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


 
                THE MONTREAL PROTOCOL AND GLOBAL WARMING 

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 23, 2007

                               __________

                           Serial No. 110-75

                               __________

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director































                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 23, 2007.....................................     1
Statement of:
    Velders, Guus, Netherlands Environmental Assessment Agency; 
      Allan Thornton, executive director, Environmental 
      Investigation Agency; and Mack McFarland, environmental 
      fellow, DuPont Fluoroproducts..............................    12
        McFarland, Mack..........................................    28
        Thornton, Allan..........................................    17
        Velders, Guus............................................    12
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia, prepared statement of.........................    10
    Issa, Hon. Darrell E., a Representative in Congress from the 
      State of California:
        Information concerning Greener Computing.................    42
        Prepared statement of....................................    54
    McFarland, Mack, environmental fellow, DuPont Fluoroproducts, 
      prepared statement of......................................    30
    Thornton, Allan, executive director, Environmental 
      Investigation Agency, prepared statement of................    19
    Velders, Guus, Netherlands Environmental Assessment Agency, 
      prepared statement of......................................    15
    Waxman, Chairman Henry A., a Representative in Congress from 
      the State of California, prepared statement of.............     4


                THE MONTREAL PROTOCOL AND GLOBAL WARMING

                              ----------                              


                        WEDNESDAY, MAY 23, 2007

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m. in room 
2154, Rayburn House Office Building, the Honorable Henry A. 
Waxman (chairman of the committee) presiding.
    Present: Representatives Waxman, Clay, Watson, McCollum, 
Hodes, Sarbanes, Davis of Virginia, Mica, Platts, Issa, Foxx, 
Sali, and Jordan.
    Staff present: Phil Barnett, staff director and chief 
counsel; Kristin Amerling, general counsel; Karen Lightfoot, 
communications director and senior policy advisor; Greg Dotson, 
chief environmental counsel; Jeff Baran, counsel; Molly 
Gulland, assistant communications director; Earley Green, chief 
clerk; Teresa Coufal, deputy clerk; Caren Auchman, press 
assistant; Zhongrui ``JR''Deng, chief information officer; 
Leneal Scott, information systems manager; Miriam Edelman and 
Kerry Gutknecht, staff assistants; David Marin, minority staff 
director; Larry Halloran, minority deputy staff director; 
Jennifer Safavian, minority chief counsel for oversight and 
investigations; Keith Ausbrook, minority general counsel; A. 
Brooke Bennett, minority counsel; Kristina Husar, minority 
professional staff member; Larry Brady, minority senior 
investigator and policy advisor; Patrick Lyden, minority 
parliamentarian and member service coordinator; Brian McNicoll, 
minority communications director; and Benjamin Chance, minority 
clerk.
    Chairman Waxman. The meeting of the committee will come to 
order.
    Before we proceed with today's hearing, I want to note that 
we have a new member of the committee with us today, 
Representative Jim Jordan from Ohio. Mr. Jordan served for over 
a decade in the Ohio State Legislature before his election to 
Congress last fall.
    Mr. Jordan, I want to welcome you to the committee and look 
forward to working with you.
    Let me yield to Mr. Davis at this point to welcome our new 
member today.
    Mr. Davis of Virginia. Thank you, Mr. Chairman.
    I am pleased to have Jim Jordan as the newest member of our 
committee. We look forward to his active participation in our 
hearings and markups, although he has a markup in another 
committee as we speak, so he will get used to running back and 
forth. But his experience in the Ohio State Legislature is 
going to benefit the work we do here on oversight and 
government reform. He represents Ohio's 4th District. He 
understands the issues facing families in the heartland of 
America.
    Welcome, Jim.
    Chairman Waxman. Thank you. I want to ask unanimous consent 
that Mr. Jordan be assigned to serve as a member of the 
Subcommittee on Federal Workforce, Postal Service, and the 
District of Columbia.
    Without objection, that will be the order.
    Mr. Jordan. Thank you.
    Chairman Waxman. Thank you. Welcome to you.
    The purpose of today's hearing is to find out whether there 
are ways to use the world's most successful environmental 
treaty, the Montreal Protocol, to tackle one of the world's 
gravest threats, global warming.
    The public is beginning to understand the dangers of global 
warming. There is a growing awareness that if the Nation and 
the world do not act, global warming could cause more floods, 
more droughts, more heat waves, stronger hurricanes, the 
extinction of 20 to 30 percent of the world's species, the 
spread of diseases like malaria, the loss of our coastlines.
    But what few people realize is that there are simple, 
affordable steps that we can take now that can make a big 
difference. The risks are large, but the situation is far from 
hopeless. There are cost-effective options for tackling climate 
change, and we have the power to reduce the dangers of global 
warming if we choose to act.
    At today's hearing we are going to learn of one step we 
could take that would make a huge impact at virtually no cost. 
Using the Montreal Protocol, we can eliminate the equivalent of 
1 billion tons of carbon dioxide emissions. That is an enormous 
amount of emissions. It is equal to roughly half of the total 
emissions reductions required under the Kyoto Protocol, yet the 
cost could be as low as 50 cents per ton, between just $500 
million and $1.5 billion globally.
    We can achieve half the global warming impact of Kyoto at a 
global cost of just $1 billion by taking one simple step: 
accelerating the phase-out of ozone-depleting 
hydrochlorofluorocarbons, or HCFCs. HCFCs are used in air 
conditioners and refrigerators. There are low-cost substitutes 
currently on the market, so banning HCFCs would be inexpensive. 
But because HCFCs are extraordinarily potent greenhouse gases, 
eliminating HCFCs would have the same impact on global warming 
as removing 20 million cars from the road.
    The Montreal Protocol was negotiated 20 years ago in order 
to stop the depletion of the stratospheric ozone layer by 
human-produced chemicals, such as chlorofluorocarbons and 
hydrochlorofluorocarbons. The treaty is widely recognized as a 
tremendous success when it comes to protecting the ozone layer.
    As a result of the Montreal Protocol's legally binding 
controls on the production and consumption of ozone-depleting 
substances, global emissions of these gases has dropped to a 
small fraction of their 1990 levels. Although we still have a 
way to go, the ozone layer is on the path to recovery.
    At the same time, the Montreal Protocol has helped protect 
the planet from global warming. Today we will hear about a 
scientific paper which finds that the Montreal Protocol has had 
the effect of delaying global warming impacts by 7 to 12 years. 
This new analysis shows that the world would be a decade closer 
to catastrophic climate change without the Montreal Protocol.
    A new round of negotiations over the Montreal Protocol is 
scheduled for September, yet few people are aware of the role 
this protocol has played in slowing down global warming, and 
virtually no one in Congress knows that by further 
strengthening the Montreal Protocol in the upcoming 
negotiations, we can make a major positive contribution to 
reducing emissions of greenhouse gases.
    Global warming is an enormous challenge. To fight global 
warming we will need to increase energy efficiency. We will 
have to reduce emissions from transportation and electricity 
generation. We need to move away from the dirty technologies of 
the past and embrace new, clean technologies. But, as we will 
learn today, there are also simple steps with dramatic effects 
that we can take now if we are creative and listen to what 
scientists are saying.
    I look forward to hearing the testimony of the witnesses 
and I thank them for being here.
    [The prepared statement of Chairman Henry A. Waxman 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Waxman. I want to recognize Mr. Davis for his 
opening statement.
    Mr. Davis of Virginia. Thank you very much, Mr. Chairman, 
for holding today's hearing to consider the achievements and 
the opportunities for climate protection under the Montreal 
Protocol.
    Climate change is a critically important issue, and as 
policymakers it is our job to consider all sensible options to 
reduce the emission of greenhouse gases. I am motivated to 
learn more about what we can do to advance the debate with 
potential solutions, and I think this hearing can serve as an 
example of how we, as a committee, can work together to 
rationally investigate the facts surrounding climate change, 
and at the same time seek agreement on the way forward.
    I am beginning to agree with some of the European climate 
change scientists who object to the Hollywood-ization of this 
issue because it further politicizes the debate and it makes 
rational consensus building a little more difficult to achieve, 
but while hyperbole and partisan accusations are good for 
grabbing headlines, they are not as productive a component of 
the deliberative process as hearings like this, so I am 
grateful the committee is pursuing this instructive line of 
inquiry today.
    Further, I think that the Montreal Protocol, itself, can 
serve as a model for international agreement on environmental 
issues. In the 1980's the United States was the world's leading 
producer of CFCs. Even so, the Reagan administration took the 
lead in negotiating an international agreement to reduce the 
emissions of CFCs. Ultimately, the Senate unanimously approved 
the Montreal Protocol. President Reagan signed the treaty 
saying that, ``The protocol marks an important milestone for 
the future quality of the global environment and for the health 
and well-being of all peoples of the world.''
    Since the Montreal Protocol was signed in 1987, the United 
States has achieved a 90 percent reduction in the production 
and consumption of ozone-depleting substances, thus ending the 
production and import of over 1.7 billion pounds per year of 
these chemicals. Between 1989 and 1995, global emissions of 
CFCs dropped 60 percent worldwide. The reduction in emissions 
has proved a measurable benefit to the global environment, and 
some studies have shown the depletion of the ozone layer may be 
slowing due to the international ban on CFCs.
    Today the Bush administration is involved in international 
negotiations over accelerating the phase-out of HCFCs, which 
could have strongly beneficial results for all of us, but we 
need facts. One of the reasons the administration did not wish 
to testify this morning is they are still trying to quantify 
the benefits of the changes attributable to the protocol. But I 
am grateful for our witnesses coming forward. I wish the 
administration had come forward.
    I look forward to hearing the testimony of today's 
witnesses. I hope they can help shed some light on the benefits 
emanating from the Montreal Protocol to both the ozone layer 
and the effort to reduce greenhouse gases.
    Thank you.
    [The prepared statement of Hon. Tom Davis follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Waxman. Without objection, all Members will have 
an opportunity to insert an opening statement in the record.
    I would like to now proceed to our witnesses. We have Dr. 
Guus Velders, who works at the Netherlands Environmental 
Assessment Agency as a senior scientist on ozone layer 
depletion, climate change, and air quality. He was the lead 
author of the 1998 and 2006 World Meteorological Organization--
United Nations Environmental Program ``Scientific Assessment of 
Ozone Depletion.'' He is also lead coordinating author of the 
Intergovernmental Panel on Climate Change ``Special Report on 
Ozone Layer Depletion and Climate Change.'' Dr. Velders is 
testifying in his individual capacity.
    Mr. Allan Thornton is the executive director of the 
Environmental Investigation Agency, a nonprofit, 
nongovernmental organization that has extensive expertise on 
the Montreal Protocol. In 2006, EPA awarded the organization 
the Stratospheric Ozone Protection Award.
    Dr. Mack McFarland is the Global Environmental Manager for 
DuPont's fluora chemicals business. Before joining DuPont in 
1983, he was an atmospheric scientist at the National Oceanic 
and Atmospheric Administration.
    I want to thank you all for being here today. We look 
forward to your testimony.
    It is the practice of this committee that all witnesses be 
sworn in, because it is the Oversight Committee, so I would 
like to ask you, if you would, please rise and raise your right 
hands.
    [Witnesses sworn.]
    Chairman Waxman. The record will indicate that each of the 
witnesses answered in the affirmative.
    Dr. Velders, why don't we start with you.

     STATEMENTS OF GUUS VELDERS, NETHERLANDS ENVIRONMENTAL 
    ASSESSMENT AGENCY; ALLAN THORNTON, EXECUTIVE DIRECTOR, 
    ENVIRONMENTAL INVESTIGATION AGENCY; AND MACK MCFARLAND, 
          ENVIRONMENTAL FELLOW, DUPONT FLUOROPRODUCTS

                   STATEMENT OF GUUS VELDERS

    Mr. Velders. Good morning, Chairman Waxman and members of 
the committee. Thank you for giving me this opportunity to 
share the results of our research with you.
    The 1987 Montreal Protocol restricting the production and 
use of ozone-depleting substances has helped to both reduce 
global warming and protect the ozone layer. Without its 
protocol, the amount of heat trapped due to ozone-depleting 
substances would be twice as much as it is today. The benefits 
to climate already achieved to date by the Montreal Protocol 
and its amendments, alone, greatly exceeds the current targets 
of the Kyoto Protocol. Potential future effects of a 
strengthened Montreal Protocol on climate are still significant 
and will decrease in the future. Future emission reductions of 
Kyoto gases will potentially have a much larger effect on 
climate.
    CFCs and other ozone-depleting substances are now globally 
recognized as the main cause of the observed depletion of the 
ozone layer. In 1974 Molina and Rowland provided an early 
warning when they first recognized the potential of CFCs to 
deplete stratospheric ozone. Concern was further heightened in 
1985 by the discovery of the ozone hole over Antarctica. The 
1987 Montreal Protocol on Substances that Deplete the Ozone 
Layer formally recognized the significant threat of ozone-
depleting substances to the ozone layer and provided a 
mechanism to reduce and phaseout global production and use of 
these compounds.
    As a consequence, the production, use, and emissions of the 
major ozone-depleting substances have decreased significantly. 
The concentrations in the atmosphere of these major ozone-
depleting substances are also decreasing.
    There is now emerging evidence that the ozone layer is 
currently starting to recover. Full recovery is not expected 
until the second half of this century. Future emissions of 
ozone-depleting and climate change may delay or accelerate the 
recovery of the ozone layer by several years.
    Ozone-depleting also contribute to the radiative forcing of 
climate change. Their current contribution is about 20 percent 
of that of carbon dioxide. The Kyoto Protocol of 1987 [sic] is 
a treaty for reducing the emissions of CO2, the 
leading greenhouse gas, and five other gases. These gases do 
not deplete the ozone layer, but include hydrofluorocarbons 
[HFCs], which are produced as alternatives for ozone-depleting 
substances. The substances that do deplete the ozone layer are 
not included in the United Nations Framework Convention of 
Climate Change [UNFCCC], and its Kyoto Protocol, because they 
were already covered by the Montreal Protocol.
    The Montreal Protocol has helped both to protect the ozone 
layer and to reduce global warming. My research shows that, 
without reductions achieved under this protocol, the amount of 
heat trapped due to ozone-depleting substances may have been 
about twice as much as it is today. This is equivalent to a 
gain of about 10 years in reductions of CO2 
emissions.
    The climate change benefits which have already been 
achieved by the Montreal Protocol, alone, are, according to my 
research, five to six times greater than the current reduction 
targets for 2008-2012 of the Kyoto Protocol, assuming full 
compliance. It is estimated that the Montreal Protocol may have 
avoided emissions of about 11 billion tons of CO2-
equivalent by 2010. However, these benefits attributed to the 
Montreal Protocol will decrease further and further as ozone-
depleting substances are being phased out under the Montreal 
Protocol.
    New measures under a strengthened Montreal Protocol can 
result in additional benefits for both the ozone layer and 
climate. The IPCC assessed the potential and cost-effectiveness 
of such measures. Removing CFCs present in existing 
applications--that is refrigerators and foams, mainly--can 
reduce emissions by about 120 million tons of CO2 
per year by 2015. An accelerated phase-out of the production of 
HCFCs in developed and developing countries could be achieved 
with instruments similar to those currently in the Montreal 
Protocol. This can additionally reduce emissions by about 340 
million tons per year of CO2 by 2015, and 
potentially about 800 to 900 million tons by 2030.
    These possible emission reductions would derive mainly from 
better containment in refrigeration and destruction of ozone-
depleting substances present in existing refrigerators and 
foams. Detailed scientific and technology assessments could 
provide policymakers with the information necessary to fine-
tune an accelerated HCFC phase-out to allow specific uses of 
HCFCs. Examples are use of HCFCs as feedstock for 
fluoropolymers and in other applications where emissions are 
near zero or where overriding energy efficiency benefits exist 
and efficiency benefits are present.
    Thus, plausible scenarios that could achieve reductions in 
CO2-equivalent emissions of ozone-depleting 
substances and alternative gases both exist and have been 
considered. These reductions are comparable to the reduction 
target of the first commitment period of the Kyoto Protocol, 
but relatively small compared to the current global 
CO2 emissions.
    It is widely acknowledged that emission reductions 
exceeding those laid down for the first commitment period of 
the Kyoto Protocol will be needed to achieve the UNFCCC 
objective, namely, stabilization of greenhouse gases 
concentrations in the atmosphere at a level that would prevent 
dangerous anthropogenic interference with the climate system. 
While emissions reductions under the Montreal Protocol have 
played an important role in the past, future amendments can 
still have additional benefits for climate, reductions of 
greenhouse gases not covered by the Montreal Protocol have a 
potentially much larger effect on climate.
    In conclusion, I think the success of the Montreal Protocol 
is also important, for it shows the effectiveness of an 
international agreement.
    Chairman Waxman, thank you.
    [The prepared statement of Mr. Velders follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Waxman. Thank you very much, Dr. Velders.
    Mr. Thornton, we would like to hear from you.

                  STATEMENT OF ALLAN THORNTON

    Mr. Thornton. Thank you, Mr. Chairman and distinguished 
members of the committee, for the opportunity to address you 
today, and thank you very much for having this very important 
hearing.
    The Environmental Investigation Agency is a nonprofit 
organization. We investigate environmental crime all over the 
world, and we promote practical solutions to remedy such 
issues. We work with government enforcement agencies on all 
continents around the world to promote compliance with the 
Montreal Protocol and other international environmental 
agreements.
    The Montreal Protocol is aptly regarded as the world's most 
successful environmental agreement, having phased out about 95 
percent of ozone-depleting substances in developed countries, 
and around 50 to 75 percent in developing countries.
    Because many ozone-depleting chemicals are also potent 
greenhouse gases, the Montreal Protocol's successful phase-out 
of CFCs and other ozone-depleting substances has also made it 
the world's most effective climate treaty. While it is true 
that the phase-out of CFCs has spared the atmosphere some 
billions of tons of greenhouse emissions, it also contains a 
cautionary tale of the consequences of not actively considering 
the impacts, particularly on the climate, of actions taken 
under the Ozone Layer Treaty.
    In the early 1990's, HCFCs became the first generation of 
substitute chemicals for ozone-layer-destroying CFCs. It was 
recognized by the protocol that these chemicals had value as 
transitional substances to facilitate the prompt phase-out of 
CFCs; however, the exponential growth in the demand for 
refrigerant gases worldwide resulted in unchecked and extremely 
excessive production of HCFCs. HCFCs contribute significantly 
to global warming, and the Montreal Protocol has, thus, 
inadvertently created a new additional significant source of 
greenhouse gases.
    The phase-out of HCFCs in developing countries is not due 
until 2040, and no caps will be required until 2015. With 
countries such as China and India set to potentially produce 
millions of tons of HCFCs over the next 10 to 20 years, and 
with the currently agreed Montreal Protocol phase-out decades 
off, this unhindered growth in HCFC production will severely 
undermine the international community's efforts to address 
climate change.
    The good news is that, by accelerating the phase-out 
schedule for HCFCs under the Montreal Protocol, the 
international community has a huge opportunity to make a 
significant contribution to the global effort to mitigate 
climate change.
    An unprecedented nine parties to the Montreal Protocol, 
including the United States, have recognized this opportunity 
and recently submitted proposals to accelerate the HCFC phase-
out. These proposals will be considered at the next meeting of 
the parties of the Montreal Protocol in September.
    As the United States considers these proposals, we would 
like to take the opportunity to highlight what EIA feels are 
key elements of what any final decision should look like on 
accelerated HCFC phase-out.
    First, any decision must include an earlier freeze date for 
the production of HCFCs. Many proposals are suggesting a freeze 
of 2010, but an earlier freeze date, such as 2007, would 
prevent additional excessive production of HCFCs by cutting off 
this very rapid growth in the production of these chemicals.
    Second, proposals should contain additional reduction steps 
to lower the production and consumption of HCFCs. These 
additional reduction steps are important because they offer 
greater climate and ozone layer benefits and would provide 
measurable benchmarks and compliance targets.
    Third, proposals must contain the commitment for funding. A 
fully funded phase-out of HCFCs ensures continuity of resources 
for the protocol's multilateral fund, allowing the fund to 
complete its important and highly cost effective work in 
protecting the ozone layer and the global climate.
    Fourth, proposals must ensure the widespread adoption of 
climate-friendly replacement for HCFCs. While ozone-layer-
friendly substitutes exist for virtually all current uses of 
HCFCs, many of these gases are just as bad, if not worse, in 
terms of climate impact. Thus, in order to realize the full 
climate benefits offered by an accelerated phase-out, any 
decision to adjust the phase-out schedule must include 
provisions that favor the adoption of climate-friendly 
alternatives to HCFCs.
    Finally, concerted action to improve cooperation between 
the ozone layer and climate treaties is vital to the continued 
success of an accelerated phase-out of HCFCs. Specifically, 
parties to those two treaties must act urgently to address the 
perverse incentive that exists for the production of HCFC-22, 
which has been created through the Kyoto Protocol's clean 
development mechanism.
    Now, HFCs, an even more potent greenhouse gases, are 
produced as a byproduct in the manufacture of HCFCs, and the 
HFCs are falling under the clean development mechanism of the 
Kyoto Protocol. Currently, the clean development mechanism is 
committing billions of dollars to capture and destroy the HFCs 
as they are produced as byproducts to HCFCs, even though there 
is no cap or commitment to cap HCFC production by the major 
producers, such as China and India.
    While concerted international action to address the 
emissions of carbon dioxide is essential, we would be remiss, 
negligent even, not to seize upon all available opportunities 
to reduce the emission of greenhouse gases. The Montreal 
Protocol has a proven track record of success. With appropriate 
policy adjustments now, this landmark agreement has the 
potential to further deliver critical and cost effective 
climate protection in the near term.
    On behalf of the Environmental Investigation Agency, I urge 
the U.S. Government to immediately and aggressively pursue an 
adjustment to the Montreal Protocol that includes measures to 
support the adoption of climate friendly alternatives to HCFCs 
in order to seize upon this historic opportunity to further 
mitigate climate change.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Thornton follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Waxman. Thank you very much, Mr. Thornton.
    Dr. McFarland.

                  STATEMENT OF MACK MCFARLAND

    Mr. McFarland. Good morning, Chairman Waxman, Mr. Davis, 
and members of the committee. My name is Mack McFarland, and I 
am the global environmental manager for DuPont's Fluorochemical 
Business. I appreciate this opportunity to speak with you 
regarding stratospheric ozone and climate protection. In my 
testimony I will discuss DuPont's experiences, our views of the 
effectiveness of the Montreal Protocol, and suggest ways in 
which the protocol can be enhanced, and, as focus shifts 
specifically to climate protection, how national implementation 
can be improved.
    DuPont is a science-driven company with a commitment to 
safety, health, and environmental protection. We strive for 
sustainable growth that benefits our shareholders, the 
societies in which we operate, and the global environment. It 
was our vision of sustainable growth that led us to set 
aggressive, voluntary goals and reduce our global greenhouse 
gas emissions. It is also this vision that led us to co-found 
the U.S. Climate Action Partnership and call for U.S. 
leadership on reducing greenhouse gases emissions.
    We believe that with a properly designed, mandatory program 
the power of the market can be harnessed to achieve 
environmentally effective and economically sustainable 
greenhouse gas emission reductions.
    DuPont introduced the first fluorochemical refrigerant 
gases, chlorofluorocarbons [CFCs], in the 1930's, as safer 
alternatives to the move dangerous refrigerants then in use, 
such as ammonia. In 1988, based on the emerging scientific 
consensus, we voluntarily committed to phaseout CFCs. We also 
used our science capabilities to lead in the development of 
alternative products to meet the growing societal need for air 
conditioning and refrigeration. This experience with CFC ozone 
issue provided us with a keen understanding of the implication 
of environmental issues that are global in scope and decades to 
centuries in duration.
    The Montreal Protocol is widely recognized as a model for 
addressing global environmental issues. Progress has been 
rapid. The actions under the protocol have led to significant 
reductions in the current and future risks of both ozone 
depletion and climate change, while allowing the market to 
bring forward safe, efficient, and cost-effective substitutes 
with lower or no ozone-depleting potential.
    We would like to recognize the tremendous leadership that 
both the Department of State and the Environmental Protection 
Agency have shown in developing, implementing, and improving 
the protocol.
    We have continued to provide a broad range of non-ozone-
depleting fluorochemicals to meet market needs. In February 
2006 we announced that we had identified low-global-warming-
potential, non-ozone-depleting alternatives for automotive air 
conditioning, with leading candidates that have global warming 
potentials only about 3 percent that of current products. It is 
our intent to apply these non-ozone-depleting, low-global-
warming-potential technologies to other applications, as well.
    While the Montreal Protocol has been a clear success, we 
believe it can be improved. At the international level, we 
believe the phase-out schedule for HCFCs should be accelerated 
in developing countries, as the U.S. Government has proposed. 
We also believe that the United States and other developed 
countries can and should accelerate their phase-out schedule.
    At the National level, we believe implementation can be 
enhanced through more reliance on market-based mechanism.
    Looking forward to regimes for climate protection, we 
suggest two potential market-based regulatory approaches for 
improving stewardship of HFCs.
    Congress could establish a cap based on carbon equivalency, 
specifically on HFCs placed on the market, as was done on 
ozone-depleting equivalency for CFCs, halons, and HCFCs. This 
could be combined with appropriate market-based incentives for 
capture and destruction of the material at the end of its 
useful life.
    Alternative, HFCs could be included in a broader cap on 
greenhouse gas emissions. In this case, carbon-equivalent 
allowances would be required to be surrendered to place these 
compounds on the market, and carbon-equivalent credits would be 
granted for their destruction, creating market incentives for 
improved stewardship.
    In summary, the Montreal Protocol has been an unprecedented 
success, protecting both stratospheric ozone and the global 
climate system. That success could be enhanced through an 
acceleration of the current HCFC phase-out schedule in both 
developed and developing countries.
    Domestically, increased use of market-based systems for the 
fluorochemical gases under any climate change legislation could 
create cost-effective market incentives for more effective 
stewardship.
    Thank you for the opportunity to share our thoughts on this 
important subject with the committee. I look forward to your 
questions.
    [The prepared statement of Mr. McFarland follows:]

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    Chairman Waxman. Thank you very much, Dr. McFarland.
    I am going to start the questioning by indicating that in 
the 1980's up to 1990, when the Clean Air Act was adopted, one 
of the major issues in the legislation was the depletion of the 
ozone layer by CFCs and other manufactured chemicals. When we 
tried to tackle this problem, industry told us that it would 
cause severe economic and social disruption.
    At a January 1990, hearing, the Air Conditioning and 
Refrigeration Institute testified that it was ``certain'' that 
``We will see shut-downs of refrigeration equipment in 
supermarkets, we will see shutdowns of chiller machines which 
cool our large office buildings, our hotels, and hospitals.'' 
That is a direct quote from their testimony.
    But instead of listening to these predictions of doom from 
the industry, we listened to the scientists who said that 
action was urgently needed if we were going to reverse the 
damage and stop further damage to the stratospheric ozone 
layer. We passed legislation to cut emissions of ozone-
depleting chemicals in the United States by 90 percent, and, of 
course, the supermarkets and hospitals weren't forced to close 
their doors. We also passed that legislation before the 
Montreal Protocol was agreed to, because we felt that we needed 
to be the leaders by taking action here at home that was 
necessary while we advanced an international agreement.
    Well, in a similar situation today with global warming, 
industry is telling us that controlling global warming 
pollution would be an economic disaster, but scientists tell us 
that we must act, that there are a variety of cost-effective 
steps that can be taken.
    In fact, I believe that there are steps that we could take 
now that would make a big difference in slowing climate change 
and wouldn't break the economy, and one of these is the point 
that the three of you are making at this hearing, that is 
maximizing the potential of the Montreal Protocol to tackle 
global warming.
    One class of ozone-depleting substances regulated by that 
protocol is HCFCs, and some HCFCs are also powerful greenhouse 
gases, in addition to affecting the ozone layer.
    Now, the protocol currently requires developed countries to 
phaseout HCFCs by 2030 and developing countries to phase them 
out by 2040. Several countries, including the United States, 
have proposed speeding up the phase-out schedule in order to 
protect the ozone layer and climate.
    Dr. Velders, your paper examined the potential climate 
benefits of an accelerated phase-out of HCFCs. If the phase-out 
were sped up and banks of existing ozone-depleting chemicals 
were addressed, what kind of drop in greenhouse gas emissions 
would you expect?
    Mr. Velders. Mr. Chairman, our study shows that, based on a 
mitigation scenario from IPC, which is based on potential cost-
effective measures which can be taken now, that it can be 
reduction of about 800 or 900 million tons of CO2 
equivalent emissions by 2015, emissions reductions per year. 
The potential after that is even larger. So those are 
significant reductions, and they will help both for the ozone 
layer and it will help climate change.
    Chairman Waxman. How would that reduction in greenhouse 
gases compare to the reductions required by the Kyoto Protocol?
    Mr. Velders. The Kyoto Protocol requires reduction by 2008, 
2012, compared to 1990, of about 2 giga-tons, so 2 billion 
tons. So this is about half, which can reach by what the Kyoto 
Protocol is.
    Chairman Waxman. These are enormous emissions reductions. 
By accelerating the Montreal Protocol, we could get some 
climate benefits, as large as half of Kyoto. That is 
equivalent, I understand, to 20 million cars off the road. Is 
that your understanding, as well?
    Mr. Velders. I haven't done the climate change.
    Chairman Waxman. Mr. Thornton, have you heard any estimates 
of how much an accelerated phase-out would cost?
    Mr. Thornton. There have been some very rough ballpark 
figures put out in the order under the Montreal Protocol in the 
order of about $500 million to $1.5 billion, but I think that 
is a very general figure, but it is also dependent on knowing 
exactly how much HCFC is being produced in China right now, 
which is having an explosive growth in HCFC production, 
substantially motivated by this perverse incentive under clean 
development mechanism for HFC----
    Chairman Waxman. Would this be equivalent to $5 per ton of 
carbon dioxide? As I understand it, these emission reductions 
under the Montreal Protocol would be as cheap as 50 cents per 
ton. Mr. Thornton, would the United States have to pay the 
entire cost of an accelerated phase-out?
    Mr. Thornton. No. The way the Montreal Protocol works is 
that the U.S. contributes to the multilateral fund, and the 
other parties to it would also contribute. I believe the U.S. 
contribution is at the U.N. scale, which I think is in the 
order of 23 to 25 percent of that amount. But, Mr. Chairman, I 
just have to say that, in terms of protecting the climate, this 
is the best bang for the buck that can be found in the world 
today. This is the most cost effective, most efficient, most 
achievable program that can be done in the near term that 
doesn't have the same complexities as the sort of larger 
greenhouse gas emissions, so it is a can-do program that the 
international community could achieve and get done and have a 
huge victory over the next years.
    Chairman Waxman. Thank you.
    Mr. Davis.
    Mr. Davis of Virginia. I am going to let Mr. Issa go first.
    Mr. Issa. Thank you. Thank you, Mr. Chairman.
    Dr. Velders, I guess my first question would be: when 
Europeans come to us on Kyoto, we often say how settled is the 
science. Turning that around, when we go out to sell, 
particularly to Africa, South America, China, other developing 
nations, how settled is the science? How are we going to be 
viewed when we say, OK, we will move this up to 2020, maybe 
even 2018; we want you to move up to 10 years after us, 
particularly when you look at figures that say Kyoto was a 
fraud, Kyoto wasn't going to save as much, in many ways as 
moving this up would save, but we're arriving 8 years after we 
walked away from Kyoto. How is that going to be received? And I 
am all for it, but how settled is the science?
    Mr. Velders. I think the science, sir, on the ozone layer 
is well established. The report says no doubt that the CFCs are 
the main cause of the ozone depletion. Also, if you look at the 
force of the climate system, of the CFCs, and of the HCFCs in 
the affirmative gases, its force is well understood. So the 
force on the climate system is well known. The effects from the 
forcing temperature change and wind pattern change to the 
climate change, there is more debate about that. That is more 
uncertain. But the forcing of the climate system, of the CFCs, 
and the affirmatives is similar to forcing of CO2.
    Mr. Issa. So, sort of reading that back to you, from a 
standpoint of ozone depletion and in closing the ozone hole, we 
will consider that settled science, but from the standpoint of, 
as I think you said, that by 2010 we will have avoided 
somewhere in the range of 10 to 12 billion tons of carbon 
dioxide equivalents, versus Kyoto targets by 2012, would have 
only avoided 2 billion. I am going to be in Berlin later this 
year meeting with our European partners again. It is a regular 
subject. Are they going to agree with these numbers? And how do 
I convince them, if they don't, that these numbers, that we 
need to push not just ourselves but the Third World to meet new 
targets?
    Mr. Velders. The number of the 10 to 12 billion tons 
avoided of emissions of course have been somewhat of a scenario 
issue, what would have happened without Montreal Protocol. We 
showed in our study 2 to 3 percent growth in the CFCs without 
the Montreal Protocol, which can be considered a rather 
conservative growth if you look at the growth figures which 
were in the 1970's and 1980's, which were much more than the 2 
to 3 percent we considered.
    So I think that number might not be 10 to 12, it could be 8 
or 9, but I think people will not question it. It is 
significantly larger than the Kyoto target.
    Mr. Issa. Very good.
    Dr. McFarland, I guess I will come back to you with the 
same sort of point, particularly since the name DuPont usually 
represents breakthroughs in science, it also represents a 
little higher price. I am glad you smiled at that. What is the 
ballpark cost if we were to move up by 10 years? I am assuming 
at that point you can pretty well decide what all the 
alternatives are if, let's say, 10 years from now we are going 
to be completely phased out. You pretty well know what is 
available. We are not talking about breakthrough science, so--
well, we are talking some breakthroughs. What will be the cost? 
Particularly when we look at methylbromide, which is continuing 
to live on, one of the ozone-depleting substances that we are 
still using even in the United States?
    Mr. McFarland. Well, I don't have any figures better than 
what Mr. Thornton put out of half a billion to 1\1/2\ billion. 
I can----
    Mr. Issa. Which is cheap. Let's be honest. When we look at 
other alternatives, there is nothing that is in those. We are 
looking at $350 trillion to get to a zero carbon footprint, so 
this is a rounding area to that.
    Mr. McFarland. It is a very cost-effective way to both 
protect climate and ozone. In more general terms, accelerating 
a phase-out to some extent in the developed world, and 
specifically in the United States, shouldn't cost anything or 
be very cost effective because the existing laws on the books 
already are phasing out the equipment made with HCFCs in a 
couple of years.
    For developing countries it is a very different situation 
than we faced during the CFC phase-out. When the CFC phase-out 
was started we didn't have the alternatives, we didn't know 
what they were, they weren't deployed. Now the alternatives to 
HCFCs exist. They exist in the developing world and, in fact, 
major developing countries like China are actually producing 
goods with the alternatives that are being sold in the United 
States, Europe, and Japan. So it is a very different situation, 
and the new equipment that is being made with these 
alternatives is more efficient, so there are benefits of moving 
away from HCFCs and into alternatives, so it should be a very 
cost-effective move.
    Mr. Issa. Thank you. Ten more questions, no more time. 
Thank you, Mr. Chairman.
    Chairman Waxman. Thank you very much.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chairman. Thank you, 
gentlemen.
    So a problem is identified in the ozone layer. Action was 
taken. We had 191 countries join together in the Kyoto 
Protocol. Average Americans understood that there was a problem 
and that there was action to be taken, and that they wanted to 
be part of protecting the ozone layer. People who sold the 
products for the most part, they understood there was a 
problem. They wanted to know what they could do in making 
people be aware and have confidence in the new products that 
were coming online, refrigerators and air conditioners and 
that, although the industry did fight it.
    The ozone layer has been protected from getting much 
larger, but really has not gotten smaller, so the success is 
there was a problem, it was identified, people came together, 
they did something about it, and what we have done is we have 
just stayed somewhat neutral in our battle against the ozone 
hole becoming larger.
    So now we know that there is a problem with the chemicals 
that we are currently using, and we have to do something about 
that, but what I am hearing with the discussion going on down 
there is a couple of different things.
    One, Mr. McFarland, DuPont has something that can come 
online. You are working very hard on it. I commend DuPont for 
doing that, but the problem in the developing countries, I want 
to go back to a little bit about what I am thinking I am 
hearing what is going on in the developing countries.
    Are we still having a black market in which the banned 
chemical is being used? And if we don't address the CFCs and 
the black market that is going on there, what prevents us from 
being able to address a black market with the HCFCs, because if 
we don't address that and figure a way in which to make a black 
market not profitable, we will never get to the point where we 
want to with fully protecting and decreasing the hole in the 
ozone layer.
    If you gentlemen could kind of, from your perspectives, say 
what we can do together to stop black markets from occurring.
    Mr. Thornton. Thank you. EIA has done extensive work on 
legal trade in CFCs and halons and have worked in close 
cooperation with the National CFC Task Force here in the United 
States, which is chaired by the Environmental Crimes Unit of 
the Justice Department and includes all the other main agencies 
working on this issue. There has been substantial improvement 
both in the United States and worldwide on significant 
reduction on illegal CFC trade due to identification of the 
problem areas; additional restrictions, both in the United 
States and Europe and in other countries, to respond to that; 
and the substantive increase in capacity building and training 
of enforcement authorities all over the world. My organization 
has taken part in about 20 regional training seminars, even to 
the point where Chinese Customs uses EIA's video on how to 
detect illegal CFC smuggling to train their own Customs 
personnel. So that has been a very big success.
    In terms of how to prevent it from happening with HCFCs, 
bringing forward the phase-out, stepping up the phase-out, and 
adding these reduction steps would be a very positive measure 
because it does give a monitorable and achievable goal and 
benchmarks that we can ascertain compliance, and it doesn't 
have a very big production at the end of the period of when 
they should stop to bring to a very rapid halt so that it is 
being stepped down and phased down over time, and it would 
allow the international community to better monitor and to 
detect any diversion of illicit material.
    That said, there are certainly indications and some 
evidence already that there is an illegal trade in HCFCs even 
coming into the United States. China does have an explosive 
growth in HCFCs occurring now, and much of that is coming back 
into the United States. There are 6 or 7 million air 
conditioning units being brought into the United States.
    Chairman Waxman. Thank you.
    Mr. Davis.
    Mr. Davis of Virginia. We have recently requested that the 
GAO conduct a study of the emissions offset programs because 
the companies that sell carbon offsets to U.S. consumers 
operate under virtually no standards. Furthermore, there are 
numerous efforts by States and the Federal Government to be 
carbon neutral, in part by purchasing these offsets.
    Now, your testimony today regarding China's attempt to gain 
the system by emitting unchecked and excessive production of 
HCFCs in order to receive credits under the Kyoto Protocols 
certified emission reduction credit system is disturbing. Does 
this manipulation of carbon credits by China impact the system 
of carbon credits that is currently so in vogue?
    Mr. Thornton. Well, the clean development mechanism is a 
work in progress, and it is just starting now. From EIA's point 
of view the whole situation and system would be a lot better if 
the United States was in there contributing to it, because the 
United States has enormous technical resources and expertise to 
help make the system work better. So some of these big projects 
are just getting up and running, but there is a significant 
commitment to take out HFC production, which is the chemical 
that produces the by-product----
    Mr. Davis of Virginia. I have a followup, but let me ask 
Dr. McFarland, do you want to comment on that?
    Mr. McFarland. Yes. I would like to separate two things. 
One is under the current clean development mechanism, projects, 
HCFC-22 plants that were in operation as of January 1, 2001, 
are allowed to participate under CDM. The current debate is 
about HCFC-22 plants that have come online since then. There is 
a significant issue there. Because of the value of those carbon 
credits, it is possible that the HFC-23 destruction CDM project 
could become the product and the HCFC-22 could become the by-
product, because the 23 credits would be worth more than the 22 
production.
    So there is a significant issue there, and it is currently 
being debated under the framework convention on climate change 
and how to manage it there, but it is also here is the 
opportunity under the Montreal Protocol to begin to deal with 
the issue by accelerating the phase-out of HCFCs in developing 
countries.
    Mr. Davis of Virginia. But don't you think then--I mean, 
Mr. Thornton said it is in its infancy in terms of 
understanding it--that Congress should continue to conduct more 
oversight into these carbon trading markets and get a better 
understanding?
    Mr. Thornton. I think the system could definitely be more 
robust. Again, we very much welcome the U.S. input to it and we 
think there are achievable solutions that could address the HFC 
issue in the clean development mechanism, for instance, by 
requiring a freeze on HCFC production for any country that is 
receiving HFC projects from CDM would be a simple way to 
further reinforce or freeze the HCFC production.
    Mr. Davis of Virginia. All right. I will yield to Mr. Issa.
    Mr. Issa. Thank you, Mr. Davis.
    I would like to ask unanimous consent to have Greener 
Computing placed in the record as a part of this question.
    Chairman Waxman. Without objection.
    [The information referred to follows:]

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    Mr. Issa. Mr. Thornton, let me understand this correctly. 
China is, in fact, gaming the system today as we speak by 
producing harmful HCFC-22 for the sole reason of destroying 
HCF-23 by-product, and we are allowing it to go on and, in 
fact, the Department of Justice should be investigating this 
and taking action. We should be, in fact, placing moratoriums 
on by-product imports so that we are not, in fact, providing 
the dollars for the very activity that we object to. Isn't that 
really the case, that we are giving China a pass today? It is 
like watching something, like watching a house be robbed and 
saying we need a stronger police force, isn't it?
    Mr. Thornton. Well, there is no law being broken, and that 
is the problem, because there is a disconnect between the 
Montreal Protocol regulating HCFC and the Kyoto regulating HFC, 
and what we are trying to do is to marry the two policies of 
the two treaties together to fast-track HCFC phase-out, at the 
same time cap, reduce, and stop the HFC.
    Mr. Issa. Well, I appreciate that, but I come from a State 
where right now we are about to stop bringing in coal-fired-
produced electricity because we finally woke up and said we 
won't allow coal fire in California, but we're willing to 
energy launder or greenhouse launder or whatever you want to 
call it in California. California has taken the response. 
Shouldn't this Oversight Committee and this Congress take steps 
to stop the importation and financial gain of by-products which 
are, in fact, damaging our environment, something we could do 
today by not providing the avenue for those tens of millions of 
refrigerators and other items made, in fact, in a way that we 
would not allow them to be done under our protocol?
    Mr. Thornton. Yes. We think it would be a very good thing 
if the United States would stop import of equipment with HCFC 
in them, because the United States is a huge market and that 
would send a huge signal to the market and would have a very 
positive, very beneficial effect, with almost immediate impact.
    Mr. Issa. Mr. Chairman, although we don't have WTO experts 
here, I would appreciate it if we could look into it as a 
committee of whether or not we could do that without violating 
the WTO rules. Thank you. I yield back.
    Chairman Waxman. Thank you very much. That is an excellent 
question. Let's see if we can get an answer to it.
    Mr. Hodes.
    Mr. Hodes. Thank you, Mr. Chairman.
    I want to thank the witnesses for appearing.
    One question that I had when reading the written testimony 
of Dr. Velders and Mr. Thornton was the following: Dr. Velders, 
you wrote, ``there is emerging evidence that the ozone layer is 
currently starting to recover. Full recovery is expected around 
2050 to 2075.'' Mr. Thornton, you wrote, ``While significant 
progress has been made to reduce the atmospheric concentration 
of ozone-layer-destroying chemicals, there is no definitive 
evidence demonstrating that the ozone layer has started to 
recover.'' Would you gentlemen explain to me whether there is a 
disagreement over whether or not the ozone layer has, in fact, 
started to recover, and, if so, how might that be resolved?
    Mr. Velders. I don't think there is that much disagreement. 
In the last ozone assessment in June we talked a lot about what 
is recovery. What do you mean recovery? Do you want to have the 
situation back as it was before, let's say, the 1960's? Or do 
you want to see it not getting worse any more? What we now see, 
it is not getting worse any more, so we say, well, there are 
signals that it is not getting worse. And the theory says, 
well, in about 50 years or a bit more we should have a 
recovered ozone layer, so it is the start of the ozone getting 
better. I think that is what it is. We are not there yet. It 
will take at least another 50 years, and there are factors 
which could influence that. But it is not getting worse, so we 
can say it is the onset of recovery.
    Mr. Hodes. Do you agree, Mr. Thornton?
    Mr. Thornton. We concur with the scientific assessment. 
There are many other factors that come into play on this. For 
instance, President Reagan agreed on a phase-out schedule for 
methylbromide that should have ended 2 years ago production and 
use in the United States, and yet the United States is still 
producing and using millions of pounds of methylbromide, which 
is undercutting the alternative markets worldwide in developing 
countries that have already bitten the bullet and done that.
    So there are all these other impacts that go along with, 
like, not full compliance with the requirements of Montreal 
Protocol. So there are other things that are causing 
unanticipated impacts because of there not being full 
compliance.
    Mr. Hodes. I want to followup on some of the questions 
about the perverse incentives to produce the HCFC-22 in order 
to gain the carbon trading credits of the HFC-23. What impact 
does the failure of the United States to be part of the Kyoto 
Protocol have on our ability to deal with this problem?
    Mr. Thornton. Well, from the point of view of the 
Environmental Investigation Agency, I mean, the United States 
has always been a leader in Montreal Protocol. It has had a 
historical leadership. It has been bipartisan. It is the 
biggest economy in the world. It is the most influential 
economy in the world. Not having the United States in Kyoto 
means that the U.S.'s vase experience, resources, and economic 
influence isn't being brought to bear, say, in the clean 
development mechanism, where you could have a huge impact 
fairly immediately. We think there is very forward-looking 
policy analysis occurring within different departments, and I 
think a huge contribution could and should be made. So, of 
course, we would like to see the United States in Kyoto. 
Whether it is not perfect or not, it would be a lot better if 
the United States was in there participating and inputting.
    Mr. Hodes. So that, while we have an opportunity to solve 
the problem under the Montreal Protocol, in terms of 
accelerating the elimination of HCFC-22, if we were part of 
Kyoto we would have much more ability to deal with the issue of 
this perverse incentive?
    Mr. Thornton. Yes.
    Mr. Hodes. Given that we are not in Kyoto, is there 
anything else that can be done in addition to the elimination 
of the HCFC-22 under Kyoto? Should we push somehow for HFC-23 
to be removed from the carbon trading scheme?
    Mr. Thornton. I think that is a rather complex question 
which I would be happy to followup in a written response, but, 
as imperfect as the scheme might be now, this is starting to 
build something that--I mean, clearly it is better that the HFC 
is not going in the atmosphere. Clearly, it would be preferable 
for the international community not to have to spend billions 
of dollars to achieve that when we could spend a lot less in 
Montreal Protocol to achieve a phase-out. Clearly, a clean 
development mechanism should require a cap on HCFC production 
of any country that is receiving HFC phase-out funding. So 
there are things that could be done.
    And certainly we would very much like to see the United 
States stop imports of air conditioners and other equipment 
from China, etc., with HCFCs because it is a huge market and it 
is a huge contributing factor.
    Mr. Hodes. Thank you.
    Chairman Waxman. Dr. McFarland, you wanted to add something 
to that?
    Mr. McFarland. Yes. A couple of things I may like to 
clarify that I possibly didn't in my written or oral testimony. 
One is that the issue is around HCFC-22 plants that have 
started up since January 1, 2001, and it is these new plants, 
and currently they are not allowed, under the clean development 
mechanism, and there is a significant debate under the Kyoto 
Protocol and the Framework Convention as to whether they 
should. The question is, how do you manage that going forward? 
To my knowledge, that is strictly an issue of China, because I 
know of no plants outside of China that have begun an operation 
since January 1, 2001.
    The second issue about this, whether WTO rules, you would 
violate WTO rules by banning the import, Europe is already 
banning the import of equipment containing HCFCs, so, I mean, 
if it doesn't violate there it shouldn't here, either.
    Chairman Waxman. That is a very good point.
    In September there is going to be a meeting to mark the 
20th anniversary of the Montreal Protocol and they will discuss 
a number of ideas to modify the treaty in order to accelerate 
the phase-out of HCFCs. I would like to ask this panel about 
the proposals from the United States, which has four elements.
    First, the administration has proposed moving up the HCFC 
phase-out dates by 10 years for both developed and developing 
countries. Do you think this is a good idea from a global 
warming perspective? Dr. Velders.
    Mr. Velders. Yes. I think if you forward the date of the 
total phase-out it will avoid additional emissions, especially 
after 2030, in developing countries, and it will be both the 
ozone layer and for climate change beneficial.
    Chairman Waxman. Do you agree with that, Dr. McFarland and 
Mr. Thornton?
    Mr. McFarland. Yes.
    Mr. Thornton. EIA would recommend a more aggressive phase-
out because we think it could be brought forward to 2007, or 
very soon thereafter. We don't think we should have to wait 
until 2010, as is said in the U.S. proposal, because the 
current HCFC production in China is very big and growing very 
quickly.
    Chairman Waxman. You would support the U.S. proposal, but 
you would go further than the U.S. proposal?
    Mr. Thornton. Yes.
    Chairman Waxman. OK. The United States has proposed adding 
intermediate HCFC phase-out steps for developing countries. 
Would this change to the Montreal Protocol also be beneficial? 
Dr. Velders?
    Mr. Velders. Yes. I think the intermediate steps are more 
important even than the base year, because they really bring 
down the future production. I have estimated, based on the 
total scheme for the U.S. proposal, by around 2030 it can avoid 
600 to 700 million tons per year of CO2 equivalents 
of greenhouse gases.
    Chairman Waxman. Do you both agree, Dr. McFarland and Mr. 
Thornton?
    Mr. McFarland. And additionally it makes economic sense, 
because if you have a sudden drop to zero you have a lot of 
equipment out there that you have to service, so it makes both 
sense from the environmental and the economic standpoint.
    Chairman Waxman. Third, the administration has suggested 
setting an earlier baseline date of 2010 instead of 2015 for 
developing countries. This is a fairly technical change. Can 
any of you explain what impact this would have on greenhouse 
gas emissions?
    Mr. Velders. If you set out a cap, like now is 2015, set a 
new cap for next 25 years, we don't know what will happen until 
2015, like strong economic growth now in China and India is 
likely to increase. So bringing that date forward will reduce 
that cap and will affect a whole period of the future emissions 
and production. It will definitely have beneficial for both 
again ozone layer and climate.
    Chairman Waxman. And, finally, the United States has 
proposed phasing out the worst ozone-depleting chemicals first. 
Do you all support that approach?
    Mr. Thornton. Yes, Mr. Chairman. Could I also just say to 
the last point that EIA also favors bringing the baseline 
forward, because if we wait until 2010 for Article 5, again, 
talking about China, we just have more explosive growth for the 
next 3 years, and probably they will rush to expand it so that 
the base will be at a very high level. We should get in as 
quick as possible to get that base set as soon as possible at 
the lowest possible level because, again, we will just be 
buying greater protection for the climate by having capped HCFC 
production at a lower level. So time is of the essence.
    Chairman Waxman. Yes.
    Let me ask this panel this question. Modifying the Montreal 
Protocol to speed up the phase-out of HCFCs wouldn't solve the 
global warming problem. We will need to do much more. I assume 
you all agree with that statement?
    Mr. Velders. Yes.
    Mr. Thornton. Yes.
    Mr. McFarland. Yes.
    Chairman Waxman. You all believe that speeding up the 
phase-out of HCFCs is an important step that is worth taking if 
we want to seriously address global warming, so there is a lot 
of work to be done and, even if we don't do anything else, we 
will at least have made an important accomplishment if we speed 
up this reduction of HCFCs.
    Mr. Velders. Yes.
    Mr. Thornton. Yes.
    Mr. McFarland. Yes.
    Chairman Waxman. Mr. Issa.
    Mr. Davis of Virginia. I will yield my 5 minutes to Mr. 
Issa.
    Mr. Issa. Thank you, Mr. Davis, and thank you, Mr. 
Chairman.
    Mr. Thornton, can you name some of the companies that are 
essentially pollution laundering by producing in China these 
air conditioners and refrigerators?
    Mr. Thornton. There are quite a number of companies. I 
would have to go back and check our notes. I would be happy to 
followup with you and write to you following this hearing.
    Mr. Issa. Well, isn't it true that many of them are 
household word names that previously manufactured in countries 
where they would not have been able to produce this 
refrigerant? I am thinking of countries like America and Japan.
    Mr. Thornton. They are primarily Chinese companies.
    Mr. Issa. They are primarily Chinese companies?
    Mr. Thornton. Yes.
    Mr. Issa. And under what trade names, though? Under Chinese 
trade names?
    Mr. Thornton. They will come in under a wide variety of 
names, either Chinese names, or they could be produced for many 
other companies.
    Mr. Issa. Let me maybe give you some names in order for 
full disclosure. Sanyo, Panasonic, General Electric--these are 
names that they may be coming in under, plus some of well-known 
air conditioning names, wouldn't it be?
    Mr. Thornton. I am sorry? Are you talking about the actual 
air conditioning units?
    Mr. Issa. Air conditioners and refrigerators, yes.
    Mr. Thornton. Well, in the air conditioning you can go out 
to any WalMart, Sears, or anywhere and they're all stacked up 
and everything is made in China, so there are extensive 
household names.
    Mr. Issa. So I think full disclosure for us in the American 
audience, what we are doing is taking products previously made 
in America under agreements in which we would not be producing 
them the way they are producing them in China, we have shifted 
off-shore the production, but we have also shifted off-shore 
the pollution around the very agreements we signed. Isn't that 
a fair statement?
    Mr. Thornton. That is generally correct.
    Mr. Issa. Because at the time of the signing, these 
products were in much greater numbers made in America, along 
with the refrigerant. Dr. McFarland, pretty well correct?
    Mr. McFarland. Yes.
    Mr. Issa. I wanted those head shaking, because it is 
important for people to understand that in an effort to be a 
good steward of the environment we have to look to countries 
like China that, in fact, we have shifted our pollution to, 
and, in full disclosure, India, Brazil, also the case. The 
Europeans, would it be fair to say that they have gone to 
Africa in the case of some of theirs, like their growing of 
orchids and flowers, things we are not talking about as much 
today. I will take that as a yes.
    Chairman Waxman. Is that an affirmative answer to his 
statement?
    Mr. Thornton. I am sorry. I don't know about the orchids 
and flowers. I am not knowledgeable.
    Mr. Issa. As a strawberry producing State, California, we 
look at lot at where the methylbromide was used, and what we 
found is each of us moved it to countries outside of the 
protocol.
    It is not good to give answers when you are up here. I 
should give questions only.
    This will be my exit question, because it is an area of 
frustration. If China is cheating, call it whatever you want, 
and Brazil and India perhaps, not being mentioned as much today 
but major industrial producers, if they are cheating today and 
we need to bring them under the Montreal Protocol sooner and 
the Kyoto agreement, if it is to be effective worldwide, how do 
you best recommend that we come up with a strategy to stop 
cheating? You have given us one, which is stop importing 
products that essentially are laundering of these items which 
we could not produce here any longer, and I think that is an 
extremely good one, even though I am a free trader and it 
sounds protectionist. We are only talking about the pollution.
    What other steps can we take to ensure that, for example, 
China--and I will just give you the best example. You mentioned 
the higher base level. They are producing, about every 8 days, 
a new coal-fired power generation plant. they are producing 
them with technology that is several generations older than 
anything being used in the United States, so they are, in fact, 
accelerating pollution faster than we are cleaning up. How do 
we, in fact, stop that behavior in the best way, in your 
opinion?
    Mr. Thornton. Well, in terms of this particular issue with 
the HCFCs and HFCs, clearly better cooperation between the two 
treaties would yield huge improvements. In terms of HCFCs, we 
generally support the direction the administration is going in, 
but, again, we think there should be a more aggressive target, 
because those targets will, in effect, apply controls under the 
internationally agreed convention to China, and China will be 
bound to comply with them. There are substantive compliance 
mechanisms available to achieve that.
    Mr. Issa. Last, but not----
    Mr. Thornton. Organizations like ourselves as well.
    Mr. Issa. I have used up the time once again. Thank you, 
Mr. Chairman.
    Chairman Waxman. Thank you very much.
    Ms. McCollum. Well, Mr. Clay hasn't had his first round of 
questions, so I will let him go first.
    Mr. Clay. I thank you, Mr. Chairman, and I thank the panel 
for being here today.
    One question that I don't think has been asked is, 
gentlemen, 12 States have acted to regulate greenhouse gas 
emissions from automobiles. Earlier this week a new report by 
the U.S. Public Interest Research Group found that these 
tailpipe standards would reduce carbon dioxide emissions by 
nearly 400 million tons by 2020. That is a major reduction and 
a major achievement, yet those emissions reductions could be 
negated by the chemicals out there right now in refrigerators 
and air conditioners. These banks of CFCs and HCFCs are a 
serious threat to our climate, aren't they, and clearly we need 
to address this looming problem.
    I would like to ask each of the panelists, what are your 
recommendations for dealing with the threat posed by banks of 
ozone-depleting substances? Dr. Velders, we will start with 
you.
    Mr. Velders. Yes, you raise a very good point. The banks of 
CFCs currently in existing applications like refrigerators, but 
also in foams, the CFCs in there, they will, if you don't do 
anything, will get out into the atmosphere, and especially in 
refrigeration it will take about 10 years and in foams it will 
take much longer. But especially in refrigeration the sooner 
you can take some action to recollect the CFCs in 
refrigerators, mobile and stationary, and destroy them so that 
they don't get into the atmosphere, the sooner the better, 
because in 5 years time about half of it will be out in the 
atmosphere. The faster the action on the banks, the better, 
both for the ozone layer and for climate.
    Where you should take those actions, there are no 
provisions in the Montreal Protocol to do this, but there might 
be other incentives that you can facilitate.
    Mr. Clay. Thank you.
    Mr. Thornton. The Environmental Investigation Agency thinks 
we should address the banks with better economic incentives to 
remove them. It won't be easy. It will be difficult. However, 
we believe the greatest lesson we can learn from the history of 
banks is to stop the banks from getting bigger. Because, again, 
every day that passes, every month, every year, there are 
millions of air conditioners being imported into the United 
States from China, each with a few kilos of HCFCs, and they are 
going to have to be addressed.
    Because if eventually all those millions of units and all 
that HCFC is lost into the atmosphere, there is just a kind of 
time bomb waiting to happen, and to further have a negative 
impact on the climate. So that is why we have stressed with the 
U.S. proposal to the Montreal Protocol to be more aggressive at 
bringing the phase-out dates forward to set the cap as early as 
2007 to prevent future growth in HCFC and the expansion of this 
industry.
    Mr. Clay. And I guess simultaneously we should also be 
addressing the smokestack issue also, the emission from the 
smokestack, or do you think that would negate it, too? Even if 
we reduce tailpipe emission, will the smokestack offset?
    Mr. Thornton. For me personally, Congressman, yes, I 
believe we should be doing all that we can wherever the carbon 
emissions are coming from, whether they are smokestacks, tail 
pipes, or from staying in the shower too long in the morning, 
but we all have to do our little bit to reduce our carbon 
footprints.
    Mr. Clay. Thank you. Dr. McFarland, please?
    Mr. McFarland. Congressman, you bring up a very good point. 
The CFCs and halons have been phased out of production and 
consumption in the United States, and if we don't act soon it 
is going to be an opportunity lost, because these things are 
continuously being emitted in the atmosphere.
    The Montreal Protocol was a protocol that limited the 
amount that could be put into this equipment and on the market. 
It did not control the end of life us of the compounds. So it 
is probably too late to control them under an ozone regime; 
however, there may be an opportunity under a climate regime, 
because they are significant greenhouse gases. You might be 
able to allow some sort of a carbon credit for their capture 
and destruction and provide the financial incentive to get them 
out of the atmosphere, but every day we wait that one-time 
opportunity of destroying these things gets smaller and 
smaller.
    Mr. Clay. And let me real quickly ask how important is it 
for the Montreal Protocol to explicitly recognize the dual aims 
of protecting the ozone layer and combatting global warming? 
Anyone on the panel can venture.
    Mr. Thornton. Well, we believe that it is very important. 
In the past the Montreal Protocol has not taken sufficient 
account of the climate impacts of ozone-layer-depleting 
chemicals. We believe that this should be the basis of policy 
decisions in the future based on the scientific experience and 
evidence we have, and so we agree that the protocol should make 
its decisions fully cognizant of the impact of the climate 
emissions or carbon emissions, CO2 equivalent 
emissions from these greenhouse gases that are also ozone 
depleters.
    Mr. Clay. Thank you for your responses.
    Mr. Chairman, I yield back. Thank you.
    Chairman Waxman. Thank you very much, Mr. Clay.
    Ms. McCollum, do you wish to ask further questions?
    Ms. McCollum. I just want to kind of followup. We have 
talked about the loophole that China has and the concerns about 
the black market, the role of Kyoto and Montreal in making for 
a healthier climate. Mr. Clay was talking about capturing the 
chemicals that are out there. But maybe we could hear a little 
more, especially from you, Mr. McFarland, about the 
alternatives that are out there for the HCFCs today, the cost 
of shifting to those alternatives, because 20 years ago, quite 
frankly, people screamed the sky was falling on industry if we 
did anything, and we found out quite the opposite. We survived 
and we stayed neutral with the ozone hole getting much larger. 
We have seen it get a little larger in 2005, but for the most 
part we stayed steady.
    We need to improve. We need to raise up the standard from 
just staying neutral to moving forward. What kind of role do 
you see out there with industries such as DuPont who are 
working very much through research to do something about this?
    Mr. McFarland. Well, for the phase-out of HCFCs, 
alternatives exist today. You can buy the products with 
alternative compounds. They are on the market. The clock is 
ticking until the phase-out, for example, of HCFC-22 equipment 
that can be produced in the United States will be illegal. As 
of January 1, 2010, according to the laws that are on the books 
today. it will be illegal to use newly produced 22 in equipment 
produced after January 1, 2010. Mr. Thornton has raised the 
issue of right now there is no law on the books that would 
prohibit the import of equipment containing 22, and that is 
something that needs to be worked on to close that so that it 
is a competitive issue for U.S. industry as well as an 
environmental issue.
    So for the phase-out of HCFCs, the compounds exist today. 
In addition, we are looking toward the next generation of 
products. You may know that the European Union has passed an F-
gas directive that will phaseout the use of R-134A or HFC-134A 
in mobile air conditioning in new cars beginning in 2011. Over 
a year ago we announced that we had identified several 
candidate refrigerants that have only about 3 percent of the 
global warming potential of HCF-134A, and we are looking to 
apply that technology to other markets, as well. So we are 
optimistic as we go forward that we can provide continuously 
more sustainable solutions to meet the growing needs of the 
global refrigeration and air conditioning industry.
    Mr. Thornton. Well, EIA endorses the point of view that 
preference should be given to using cooling gases that have the 
lowest possible global warming potential. We don't want to have 
another transition chemical situation like HCFCs [sic] that has 
a lesser global warming potential compared to, say, HCFCs, but 
is still a significantly global warming potential when the 
chemical is mass produced, so we should be aiming for the 
lowest possible and then giving preference to encouraging those 
technologies.
    Ms. McCollum. How difficult is it, if you have an older 
refrigeration unit? I know that recyclers are supposed to be on 
the watch, trying to not release these chemicals into the air. 
I know the automotive dealers were working very hard with 
refrigeration units in the cars when the switch was made not to 
release the chemicals. Is there anything that industry can do 
better?
    Mr. McFarland. This is why we are proposing more reliance 
on market-based mechanisms that provide the financial 
incentives for all of the technicians throughout the value 
chain to prevent emissions into the atmosphere. Right now the 
data shows that, of the R-134A, HFC-134A, for example, that is 
used in automotive air conditioning and other refrigeration 
systems, of the amount that is contained out there in 
equipment, about 20 percent gets into the atmosphere every 
year, either through leaks, poor service practices, end of 
life.
    The same is true for HCFC-22 that is used in air 
conditioning and refrigeration systems, for example, your home 
air conditioner and supermarkets. And you are dealing with 
literally tens of millions of potential sources out there and 
tens of thousands of technicians that are going out there to 
work on those systems.
    What you need is a market-based system that provides a 
financial incentive for them to recover it, so it is more cost 
effective for them to recover it than it is to allow it to 
escape into the atmosphere, and to maintain it in the 
equipment. So that is the basis for our suggestions that moving 
forward the implementation of agreements to improve 
environmental performance could be much more effective with 
market-based mechanisms rather than command and control systems 
that just say, Technicians, you cannot emit this into the 
atmosphere.
    Chairman Waxman. Thank you very much, Ms. McCollum.
    I want to thank the three of you very much for your 
presentation to us. I think this hearing has set a record that 
I think will be important for Congress as we consider the 
problems of the upper ozone, as well as the climate change 
matters. I hope this will also encourage the administration to 
push forward at the September meeting even more aggressively 
than they already are proposing, but they are proposing some 
good ideas and we want to commend them for that.
    Thank you very much. That concludes our business for today. 
We stand adjourned.
    [Whereupon, at 11:30 a.m., the committee was adjourned.]
    [The prepared statement of Hon. Darrell E. Issa follows:]

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