assume exporter. I don't have those 
statistics with me but yes, and we work in both the Carolinas 
too, two different utilities.
    Mr. Shimkus. Thank you.
    Ms. Adams, California?
    Ms. Adams. Net importer.
    Mr. Shimkus. I knew that answer.
    Ms. Jackson?
    Ms. Jackson. Net importer, about 25 percent.
    Mr. Shimkus. I knew that answer.
    Mr. Curry--oh, before you start, God put a rainbow in the 
sky to say there wouldn't be another flood that destroyed the 
whole world so I think you are safe from seeing any beachfront 
property any time soon.
    Mr. Curry. Well, we have lots of sand. We are ready to go.
    Net exporter.
    Mr. Shimkus. Thank you.
    Ms. Parsley. In ERCOT we are self-sufficient. We do have 
some DC ties that we do move power through, but all the power 
in ERCOT is used in ERCOT. The out of ERCOT areas, I believe 
that they are net importers but----
    Mr. Shimkus. And Texas is a little different because of 
ERCOT, the way that was set up.
    How many of you think there is a benefit to lower energy 
prices?
    Mr. McCrory. One emphasis with energy prices which we 
always talk about residential energy prices but what is most 
important to us in the Southeast is energy prices for industry 
and manufacturing that is deserting our area, so that is very, 
very important for any kind of development.
    Mr. Shimkus. Ms. Adams?
    Ms. Adams. Yes, sir, although California does have some of 
the highest rates, people pay bills and for the most part 
Californians pay lower bills because we are highly energy-
efficient. Our electricity----
    Mr. Shimkus. So the question, do you support low price 
energy prices or high energy prices?
    Ms. Adams. I support low but----
    Mr. Shimkus. OK. Thank you.
    Ms. Jackson?
    Ms. Jackson. Governor Corzine has made it clear that 
lowering energy prices is important for our economic----
    Mr. Shimkus. Because you are one of the highest energy cost 
States in the Nation.
    Ms. Jackson. We do have high energy prices.
    Mr. Shimkus. Thank you.
    Mr. Curry?
    Mr. Curry. We believe in low energy prices, and the fact 
that we have low energy prices in New Mexico has helped create 
80,000 jobs in----
    Mr. Shimkus. And you are a net exporter.
    Mr. Curry. That is right.
    Mr. Shimkus. And that is an important point.
    Ms. Parsley?
    Ms. Parsley. Yes, we do believe in low energy prices.
    Mr. Shimkus. How many jobs in your States are based upon 
energy exploration or recovery? And again, the mayor, you may 
not know.
    Ms. Adams?
    Ms. Adams. I don't have that.
    Mr. Shimkus. You don't have the information?
    Ms. Jackson?
    Ms. Jackson. I think it would be minimal.
    Mr. Shimkus. I would say limited for both of you but you 
might want to clarify that for the record in the future.
    Mr. Curry, probably quite a few?
    Mr. Curry. Yes.
    Ms. Adams. And obviously Texas quite a few.
    Mr. Shimkus. When we address this greenhouse gas debate, I 
think it is safe to assume that natural gas could be a big 
advantage in trying to reduce the amount and keep electricity 
prices low. This was a map that I used before we eventually 
opened up some of the eastern Gulf Coast exploration but it is 
always significant that the west coast and the east coast, big 
red, off limits for natural gas exploration. Do you all know 
that?
    Mr. Mayor, off your coast, do you know we can't explore for 
natural gas?
    Mr. McCrory. Yes.
    Mr. Shimkus. Secretary Adams?
    Ms. Adams. Correct.
    Mr. Shimkus. Ms. Jackson?
    Ms. Jackson. Yes, we oppose that.
    Mr. Shimkus. And of course, you are not on the coast yet 
there, Mr. Curry, so----
    Ms. Parsley. Obviously we support it and we are a net 
exporter of natural gas in Texas.
    Mr. Shimkus. And of course, you do have exploration off the 
coast of Texas.
    If we want low cost, we have got to have supply too. If we 
want to have lower greenhouse gas emissions, we ought to move 
to some supply that would incentivize low-cost energy by using 
less emissions. But that is why a lot of us have problems with 
this debate from our friends on the other side of the aisle 
because they don't want to explore, they don't want to go after 
more natural gas, and natural gas is a major product and 
commodity for industry, for manufacturing, for agriculture and 
the like.
    I want to end up with my last question to the mayor. Where 
is the high-level nuclear waste stored in those two nuclear 
power plants that are in your community?
    Mr. McCrory. I don't have the statistics but much of it is 
currently temporarily stored on the location.
    Mr. Shimkus. Whose responsibility is it to receive that 
high-level nuclear waste?
    Mr. McCrory. The utilities work through the Federal 
Government and work through the nuclear agencies of the Federal 
Government but that is----
    Mr. Shimkus. Do you think it would be safer to store that 
high-level nuclear waste under a mountain in the desert or next 
to your community?
    Mr. McCrory. I personally think that we need to have a 
Federal policy of having one location, and I am an advocate of 
that. I think you are addressing the program which you 
addressed with natural gas and everything else. Even as mayors, 
as Sue knows, we have NIMBY issues where we are all rather 
hypocritical.
    Mr. Shimkus. If we are going to increase in a cap-and-trade 
program down to 80 percent that some people want, we are going 
to have at a minimum 40 percent increase in cost and the NIMBY 
issue better stop because you are using our resources, our 
coal, our natural gas and you are not footing your part of the 
bill, and I would take that back to your State.
    I yield back.
    Mr. Butterfield. Thank you. Thank you very much.
    At this time the Chair recognizes the distinguished 
gentleman from the State of Washington, Mr. Inslee, for 5 
minutes.
    Mr. Inslee. Thank you. I would like to ask unanimous 
consent to put in the record a letter from Mayor Greg Nicholas 
concerning----
    Mr. Butterfield. Without objection, the letter will be 
received into the record.
    Mr. Inslee. I want to elaborate on my thanking you for the 
local leadership States and cities have shown on this from an 
economic development perspective. A lot of people think of this 
as an environmental issue. I tend to think of it as an economic 
opportunity for the United States, and I just want to thank you 
for the successes that you are creating by creating economic 
opportunity. The fact that the local Governors and mayors are 
moving on this issue has created an investment opportunity for 
companies that are now developing technologies that are going 
to sell their products to China one of these days, and right 
now the RamGen Corporation, for instance, in Tacoma, 
Washington, has a compression technology that might reduce the 
cost of compressing CO\2\ so we can make clean coal actually a 
market-based possibility in this country, and because of what 
you are doing, it is creating an investment climate so that 
they can move forward to develop clean coal technology that one 
of these days we are going to sell to China, because we need to 
sell our technology to China to create jobs here and to 
restrain their unrestrained CO\2\ emissions in China.
    We have tremendous investment in the Nano Solar Corporation 
in Palo Alto, California, that has developed a thin-celled 
solar cell, a phototaic cell, using the sigs system rather than 
a silicone-based system, but they have an investment climate 
that now allows that because you have moved forward to create 
this economic opportunity and one of these days we are going to 
sell that material, we are going to be the providers to China 
and India of solar. We have solar thermal. We just had a 
company bought from Austria now called Auster, it used to be 
called the Solar Power and Heating Company, we are going to 
sell that technology around the world. We have the A-123 
Battery Company that is now in an investment climate where they 
can grow because of your local leadership and they have 
developed a lithium ion battery that is going to power the next 
generation of plug-in cars. It is going to get 150 miles a 
gallon and go 40 miles on zero carbon emissions. It can 
decrease CO\2\ 30 to 40 percent even using today's grid.
    The point I want to make is, what you all are doing locally 
are growing the Nation's economy by allowing us to fulfill our 
destiny that I believe is America's destiny to sell clean 
energy technology to the world, and I believe that is a 
leadership destiny for this country that we ought to seize, and 
the effort that you are doing right now is helping us, so I 
just want to thank you for that. A lot of people think of you 
from the green perspective. I am thinking of the other kind of 
green here, and there is some other kind of green that we got 
to think about when we develop our global warming policy.
    So with that, a question to Ms. Parsley. You talked about--
and I am not sure I understood. You said an RPS could be a cap 
if it was not treated correctly, and I am not sure I follow 
what you said. You said we had to do something on RPS so that 
it didn't end up being a cap, it would actually be a floor.
    Ms. Parsley. Right. Well, what I meant was, if you have a 
market with the buyers and sellers, you can buy as much as sold 
and you will produce, which is the law of supply of demand. 
With an integrated utility, you tend to have to say you would 
either buy 10 percent of whatever your output is and if the 
utility is doing that, then that tends to be a cap, in other 
words. It could be 10 percent of what they can actually 
purchase and what they can actually use because there are some 
system reliability limitations on wind because it is 
intermittent and some other issues surrounding it. So that is 
all I meant. I didn't mean that an RPS integrated utility was a 
bad thing at all. I just meant that if you have a market where 
you actually have people who can buy and sell it, it tends to 
act--it tends to increase.
    Mr. Inslee. I will give you another company, by the way. 
You mentioned intermittent nature of wind. There is a company 
called General Compression that has had a very significant 
round of financing and they have a system of compressing air, 
putting it in the ground, treating it as a battery that can run 
a turbine and it can potentially double revenues from wind 
turbines by making it a stable source of energy rather than 
intermittent, and it is that type of investment that your 
actions are driving and I think that is a technology some day 
that we want to sell to China as well.
    Could I ask about the California experience? You may have 
talked about this. As I understand it, California has had 
essentially a stable electrical usage because of their 
efficiency work that they have done whereas the average 
American has gone on 50 percent in the last 15 or 20 years. I 
believe that is the statistic.
    Ms. Adams. Yes, sir, I believe it is.
    Mr. Inslee. Could you talk about what you think is the most 
effective ways to accomplish that what I consider incredible 
achievement? You are still enjoying hot tubs out there. Your 
economy is doing pretty well but you have stabilized electrical 
use but everybody else's is going up by a factor of 50 percent.
    Ms. Adams. Yes, that is true. Our electrical use per capita 
has remained nearly flat while the rest of the Nation's use has 
increased by 50 percent, and we do--we are very energy-
efficient in California and we have through the rates paid for 
our rebate programs and other energy-efficiency programs such 
as installing dual-pane windows, installing solar, so we have a 
very active rebate program. My local utility, which is one of 
the most green in the State, provides free shade trees. We have 
some hot weather in Sacramento in the summer so----
    Mr. Butterfield. The gentleman's time has expired.
    Mr. Inslee. Thank you.
    Ms. Adams. You are welcome.
    Mr. Butterfield. At this time the Chair recognizes the 
distinguished gentlelady from North Carolina, Mrs. Myrick.
    Mrs. Myrick. Thank you, Mr. Chairman, and thanks to all of 
you again for your testimony and your suggestions and things 
you are doing.
    I wanted to ask my mayor a question and just let you 
elaborate. I know community-wise, we have got a lot going on 
with green building initiatives and the same with what you are 
doing in government. Could you just give us a little bit of a 
synopsis on how that is all working together and the difference 
it makes?
    Mr. McCrory. Absolutely. I think this green building 
initiative, which I really commend Mayor Daley in Chicago for 
being one of the major leaders in this effort, is taking cities 
by storm and now we are working with the private sector, the 
architects, the designers of buildings. We have designed a 
museum and a theater recently as a green building in downtown 
Charlotte and now we are looking at putting those types of 
requirements in other buildings. Of course, you have to balance 
the costs and there are different levels of the green ratings 
but we think it has tremendous potential, especially with the 
impact of the heat index in major metropolitan areas.
    Mrs. Myrick. And of course, because we have low energy 
rates in the Southeast, I think a 40 percent increase would 
probably be very damaging to what happens with our economy in 
business and industry.
    Mr. McCrory. Well, Sue, in your district, as you know, 
especially in the Gaston County area, we are trying to hang 
onto industry at this point in time, and as we try to compete 
with the Central America right across the border and even 
China, one of the major questions we get when we recruit 
industry or try to retain them is the energy prices. No doubt 
about it.
    Mrs. Myrick. One of the things that I think frustrates us a 
little bit in North Carolina relative to our energy situation 
is the fact that hydro is great and wind is great but we don't 
have the advantage of being able to use a lot of that, and so 
we have had to rely on other technologies and I wanted to ask 
Ms. Parsley, relative to Texas, I know you don't do coal but do 
you have any plans or how do you look at or have you considered 
clean coal technology in Texas? Is that an option for you?
    Ms. Parsley. We have had two announced IGCC plants. They 
are test facilities. Texas has two of the four remaining sites 
for FutureGen and we really hope that FutureGen will site in 
Texas very much. But, yes, we are very supportive of that. It 
is still a burgeoning technology. It is very, very promising 
but it is still not quite available for commercial use. So that 
is something we are looking at very--we are very interested in 
that, yes.
    Mrs. Myrick. Mr. Curry, forgive my ignorance on this. Do 
you have any nuclear in New Mexico?
    Mr. Curry. Mr. Chairman, we do not have any nuclear in New 
Mexico but we do use Palo Verde nuclear plant, which is in 
Arizona, southern Arizona, and New Mexico is also in the 
process of permitting and has already been permitted by the NRC 
a uranium enrichment plant, which is in New Mexico, which will 
be used to supply fuel for nuclear facilities.
    Mrs. Myrick. Thank you. I will yield back my time.
    Mr. Butterfield. Thank you. I believe that completes the 
first round of questioning. Would you like to go a second 
round?
    Mr. Shimkus. Mr. Chairman, I had a question from the 
ranking member that----
    Mr. Butterfield. The gentleman is recognized.
    Mr. Shimkus. It is also one that I would want to ask also 
for public disclosure. I am glad Sue talked about coal. The 
basic question is, do you support the development of clean coal 
power plants in your State or adjacent States? And then I will 
just follow up with a little response.
    Mayor? And I am talking about integrated, combined gas 
cycle which is the current technology.
    Mr. McCrory. Yes, I do.
    Mr. Shimkus. Ms. Adams?
    Ms. Adams. I am not familiar with the technology on so-
called clean coal but I know that sequestration is a big part 
of the solution and that is something that California is 
willing to invest in and look at.
    Mr. Shimkus. And we had a big hearing on that a couple 
hearings ago, so Ms. Jackson?
    Ms. Jackson. Governor Corzine has made it clear that he 
thinks we must invest in coal technologies, not only IGCC but 
other sequestration technologies and we believe it is part of 
the mix.
    Mr. Shimkus. Tell him thank you for me.
    Mr. Curry?
    Mr. Curry. Yes, we do, and we are exploring the various 
types of credits that are available to companies that would be 
willing to do that exactly that in New Mexico.
    Mr. Shimkus. And Ms. Parsley?
    Ms. Parsley. Yes, we are.
    Mr. Shimkus. And I hope that Texas is not successful. The 
two other FutureGen sites are in southern Illinois, which is 
where I am at. The States ought to be following this because it 
is near-zero-emission with carbon sequestration if you have the 
geological formations.
    I do appreciate you coming, and with that, Mr. Chairman, I 
will yield back my time. Thank you.
    Mr. Butterfield. The gentleman from Washington, Mr. Inslee.
    Mr. Inslee. Thank you, Mr. Curry, for writing a book about 
the economic opportunities associated with clean energy, and I 
have been really impressed with what has gone on in New Mexico 
because it has been historically a fossil fuel-producing State 
and it has been a major part of its economy but I have seen 
very significant changes under Governor Richardson's leadership 
and I just wanted to give you a chance to crow for a minute or 
two and tell us what you think has been most successful in 
those efforts. The question I guess I would ask you is, here we 
have a State that has been dependent on fossil fuels and has 
been an integral part of its economy and yet it is making this 
transition. How do you pull that off?
    Mr. Curry. Well, I will crow for the Governor, Mr. Chairman 
and Members. New Mexico gets most of its revenue stream from 
the oil and gas industry, a third of it and sometimes more than 
that, depending on the year, and that revenue stream helps to 
support our schools in New Mexico. The oil and gas industry is 
unique in New Mexico. When we have done our inventories on 
emissions that are greenhouse gases, the oil and gas industry 
is number two in New Mexico for those emissions. So it is the 
good and the bad, if you will, and what we have done is include 
them in the process and they understand how important it is to 
work on this problem and work on it with the State. In addition 
to that, we have brought industries in like Advent Solar that 
are going to bring a lot of jobs to New Mexico that are clean 
energy obviously. Tesla Electric Car Motor Company have just 
announced they are going to New Mexico. The Governor is 
determined and putting into green building, clean energy 
buildings that have low emissions within New Mexico.
    And so we recognize the importance of fossil fuels in our 
State and they will be there for a long time but we are also 
determined to develop a strong renewable portfolio and these 
companies are helping us to do that, and it is a--without 
sounding too much like I am promoting the guy that I work for, 
it really is due to his leadership in these areas because he is 
familiar with the way business works in New Mexico and how 
important these are to our sound economy but he has been able 
to bring in to the State the types of businesses that people 
see are profitable and sustainable as far as energy goes, and 
we are going to continue to do that. We have done that with tax 
credits and we have done that with tax cuts, and just like we 
were mentioning on the IGCC, we have got a proposal in front of 
our legislature right now to offer credits for coal companies 
that are willing to invest in the best available technology 
that is out there, and it is that sort of innovative thinking 
that is making that transition easy.
    Mr. Inslee. Sort of a working presumption I have is that we 
in Congress have been slow to this because we haven't 
recognized the public's recognition that they recognize this as 
an economic opportunity for us, and as far as I can tell, no 
politician in America has ever been beat arguing that Americans 
are smart enough to grow new technology, and my perception is, 
people understand that and that is why New Mexico has been 
successful at leadership. California, you have had good success 
and in New Jersey and other States. In New Mexico, has there 
been any sort of pushback from any quarter of the economy to 
try to grow these new companies in New Mexico?
    Mr. Curry. Mr. Chairman, Members, there have been certainly 
areas where people have resisted change, but when you get down 
and you sit down and have a conversation with them, just like 
this policy advisory committee that the Governor set up that 
included oil and gas industry, it included areas like the dairy 
industry, which is a producer of methane in our State, and New 
Mexico is one the largest dairy-producing States in the Nation, 
when you sit down and explain to folks if they can reduce waste 
in their business, whether it is greenhouse gases or other 
types of waste, as you reduce waste in business, your bottom 
line is going to improve over time. It will just simply do that 
by reducing waste and that is what the Governor has been able 
to do and that is what we continue to do.
    Mr. Inslee. Thank you.
    And as I leave, I want to congratulate Texas for their 
movement with TXU coal sequestration technology. We hope that 
reaches fruition. Good luck. Thank you.
    Mr. Butterfield. Thank you, Mr. Inslee.
    The gentlelady from North Carolina? She has no questions. 
Thank you.
    Well, I believe that completes the questions. Any other 
questions from any other Member?
    Again, we want to thank all of you for coming. This has 
been most informative. This committee is in recess. Thank you.
    [Whereupon, at 12:44 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

    [GRAPHIC] [TIFF OMITTED] T7423.001
    
    [GRAPHIC] [TIFF OMITTED] T7423.002
    
    [GRAPHIC] [TIFF OMITTED] T7423.003
    
    [GRAPHIC] [TIFF OMITTED] T7423.004
    
    [GRAPHIC] [TIFF OMITTED] T7423.005
    
    [GRAPHIC] [TIFF OMITTED] T7423.006
    
    [GRAPHIC] [TIFF OMITTED] T7423.007
    
    [GRAPHIC] [TIFF OMITTED] T7423.008
    
    [GRAPHIC] [TIFF OMITTED] T7423.009
    
    [GRAPHIC] [TIFF OMITTED] T7423.010
    
    [GRAPHIC] [TIFF OMITTED] T7423.011
    
    [GRAPHIC] [TIFF OMITTED] T7423.012
    
    [GRAPHIC] [TIFF OMITTED] T7423.013
    
    [GRAPHIC] [TIFF OMITTED] T7423.014
    
    [GRAPHIC] [TIFF OMITTED] T7423.015
    
    [GRAPHIC] [TIFF OMITTED] T7423.016
    
    [GRAPHIC] [TIFF OMITTED] T7423.017
    
    [GRAPHIC] [TIFF OMITTED] T7423.018
    
    [GRAPHIC] [TIFF OMITTED] T7423.019
    
    [GRAPHIC] [TIFF OMITTED] T7423.020
    
    [GRAPHIC] [TIFF OMITTED] T7423.021
    
    [GRAPHIC] [TIFF OMITTED] T7423.022
    
    [GRAPHIC] [TIFF OMITTED] T7423.023
    
    [GRAPHIC] [TIFF OMITTED] T7423.024
    
    [GRAPHIC] [TIFF OMITTED] T7423.025
    
    [GRAPHIC] [TIFF OMITTED] T7423.026
    
    [GRAPHIC] [TIFF OMITTED] T7423.027
    
    [GRAPHIC] [TIFF OMITTED] T7423.028
    
    [GRAPHIC] [TIFF OMITTED] T7423.029
    
    [GRAPHIC] [TIFF OMITTED] T7423.030
    
    [GRAPHIC] [TIFF OMITTED] T7423.031
    
    [GRAPHIC] [TIFF OMITTED] T7423.032
    
    [GRAPHIC] [TIFF OMITTED] T7423.033
    
    [GRAPHIC] [TIFF OMITTED] T7423.034
    
    [GRAPHIC] [TIFF OMITTED] T7423.035
    
    [GRAPHIC] [TIFF OMITTED] T7423.036
    
    [GRAPHIC] [TIFF OMITTED] T7423.037
    
    [GRAPHIC] [TIFF OMITTED] T7423.038
    
    [GRAPHIC] [TIFF OMITTED] T7423.039
    
    [GRAPHIC] [TIFF OMITTED] T7423.040
    
    [GRAPHIC] [TIFF OMITTED] T7423.041
    
    [GRAPHIC] [TIFF OMITTED] T7423.042
    
    [GRAPHIC] [TIFF OMITTED] T7423.043
    
    [GRAPHIC] [TIFF OMITTED] T7423.044
    
 Answers to Submitted Questions of Hon. Michael C. Burgess From Julie 
                           Caruthers Parsley

    1. Transmission siting and investment have been a problem 
in the United States. How has Texas been so successful in 
siting and building new transmission? What are Competitive 
Renewable Energy Zones and how will they work?

    I believe that the major factors that have impeded the 
construction of new transmission facilities in the United 
States have been:
    1. Lack of regulatory certainty, particularly uncertainty 
about the recovery of investment in new transmission 
facilities;
    2. Market structures and rules that resulted in impediments 
to developing new transmission facilities; and
    3. Environmental and land-use concerns.
    In Texas, we have adopted measures to address the first two 
issues. With respect to environmental and land-use concerns, 
these issues arise in Texas in connection with transmission 
proposed for urban and suburban areas and environmentally 
sensitive areas. Much of Texas, particularly in areas in which 
renewable resources occur, is sparsely populated, and these 
issues have not been as prominent as in other areas of the 
United States.
    Uncertainty about regulatory decisions, particularly 
regarding cost recovery, has been an issue in many areas of the 
United States for several reasons. In areas where Regional 
Transmission Organizations were being formed, there was a 
period in which the rules for the recovery of transmission 
investment were changing. While the new rules were being 
debated by interested persons and being reviewed by regulatory 
bodies, there was uncertainty about cost recovery. In addition, 
in many areas of the United States, transmission projects might 
affect several states, and there could be different 
perspectives among affected regulatory bodies about the need 
for additional transmission facilities and the recovery of 
their costs.
    In the Electric Reliability Council of Texas (ERCOT), the 
Texas Public Utility Commission (PUC) is the sole regulatory 
body that has responsibility for licensing and cost recovery 
for transmission expansion. Transmission facilities in ERCOT do 
not affect other states, and ERCOT is subject to regulation by 
the Texas PUC both for retail and wholesale issues. Thus, the 
prospect for conflicts among regulatory bodies is virtually 
eliminated. In addition, the PUC has adopted rules that remove 
much of the uncertainty about cost recovery for transmission. 
Texas has adopted a regional transmission rate that allocates 
transmission costs to all load-serving utilities in the region 
on the basis of peak demand, which is called a "postage-stamp" 
transmission rate, along with a mechanism that allows for 
annual adjustments of transmission charges to reflect new 
investment in transmission. The postage-stamp rate was adopted 
in ERCOT in 1996. Accordingly, there was not a long period in 
which there was uncertainty about how investment in 
transmission would be recovered. The rules for recovering the 
costs of transmission are clear, simple, and stable.
    One of the reasons that the Texas PUC adopted a postage-
stamp rate for transmission in which the costs are charged to 
load-serving utilities was its view that many of the 
transmission facilities in the region served multiple purposes 
and customers. Rather than trying to determine, on a line-by-
line basis, which class of customers or generators would 
primarily benefit from the project, we adopted the philosophy 
that all transmission projects benefit the integrated electric 
grid, so all users should pay the costs. This approach has 
eliminated much of the contention over building transmission, 
and has both streamlined the process and greatly reduced the 
uncertainty surrounding projects.
    In ERCOT, we not only use a transmission rate in which all 
load-serving utilities bear a share of the cost of 
transmission, but all wholesale customers have the same right 
to transmission service, and we have assigned to the ERCOT 
Independent System Operator the responsibility for planning the 
ERCOT bulk-transmission system. Therefore, the planning 
responsibility is not in the hands of a company that has an 
interest in whether transmission is built, but in a neutral 
planning organization whose mandate is to enhance reliability 
and facilitate a competitive wholesale market.
    The statute and rules related to Competitive Renewable 
Energy Zones (CREZs) were developed to address issues specific 
to renewable energy. CREZs are areas throughout Texas, to be 
designated by the PUC, in which renewable energy resources and 
suitable land areas are sufficient to develop generation 
capacity from renewable energy technologies. The PUC is 
required to develop a transmission plan for delivering that 
renewable energy to areas where it can be consumed. The CREZ 
framework was developed, in part, to address timing challenges 
since traditional processes require significant generator 
commitments before the transmission upgrades are considered and 
renewable generation can be operational within 18 months, while 
transmission lines often require up to 5 years for 
construction. In addition, because the lines needed for 
renewable generation are typically not needed for reliability, 
there is difficulty getting approval through standard 
processes. The purpose of the CREZ proceedings is to assess 
interest in renewable generation in specific areas and then 
develop a plan to construct transmission in a manner that is 
most beneficial and cost-effective to customers. The PUC 
initiated the first CREZ proceeding in January 2007, and it 
expects to enter an order in this proceeding in July.

    2. Please describe the concept of renewable transmission 
corridors and how they would work.

    The concept of national interest electric transmission 
corridors was one of the provisions in the Energy Policy Act of 
2005 to supplement state transmission siting efforts for the 
development of stronger energy infrastructure. As you know, the 
Department of Energy (DOE) is considering national corridors 
based on several factors, including the economic vitality and 
growth of the corridor or end markets served by the corridor, 
as well as issues such as energy independence, reliance on 
national energy policy, and enhancement of national defense and 
homeland security. If national leadership seeks to promote 
renewable resources, renewable potential could also be reviewed 
within a framework similar to that of the DOE. These corridors 
could be critical to the success of a national renewable 
mandate, because renewable generation is often located far from 
load centers, and this generation cannot be used by consumers 
unless transmission exists to move the energy to load centers.
    The transmission facilities that are being developed in 
Texas as a part of the CREZ proceeding, as discussed above, are 
in effect, renewable transmission corridors. The critical 
elements of the CREZ proceeding are designating areas that are 
suitable for renewable energy development, identifying related 
transmission facilities, and relying on financial commitments 
of developers of renewable projects to make these decisions.

    3. Please describe how a vibrant, competitive market was 
developed in Texas that encourages the development of more 
renewable energy.

    As I mentioned in my earlier testimony, I believe a 
commitment by Texas leadership to renewable energy, facilitated 
by the following three essential factors, has encouraged the 
development of renewable energy in Texas: robust markets for 
renewable energy; significant transmission investment; and 
positive economic incentives. First, a commitment in 
competitive wholesale and retail markets has facilitated 
willing buyers and sellers to expand the growth of renewable 
resources. Second, utilities have made significant commitments 
to improve the transmission infrastructure in ERCOT, including 
over $2.2 billion from 1999 to 2005 with an additional $3.1 
billion expected from 2006 to 2012. This level of transmission 
investment is due, in large part, to the mandate from the State 
Legislature that wholesale transmission services are priced 
based on the postage-stamp method and costs are socialized 
across ERCOT. In addition, the Texas Legislature directed the 
PUC to designate competitive renewable energy zones and develop 
a plan to construct transmission capacity necessary to deliver 
renewable energy to consumers. Finally, the Federal Production 
Tax Credit and Texas Renewable Energy Credits trading program 
offer positive economic incentives to help make the costs of 
wind energy competitive, especially during times of high 
natural gas prices.

    4. We learned at an earlier hearing that instituting a cap-
and-trade scheme in Germany raised electricity prices 30 
percent to 40 percent. What would happen to the Texas economy 
if electric rates went up 40 percent after instituting a cap-
and-trade system?

    It is unclear how a cap-and-trade program would affect 
electric rates in Texas for two reasons. First, we have a 
competitive wholesale market and some costs may be absorbed by 
the generators. Second, approximately 72 percent of electric 
generation in ERCOT is fueled by natural gas, and it is unclear 
how natural gas generation would be affected by a cap-and-trade 
program.
    That said, the Texas economy relies heavily on 
manufacturing, refining, oil and gas production, and 
agriculture, industries which use a great deal of electricity. 
If prices were to rise an additional 40 percent, it would 
obviously be extremely detrimental to both residential and 
business customers, and to economic development in Texas.

[GRAPHIC] [TIFF OMITTED] T7423.045

[GRAPHIC] [TIFF OMITTED] T7423.046

[GRAPHIC] [TIFF OMITTED] T7423.047

[GRAPHIC] [TIFF OMITTED] T7423.048

[GRAPHIC] [TIFF OMITTED] T7423.049

[GRAPHIC] [TIFF OMITTED] T7423.050

[GRAPHIC] [TIFF OMITTED] T7423.051

[GRAPHIC] [TIFF OMITTED] T7423.052

[GRAPHIC] [TIFF OMITTED] T7423.053

[GRAPHIC] [TIFF OMITTED] T7423.054

[GRAPHIC] [TIFF OMITTED] T7423.055

[GRAPHIC] [TIFF OMITTED] T7423.056

[GRAPHIC] [TIFF OMITTED] T7423.057

[GRAPHIC] [TIFF OMITTED] T7423.058

[GRAPHIC] [TIFF OMITTED] T7423.059

[GRAPHIC] [TIFF OMITTED] T7423.060

[GRAPHIC] [TIFF OMITTED] T7423.061

[GRAPHIC] [TIFF OMITTED] T7423.062

[GRAPHIC] [TIFF OMITTED] T7423.063

[GRAPHIC] [TIFF OMITTED] T7423.064

[GRAPHIC] [TIFF OMITTED] T7423.065

[GRAPHIC] [TIFF OMITTED] T7423.066

[GRAPHIC] [TIFF OMITTED] T7423.067

[GRAPHIC] [TIFF OMITTED] T7423.068

[GRAPHIC] [TIFF OMITTED] T7423.069

[GRAPHIC] [TIFF OMITTED] T7423.070

[GRAPHIC] [TIFF OMITTED] T7423.071

[GRAPHIC] [TIFF OMITTED] T7423.072

[GRAPHIC] [TIFF OMITTED] T7423.073

[GRAPHIC] [TIFF OMITTED] T7423.074

[GRAPHIC] [TIFF OMITTED] T7423.075

[GRAPHIC] [TIFF OMITTED] T7423.076

[GRAPHIC] [TIFF OMITTED] T7423.077

[GRAPHIC] [TIFF OMITTED] T7423.078

[GRAPHIC] [TIFF OMITTED] T7423.079

[GRAPHIC] [TIFF OMITTED] T7423.080

[GRAPHIC] [TIFF OMITTED] T7423.081

[GRAPHIC] [TIFF OMITTED] T7423.082

[GRAPHIC] [TIFF OMITTED] T7423.083

[GRAPHIC] [TIFF OMITTED] T7423.084

[GRAPHIC] [TIFF OMITTED] T7423.085

