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



ADMINISTRATION PERSPECTIVES ON UNITED NATIONS CLIMATE CHANGE CONFERENCE 
                                IN BALI

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 17, 2008

                               __________

                           Serial No. 110-80


      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov






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                    COMMITTEE ON ENERGY AND COMMERCE

                  JOHN D. DINGELL, Michigan, Chairman

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

                           Professional Staff

                     Sue D. Sheridan, Chief Counsel
                        John W. Jimison, Counsel
                   Rachel Bleshman, Legislative Clerk
                    David McCarthy, Minority Counsel









                             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. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     2
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     4
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     6
Hon. Mike Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     7
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     8
Hon. Tammy Baldwin, a Representative in Congress from the State 
  of Wisconsin, opening statement................................    10
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    11
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    13

                               Witnesses

James L. Connaughton, Chairman, White House Council on 
  Environmental Quality..........................................    15
    Prepared statement...........................................    19
    Answer to submitted question.................................   123

                           Submitted Material

"U.S. Clean Technology Development," presentation by Alexander 
  "Andy" Karsner, United States Assistant Secretary of Energy....    60
"Actions to Address Climate Change in the Land Use Sector," 
  presentation by William Hohenstein, United States Department of 
  Agriculture Global Change Program Office.......................    91
Bali Action Plan.................................................   103
"Methane to Markets, Partnership Overview and USG 
  Accomplishments," presentation by William Irving...............   108

 
ADMINISTRATION PERSPECTIVES ON UNITED NATIONS CLIMATE CHANGE CONFERENCE 
                                IN BALI

                              ----------                              


                       THURSDAY, JANUARY 17, 2008

                  House of Representatives,
            Subcommittee on Energy and Air Quality,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Rick 
Boucher (chairman) presiding.
    Members present: Representatives Boucher, Butterfield, 
Melancon, Barrow, Markey, Doyle, Gonzalez, Inslee, Baldwin, 
Matheson, Dingell (ex officio), Upton, Hall, Whitfield, 
Shadegg, Buyer, Walden, Sullivan, Burgess, and Barton (ex 
officio).
    Staff present: Bruce Harris, Sue Sheridan, Laura Vaught, 
Chris Treanor, Rachel Bleshman, Alex Haurek, Kurt Bilas, David 
McCarthy, Tom Hassenboehler, Garrett Golding.

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

    Mr. Boucher. The subcommittee will come to order. I want to 
begin this morning by welcoming to the position of ranking 
Republican member of the subcommittee our friend and colleague 
from Michigan, Mr. Upton. I have long admired Mr. Upton's 
legislative work whether on energy policy or in his previous 
position as chairman of the Telecommunication Subcommittee, and 
most recently ranking member of that subcommittee. And I very 
much look forward to working closely with him as we undertake 
the challenges that lie ahead for the subcommittee this year.
    I have also been asked by Mr. Wynn to express that the 
reason for his absence from the subcommittee this morning is 
that he is attending a funeral in his district and will make 
every effort to join us later during the hearing.
    Today the subcommittee resumes its examination of climate 
change and the determination of an appropriate legislative 
response. Last year we conducted extensive hearings which 
helped to lay a foundation for the development of climate 
change legislation. We published a position paper announcing 
our intention to produce a mandatory greenhouse gas control 
program relying on cap-and-trade as the control methodology.
    For the past 6 months our focus was the drafting and 
passage of the Energy Independence and Security Act of 2007. 
While that new law makes important contributions to the 
reduction of greenhouse gas emissions by increasing auto fuel 
economy, enhancing energy efficiency, and requiring the greater 
use of renewable fuels it does not address the climate change 
challenge in a comprehensive manner. Separate economy-wide 
legislation will be necessary to meet that challenge. It is our 
intention to produce that separate legislation during the 
current year.
    We will publish additional position papers focusing on 
various components of the legislation to come. We will conduct 
additional hearings. We will seek to involve all members of the 
subcommittee in a bipartisan process as the legislation is 
developed, as it is considered in the subcommittee, and as it 
is brought to full committee and subsequently to the House. We 
will consult with the Administration, with the private sector, 
and also with environmental advocates, and we will process 
through subcommittee, full committee, a bill for House 
consideration later during this year.
    The legislative response to climate change will be the 
subcommittee's major focus, not our entire focus but certainly 
our major focus during 2008. Appropriately, we begin that work 
this morning by examining the process by which the nations that 
are signatories to the U.N. Framework Convention on Climate 
Change will address global climate change challenges after the 
expiration of the Kyoto Treaty in the year 2012. A key step in 
that process was the conference held in Bali in December which 
created the Bali Action Plan, sometimes referred to as the Bali 
road map. That plan forms the parameters for negotiations among 
the parties to the Framework Convention as they decide over the 
course of the coming year and for a portion of 2009 what 
agreement will replace the Kyoto Protocol in the post-2012 era.
    This morning our sole witness was the key U.S. 
representative in the Bali conference. He will also lead United 
States negotiations between now and the time of the Copenhagen 
conference in 2009 at which it is expected that a final post-
2012 agreement will be concluded among the convention parties. 
We are pleased to have as our witness this morning the 
Honorable James Connaughton, Chairman of the White House 
Council on Environmental Quality. He is the principal advisor 
to the President on among other subjects climate change, and we 
very much welcome him and are pleased that he could join us 
today.
    We will turn to his testimony following the receipt of 
opening statements by other members of the subcommittee, and at 
this time I am pleased to welcome the new ranking member of the 
subcommittee, and ask for the opening statement of Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. I thank my Chairman, and I thank him for his 
very kind words at the start, but I also thank him for the 
years of relationship that we have had and also serve in the 
same hallway, and we pass each other and walk to the floor 
quite often, but I too am very excited about this new role for 
myself, and obviously working with you and with Chairman 
Dingell and my great friend, Mr. Barton. I also want to thank 
our distinguished witness today, Mr. Connaughton, for being 
with us. I had the opportunity to travel with him earlier last 
year along with Chairman Boucher and Ranking Member Hastert on 
energy and climate change and I look forward to your testimony 
today.
    Much of the focus of this committee over the next year will 
be on climate change, as the Chairman indicated. The U.N. 
Framework Convention on Climate Change and the Bali Action Plan 
are just in fact the beginning of what has shaped up to be a 
global issue of concern. Emphasis must be placed on the word 
global. While I feel strongly that addressing climate change is 
certainly important, I believe that we must address this 
through a global voluntary framework that focuses on 
innovations and technology and efficiency rather than a pure 
government mandate, and at the end of the day we will need to 
demonstrate that the price paid in both jobs and dollars 
equates to some tangible environmental benefits to the American 
people.
    In my view, spending trillions of dollars and losing a 
countless number of jobs to maybe alter temperatures by a tenth 
of a degree while China and India continue to spew emissions is 
not the option that we are looking for. By the year 2030 our 
energy needs are going to grow by more than 50 percent. Let me 
say that again. By the year 2030 our energy needs are going to 
grow by more than 50 percent. That is a fact that we are going 
to have to deal with regardless of climate change. The cost and 
supply of energy have a direct impact on jobs in our economy. 
We cannot cap our economic growth and trade it away to China or 
India. We cannot cap American jobs and trade them to China or 
India. As far as I am concerned, these are not valid options. 
Unless we want to put a lid on our economy and burden consumers 
with a multi-billion dollar cost increase, energy demand must 
be met with reliable sources of energy that are also clean.
    While I support reducing greenhouse gas emissions, 
thoughtful choices need to be made on how we are going to meet 
increasing energy demand. I support renewable energy. We do 
need to expand the use of wind and other means. I support 
energy efficiency. That was my provision along with Ms. Harman, 
the Harman-Upton provision to increase lighting efficiency 
standards saving over 120 million tons of CO2 per 
year while simultaneously saving consumers billions in energy 
costs. I support clean energy. I am a strong advocate for 
nuclear which has a life cycle emission equal to wind and 
hydro. However, as we move forward and try to meet our energy 
demand, we must take a common sense approach that doesn't 
needlessly pick winners and losers. Congress must not place 
mandates on the market that will only serve to increase energy 
costs for hard-working Americans while at the same time sending 
jobs overseas.
    I believe that a voluntary framework is best to insure that 
our future energy demands are met with clean and affordable 
power. For example, the so-called RPS that passed the House 
last year excluded new hydro and nuclear, two of the cleanest, 
most cost-effective energy sources available. The RPS won't 
give us energy security. It won't be effective in reducing 
greenhouse gas emissions. What we really need is a flexible 
clean portfolio standard that includes any source of power like 
nuclear that is both clean and affordable. If the goal is to 
reduce greenhouse gases, why pick the winners or losers? Let us 
be realistic. Currently we get approximately 20 percent of our 
electricity from nuclear. By comparison, France gets nearly 90 
percent. Seven percent of our generation comes from hydro. Just 
to stay even with these two zero emission sources, we would 
need to build by 2030 over 50 new nuclear plants and almost 
2,000 hydro plants, and that is just to stay even if we keep 
those same ratios.
    If we are serious about cutting emissions, our usage of 
nuclear needs to be much higher than 20 percent. During the 
climate debate it is easy to toss around numbers without a real 
understanding of perhaps what they mean. One gigaton of 
CO2 equals 273 zero emission, 500 megawatt coal-
fired plants or 1,000 carbon sequestration sites, we have only 
three today, or 136 new nuclear plants at 1 GW each, or 270,000 
wind turbines of 1 megawatt each or 125 times the current 
global solar photovoltaics generation or convert a barren area 
of almost two times the size of England for bio-mass 
cultivation, or a barren area larger than Germany and France 
combined for a CO2 storage in new forests.
    Many nations that attended Bali and many members of this 
committee advocate cutting greenhouse gases by 50 percent by 
2030, approximately 4 gigatons of CO2. Are we 
willing or able to build 550 new 1 gigawatt nuclear plants, 
over a million new wind turbines, or 1,000 new zero emission 
coal-fired power plants? Current legislation measures seek to 
pick winners and losers, and will lead to higher costs for 
consumers, sending our jobs overseas, and disproportionately 
harming perhaps the poorest in our population. I do support the 
goal of cutting emissions but let us do it in a way that is 
least harmful to our economy. I yield back to my chairman.
    Mr. Boucher. Thank you very much, Mr. Upton. I am now 
pleased to recognize for his opening statement the Chairman of 
the full committee, the distinguished gentleman from Michigan, 
Mr. Dingell.

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

    Mr. Dingell. Mr. Chairman, thank you, and I want to thank 
you and commend you for holding this hearing. I begin by 
welcoming my colleagues to this new session of Congress. We 
have a new ranking member on this subcommittee, my dear friend 
from Michigan, Mr. Upton, who I know will provide exceptional 
leadership and competence, and I welcome him with particular 
enthusiasm. We look forward to working with him as we continue 
to grapple with difficult energy issues in matters relative to 
climate change. Today we will embark upon what I believe is the 
third phase of this committee's work on climate change in this 
Congress. The first phase was the intensive set of hearings 
convened by you, Mr. Chairman, last year. It served as the 
foundation for all members to become familiar with the 
difficult terrain on this issue.
    These hearings were very instructive, and I commend you, 
Mr. Chairman, for your leadership, and, quite frankly, for your 
stamina and patience. The second phase was the legislation 
introduced by this committee that was ultimately enacted into 
law as it provided the framework of the legislation that was 
adopted by the Congress last year. It contained landmark 
provisions on CAFE, bio-fuels, and energy efficiency. The 
energy efficiency provisions alone will remove 10 million tons 
of carbon dioxide from the atmosphere by 2030, the equivalent 
of taking all cars, trucks off the road, and all planes out of 
the skies for a period of 5 years. That is a remarkable 
achievement but it is only the beginning of what must be done. 
Now we begin the third phase of our work, crafting climate 
change legislation that will protect our environment without 
putting the American economy at a disadvantage. This 
undertaking will require us to work through an enormous amount 
of information in order to arrive at the best public policy in 
our nation.
    It will also require us to commence the assembling of a 
piece of legislation and the drafting of a very difficult piece 
of legislation in a rather constrained time frame. In doing 
this work, we must be mindful of the need to coordinate U.S. 
domestic policy with ongoing international negotiations 
pursuant to the recently adopted Bali Action Plan. We must also 
do something else which is important, and that is to see to it 
that the United States does carry out its responsibilities but 
also to see to it that we are not stuck with the entire bill 
for addressing the problem of climate change and global 
warming. This was one of the defects of the Kyoto plan, which 
left the United States with a significant burden and very few 
others with any burden of consequence. The end result of that 
was that it was rejected by the Senate which informed the 
Administrations then and now by a unanimous vote that there 
will be no legislation which does not impose burdens on others 
if the United States undertakes its responsibilities. This is 
something we are going to have to keep in mind both because of 
fairness to this country and because of the fact that we have a 
certain duty to our constituents to see to it that we do not be 
the only ones who do this thing as we move forward.
    We are going to require then bipartisan cooperation, and I 
hope my friends on both sides of the aisle will come to this 
task with an open mind and a willingness to be helpful. It is 
going to require active engagement in the Administration, 
something which remains to be seen. I would note that we had 
very small involvement with the Administration in our 
undertakings last year. I hope that that will significantly 
improve. Judging from the rather thin testimony presented to 
this subcommittee by our witness today, I must confess that I 
am less than optimistic. I hope that the remarks of our witness 
before the subcommittee will answer our questions and will be 
more forthcoming. Mr. Chairman, again I commend you for holding 
this hearing, and for initiating a very important phase of an 
extremely important undertaking. I yield back the balance of my 
time.
    [The prepared statement of Mr. Dingell follows:]

                   Statement of Hon. John D. Dingell

    Chairman Boucher, thank you for holding this hearing. I 
want to begin by welcoming my colleagues to this new session of 
Congress. We have a new Ranking Member on this Subcommittee, my 
good friend from Michigan, Mr. Upton, who I know will provide 
exceptional leadership. We look forward to working with him as 
we continue to grapple with energy issues and climate change.
    Today we embark on what I believe is the third phase of 
this Committee's work on climate change in this Congress. The 
first phase was the intensive set of hearings convened by 
Chairman Boucher last year that served as a foundation for all 
Members to become familiar with the difficult terrain of this 
issue. Those hearings were very instructive and I commend 
Chairman Boucher for his leadership - and his stamina.
    The second phase was the legislation produced by this 
Committee that was ultimately enacted into law and contained 
landmark provisions on CAFE, biofuels, and energy efficiency. 
The energy efficiency provisions alone will remove 10 billion 
tons of carbon dioxide from the atmosphere by 2030, the 
equivalent of taking all cars, trucks, and planes off the road 
and out of the skies for 5 years. That's a remarkable 
achievement, but it's only the beginning.
    Now we begin the third phase of our work: crafting climate 
change legislation that will protect our environment without 
putting the American economy at a disadvantage. This 
undertaking will require us to work through an enormous amount 
of information in order to arrive at the best public policy for 
our Nation.In doing this work, we must be mindful of the need 
to coordinate U.S. domestic policy with ongoing international 
negotiations pursuant to the recently adopted "Bali Action 
Plan."
    This will require bipartisan cooperation and I hope that my 
friends on the other side will come to this task with an open 
mind. It will require as well the active engagement of the 
Administration, which remains to be seen. Judging from the 
rather thin testimony presented to the Subcommittee by our 
witness today, however, I am less than optimistic. I hope his 
remarks before the Subcommittee and answers to our questions 
will be more forthcoming.
    Again, Mr. Chairman, I commend you for holding this hearing 
today and initiating the next phase of this important 
undertaking.
                              ----------                              

    Mr. Boucher. Thank you very much, Mr. Dingell. The 
gentleman from Kentucky, Mr. Whitfield, is recognized for 3 
minutes.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. Mr. Chairman, thank you very much. And like 
others on this subcommittee, we look forward to working with 
Ranking Member Upton and congratulate him on his new position, 
and all of us have some important issues in energy facing our 
country that we look forward to the opportunity to move 
forward. I want to welcome Chairman Connaughton and look 
forward to his testimony today and working with him as we move 
forward. I think today obviously we are going to be focused on 
the post-Kyoto world and a goal of reaching an agreement by 
2009 that most countries in the world can sign and agree to. 
And I think that obviously as has been stated earlier, this is 
really going to be a balancing act because we are going to have 
to determine what responsibilities did the developing countries 
in the world have as well as the developed countries of the 
world.
    And as we move forward, I believe that we have to recognize 
that since the U.S. has a 250-year reserve of coal, and that 
coal has to continue to play an important part in meeting our 
energy needs. Fred Upton mentioned that our demand for energy 
is going to increase by 50 percent over the next 10, 15, 20 
years, and we are not going to be able to meet those energy 
demands without using coal. And we know that in China they 
continue to develop coal-fired plants, and we do have the 
technology to use clean coal. But I think ultimately we simply 
have to look at what is the cost of making sure that we reduce 
these greenhouse gas emissions, what impact or steps that we 
take are going to have on employment in the United States and 
how is it going to affect our competitiveness with other 
economies around the world.
    So we have a great opportunity. All of us are looking 
forward to trying to solve this problem and I look forward to 
participating in today's hearing as we move forward. Thank you 
very much.
    Mr. Boucher. Thank you very much, Mr. Whitfield. The 
gentleman from Georgia, Mr. Barrow, is recognized for 3 
minutes.
    Mr. Barrow. I thank the Chairman. In the interest of time, 
I will waive an opening.
    Mr. Boucher. The gentleman from Georgia waives his opening 
statement, and I would note for the benefit of other 
subcommittee members that in accordance with the rules of the 
subcommittee and full committee any member who waives an 
opening statement at this time will then have 3 minutes added 
to that individual's time for propounding questions to the 
witness. The gentleman from Pennsylvania, Mr. Doyle, is 
recognized for 3 minutes.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman. I also would like to 
welcome back all of our colleagues. I hope we have all returned 
well rested and ready to roll up our sleeves and begin working 
together to produce a comprehensive legislation to address the 
dangers of global warming. This monumental challenge is one I 
believe we can and must meet so that this Congress can deliver 
a workable solution to the American people this year. As 
everyone on this dais knows, I am firmly committed to insuring 
that our nation not only dramatically decrease our global 
warming gas emissions but leads the world to insure that all 
other nations do their part to reach our common goal.
    One thing is clear, Mr. Chairman. If we do nothing, others 
will do nothing. It is critical that we put our money where our 
mouth is so that we can push others to do the same. The 
meetings in Bali were an important step towards achieving this 
goal of a world of nations united to combat global warming. 
Development such as launching negotiations with developing 
countries instead of simply holding discussions are very 
important. I was also happy to see that the Bali Action Plan 
takes into account the challenges these nations face as they 
strive to do their part, and I think the plan's focus on 
measurable, reportable, and verifiable mitigation plans based 
on individual country's needs and resources will go a long way 
to achieving our shared goal.
    However, we are a long way from turning these commendable 
words and statements into action. We need a firm commitment 
backed up by concrete action, not words. I have to say in 
reviewing our witness' testimony that I can't remember another 
time during my service in Congress when a witness testified for 
a hearing and his testimony is a mere 1-page document that 
describes a slide presentation and a statement from the 
President. I would hope that this Administration doesn't think 
that this committee is not worth preparing comprehensive 
testimony for.
    We need, Mr. Chairman, concrete action. I stand ready to 
work with you and any member of this committee that wants to 
address the real world challenges that global warming presents. 
This is a global problem. It requires a global solution. I 
would hope that this Administration will join us in this 
critical effort as we move forward. With that, Mr. Chairman, I 
will yield back my time.
    Mr. Boucher. Thank you very much, Mr. Doyle. The gentleman 
from Texas, Mr. Burgess, is recognized for 3 minutes.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman. I certainly want to 
welcome our witness, Mr. Connaughton. Thank you for testifying 
before us today. It is timely that you are here to talk about 
the role the United States will play in global climate change 
negotiations over the next couple of years. It is also timely 
that we are having a hearing about the economic stimulus 
package that Congress is currently preparing or at least 
rumored to be preparing, so I am pleased we have held off on 
voting on that package long enough to consider the impact of 
our climate change plan on our efforts to stimulate growth in 
the American economy.
    Mr. Connaughton, from what I have heard, your 
representation of the United States in Bali was commendable, 
and I want to thank you for meeting the objectives and 
challenging all countries to participate. Global problems 
require global solutions, and I hope we can continue to pursue 
that goal. From your statements at the conference I understand 
that we want the United States to take a lead in the 
negotiations. That is as it should be. Your hand-outs from the 
conference show that since 2001 the United States has invested 
more money, $37 billion, into global climate change than any 
other country represented at the conference, including Kyoto-
compliant countries. Let us state that again for emphasis. The 
United States has invested more money than any other country, 
including Kyoto-compliant countries.
    We often hear about the lack of United States support for 
global climate change initiatives, so I hope you can shed some 
light on what we have provided so far and how we can engage in 
the negotiation process over the next 2 years to put together a 
package that would be workable in the future. Anecdotally, this 
committee took a field trip to Scandinavia in August, 2006. 
Many members who are on this subcommittee participated. We 
talked about energy and telecom issues. And in the country of 
Norway we met with some of our counterparts in the Norwegian 
parliament. Norway produces most of its power from 
hydroelectric, which obviously is carbon neutral, but they had 
a tough series of years where it didn't rain for 3 years so 
their production was low. Well, they get a lot of natural gas 
from the North Sea so instead of liquefying it and putting it 
on the big orange boat over to Ed Markey's district maybe they 
could just open up a couple of gas-fired electrical plants so 
that their constituents didn't freeze to death during their 
winter. But they can't do that because they are signatories of 
the Kyoto so they can't burn the natural gas because that will 
put carbon into the atmosphere.
    So in order to meet the demand of their constituents they 
would buy power from Denmark and provide power to their 
citizens that way, buy electricity from Denmark. How does 
Denmark generate their power? They burn coal. It is this sort 
of circuitous logic that goes on that just defies gravity, and 
this is one of the challenges that of course you and this 
committee have to confront is the myths that surround this 
global concern. In Texas on the way to the airport to fill up 
before coming here this week gasoline cost $3.10. January is 
the cheapest gas in Texas because the summer driving period 
isn't here and we don't have all the expensive ethanol blends 
that the Clean Air Act demands that we have. So Texans, I 
suspect, are going to be paying in excess of $4.00 a gallon for 
gas around Memorial Day. We have the economic stimulus package 
coming up. Every dollar that we provide, whatever we do, every 
dollar that we provide is going to be immediately eaten up in 
increased energy cost at least as it will affect the 
constituents in my district.
    Again, Mr. Chairman, I thank you for holding this hearing. 
I think it is timely. I think it is important work, and look 
forward to the testimony of our witness today. I yield back.
    [The prepared statement of Mr. Burgess follows:]

                  Statement of Hon. Michael C. Burgess

    Thank you Mr. Chairman,
    I would like to welcome our witness, Mr. Connaughton, and 
thank him for testifying today.
    Mr. Connaughton, it is timely that you are here to talk 
about the role that the United States will play in global 
climate change negotiations in the next two years. It is also 
timely because we have been hearing about an economic stimulus 
package that this Congress is preparing. I am pleased that we 
have held off on voting on that package long enough to consider 
the impact of our climate change plan on our efforts to 
stimulate growth in the American economy.
    Mr. Connaughton, from what I have heard, your 
representation of the United States in Bali is commendable and 
I want to thank you for meeting the objectives and challenging 
all countries to participate. Global problems require global 
solutions and I hope we can continue to pursue that goal. From 
your statements at the Bali Conference I understand that we 
want the United States to take the lead in these negotiations. 
Your power point handouts from the Conference show that, since 
2001, the United States has invested more money ($37B) into 
global climate change initiatives than any other country 
represented at the Conference, including Kyoto compliant 
countries. We often hear about the lack of United States 
support for global climate change initiatives, so I hope you 
can shed some light on what we have provided so far and how we 
can engage in the negotiation process over the next two years 
to put together a package that will be workable after 2012.
    Mr. Chairman, I am concerned that as a nation, we cannot 
expect to engage in economic growth if we continue to avoid the 
uncertainty of the cost of climate change compliance. All of 
our constituents are worried about the rising cost of energy 
and the uncertainty in our markets. In fact, last week in Texas 
I stopped and filled up with $3.10 gasoline. As I am sitting 
here today, I am trying to calculate exactly how much we are 
going to pay for a gallon of gasoline next spring. It is 
concerns me greatly to know that we may see gas prices as high 
as $4.00 per gallon when summer blends are mixed in.
    In our continued negotiations with the other participants, 
I hope we raise the question, "how do we build a global 
consensus to implement an environmental protection plan that 
not only does no harm but actually builds our global economy?" 
I believe that sustaining our planet and avoiding catastrophic 
global climate change are not separate from a successful global 
economy model, they are actually mutually dependent.
    I hope that through the next phase of negotiations we can 
build a consensus that helps grow our domestic renewable and 
alternative energy programs and allows us to create new jobs 
producing the products and fuel that our planet needs to 
sustain growth. I hope we can strengthen our global energy 
trade and investment in cutting edge technology. Ultimately, I 
also hope that the developing world is willing to join us in 
these efforts because, as we have seen, when the cost of 
compliance is high, developing economies simply sustain growth 
in exchange for mitigating the effects of climate change.
    Mr. Chairman, we cannot avoid indicators that point out 
that global demand for energy is going to increase regardless 
of our efforts to cap and control carbon. Global energy demand 
growth has been projected at 50-60 percent due to improved 
living standards and population growth in developing countries. 
ERCOT, the Electric Reliability Council of Texas, has said that 
unless new generation capacity is built in Texas, we will not 
have enough electricity to ensure reliability within the next 
5-10 years. In addition, the fossil fuel market is a global 
market and we cannot operate as a protectionist society that is 
only looking to sustain our growing demand while our economy is 
struggling--we must also work to seek out new sources of 
domestic energy to provide the production that fits the growing 
demand within this global market.
    Mr. Connaughton, I hope that the United States can take the 
lead in these negotiations and make a real global impact. By 
leading the way, we can create a platform that is not only 
measurable, reportable, and verifiable but is also transparent, 
predictable, and spreads compliance evenly across the 
participants. I hope that we can do this while at the same time 
boosting our lagging domestic economy by providing the products 
that sustain growth at home and in the developing world.
    With that Mr. Chairman, I yield back.
                              ----------                              

    Mr. Boucher. Thank you very much, Mr. Burgess. The 
gentleman from Texas, Mr. Gonzalez, is recognized for 3 
minutes.
    Mr. Gonzalez. Waive opening.
    Mr. Boucher. The gentleman waives his opening statement. 
The gentleman from Washington State, Mr. Inslee, if he is here. 
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. The attention focused 
on the issue of climate change has clearly reached a new level. 
We are no longer questioning whether we should act but rather 
how and when we will act, and as participants in the U.N. 
climate change conference arrived in Bali the answers were 
clear. We must act now with firm, bold, and decisive actions 
that push the envelope and provide us with a road map for 
repairing the damage we have done to our planet. I am 
continuously struck by the efforts to combat climate change in 
our country whether through environmental advocacy, private 
sector initiatives or local, state, and regional agreements. 
These programs demonstrate America's commitment and drive to be 
stewards of our environment. But I often wonder is the rest of 
the world aware of most of these efforts. Do they know that 
there is a movement here in America to reduce greenhouse gas 
emissions, increase our energy efficiency, and protect our 
planet for generations to come.
    Unfortunately, I believe too often what the international 
community hears is how our Administration has done everything 
in its power to stifle the debate on climate change through 
sidelining science, editing government reports out of EPA or 
NASA or refusing to back firm goals for reducing emissions. It 
is clear that not only do we lack a strong national strategy 
for addressing climate change but also that we are missing the 
leadership that is committed to set one in place, and herein 
lies the problem with the agreement reached in Bali. Our 
Administration sent representatives poised as our nation's 
voice to lead the talks in Bali, and rather than uniting around 
a policy that reflects the views of Americans, one that 
demonstrates a finite commitment to addressing climate change, 
the agreement reached shows how our leaders can water down, 
avoid, and delay our actions to reduce greenhouse gas 
emissions.
    The perception of the United States through the eyes of our 
international friends has taken a hit. Criticism has been 
widespread and the calls for true leadership from our country 
have been loud and clear. As one participant put it during the 
debate, the international community looks to us for leadership 
but if we are not going to do so, we must move out of the way. 
Mr. Chairman, the climate in Bali and the rest of the world may 
be changing for the better but the forecast here in Washington 
for the next year appears to be politics as usual. Our 
Administration had the opportunity to catch the momentum and 
bring our nation up to speed, and I just hope that by the time 
the temperature changes it won't be too late for us to take 
action. Thank you, and I yield back the balance of my time.
    Mr. Boucher. Thank you very much, Ms. Baldwin. The 
gentleman from Indiana, Mr. Buyer. The gentleman waives his 
opening statement. The gentleman from Oklahoma, Mr. Sullivan is 
recognized. Mr. Sullivan also waives his statement. The 
gentleman from North Carolina, the Vice-Chairman of the 
subcommittee, 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. Thank you very much, Mr. Chairman, for 
convening this important hearing today, and I thank the witness 
for coming forward today with his very important testimony. I 
appreciate the witness' willingness to come today to speak to 
us about the Administration's perspective on the recent U.N. 
climate change conference in Bali, but I must admit that I am 
mystified to some extent about how concise or inconcise the 
written testimony that has been provided to us appears to be. 
Most of the members of Congress were not able to participate in 
the conference and so I am looking forward to hearing the 
testimony today and hopefully we can be provided more details 
than have been forthcoming.
    We have all heard the phrase, Mr. Chairman, about kicking 
the can down the road. Well, I am worried that if we don't take 
immediate action on this subject there won't be much of a can 
to kick anymore or even a road for that matter. Thankfully, 
parties were able to agree upon a framework while continuing 
discussions by way of the Ad-Hoc Working Group that will meet 
at least 4 times this year, and it is my sincere hope that the 
U.S. will have something more substantive to contribute in 
April than an innocuous agreement or technology transfer with 
other nations. And the world in 8 months will witness the 
Olympics. They will be in China, the country that now holds the 
distinction of being by some estimation the world's largest 
emitter of greenhouse gases. China's capital, which is the City 
of Beijing, is currently attempting at this late hour to reduce 
its crippling level of smog and pollution so athletes traveling 
there will be able to compete without covering their faces.
    I am not sure if the Chinese will get things under control 
by then but the point is that this country, the United States, 
cannot chastise the Chinese for their chronically bad pollution 
levels because we are in no better position than they are to 
throw accusations. Since the beginning of this Administration, 
it has consistently undermined world bodies that were put in 
place to facilitate order and compromise on some of the world's 
most pressing concerns. My point is that these actions continue 
to undermine our historically strong position to negotiate in 
good faith with the rest of the world. With 1 more year left of 
this Administration, I am not sure what the Administration has 
to gain by continuing this line. Cynicism has become so evident 
that the delegates moved the goal post a little and decided 
that negotiations should have agreed upon by December of 2009, 
not really enough time for whatever the new Administration has 
in place but enough time to move past the inaction that has 
crippled us to this point.
    I would like to hear more from the witness about 2 
principal concerns that I have as a member from a coastal state 
who will undoubtedly be the first to bear the brunt of whatever 
adverse effects of climate change this country experiences. Mr. 
Chairman, I have run out of time. I am going to reserve the 
remainder of my statement. I will include it in the record, and 
I will ask the appropriate questions at the appropriate time. 
Thank you.
    [The prepared statement of Mr. Butterfield follows:]

                   Statement of Hon. G.K. Butterfield

    Good morning Mr. Connaughton, Happy New Year. I appreciate 
you coming to speak to us about the Administration's 
perspective on the recent United Nations Climate Change 
Conference in Bali but I must admit I am mystified about how 
concise your written testimony you provided this Committee was. 
It is my hope that you will speak to us in greater detail since 
most Members of Congress were not able to visit the Conference. 
I'm not so sure how Happy 2008 will end up being if your boss, 
the President, decides to maintain the status quo instead of 
being the Decider as he would have us believe him to be. We've 
all heard of the phrase, "kick the can down the road", well, 
I'm worried if we don't take immediate action, there won't be 
much of a can to kick anymore. Or a road for that matter. 
Thankfully, parties were able to agree upon a framework for 
continuing discussions via an Ad Hoc working group that will 
meet at least four times this year and it is my sincere hope 
that the US will have something more substantive to contribute 
in April than an innocuous agreement on technology transfer 
with other nations.
    The world in eight months will witness the Olympics in 
China, the country that now holds the distinction of being, by 
some scientist's estimation, the world largest emitter of green 
house gases. China's capital city, Beijing, is currently 
attempting at this late hour to reduce its crippling level of 
smog and pollution so athletes traveling there will be able to 
compete without masks covering their faces! I'm not sure if the 
Chinese will get things under control by then but the point is 
that this country, the United States of America, cannot 
chastise the Chinese for their chronically bad pollution levels 
because we're in no better position than they are to throw 
accusations. Since the beginning of this administration, it has 
consistently undermined world bodies that were put in place to 
facilitate order and compromise on some of the world's most 
pressing concerns. My point Mr. Connaughton is that these 
actions continue to undermine our historically strong position 
to negotiate in good faith with the rest of the world. With one 
more year left, I'm not sure what the Administration has to 
gain by continuing down this line. Cynicism has become so 
evident that the UNFCCC delegates moved the goal posts a little 
and decided that negotiations should agreed upon by December of 
2009. Not really enough time for whatever new Administration is 
in place but enough time to move past the inaction that has 
crippled negotiations up to this point.
    I would like to hear more from you about two principle 
concerns that I have as a Member of Congress from North 
Carolina, a coastal state that will undoubtedly be the first to 
bear the brunt of whatever adverse affects of climate change 
this country experiences. North Carolina has already had more 
than it's fair share of hurricanes and other acts of God that 
have left some municipalities like Princeville in my District, 
still recovering from Hurricane Floyd. It has been almost nine 
years since September 16th, 1999, when Floyd ravaged huge 
swaths of eastern North Carolina killing 52 people in its path. 
North Carolina has been fortunate since then but other Atlantic 
and Gulf coast states have not been so lucky. I do not mean to 
suggest that the rash of hurricanes we have recently 
experienced are somehow directly related to ongoing climate 
change but I am stating that coastal states and cities, 
including here in the Chesapeake Bay region with well over 16 
million people, should be very concerned about global warming. 
Despite current restoration efforts, the Chesapeake Bay is 
still one of the most sensitive ecosystems in the US and there 
is no plan in place to address potential rising of sea levels 
or a significant plan to restore the marshes and wetlands in 
Florida, Louisiana or North Carolina for that matter. My second 
concern deals with the Administration's plan to help developing 
nations deal with adaptation to an ever changing world that has 
already seen significant impacts from global warming. There are 
a plethora of anecdotal observations as well as empirical data 
that clearly states that Africa, Asia and the Caribbean will be 
the first to suffer the ravages of global warming despite being 
the lowest greenhouse gas contributors. Since the US has been 
the world's largest emitter of GHG's for the past 100 plus 
years, we have a unique role to play in helping mitigate the 
changes and assist with the deployment of affordable 
environmentally sound technologies and sustainable forest 
management and degradation procedures to help these countries 
cope. We are intimately tied to these developing nations given 
our high level of contribution to this radically changing 
environment.
    Congress and the President recently passed a bold and 
innovative Energy bill this past December and I look forward to 
working together to utilize the momentum we've generated to do 
greater things in 2008. Eight years of inaction have cost us 
dearly but I pledge my support in creating an atmosphere where 
we can work together for the good of our children and 
grandchildren. We must not continue to kick this can down the 
road, thank you.
                              ----------                              

    Mr. Boucher. Thank you very much, Mr. Butterfield. The 
ranking member of the full committee, the gentleman from Texas, 
Mr. Barton, is recognized for 5 minutes.

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

    Mr. Barton. Thank you, Mr. Chairman. It is good to have 
this subcommittee back in action. It started off with a flurry 
early in the first session and then along around the summer 
time it kind of went into hibernation so we are glad to have 
you back on the front lines here. I want to welcome some people 
today. I want to first welcome our new ranking member, Mr. 
Upton. Mr. Upton has been on the committee for quite a number 
of years. He has made his major contribution as the past 
subcommittee chairman, ranking member of the Telecommunications 
Subcommittee, but he has switched over to Energy and Air 
Quality with the departure of former Speaker, Mr. Hastert. He 
has got big shoes to fill. Mr. Hastert and Mr. Hall, who is 
another ranking member of the Science Committee, and way back 
when one of the former chairman, myself. I started out as the 
chairman of this subcommittee so I am very, very happy to have 
nominated Mr. Upton to this position.
    I also want to welcome Mr. Connaughton. He and I have had 
an ongoing relationship and a number of discussions for I don't 
know how many years but a fair number. He just got back from 
Bali. We are going to hear his insights, but I think it is safe 
to say of all the people in the world Jim Connaughton is one of 
the most knowledgeable on the issue that you got on the hearing 
schedule today which is global warming and climate change. We 
have had a lot of hearings about this issue in the last several 
years. I am still not convinced that the science and the 
economics of the issue are settled. I know a lot of people want 
to move on and look at solutions but I don't think we can have 
a very good chance to develop an optimal solution if we really 
don't understand the problem, and a very large number of 
skeptics still out there about what causes climate change and 
what mankind can do about it.
    I hope some of your hearings this spring touch on that. As 
I have said before, when we get ready to consider legislation I 
have 4 issues or goals, I guess, that I want to try to meet. I 
do want to keep electricity affordable and plentiful in 
America. I also want to keep our transportation sector viable. 
It is interesting to know that in the euphoria over passing a 
CAFE increase at the Detroit auto show this week our 
manufacturers said that legislation, if implemented, is going 
to raise the price of an American vehicle approximately $6,000 
per car. I want you to tell me how that helps our economy when 
the price of automobiles goes up $6,000 per vehicle. I want to 
keep our natural gas prices as affordable as possible because 
many, many Americans heat their homes with natural gas, cook 
their meals, and we still have an industry that uses natural 
gas as a raw material.
    And obviously I want to protect American jobs. We can have 
the most perfect climate change bill in the world, and it is 
not going to do us a lot of good if we raise the unemployment 
rate 5 or 10 points to do that. You indicated that you want to 
introduce a cap-and-trade bill sometime this spring, Mr. 
Chairman. I hope we can dissuade you from that position. The 
great experiment in Europe with cap-and-trade so far is an 
absolute failure. There is no other way to put it. The prices 
their economies are paying are going up and their emissions are 
going up too. Now their apologists say that it is just because 
they don't have it just right, but I predict that no matter how 
much they tinker with it when you are trying to cap-and-trade 
something as ubiquitous as CO2, most of which is not 
man-made, it is folly. It is an impossible situation.
    So hopefully you will also really get into the details of 
just exactly what a cap-and-trade program would look like here 
in America. I also want to make a point that a number of other 
people have made. We are in a global economy now. We are the 
world's largest economy but if we do some things that are very 
draconian on our emissions here in the United States, and 
really all it does is cost us jobs, I am very skeptical that 
the rest of the world is going to follow suit. There is no 
nation in the world in the last thousand years that when faced 
with a choice of poverty or a better standard of living for 
their population has chosen poverty, and it is absolutely 
ludicrous in my opinion for us to ask China and India and 
Brazil and Mexico and all the developing world to adopt some of 
these very, very stringent controls on CO2 when if 
they do that it is an absolute recipe for making sure that 
their people don't move forward and have a better standard of 
living.
    We made that choice beginning in the late 1800s and all 
through the 1900s as we electrified America, put in our 
transportation system, created an economy literally based on 
the automobile, and the result has been the highest standard of 
living the world has ever known, so it is silly for us to ask 
the rest of the world to not move forward as we have moved 
forward in the last 125 years. So, Mr. Chairman, I am glad to 
have this subcommittee back in action. I do think climate 
change is a real issue. I do think to the extent that we can do 
things that make economic sense and environmental sense we 
should try to move forward, but I do not believe that we should 
just jump off the cliff in the name of political correctness. 
And with that, Mr. Chairman, I very, very respectfully yield 
back to you.
    Mr. Boucher. Well, thank you very much, Mr. Barton, and 
very respectfully let me say that we were really not in 
hibernation. During the course of the last 6 months we were 
intensely focused on drafting and passing the 2007 energy 
security legislation, and as the gentleman knows I differ with 
his characterization of the European cap-and-trade program but 
these will all be matters we discuss during the course of this 
year. The gentleman from Utah, Mr. Matheson, is recognized for 
3 minutes. Mr. Matheson waives. The gentleman from Louisiana, 
Mr. Melancon, do you care to make an opening statement? The 
gentleman waives. Are there other members seeking to make an 
opening statement? Apparently not.
    Mr. Connaughton, we are delighted to have you with us this 
morning. I said some introductory words about you. Let me 
commend you for your successful efforts during the Bali 
conference. I think all of us were impressed with the skill 
with which you and your partners representing the United States 
advanced our position. Congratulations on the agreement which 
was concluded during that conference, and we look forward to 
your description of it and a statement of your intentions with 
regard to your leadership of the U.S. negotiation efforts 
between now and the Copenhagen conference which will occur in 
2009. Without objection, your statement will be made part of 
the record, and we welcome your oral presentation.

   STATEMENT OF JAMES L. CONNAUGHTON, CHAIRMAN, WHITE HOUSE 
                COUNCIL ON ENVIRONMENTAL QUALITY

    Mr. Connaughton. Thank you, Mr. Chairman, and I am very 
pleased to be here in front of this committee, and particularly 
this point in time after a very constructive last year in 
setting the stage for what I think will be a fairly important 
conversation here in the United States as well as globally on 
next steps. And we are pleased that you are helping to lead 
this effort, Mr. Chairman, particularly with Fred Upton at your 
side as the new ranking member. I think it is a powerful 
combination. I was also pleased to see Chairman Dingell here. I 
am sorry he had to leave for the moment. I hope we see him a 
little bit later. And also to have ranking Chairman Barton as 
well. It is nice to see the group of 4 focused on this issue in 
the way that it deserves.
    Members of the committee, the Bali Action Plan, which you 
have now heard about, also known as the Bali road map, was in 
fact a major achievement adopted by more than 190 countries 
which is no small order who are the parties to the United 
Nations Framework Convention on Climate Change. This document, 
which reflects my testimony, is a 4-page, highly detailed 
negotiation guide for how we will develop a comprehensive new 
post-2012 climate change arrangement, and we want to try to do 
that by 2009. Our 3 negotiating objectives going in were to 
launch negotiations, which had not taken place for 10 years, to 
be sure that we had a comprehensive set of negotiations, 
including participation by major developing countries as a 
critical condition well recognized in a bipartisan way here in 
the United States, and to do so rapidly by 2009 so there is 
time to prepare for its implementation which would start in 
2012. All 3 of those objectives were met.
    Also included as part of my testimony were the actual 
presentations that I and others gave in Bali outlining the 
steps that the United States is taking and will be taking with 
respect to our contribution both domestically and 
internationally, and if you have not taken a look at those I 
would encourage the members to thumb through those materials. 
It is 70 pages of quite substantial discussion. The United 
States is committed to working with other nations to agree on a 
global outcome, and it is important that that global outcome is 
both environmentally effective to do the job and economically 
sustainable, which means it should do the job smart. Only an 
arrangement that meets both of these objectives can win public 
support. To be environmentally effective a new approach must be 
truly global and has to involve measurable, reportable, and 
verifiable actions by the world's largest producers of 
greenhouse gas emissions, that is developed and developing 
countries alike.
    The basic truth is this. Without substantial participation 
by major developing economies greenhouse gas emissions will 
continue to rise rapidly over the next 50 years even if the 
U.S. and other developed countries cut their emissions to zero. 
We are in this together. To be economically sustainable our 
actions must uphold the hopes of people everywhere for economic 
growth, energy security, and an improved quality of life. 
Lowering the cost of emissions is critical to that equation but 
that will require speeding up the development and the 
deployment of technologies that will fundamentally improve the 
way we produce and consume energy. These include the capture 
and storage of carbon emitted from coal power plants, more 
affordable nuclear, and gigawatt scale renewable power, bio-
fuel, electric, natural gas, hydrogen, and other clean 
alternatives to petroleum, and of course greater efficiency. In 
the absence of technology advances and cost reduction advances 
in these areas reducing global emissions on the scale necessary 
will be impossible without significantly sacrificing economic 
growth globally and then the social consequences that come from 
that sacrifice.
    Last May President Bush announced that the U.S. would work 
closely with other Major Economies to contribute to a new 
global agreement under the U.N. Framework Convention on Climate 
Change. I would note that this initiative has now received 
broad international support as a contributing, as a supportive 
effort to achieve the Bali road map. This includes the G-8 
leaders, the Asia-Pacific Economic Cooperation leaders, so 
these are the 20 plus leaders of the Asia-Pacific rim, and even 
U.N. Secretary General Ban Ki-moon. The U.S. has hosted the 
first meeting in late September that brought together 17 Major 
Economies accounting for more than 80 percent of the world's 
economic output, energy use and greenhouse gas emissions.
    Now guided the consensus in Bali the Major Economies plan 
to meet again at the end of January for a series of meetings 
that will discuss a work program that can advance the key 
elements of Bali. In our view, such a work program should 
include a discussion of a long-term global emission reduction 
goal, national plans that include mid-term goals backed by 
nationally appropriate mix of strategies, regulations, 
incentives, and public-private partnerships. We need all the 
tools in the tool kit. Cooperative technology and other actions 
in key sectors, we need to focus especially on fossil power 
generation, personal transportation, and sustainable forest 
management because together they represent more than 80 percent 
of future greenhouse gases.
    We need to focus on innovative financing mechanisms 
importantly coupled with the elimination of tariff and non-
tariff barriers for the clean energy goods and services that 
that would finance, and then an approved emissions accounting 
system to verify our progress and then ways to help countries 
adapt to climate change and gain access to technology, and that 
is important particularly for developing countries. In 
addition, we think it is going to be important to discuss ways 
of structuring a post-2012 arrangement in a way that will 
encourage rather than deter actions by the major developing and 
developed countries so we need to do it in a way that 
incorporates positive, not punitive ways to insure 
accountability. This issue is big. It does cover really all 
economic activity and so we need a constructive way to create 
the framework.
    We hope that these discussions can produce tangible 
outcomes that can be endorsed at a Major Economies leaders 
meeting that the President has called for later this year. This 
would fulfill the G-8 pledge last year for the Major Economies 
to make a detailed contribution to the U.N. negotiations. Now I 
just want to give a couple examples of what we are doing from 
the U.S. perspective already that are tangibly contributing to 
this next conversation. So first, and let us look at the 
international level, last year the U.S. joined with some key 
developing countries, helped to forge a global legally binding 
agreement to accelerate the phase-out of hydrofluorocarbons 
under the Montreal Protocol. These are also potent greenhouse 
gases. This was an agreement that China and India joined. They 
were developing countries but they joined in the legally 
binding agreement that would reduce greenhouse gases by at 
least 3 billion metric tons which would probably meet or exceed 
what the Kyoto Protocol might achieve by 2012 so just to give 
you a sense of the scale of a sector-based agreement.
    Here at home this committee knows better than any committee 
because of the hard work they did last year in just 1 year to 
provide legislation that President Bush was pleased to sign 
that mandates substantial mid-term requirements and objectives 
for vehicle fuel efficiency, for renewable fuels, for appliance 
efficiency, lighting efficiency, and the efficiency and 
renewable fuel use of government operations, 5 brand new mid-
term mandates with hard objectives. Other countries are looking 
very closely at what we did this year to see how that might 
apply--they might apply similar approaches in their countries. 
This law is mandatory. This law is binding. And this law will 
produce some of the large emission cuts in our nation's 
history.
    I was pleased to hear Chairman Dingell's estimate of more 
than 10 billion metric tons I conservatively estimated at 6 but 
let us just say it is big. It is very big in terms of the 
greenhouse gas benefits of that legislation. The U.S. is also 
working with other countries to establish a new, multi-lateral 
financing mechanism that is going to help accelerate the use of 
cleaner, lower carbon technologies and infrastructure. 
Importantly, this Congress and this committee have created 
similar tools for use in America so we are accelerating the 
deployment of these technologies here at home and now we want 
to come up with financing mechanisms to help sell good clean 
American technology overseas.
    The U.S. and the EU, who are often seen as disparate on 
this subject have jointly proposed in the World Trade 
Organization the rapid elimination of the tariff and non-tariff 
trade barriers that impede investment in clean technologies and 
services. There is absolutely no reason why we are charging 
tariffs on each other for these goods and services that are 
very important to reduce greenhouse gas emissions. Removing 
such barriers would not only lower the cost of cutting 
emissions, they would increase our 2-way clean technology trade 
by up to 14 percent per year. That is a lot of good old-
fashioned American know how finding its way into the global 
market place. And then along with Japan the U.S. will continue 
its massive investment, nearly $18 billion since 2001, in the 
technology research development and deployment effort. The U.S. 
and Japan account for most global spending in this area. We 
encourage other countries to step up their efforts.
    Finally, deforestation, a subject that has been somewhat 
overlooked, accounts for roughly 20 percent of global 
emissions. The U.S. is enhancing its efforts to work 
cooperatively internationally to help other countries find ways 
to sustainably manage their forests the way we do here in 
America, and we are providing some good measurement tools to 
enable that as well. I look forward to a very aggressive year 
of activity. If we want to reach final agreement in 2009 the 
work we do this year is critical because moving from the 
domestic discussion to a Major Economies discussion to a 190-
nation discussion requires a lot of work so we look forward to 
working constructively with this committee on that. Thank you.
    [The prepared statement of Mr. Connaughton follows:]



    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                            THE WHITE HOUSE

                     Office of the Press Secretary

                For Immediate Release September 28, 2007

                        REMARKS BY THE PRESIDENT

                     AT MAJOR ECONOMIES MEETING ON

                   ENERGY SECURITY AND CLIMATE CHANGE

                        U.S. Department of State

    10:09 A.M. EDT
    THE PRESIDENT: Good morning. Thank you. Welcome to the 
State Department. I'm honored to address this historic meeting 
on energy security and climate change. And I appreciate you all 
being here.
    Energy security and climate change are two of the great 
challenges of our time. The United States takes these 
challenges seriously. The world's response will help shape the 
future of the global economy and the condition of our 
environment for future generations. The nations in this room 
have special responsibilities. We represent the world's major 
economies, we are major users of energy, and we have the 
resources and knowledge base to develop clean energy 
technologies.
    Our guiding principle is clear: We must lead the world to 
produce fewer greenhouse gas emissions, and we must do it in a 
way that does not undermine economic growth or prevent nations 
from delivering greater prosperity for their people. We know 
this can be done. Last year America grew our economy while also 
reducing greenhouse gases. Several other nations have made 
similar strides.
    This progress points us in the right direction, but we've 
got to do more. So before this year's G8 summit, I announced 
that the United States will work with other nations to 
establish a new international approach to energy security and 
climate change. Today's meeting is an important step in this 
process. With the work we begin today, we can agree on a new 
approach that will reduce greenhouse gas emissions, strengthen 
energy security, encourage economic growth and sustainable 
development,and advance negotiations under the United Nations 
Framework Convention on Climate Change. (Applause.)
    I thank the State Department for hosting this event. I 
appreciate members of my Cabinet who have joined us today. I 
thank Jim Connaughton, who is the Chairman of the Council on 
Environmental Quality, for being here. I appreciate you being 
the personal representative of this, and I hope you're doing -- 
I hope you think he's doing a fine job. (Applause.)
    I welcome Minister Rachmat, the Minister of Environment of 
Indonesia, who is the Chairman of the upcoming U.N. climate 
meeting in December. I welcome Mr. de Boer, who is the 
Executive Secretary of the United Nations Framework Convention 
on Climate Change. I welcome all the ministers and delegates 
who are here. We really appreciate you coming. I thank the 
ambassadors for joining this august group. I thank members of 
the Congress who have taken time to come by: Congressman Ed 
Markey of Massachusetts and Congressman Bart Gordon of 
Tennessee. I appreciate you taking time to come by and 
participate in these meetings.
    Every day energy brings countless benefits to our people. 
Energy powers new hospitals and schools so we can live longer 
and more productive lives. Energy transforms the way we produce 
food, so we can feed our growing populations. Energy enables us 
to travel and communicate across great distances, so we can 
expand trade and prosperity. Energy sustains the world's most 
advanced economies, which makes it possible for us to devote 
resources to fighting hunger and disease and poverty around the 
globe.
    In this new century, the need for energy will only grow. 
Much of this increased demand will come from the developing 
world, where nations will need more energy to build critical 
infrastructure and grow their economies, improve the lives of 
their people. Overall, the demand for energy is expected to 
rise by more than 50 percent by 2030.
    This growing demand for energy is a sign of a vibrant, 
global economy. Yet it also possesses -- poses serious 
challenges, and one of them, of course, is energy security. 
Right now much of the world's energy comes from oil, and much 
of the oil comes from unstable regions and rogue states. This 
dependence leaves the global economy vulnerable to supply 
shocks and shortages and manipulation, and to extremists and 
terrorists who could cause great disruptions of oil shipments.
    Another challenge is climate change. Our understanding of 
climate change has come a long way. A report issued earlier 
this year by the U.N. Intergovernmental Panel on Climate Change 
concluded both that global temperatures are rising and that 
this is caused largely by human activities. When we burn fossil 
fuels we release greenhouse gases into the atmosphere, and the 
concentration of greenhouse gases has increased substantially.
    For many years those who worried about climate change and 
those who worried about energy security were on opposite ends 
of the debate. It was said that we faced a choice between 
protecting the environment and producing enough energy. Today 
we know better. These challenges share a common solution: 
technology. By developing new low-emission technologies, we can 
meet the growing demand for energy and at the same time reduce 
air pollution and greenhouse gas emissions. As a result, our 
nations have an opportunity to leave the debates of the past 
behind, and reach a consensus on the way forward. And that's 
our purpose today.
    No one country has all the answers, including mine. The 
best way to tackle this problem is to think creatively and to 
learn from other's experiences and to come together on a way to 
achieve the objectives we share. Together, our nations will 
pave the way for a new international approach on greenhouse gas 
emissions.
    This new approach must involve all the world's largest 
producers of greenhouse gas emissions, including developed and 
developing nations. We will set a long-term goal for reducing 
global greenhouse gas emissions. By setting this goal, we 
acknowledge there is a problem. And by setting this goal, we 
commit ourselves to doing something about it.
    By next summer, we will convene a meeting of heads of state 
to finalize the goal and other elements of this approach, 
including a strong and transparent system for measuring our 
progress toward meeting the goal we set. This will require 
concerted effort by all our nations. Only by doing the 
necessary work this year will it be possible to reach a global 
consensus at the U.N. in 2009.
    Each nation will design its own separate strategies for 
making progress toward achieving this long-term goal. These 
strategies will reflect each country's different energy 
resources, different stages of development, and different 
economic needs.
    There are many policy tools that nations can use, including 
a variety of market mechanisms, to create incentives for 
companies and consumers to invest in new low-emission energy 
sources. We will also form working groups with leaders of 
different sectors of our economies, which will discuss ways of 
sharing technology and best practices.
    Each nation must decide for itself the right mix of tools 
and technologies to achieve results that are measurable and 
environmentally effective. While our strategies may be 
differentiated, we share a common responsibility to reduce 
greenhouse gas emissions while keeping our economies growing.
    The key to this effort will be the advance of clean energy 
technologies. Since I became President, the United States 
government has invested nearly $18 billion to research, develop 
and promote clean and efficient energy technologies. The 
private sector here in our country has responded with 
significant investments, ranging from corporate research and 
development to venture capital. Our investments in research and 
technology are bringing the world closer to a remarkable 
breakthrough -- an age of clean energy where we can power our 
growing economies and improve the lives of our people and be 
responsible stewards of the earth the Almighty trusted to our 
care.
    The age of clean energy requires transforming the way we 
produce electricity. Electric power plants that burn coal are 
the world's leading cause of greenhouse gas emissions. The 
world's supply of coal is secure and abundant. And our 
challenge is take advantage of it while maintaining our 
commitment to the environment. One promising solution is 
advanced clean coal technology. The future of this technology 
will allow us to trap and store carbon emissions and air 
pollutants produced by burning coal. Since 2001 the United 
States has invested more than $2.5 billion to research and 
develop clean coal. And in partnership with other nations and 
the private sector we're moving closer to a historic 
achievement -- producing energy from the world's first zero-
emissions coal-fired plant.
    We also need to take advantage of clean safe nuclear power. 
Nuclear power is the one existing source of energy that can 
generate massive amounts of electricity without causing any air 
pollution or greenhouse gas emissions. Without the world's 439 
nuclear power plants, there would be nearly 2 billion 
additional tons of carbon dioxide in the atmosphere each year. 
And by expanding the use of nuclear power, we can reduce 
greenhouse gas emissions even more.
    The United States is working to reduce barriers to new 
nuclear power plants in our country without compromising 
safety. Just last week, a company applied for approval to build 
the first new nuclear reactor in my country since the since the 
1970s. As we build new reactors here in the United States, 
we're also working to bring the benefits of nuclear energy to 
other countries.
    My administration established a new initiative called the 
Global Nuclear Energy Partnership. This partnership will work 
with nations with advanced civilian nuclear energy programs, 
such as France and Japan and China and Russia. Together we will 
help developing nations obtain secure, cost-effective and 
proliferation-resistant nuclear power, so they can have a 
reliable source of zero-emissions energy.
    We'll also need to expand our use of two other promising 
sources of zero-emissions energy, and that's wind and solar 
power. Wind power is becoming cost-effective in many parts of 
America. We've increased wind energy production by more than 
300 percent. We also launched the Solar America Initiative to 
lower the cost of solar power, so we can make -- help make this 
technology competitive, as well. Taken together, low-carbon 
technologies like wind and solar power have the potential to 
one day provide up to 20 percent of America's electricity.
    The age of clean energy also requires transforming the way 
we fuel our cars and trucks. Almost all our vehicles run on 
gasoline or diesel fuel. This means we produce greenhouse gas 
emissions whenever we get behind the wheel. Transportation 
accounts for about 20 percent of the world's greenhouse gas 
emissions every year. To reduce these emissions we must reduce 
our dependence on oil. So America is investing in new, clean 
alternatives. We're investing millions of dollars to develop 
the next generation of sustainable biofuels like cellulosic 
ethanol, which means we'll use everything from wood chips to 
grasses to agricultural waste to make ethanol.
    We're offering tax credits to encourage Americans to drive 
fuel-efficient hybrid vehicles. We're working to develop next-
generation plug-in hybrids that will be able to travel nearly 
40 miles without using a drop of gasoline. And your automobile 
doesn't have to look like a golf cart. (Laughter.)
    We're on track to meet our pledge of investing $1.2 billion 
to develop advanced hydrogen-powered vehicles that emit pure 
water instead of exhaust fumes. We're also taking steps to make 
sure these technologies reach the market. We've asked Congress 
to set a new mandatory -- I repeat, mandatory -- fuel standard 
that requires 35 billion gallons of renewable and other 
alternative fuels in 2017, and to reform fuel economy standards 
for cars the same way we did for light trucks. Together these 
two steps will help us cut America's consumption of gasoline by 
20 percent in 10 years. It's an initiative I've called 20-in-
10.
    Ushering in the age of clean energy is an historic 
undertaking. We take it seriously here in the United States. 
Achieving this vision will require major investment in 
innovation by all our nations. Today the United States and 
Japan fund most of the research and development for clean 
energy technologies. Meeting the objectives we share and the 
goal we're going to set will require all the nations in this 
hall to increase their clean energy research and development 
investments.
    We must also work to make these technologies more widely 
available, especially in the developing world. So today I 
propose that we join together to create a new international 
clean technology fund. This fund will be supported by 
contributions from governments from around the world, and it 
will help finance clean energy projects in the developing 
world. I've asked Treasury Secretary Hank Paulson to coordinate 
this effort, and he plans to begin exploratory discussions with 
your countries over the next several months.
    At the same time, we also must promote global free trade in 
energy technology. The most immediate and effective action we 
can take is to eliminate tariff and non-tariff barriers on 
clean energy goods and services.
    As we work to transform the way we produce energy, we must 
also address another major factor in climate change, which is 
deforestation. The world's forests help reduce the amount of 
greenhouse gases in the atmosphere by storing carbon dioxide. 
But when our forests disappear, the concentration of greenhouse 
gas levels rise in the atmosphere. Scientists estimate that 
nearly 20 percent of the world's greenhouse gas admissions 
[sic] are attributable to deforestation.
    We're partnering with other nations to promote forest 
conservation and management across the world. We welcome new 
commitments from Australia, Brazil, with China and Indonesia. 
The United States remains committed to initiatives such as the 
Congo Basin Forest Partnership and the Asian Forest 
Partnership. We will continue our efforts through the Tropical 
Forest Conservation Act, which helps developing nations 
redirect debt payments toward forest conservation programs. So 
far my administration has concluded 12 agreements, concluding 
[sic] up to 50 million acres of forest lands.
    America's efforts also include an $87-million initiative to 
help developing nations stop illegal logging. These efforts 
will help developing nations save their forests, and combat a 
major source of greenhouse gas emissions.
    The United States is also taking steps to protect forests 
in our own country. It's one thing to help others; we got to 
make sure we do a good job here at home -- and we are. Since 
2001, we've provided more than $3 billion to restore our 
forests and protect them against catastrophic fires as part of 
a Healthy Forest Initiative. In partnership with our farmers 
and ranchers, we're providing tens of billions of dollars in 
incentives for conservation. We're promoting sustainable public 
and private land-management policies. By taking these steps, 
we've helped increase the amount of carbon storage in our 
forests, and we've helped safeguard a national treasure for 
generations to come.
    What I'm telling you is, is that we've got a strategy; 
we've got a comprehensive approach. And we look forward to 
working with our Congress to make sure that comprehensive 
approach is effective. And we look forward to working with you 
as a part of this global effort to do our duty.
    And we've done this kind of work before. And we have 
confidence in the success of our efforts. Twenty years ago 
nations finalized an agreement called the Montreal Protocol to 
phase-out substances that were depleting the ozone layer. Since 
then, we have made great strides to repair the damage. Just 
last week, developed and developing nations reached consensus 
on speeding up the recovery of the ozone layer by accelerating 
the phase-out of these harmful substances. This accelerated 
phase out will bring larger benefits because they'll 
dramatically reduce greenhouse gas emissions.
    We have seen what happens when we come together to work for 
a common cause, and we can do it again. And that's what I'm 
here to urge you. The United States will do our part. We take 
this issue seriously. And we look forward to bringing a spirit 
of cooperation and commitment to our efforts to confront the 
challenges of energy security and climate change. By working 
together, we will set wise and effective policies. That's what 
I'm interested in, effective policies. I want to get the job 
done. We've identified a problem, let's go solve it together.
    We will harness the power of technology. There is a way 
forward that will enable us to grow our economies and protect 
the environment, and that's called technology. We'll meet our 
energy needs. We'll be good stewards of this environment. 
Achieving these goals will require a sustained effort over many 
decades. This problem isn't going to be solved overnight. Yet 
years from now our children are going to look back at the 
choices we make today, at this deciding moment: It will be a 
moment when we choose to expand prosperity instead of accepting 
stagnation; it will be a moment when we turn the tide against 
greenhouse gas emissions instead of allowing the problem to 
grow; it will be a moment when we rejected the predictions of 
despair and set a course of a more hopeful future.
    The moment is now, and I appreciate you attending this 
meeting. And we look forward to working with you. May God bless 
you all. (Applause.)

                           END 10:29 A.M. EDT

                              ----------                              

    Mr. Boucher. Thank you very much, Mr. Connaughton, and we 
look forward very much to our working in collaboration with 
you. Do you have any sense of when in 2009 that final meeting 
in Copenhagen is likely to take place?
    Mr. Connaughton. It will occur in December. Typically it is 
some time in December.
    Mr. Boucher. And that date has been set?
    Mr. Connaughton. I don't think they have got a--well, 
actually the date has been set but I don't know specifically 
what it is.
    Mr. Boucher. So you have now almost 2 full years within 
which to carry forward the negotiations pursuant to the Bali 
road map?
    Mr. Connaughton. That is correct. The first big meeting 
occurs again in December in Poland this year, and then the next 
big one will be in December in Copenhagen.
    Mr. Boucher. In the fall of last year your office convened 
on behalf of the President a Major Economies meeting here in 
Washington to which you invited I think it was the 12 largest 
emitting nations in the world, and I think you intend to have 
further meetings of that group over time. Describe, if you 
will, the way that that process of major economy nations which 
the United States is directing will coincide with the Framework 
Convention meetings under the Bali road map. They are happening 
at about the same time. Do you view them as being in 
competition or do you view them as being complimentary one of 
the other?
    Mr. Connaughton. The intention of the meetings is actually 
to be strongly in support of the broader discussion that will 
occur under the U.N. so it goes beyond complimentary. It is 
targeted at the specific subjects that the large economies 
really need to grapple with. We are the big emitters, and those 
who are the big emitters with the biggest technology challenges 
should be getting together early and fast to see how we can 
advance this discussion and bring that to the broader U.N. 
grouping. It is actually about 17 countries depending on how 
you treat the EU but as it happens those 17 account for most of 
what needs to be done.
    The Bali road map, which is 4 pages long, has many, many 
elements. I highlighted about 6 core elements the Major 
Economies will probably focus on, and then there will be a 
whole series of other conversations in the U.N. process so this 
is a subset of that.
    Mr. Boucher. Well, thank you very much. I personally think 
that you are taking the right step in this Major Economies 
meeting because to the extent you can have the developed world 
come to some agreement about how it will govern emissions in 
terms of their own emissions and also interact with developing 
countries that should be helpful to the overall Bali process. 
As you noted in your testimony, the Bali Action Plan 
contemplates action being taken in order to prevent tropical 
rain forest deforestation and deforestation in other regions in 
the developing world, and the plan basically says that it would 
encourage incentives being provided toward that objective.
    Do you have any thoughts today about what kinds of 
incentives would be appropriate within that context realizing 
that the Administration does not have a formal position with 
regard to any specific legislation at this point? Assuming that 
we come forward with a mandatory control methodology relying 
perhaps on cap-and-trade, would the allowance of the purchase 
of credits or offsets for tropical rain forest and 
deforestation efforts be one such incentive?
    Mr. Connaughton. First, in terms of incentives the United 
States is actually one of the leading countries already with 
the Tropical Forest Conservation Act which provided several 
hundred million dollars of incentives through debt relief for 
some of the most important tropical forest conservation areas. 
Let us focus on tropical forests. But those are critical to 
climate change discussion. We also through USAID do a lot of 
direct incentive payments for sustainable forest management and 
a significant amount of money flows through that program. We 
also are contributing under the President's initiative against 
illegal logging to one aspect of the deforestation issue and 
that is illegal harvest of timber and providing enforcement and 
money to enhance enforcement capacity and that really hurts our 
guys because our guys sustainably manage, put the effort in, 
and then they are out competed in the global market place by 
those that don't.
    One other highlight that is currently underway is the 2 
other root causes of deforestation are taking down forests for 
energy to burn wood like we used to in the 1800s. That is an 
issue of providing resources for access to more affordable 
energy services. That is the solution, and we are doing a lot 
of work with countries on that. The other is taking down 
forests for agriculture, and the answer to that actually is 
access to energy to do more productive and modern agricultural 
activities and to clean water, so we have a lot underway and we 
want to expand that effort. We have proposed some new financing 
through the World Bank to a forest partnership fund and of 
course our NGOs are putting a lot of money into this.
    I say all of that, Mr. Chairman, with respect to the offset 
issue in terms of cap-and-trade. We do not have a formal 
Administration position on this so I will just give you my 
reflections, which is it does create some challenges because it 
is very, very difficult to know that you are getting what you 
are paying for. And so what we have done in Bali is we have 
committed to doing a series of pilot projects to see if we can 
bring integrity to that kind of a financing tool and the 
international community agrees that we need that pilot testing 
first before we start making commitments of this type. The 
second issue that we have concerns with, Mr. Chairman, is if 
you are going to increase the cost of electricity to someone on 
a fixed income or if you are going to increase the price at the 
pump for someone that is using gasoline to get to work, we 
think that it is politically a little bit more understandable 
to see that money going into buying technology that is going to 
solve the problem rather than paying for forest projects 
overseas, so I would just suggest that if we are going to move 
toward further pricing of carbon, we should keep our eye on the 
ball and focus it on the technologies that we need and then use 
the economy to get those technologies broader in the global 
marketplace.
    Mr. Boucher. Thank you. We will have further discussions 
about that.
    Mr. Connaughton. I know we will.
    Mr. Boucher. I do have some contrasting views which I will 
withhold for the moment. My final question to you is this. Will 
it be helpful to you as you carry forward the U.S. position in 
negotiations over the coming 2 years if the Congress passes 
legislation that sets targets and announces what is expected in 
terms of greenhouse gas reductions across this entire economy. 
That target setting exercise will be as we have described the 
product of a broad consultation. Once it passes and is 
presented to the President hopefully to be signed into law 
later this year it would be a set of commitments that the 
United States really could keep, something that would enjoy 
reasonably broad support across our society, otherwise, we 
won't be successful in passing the bill at the outset.
    And so is that exercise helpful to you? If we are able to 
put those targets into law, does that strengthen your ability 
to make firm commitments in terms of what the United States 
will be able to advance and adhere to in terms of international 
negotiations?
    Mr. Connaughton. Mr. Chairman, when the history is written, 
I think one of the challenges of Kyoto was that it put the cart 
before the horse. International negotiators set domestic policy 
in an international negotiation. What you have just asked is 
very consistent with what the President has suggested that what 
we need is actually a domestically defined set of objectives 
and then bring that to the international conversation, and that 
is a core part of the Major Economies process how to frame up 
what we would like to see in domestic commitments. Now this 
committee broadly had already made a major contribution in that 
respect because you did announce 5 new objectives that are 
backed up by 5 major new programs. That is something most of 
the other countries have not done yet in the sectors where this 
Congress is active.
    So ultimately international acceptance by the United States 
is going to turn on a bipartisan and across Pennsylvania Avenue 
agreements on what we think this outcome should be.
    Mr. Boucher. Well, thank you very much, Mr. Connaughton. 
Your views and mine on that issue are completely in accord. Let 
me just finally compliment you on the role that you are playing 
and the success that you are achieving in re-involving the 
United States internationally and playing a leading role in 
doing that. I think that was very important for us to do and in 
my view you have done it well. The gentleman from Michigan, Mr. 
Upton, is recognized for 5 minutes.
    Mr. Upton. Thank you, Mr. Chairman. And again, Mr. 
Connaughton, thanks very much for your testimony. As we hit on 
here earlier as part of your testimony the Congress did act in 
a number of processes that really induced emissions, lighting, 
fuels, automobiles, et cetera. What kind of reaction did you 
get from the folks in Bali that in fact we have actually done 
something that perhaps they have not? I have not traveled 
extensively around the world hardly at all, and I look and see 
what we have done. I don't think any nation is as close as we 
are whether it be Europe or other places around the world as it 
looks to real changes in the way that we consume energy down 
the road in terms of legislative language. What type of credit 
did we get because that was bill was pretty close to fruition. 
In fact, that is one of the reasons why the congressional 
representation was so low was because we were literally in the 
midst of debating that legislation on the House floor but they 
knew that it was coming. What type of credit did we get for 
that?
    Mr. Connaughton. In terms of Bali itself the bill was 
agreed as we were wrapping up so it was swallowed by the last 
minute skirmishing around the agreement. I would observe though 
that we made a substantial presentation on what was coming to a 
very large session of NGOs and other countries, and to a person 
what happens is when we present a total U.S. effort at the 
Federal, state, and local level people are amazed because of 
the misperception in the media. As Congresswoman Baldwin points 
out, I think, Congresswoman, it is a lack of awareness that is 
bigger. It is not lack of action. It is a lack of awareness. I 
would suggest probably many of us don't have a keen sense of 
what Europe is actually doing or what Japan is actually doing 
either. We need much more understanding of what we are actually 
doing because when we presented the CAFE piece and we presented 
the fuels piece no country on CAFE or on fuels is as aggressive 
as we are under alternative fuels. The lighting piece, there 
are only a couple countries that have looked at lighting the 
way that we just did, and so now this is inspiring, some focus 
thinking by their countries.
    So again this bipartisan agreement, when the United States 
comes together bipartisan agreement it has a big effect 
globally, and I think you will see the repercussions of that 
this year. I need to also observe those, not just the 
regulatory side, the work that was done in the '05 energy bill. 
When we talk about $35 billion of loan guarantees other 
countries aren't doing that so that makes them think, hey, 
maybe that is a tool we can look at. When we talk about $2 
billion of incentives for the purpose of highly fuel efficient 
vehicles again other countries are not doing that at the scale 
we are doing it. So it is not just the regulatory side, it is 
the incentive side and the technology investment side that is 
going to have that influence so we need to again continue to 
put that comprehensive package together.
    Mr. Upton. This week the German steel industry is on record 
warning of huge job losses if the European Commission went 
ahead with the current schedule that they have got. In fact, 
they actually indicate that there could be as many as 50,000 
jobs that leave Germany. The Financial Times earlier this week 
had a quote I think from the new French Prime Minister Sarkozy 
who said that it could unfairly penalize France and pose a real 
threat to the European industry if these targets continue to be 
mandated. When you look at that angle of it all of a sudden 
Europe is beginning to wake up to see what those changes are 
going to be not going ahead with some of the changes that we 
have already done, lighting, automobiles, et cetera, and then 
you take a peek at what China and India are also not doing, how 
do you see all these pieces coming together or apart?
    Mr. Connaughton. I think one of the most important issues 
for this committee to explore this year and for all the members 
to become pretty savvy in is this concept of what is called 
leakage, leakage of jobs, leakage of emissions, so there are 
many strategies we can employ that produce technology and new 
jobs in America so there are many that work that way so that is 
good. But if we are not careful in the design of our policy, we 
can end up driving up electricity prices, driving up gas 
prices, and moving manufacturing overseas so you not only lose 
the jobs but the emissions go up overseas so you don't get the 
environmental outcome either so you just need to be thoughtful 
in your policy design to be sure not to create that kind of a 
consequence.
    Now one way you do that is get China and India in 
particular sectors to make similar commitments. I will give you 
a hard example of that. Through the Asia-Pacific Partnership we 
got the aluminum sector together, the Chinese and the Indian 
aluminum sectors, committing to similar objectives with our 
aluminum guys and the Japanese aluminum guys on very specific 
time lines for reducing the greenhouse gas emissions. They are 
equally and jointly shared.
    Mr. Upton. So they are the same.
    Mr. Connaughton. They are the same, so you are not talking 
about them coming in later, you are not talking about them 
doing less in the aluminum sector. They are committed to doing 
the same thing. Now that is where we need to go.
    Mr. Upton. Thank you.
    Mr. Boucher. Thank you very much, Mr. Upton. The gentleman 
from Georgia, Mr. Barrow, is recognized for a total of 8 
minutes.
    Mr. Barrow. Thank you, Mr. Chairman. Thank you, Chairman 
Connaughton, for being here today. I want to talk carbon 
sequestration with you for a little bit because it is important 
to a lot of the big emitters in the area that I have the 
privilege of representing. But at the outset I can't help but 
observe we want to digest what it is you have to say. We want 
to digest what it is you have to offer, but I will note that 
the digestion process begins with chewing and there is very 
little to chew on in your written statement. There is a lot to 
chew on in your extemporaneous opening statement though, and so 
I would like to offer and invite you in the future to help us 
get going on this process by giving us more to chew on in your 
prepared statement than you gave us here opening here today.
    Now on the subject of carbon sequestration, I know that 
there are a lot of technical issues and I know that there are a 
lot of legal issues. Folks in my part of the country don't want 
the Floridian aquifer to be turned into one great big old 
carbonated water deposit. We want to get the carbon out of our 
water, our ground water, for example. I understand that at Bali 
there was some talk about trying to bring international science 
and resources to bear on actually studying the technical and 
the legal issues involved with the notion or the idea that we 
can take all this carbon out of the coal that we are going to 
use and stick that in the ground somewhere and store it safely. 
I also understand that there was some objection from some of 
the developing countries to going down this path and as a 
result the idea was essentially, if I am understanding 
correctly, that this notion is going to be shelved until the 
next COP meeting some time toward the end of this year, 
December of 2008.
    My question to you is in two parts. First, is this 
Administration committed to an international study that brings 
all the best science and scientists to bear on the issue of the 
technical and legal issues surrounding carbon sequestration in 
geological formations or not?
    Mr. Connaughton. Yes.
    Mr. Barrow. What can we expect to get done about that in 
the last year of this Administration's term in office?
    Mr. Connaughton. Let me outline that for you, Congressman. 
Let me briefly make an aside with respect to my testimony. No 
offense was intended, please. The Bali Action Plan is 4 full 
pages. It is the statement of administration policy because we 
agreed to it, and in fact reading it from end to end is 
probably the most important thing we could be doing right now 
and understanding, so please know that was my intention.
    Mr. Barrow. Well, in your Power Point presentation I just 
find two very brief, which is incorporated by reference in your 
testimony, two brief references to the subject of carbon 
sequestration and no explanation of what we want and what we 
plan to do in the last year of this Administration's term.
    Mr. Connaughton. Well, let me map this out. First, it is 
probably the single most important thing we need to be doing 
because as we go forward the use of coal to make power will 
account for more than 50 percent of global emissions and so if 
we don't find a pathway with respect to this source----
    Mr. Barrow. We already know how important it is. What does 
this Administration hope to do before it leaves office?
    Mr. Connaughton. So, one, we have a full plan that will run 
over the course of the next 10 years or so of the research, the 
demonstration, and then the policy so it will help the 
deployment to do large scale demonstration projects for all the 
components that carbon capture and storage possible.
    Mr. Barrow. A 10-year plan is going to last longer than the 
next two administrations.
    Mr. Connaughton. Well, actually what we have done, 
Congressman, is we have requested and gotten mostly from the 
Congress the budgets necessary to build the world's first zero 
emission coal-fired plant known as the FutureGen Project. The 
President's budgets have requested and we have received from 
the Congress tax credit authority to the tune of $1.8 billion 
this year and next year----
    Mr. Barrow. Back to the subject of my question though which 
is an international study of the technical and legal issues 
involved with sequestering carbon in geological formations as a 
solution as a part of the overall picture.
    Mr. Connaughton. Five years ago, Congressman, the U.S. 
launched what was called the Carbon Sequestration Leadership 
Forum, and that forum was set up to specifically engage those 
issues, and in fact a lot of work has been done in that forum 
on that broader range of issues, policy type issues and design 
issues that you discussed. What we have done since then is we 
are now turning that into our domestic policy that is backed up 
by both the effort in EPA and the other agencies on the legal 
side, backed up by the Treasury on the----
    Mr. Barrow. What is that policy, and what is it going to 
accomplish by the end of this year?
    Mr. Connaughton. By the end of this year, we will be 
underway with project planning and design to actually break 
ground on the FutureGen project.
    Mr. Barrow. Back to the study though--the subject of my 
questioning is the need for an international study to ascertain 
what really are the technical issues and the legal issues 
involved with the whole notion of sticking this stuff in the 
ground and building a zero emitting plant is a good idea of 
going around the problem. My question is what are we going to 
do about the carbon we are taking out of coal that burns to 
make energy.
    Mr. Connaughton. On the specific issue of the study MIT has 
produced a state of the art study that the rest of the globe 
has been working with. The Department of Energy has produced 
its own road map and plan with respect to this. The Electric 
Power Research Institute of America has also conducted their 
own evaluation of this. What we are doing now is bringing that 
to the international community to see if we can then develop a 
joint road map that will build on the work that the U.S. has 
now pulled together. So on that specific issue it is our 
intention this year to get agreement among the Major Economies, 
especially the coal-using countries to a joint effort, but not 
just a study, Congressman, a joint effort and a joint 
commitment to put the resources necessary to begin to build the 
demonstrations that will make this possible and to do it as 
fast as we can. It goes beyond just a study.
    Mr. Barrow. Are you telling me we already understand the 
technical and legal liability issues well enough to be able to 
actually try and implement a program of carbon sequestration in 
geological formations? Do you think we can do that by the end 
of this year?
    Mr. Connaughton. I am telling you, Congressman, that we 
have identified a lot of the issues and we have done a lot of 
evaluation of those issues.
    Mr. Barrow. I have identified an issue. We have identified 
the issue of the technical problems of sticking it under ground 
and storing it hopefully for a long time and getting into other 
things we don't want to get into. That is an issue, and what 
the legal liability issues are if it doesn't work out. I mean 
is Georgia Power and the Southern Company going to be liable to 
get the carbon out of water that they put into the ground if 
they are trying to follow your road map and your plan for 
storing this stuff underground? Where are we on that track?
    Mr. Connaughton. Specifically on that track with respect to 
the FutureGen Project, we have already set up the legal regime 
and that is going to be put in place to make that project 
happen as a research plan and then the Environmental Protection 
Agency is working on the regulations, Congressman, to do what 
you just described more broadly.
    Mr. Barrow. What legal regime are you talking about, Mr. 
Chairman?
    Mr. Connaughton. I am sorry?
    Mr. Barrow. What legal regime, what are the steps that have 
been taken to create a legal regime for dealing with the issues 
of geologically stored carbon that leaks into other things?
    Mr. Connaughton. There is a team in the executive branch 
that is working through the regulatory design and needs to be 
sure to address the liability issues and the regulatory issues 
associated with those practices.
    Mr. Barrow. Seven minutes into my 8-minute period of 
questioning, my question now is what is that team going to 
produce for us by the end of this year?
    Mr. Connaughton. They are working on the very specific 
recommendations for policy that can be effectuated without need 
for congressional action and policy that may require 
congressional action to make these projects----
    Mr. Barrow. By the end of this year they are going to be 
able to tell us what they think Congress has to address and 
what Congress doesn't have to address?
    Mr. Connaughton. A lot of that has been identified already, 
Congressman, and now we are working on specific 
recommendations.
    Mr. Barrow. Not in this Power Point presentation, which is 
what I am asking for. Can you tell us that by the end of this 
month, for example, we will have a full and comprehensive 
report on the issues that have been identified by this study 
group on the subject of carbon sequestration and geological 
formations?
    Mr. Connaughton. I would be more than happy to provide you 
with the materials that have been prepared by DOE to date, by 
EAP to date, by MIT to date, and by the Electric Power Research 
Institute. I think you will find----
    Mr. Barrow. How about the working study of this 
Administration?
    Mr. Connaughton. I am sorry?
    Mr. Barrow. How about the study group of this 
Administration?
    Mr. Connaughton. We have DOE work, and we have EPA work on 
this. I am happy to share that with you.
    Mr. Barrow. I have your assurance on that by the end of 
this month?
    Mr. Connaughton. Absolutely.
    Mr. Barrow. I am through.
    Mr. Connaughton. I welcome your engagement on it, 
Congressman.
    Mr. Barrow. Thank you, sir.
    Mr. Connaughton. It is critical.
    Mr. Boucher. Thank you very much, Mr. Barrow. The gentleman 
from Texas, Mr. Barton, is recognized for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman. My friend from 
Georgia's questions just kind of highlight some of the Alice in 
Wonderland aspects of this debate. The more questions he asks 
the more CO2 he created. The more Mr. Connaughton 
tried to answer the questions, the more he created, the very 
thing that we are trying to sequester. I guess my first point, 
Mr. Connaughton, just to kind of set the ground rules, what is 
the most prevalent greenhouse gas in the world?
    Mr. Connaughton. Total volume, it is CO2.
    Mr. Barton. I thought water vapor was classified as a 
greenhouse gas, H2O. Am I wrong on that?
    Mr. Connaughton. It is a greenhouse gas. It is a forcing 
agent so you don't think of water vapor as a gas, but, yes, 
that is the most prevalent. That is the most prevalent forcing 
agent, yes.
    Mr. Barton. Pure chemical, clinical terminology, water 
vapor is in fact, I think, over 90 percent of the greenhouse 
gases in the world, is that correct?
    Mr. Connaughton. I believe you are correct.
    Mr. Barton. Okay. Does the Bush Administration have a 
proposal to regulate H2O?
    Mr. Connaughton. No, we do not.
    Mr. Barton. What is the relative volume of water vapor in 
the atmosphere as compared to CO2?
    Mr. Connaughton. I don't have those technical answers, Mr. 
Chairman.
    Mr. Barton. Just give an approximation, kind of a back of 
the envelope estimate. You know it.
    Mr. Connaughton. Actually I don't have the specific ratios 
in my head. I would be happy to----
    Mr. Barton. Isn't it like 1 to 1,000, something like that? 
How far off would I be on that? It is not anywhere close to 1 
to 1, is it?
    Mr. Connaughton. It is not. I think the issue, Mr. 
Chairman, as we look at this is the question of the--we measure 
these forcing agents in parts per million, and we are talking 
about additions or subtractions at the margin. I think the 
question that the scientists are exploring is whether the 
changes at the margin are of consequence in the overall climate 
balance. And so that is where the scientists are really focused 
so when you are talking about there is a lot of natural 
CO2 in the atmosphere, there is a lot of natural 
methane in the atmosphere, a lot of the natural water vapor in 
the atmosphere, then the question we ask ourselves is even if 
we had a tiny bit more from humans can that effect the balance.
    Mr. Barton. We are talking about orders of magnitude of 
thousands or tens of thousands. I mean to me it is a little bit 
hard to accept from an engineering standpoint, we are talking 
about regulating man-made CO2 when the elephant in 
the room is God-made H2O vapor. I mean nobody is 
talking about regulating H2O vapor, water vapor, 
because you can't do it and you don't want to do it. Even in 
the famous U.N. studies in their little table of what causes 
warming or cooling their big variable, their big forcing agent, 
I think is the term you used is H2O, is cloud 
formation, which they don't accurately know how to model and 
are just now beginning to understand, and yet again my good 
friend from Georgia rightfully so because his constituents are 
worried about the legal liability of carbon sequestration, 
CO2 sequestration, that is such a minor part of the 
overall total global forcing agent that it is--I mean if you 
did any kind of a rational engineering analysis it wouldn't 
even be a variable or if it would, it would be such a minor 
variable that it would be de minimus.
    Let me ask another question. The cap-and-trade system in 
Europe, has it resulted in emissions going down, staying the 
same or going up?
    Mr. Connaughton. We actually don't have the data from 
Europe yet for the last 2 years. The U.S. is way out in front 
of other countries in our ability to get our data out so I 
couldn't speak specifically to that. We have data through 2005 
which shows a trend line in Europe of increasing emissions 
slightly higher than the U.S. 2005, that is the first year of 
their emissions training program.
    Mr. Barton. Wouldn't you think if the cap-and-trade program 
were really successful that their emissions rate would be going 
down? I mean the trend should be down, not up. Isn't it kind of 
contradictory that the trend seems to be the opposite of what 
the proponents hoped it would be?
    Mr. Connaughton. Well, there are 2 features to that. One is 
their emissions training system only applies to power plants 
and industrial sources. It doesn't apply to the rest of the 
economy. Secondly, they brought aboard all the eastern European 
economies which are heavily fossil fuel dependent but they 
didn't originally have caps of any kind, and so--or 
consequential ones, I guess is probably the fair way to say it, 
and so their current program was quite limited to begin with 
anyway. There were also some design issues with that program 
that many people have highlighted in my view not the least of 
which is how much the European industries are buying compliance 
by investing in efficiency projects overseas, so that allows 
emissions to increase in Europe. Theoretically they decrease in 
China but we have at least some examples, we don't have good 
studies on this, but some examples that appears to be creating 
an incentive in China for entities to increase their emissions 
in order to be paid to decrease them and we want to avoid that.
    Mr. Barton. My time has expired, and the Chairman has been 
very gracious. Thank you, Mr. Chairman, and, thank you, Mr. 
Connaughton, for your service to the country.
    Mr. Boucher. Thank you very much, Mr. Barton. The gentleman 
from Pennsylvania, Mr. Doyle, is recognized for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman. Well, after just 
listening to my good friend from Texas speak, and he is my 
friend, this shows you how tough this debate is going to be. 
Some people on this panel don't even believe this is a problem 
and that we should be regulating water vapor so it is a tough 
challenge. I have a couple questions. I don't think there is 
anything more important to our national security and our 
economic security than extricating us from petroleum, and it 
seems to me that in the process if we can do that and develop 
alternative energy sources, increase some of our nuclear 
capacity here, learn how to burn coal cleaner, we can kill two 
birds with one stone. We can address greenhouse gases, and we 
can start putting our country on a path to energy independence, 
which I think is very, very important for our future.
    When you look at all the most troubled parts of the world 
the people leading those countries are sitting under a bunch of 
petroleum that we still have to have and as a result we get 
ourselves mixed up in a lot of foreign policy debacles we 
shouldn't be in. Having said that, when President Kennedy 
decided we were going to put a man on the moon, and we didn't 
know how to do that at the time, one of the things he did do 
was he marshaled the resources of this country, he doubled the 
Nassau budget several times, and something that was thought to 
maybe take decades was done in less than 10 years.
    One of the most frustrating things for me as a member of 
this committee and someone who has been in Congress 14 years 
now is to watch energy secretary after energy secretary, it 
doesn't matter what the Administration is, through the Clinton 
Administration, through the Bush Administration, sit before 
this committee on budget time and tell us how they don't need 
any more money and watching them take programs that rob Peter 
to pay Paul, whatever the program de jour is that year, and 
then that seems to fade aside. Fuel cells was big, and then we 
get near commercialization and we pull the plug on them and we 
are funding FutureGen. FutureGen is now the big thing we want 
to talk about and what comes next. Where is the commitment on 
this Administration and hopefully future administrations to 
finally put our money where our mouth is and put the dollars 
necessary so that instead of these different constituencies, 
you know, the battle we hear from the alternative energy people 
is don't put money into clean coal, you are stealing money that 
could go into renewables.
    It is always people see the pie as just constant and that 
their slice of the pie is going to get smaller if we move into 
these other fields. We have to do all of this. We have to do 
all of this. We have to burn coal clean. We have to increase 
nuclear. We have to bring alternative energy sources into the 
market. We have to commercialize these things. Carbon 
sequestration, we can't wait 10 years for a study. We need to 
be able to deploy that technology in this country in the next 
few years. We need to make it a national emergency. It has to 
get done, and we have to marshal the best and brightest minds 
in our country and say if we can spend $10 billion a month in 
that black hole called Iraq, we certainly can start spending 
some money in the United States of America to extricate this 
country from this addiction we have to petroleum which is 
absolutely crushing our kids and grandkids and give them a 
worse quality of life than we enjoy today if we don't start 
doing something about it.
    I have yet to see an administration on Democrat or 
Republican that is serious about tackling this problem. Can we 
expect next year when the Secretary of Energy and when this 
Administration starts to put their budget together a real 
commitment in terms of dollars and resources in the Department 
of Energy and other agencies that shows a true commitment to 
the American people and the rest of the world that the United 
States is serious about two things, getting us off petroleum in 
the near future, and at the same time curbing greenhouse gases, 
and as an added bonus to that creating new industries in this 
country where we will start to export that technology to other 
countries to help them also comply to cut their carbon 
emissions? What can we expect next year from the Administration 
in terms of an energy budget request in these other agencies?
    Mr. Connaughton. Well, first, as a general matter with the 
possible exception of your comments on Iraq, I just need to say 
I agree and the President strongly agrees with your perspective 
and the passion you are bringing to this. I would also note I 
think you may be selling your own committee short, Congressman, 
the bill you just passed was a major step forward and actually 
unrivaled if you look around the world in terms of putting in 
place the pieces to set that in place. Now we came up a little 
bit short of the broader approach the President called for in 
the State of the Union last year but we can continue to work on 
that because I think you have been doing great work in 
Pennsylvania about looking for all the opportunities for 
replacing petroleum, not just focusing on a particular one, and 
so I think that is where we need to take the conversation next. 
In terms of the----
    Mr. Doyle. Our bill was a baby step, not a big step. It was 
a baby step. It was a step in the right direction but it is 
miniscule in terms of what we need to do to make ourselves 
independent on energy for the future and at the same time cut 
greenhouse gases. We need to do 100 times more than what we are 
doing right now for our own good. Forget the rest of the world. 
For the good of the United States of America, we need to do a 
lot more than we are doing.
    Mr. Connaughton. And let me agree with you especially in 
light of what it takes to really cut greenhouse gases and 
displace petroleum in the way you have described. Secondly and 
importantly, and this goes back to questions that Congressman 
Barrow was asking as well, on replacing petroleum we have good 
tools now from the Congress. We have good budget aspects from 
the Congress that are going to enable us to move beyond just 
studying and begin to start demonstrating. We are already 
deploying the resources to build 3 of the world's--among the 
world's first major cellulosic ethanol production plants, and 
the venture capital folks are coming in behind that and we have 
to go there because that is low greenhouse gas profile and 
really sustainable.
    We now need to do the same thing on coal and capture and 
storage of coal, and again move beyond just the research and 
that is important. Don't get me wrong there. But get the big 
plants built, get the commercial scale capture experiments 
done, get the commercial scale sequestration experiments done 
so we can show the thing works and then in the legal liability 
regime that people will invest against and we are committed to 
this.
    Mr. Doyle. The Chairman has been very generous with my time 
and I appreciate it. I would just say, Chairman, whatever you 
are thinking of doing multiply it times 10 and cut the time in 
half. Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Doyle. The gentleman 
from Arizona, Mr. Shadegg, is recognized for 5 minutes.
    Mr. Shadegg. Thank you, Mr. Chairman. You caught me a 
little bit by surprise. I thought there were others ahead of 
me. I am fighting a cold, and I apologize for that. Mr. 
Connaughton, I want to thank you for your service to the 
country. We bumped into each other in China last summer, and I 
know you were working on these issues then. In your testimony 
you mentioned that there are several existing programs that are 
promoting energy efficiency and environmental quality that have 
led to reduction in greenhouse gas emissions here already. This 
committee and this Congress appear to be hell bent on a major 
policy change, specifically a cap-and-trade system.
    I have concerns about a cap-and-trade system. I have 
concerns that a cap-and-trade system would be so confusing the 
American people will not understand it. They will not 
understand why the cost of goods is going up, and they will be 
frustrated if they learn at a later point in time that the cost 
of goods and services went up but greenhouse gas emissions did 
not go down. And Mr. Barton pointed out that at least in Europe 
as a result of some problems in the implementation of their 
cap-and-trade system greenhouse gas emissions in fact have not 
gone down. I am familiar with stories about producers in Europe 
who are going outside of Europe, moving the production, for 
example, of cement from France to Algeria outside the European 
cap-and-trade structure.
    I guess I have a broad question for you. I largely agree 
with my colleague from Pennsylvania about the need to move 
forward on efficiency, and I am concerned that if we do a 
radical policy change in the nature of cap-and-trade, we could 
spend a lot of energy trying to implement that without in fact 
reducing greenhouse gases and at the same time doing 
substantial damage to the economy. I do agree that we need to 
get off of oil. I completely agree with my colleague from 
Pennsylvania with regard to our dependence on oil from people 
who hate us, which not only puts us into a difficult economic 
situation but has us funding our enemies, and I think with the 
war on terror and the commitment of radical Islam to destroy us 
that is a serious policy mistake in itself.
    My broad question to you is do you think that we need to 
move as quickly as this committee is talking about towards a 
cap-and-trade program? If so, are there things you would 
caution us to do or not do? How do you feel about a carbon tax 
instead? Is it more transparent? Would it be easier to 
implement, and are there other things that can promote 
efficiency or reduce our reliance on foreign law that you would 
recommend?
    Mr. Connaughton. Thank you, Congressman. You have asked 
many, many questions so let me see if I can address them.
    Mr. Shadegg. I wanted to get them all in. I have a cold so 
I don't have to talk again.
    Mr. Connaughton. Let me see if I can address them as a 
package. As I indicated at the beginning, we have a portfolio 
of strategies that includes regulations, some of the new ones, 
which by the way are market based, the CAFE piece and the fuels 
piece, used as something alike. You know, it is a cap with a 
flexible trading system involved in it. We have technology 
mandates like we did for efficiency of appliances. We have good 
old-fashioned incentives and those are very powerful to opening 
up markets where the marginal cost is just within reach. And so 
the challenge for us as we get into this year is taking stock 
of what we have got where the Congress has already declared 
goals, and then seeing what more we might need, and we should 
be looking at the full range of options for that. Some suggest 
tax, some say incentives. Some say cap-and-trade. Some say 
technology mandate. Some say let the sectors come up with a 
compact and commit to it and hold them to it and come back at 
them if they don't make it.
    So there are a variety of approaches, and I have seen them 
all work. I have seen all of them also designed badly and fail 
so we are at the point where we need to be that specific and 
that goes to the heart of your questions. cap-and-trade can be 
a very powerful tool when focused, used correctly, and 
depending on the market. We did it on SO2 because 
there was 500 power plants, 1 pollutant with a very specific 
objective in mind with a known technology. It was ready to be 
deployed. CO2 is different. When it comes to coal we 
do not have the technology available to us today where it can 
be--liability can be established, warranties can be given. You 
are going to be able to make sure the lights stay on and you 
are not going to drive up electricity costs for the poor and 
people on fixed incomes.
    The Congress is debating LIHEAP today, and our goal can't 
be to raise costs of electricity and gasoline on those least 
able to afford it. So those become critical factors in this 
discussion and debate, and again this committee has the 
capacity to be the most thoughtful in addressing those very 
important questions. And as I indicated there is the leakage 
issue. The leakage issue that if you drive up, for example, if 
your policy drives up natural gas prices further that means 
even less good high-paying American jobs in commodity chemical 
manufacturing and in fertilizer manufacturing. Right now we 
have become, I am told, we are now going to import our 
fertilizer for the first time. What sense does that make? It is 
an area where we are otherwise competitive but because of high 
and fluctuating natural gas prices we are now importing. So 
that is what we want to just focus on, but I am hopeful that 
the Chairman in his effort this year will distill out these 
specific issues and then we can begin and then look at policy 
designs on the facts and on the economic analysis, and like we 
did on CAFE and like we did on fuels find some common ground 
that addresses these issues.
    Mr. Shadegg. I hope we will continue to work with you and 
get your advice as we go forward. Thank you.
    Mr. Boucher. Thank you very much, Mr. Shadegg. The 
gentleman from Texas, Mr. Gonzalez, is recognized for 8 
minutes.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. Welcome 
and thank you for your service. A couple of observations before 
I get to the particular question, and the first one is, and see 
if you agree, because I think our concern is to do this and do 
it in a way that it doesn't in any way jeopardize our economic 
well-being. But it has to be acknowledged, and I think we have 
to be honest as elected officials and those that serve in the 
Administration such as yourself that it is going to cost more, 
and that means it is going to cost more to each and every 
citizen, and we need to prepare them for that. And somehow we 
have to convince them, of course, that it is an investment now 
that will serve us well in the future.
    Now do you agree that we should be up front telling the 
consumer of America that it is going to cost them more when it 
comes to energy in the future, and not--we have costs already 
that are skyrocketing in certain areas but just what we 
presently have and with the technology that is going to be 
employed that is going to add cost, do we not need to be honest 
with the consumer that they are going to have to make their 
contribution in the way of higher cost?
    Mr. Connaughton. I think there are 3 dimensions to that 
question, Congressman.
    Mr. Gonzalez. And could you be as brief as possible because 
that is my observation and I want to get----
    Mr. Connaughton. There are some investments that will pay 
for themselves over time, and that is the efficiency discussion 
and we have the tools for that. There are some investments 
where if we are controlling for air pollution where we can 
quantify health benefits and also get greenhouse gas reduction 
from that. You can actually show there is a net benefit so the 
cost is worth the investment. There is then the uncertainty 
zone where you are asking for more cost and we just need to be 
smart about what those costs are and make sure we are tailoring 
them to deliver something that we think will be good, and so 
that is my answer to all 3.
    Mr. Gonzalez. And I understand, and all 3 equate to greater 
cost. It is just how we invest it. I just want to make sure 
that we are finally asking our constituents which is the 
hardest thing in the world to make their own specific 
contribution by way of greater cost, and it is a very difficult 
thing for an elected official. The next thing is I know that 
there have been certain individuals that observed when we are 
dealing with the developing nations that we understand their 
concerns and the fact that they can look to the United States 
experience and figure, hey, how did you guys get there, how did 
your Major Economies get there? You are blocking us off from 
the same practices in which you engage to attain that wonderful 
lifestyle that you enjoy today.
    I think that is a terrible way of looking at it, and we 
have to provide developing nations with alternatives to the 
traditional ways that many economies arrived to where they are 
today, otherwise, we would say, well, we will let you have 100 
years of slavery. Or we can just, as a matter of fact, job 
waiver, we will give you 50, 60, 70 years of that. Sweatshops, 
well, we will give you, I don't know, maybe a half century or 
longer maybe of that. And then of course you can pollute your 
air and your water and figure a solution later. I think that is 
a really dangerous thing to do. I think we have to relate to 
exactly where they are coming from and such, and I think you 
have pointed out in your testimony, I am not selling it short, 
and I am not saying that you are not obviously cognizant of 
that consideration, I am just afraid that many individuals, 
especially elected officials, are simply saying, well, look how 
we got there, how can we be asking that of developing 
countries.
    Well, very easily. I think they can learn through our own 
mistakes. But my central question, and we are going to have 
enough time, because I am really concerned and I am not real 
sure if I have the latest information, but I know that we 
became parties to this Bali road map or whatever it is but we 
have also been talking about the Major Economies coming 
together. Do we still have something set up in Hawaii at the 
end of the month?
    Mr. Connaughton. Yes, we do.
    Mr. Gonzalez. All right. And it looks like there is going 
to be full participation by the European Union. We don't have 
any problem with any of these Major Economies participating?
    Mr. Connaughton. No. Actually the leader's representatives, 
people like me, who are direct reports to their leaders, that 
is how seriously this is being taken and that is good.
    Mr. Gonzalez. Okay. Now those are obviously the developed 
economies, the Major Economies, the major emitters, whatever we 
want to call ourselves. Do we have a counterpart with the 
developing nations having their own pre-Bali road map meetings?
    Mr. Connaughton. We do not in this particular setting. 
There is something called the G-77, which is all the developing 
countries combined but that actually is beginning to show 2 
aspects. There are the major developing countries who are big 
energy users and emitters, and then there is everybody else. 
And Bali began to show that, which is the China, India, Brazil, 
South Africa, Mexico, they are in a slightly different place 
because they are big contributors to greenhouse gases and they 
are now part of this discussion with us.
    Mr. Gonzalez. And of course what we are doing there in 
Hawaii and such is not viewed as counterproductive or 
subverting or something in addition to or a side show, but 
wouldn't you say that whatever decision is reached in that 
particular setting is really what we probably would be taking 
to the meetings that are set up because we are still trying to 
figure out what our domestic bottom line is, right, and so then 
we have to get all our major emitters to figure out what their 
basic bottom line before we really get to the negotiating table 
with all of the parties.
    My only concern is all the stakeholders aren't there, and 
maybe it is all right to have all these preliminary meetings 
that precede whatever is going to happen when all stakeholders 
are there, but is there any danger that those that are not part 
of this major emitters, Major Economies meetings since they are 
not there to engage us because I am so not sure that we are 
going to get off our bottom line once we establish it in that 
setting and we go to the major meeting. Now if I am a 
stakeholder, we are all stakeholders developed and developing, 
but I am not included in the developing where you guys are 
establishing your bottom line, I am not so sure I am so crazy 
when you come to our big meeting and you are telling me this 
our bottom line, I never had anything to say about your bottom 
line. Is there any danger in what I have just proposed?
    Mr. Connaughton. That is always a concern. The same is true 
when any sub-group of this committee begins to try to work 
something out and brings it to the broader committee, so we are 
trying to organize this in a way that we did a lot of 
preparatory work, we did a lot of briefing of everybody on what 
we are trying to achieve when we were in Bali. There is now 
greater acceptance that this was a useful tool recognizing that 
whatever the output of this has to be brought back to 
everybody, and so the U.N. process will start in April so we 
will have a couple meetings in advance of that and bring our 
ideas to that. We will have a couple after that first U.N. 
meeting and then hopefully the leaders will be able to get 
their heads together around this so that in plenty of time for 
polling at the end of this year, there will be 3 or 4 or 5 
months where we can have even the broader stakeholder 
discussion.
    Surely, Congressman, you can agree starting on a few of 
these with the countries that are most responsible is probably 
a good step, and you can also understand having a room filled 
with 190 people as an initial opening place for the 
conversation is a little bit tricky. But that is what we did 
with Bali. We had 190 nations giving a big outline of what we 
need to do. Now we can break it into its parts and get the 
countries that have a role in those parts bringing some real 
concrete ideas forward. We are trying to be quite constructive.
    Mr. Gonzalez. But even in Bali wouldn't you admit that 
towards the end there if the United States had made its own 
adjustments to the outcries and concerns of developing nations 
more than anyone else we probably wouldn't be where we are 
today with the road map. My last observation, with 15 seconds, 
you said something about we should understand even with our 
subcommittee structure and our committee structure and in the 
full Congress I trust the Bali road map and what you all are 
going to do doesn't exactly follow that model because we don't. 
And again I just want to say thank you for your service and 
your testimony today.
    Mr. Boucher. Thank you very much, Mr. Gonzalez. The 
gentleman from Oregon, Mr. Walden, is recognized for 5 minutes.
    Mr. Walden. Thank you very much, Mr. Chairman. I want to 
thank Mr. Connaughton for his work for the country and for the 
President and appreciate your testimony today. I want to follow 
up on a couple of points you made just to make sure I heard 
them correctly that with the $35 billion in loan guarantees the 
U.S. has put forward we lead the world, is that correct?
    Mr. Connaughton. Yes. That is a substantial backing of the 
investments necessary to get low carbon technologies.
    Mr. Walden. And then you said $2 billion in incentives for 
highly fuel efficient vehicles. That is also leading the world 
in that area?
    Mr. Connaughton. We are among the leaders. Germany and a 
couple of other countries are right up there with us but just a 
few of us.
    Mr. Walden. And do they have the same clean air 
requirements in Europe and Germany that we have here? I mean 
they have been out front with diesel for a long time. Hasn't 
that had health implications?
    Mr. Connaughton. Actually right now our clean air 
requirements for diesels is more stringent than Europe's. 
Because they are so heavily invested in diesel, they have been 
a little more forgiving on their clean air for the sake of fuel 
efficiency.
    Mr. Walden. And has that had a health impact?
    Mr. Connaughton. Yes, it has had a negative health impact. 
Our diesel-related illnesses and deaths are in the thousands. 
Theirs are in the tens or hundreds of thousands.
    Mr. Walden. Deaths as a result of diesel burning vehicles.
    Mr. Connaughton. Or hospitalizations. Yes.
    Mr. Walden. All right. When you talk about forest issues, I 
know you raised those, and you have been very aggressive at the 
international problem, one of the issues I know is out there is 
the use of palm oil for bio-fuels. Now Mr. Doyle talked about 
we needed, I think he said a 10 fold increase in whatever it is 
we are doing now in half the time. Now we just passed a very 
aggressive increase in bio-fuels. Is that the most aggressive 
in the world?
    Mr. Connaughton. It is. It is. In fact, Europe has a stated 
goal that is less aggressive and they are having trouble 
getting the programs in place to meet it.
    Mr. Walden. And isn't the EU presently evaluating 
restricting the source of inputs for their bio-fuels program 
because they are discovering not all bio-fuels are as 
environmentally friendly as others, and in fact they are 
working on regulations as we speak to limit or prohibit the use 
of palm oil because in many countries aren't they ripping out 
their forests to produce palm oil?
    Mr. Connaughton. Actually EU is headed down the road to a 
very aggressive regulation of alternative fuels, and by the way 
some of that is based on then misplaced facts and information 
which remains a challenge in terms of on the issue of palm oil 
there are a few very bad examples that overwhelm the potential 
ability of palm oil to be done well, and what is happening is I 
think the EU is taking a classic approach. They are abandoning 
the entire thing for the sake of a problem that could otherwise 
be well regulated.
    Mr. Walden. And is that an area that we need to focus on 
now that we have this enormous bio-fuels mandate in statute? Do 
we need to set up some side boards around that? I know in the 
energy bill one of the things I was frustrated about, and I 
voted for it, was the fact that if you produce alternative 
fuels from woody bio-mass they count towards renewable fuels 
portfolio standard unless, unbelievably unless that woody bio-
mass comes off of Federal land. Can you explain the scientific 
reason why woody bio-mass that comes off Federal land should 
not be considered a bio-fuel but if it comes off private lands 
it does count? Is there any difference in that woody bio-mass?
    Mr. Connaughton. There is no difference. And, Congressman, 
one of the core concerns that we as the Administration have is 
the endeavor to try to cherry pick and narrow down on all of 
these alternatives because the fact is the scale that we have 
to achieve is so big that we need to find ways to properly 
regulate but effectively get many alternatives out there based 
on performance, not based on preference.
    Mr. Walden. Unfortunately, I have less than a minute left. 
One of the other real problems in the energy bill and that I 
hear a lot from my state and people who are very concerned 
about moving forward with sustainable growth and renewable 
energy development is the short-term nature of the production 
tax credit. Now I personally believe we ought to extend it out 
a minimum of 5 years so that investors can make wise decisions 
into the future and get in the cues and get the turbines and 
whatever else they have to get, access to the grid, whatever, 
takes many years. Can you speak to the Administration's 
position on a longer term extension of the production tax 
credit?
    Mr. Connaughton. We will not react to specific legislation 
so let me just deal with the issue generally which is the 
short-term nature of the production tax credit is why we are 
not seeing enough expansion of manufacturing capacity so we end 
up buying a lot of our products from overseas because of the 
boom and bust cycle of the production tax credit. And so 
whether you redesign that policy or develop a different one, we 
should be focused on our own manufacturing capacity so we can 
scale up renewables to the gigawatt scale----
    Mr. Walden. And create the jobs here. So we could do the 
manufacturing jobs here, produce the various components for 
renewable energy development in our country ought to be done 
here.
    Mr. Connaughton. And lower the cost. Right now the price of 
solar and wind is going up, not down. That is not what we all 
wanted. We wanted it to go down.
    Mr. Walden. Thank you, Mr. Chairman, for being generous 
with the time. Mr. Connaughton, thanks for your hard work and 
your testimony today.
    Mr. Boucher. Thank you very much, Mr. Walden. The gentleman 
from Washington State, Mr. Inslee, is recognized for 5 minutes.
    Mr. Inslee. Thank you. Mr. Connaughton, the last time we 
were together was at I think the Schwarze Pumpe coal plant 
which may be Europe's first coal sequestration plant if things 
go well for them. And we were excited by that because that 
technology works. It could be of benefit but the only reason it 
will ever be implemented is if we have some economic incentive 
for it to be implemented leading us to conclude we need a cap-
and-trade system to create an economic incentive for that and a 
whole host of technologies to be implemented. So I would like 
to ask you if the President will sign a cap-and-trade piece of 
legislation passed by this Congress this year.
    Mr. Connaughton. As you know, Congressman, we don't comment 
on specific pieces of legislation that haven't been proposed 
yet but we have been, as you know, willing to be constructively 
engaged in this conversation. I would observe when it comes to 
incentives there are positive and negative incentives. We 
employ both. And when it comes to carbon capture and storage 
because the technology is not yet available, I think most of 
the emphasis is going to have to be on the positive incentive 
side because of the ease with which we can fuel switch in 
America out of coal to natural gas and other sources, and so 
that creates its own basket of problems so I just want to be 
sure as we work on this together that we are thoughtful about 
that unintended consequence.
    Mr. Inslee. Are you going to encourage the President to 
address the issue of a cap-and-trade system in the State of the 
Union speech, and the reason I suggest that would be helpful is 
that when we went to the moon Kennedy went and urged us to go 
to the moon. We need presidential leadership on this. Will you 
be suggesting to the President that he address the parameters 
of the cap-and-trade system that could help us in this 
challenge?
    Mr. Connaughton. One, we don't comment on State of the 
Union, and my advice and counsel to the President is between me 
and the President. I would observe that we are very focused on 
the next steps after last year's energy bill. I would observe 
that we do see a lot of common ground on advancing the carbon 
capture and storage agenda and doing that appropriately. We see 
a lot of common ground on making sure we are on the ball on the 
alternatives to petroleum so I think you will see dedicated 
action from us on those issues among others. Nuclear is 
critical too. I know we have a little bit of difference there. 
But these are all critical. We need action on all these fronts, 
not just a single front.
    Mr. Inslee. So do you believe that we can design a cap-and-
trade system that will inhibit CO2 emissions and 
help grow our technological response to this? Do you believe we 
can do that?
    Mr. Connaughton. I don't know yet.
    Mr. Inslee. And what could we do to help you get over that 
hurdle to help us develop momentum for a cap-and-trade system 
because presidential leadership is important in this and 
presidential inertia could also be a drag on our ability to 
move this legislation. What can we do to help the 
Administration clarify its position because I think clarity in 
telling us that this is within something of the realm that the 
President could sign would be helpful for us moving forward. 
What could we do to help you get over that hurdle?
    Mr. Connaughton. Well, I think first it is going to be 
important that this committee in particular, and I'm glad the 
Chairman has started so quickly with this set of discussions, 
is to do a stock taking in what we have got and then tailor 
what more we need to that. I haven't seen that occur yet. That 
is going to be very important. One thing of concern we would 
have is the idea of putting a mandate on top of a mandate and 
so we want to make sure that we have got a regulatory system 
working in close harmonization with our incentives, the 
positive incentives, with also the private sector initiative, 
and so that is just going to take a little bit of thought, and 
if we do that we can simplify.
    Right now what we see in the Senate are a number of 
proposals that are highly complicated and highly constituent 
interest group focused and I think that is not a recipe for 
success.
    Mr. Inslee. Well, let me ask you this. It is clear, it is 
absolutely clear, if you disagree tell me but I think it is 
absolutely clear that for coal sequestration technology ever to 
be implemented because it will involve some work, some cost, 
some investment, there will have to be some economic incentive 
for its deployment. Now that can be a positive incentive or it 
can be a negative incentive.
    Mr. Connaughton. I agree with that.
    Mr. Inslee. You agree with that.
    Mr. Connaughton. It has to be positive. We need an 
incentive. How we structure it matters but we need an 
incentive.
    Mr. Inslee. It is certainly my belief, I think most 
economists who evaluate it, is that there has to be some 
disincentive for putting CO2 in the air to make 
carbon sequestration through coal technology economically 
viable. Do you agree with that assessment?
    Mr. Connaughton. No. I think we are mixing 2 different 
pieces. An incentive, whether it is structured as a positive or 
negative one generically will drive more investment toward 
lower CO2, but when you are looking specifically at 
the issue of coal and capture and storage because of the 
opportunity to substitute something else or because the 
opportunity just to shut down operations and move your 
manufacturing and demand some place else, you could actually 
delay the desire to make the investment necessary to prove 
carbon capture and storage because it is not proven yet. So 
step 1 is you got to prove the technology, get the liability 
regime in place, and get the cost within reach, then some of 
these other deployment strategies, whether it is on the 
positive or negative side become effective. That is what we did 
with SO2. There was a very dedicated period of 
developing the technology before the system of positive and 
negative incentives were put in place so we have to sequence 
it.
    And actually the Chairman I think in some of his white 
papers has done some thoughtful discussion of that, and I think 
that is where we got some constructive ground, and again happy 
to engage daily as need be just to make sure we are getting to 
the bottom line on some of these questions.
    Mr. Boucher. Thank you very much, Mr. Inslee and Mr. 
Connaughton. The gentleman from Texas, former chairman of this 
subcommittee, Mr. Hall, is recognized for 5 minutes.
    Mr. Hall. Thank you, Mr. Chairman. I have noted concern on 
both sides here about different aspects here. I think the 
gentleman from San Antonio, Mr. Gonzalez, was concerned about 
the cost, and there is a good follow-up question there, I am 
concerned about who pays, and I don't know how much discussion 
took place on that little bitty island down there. There was 
185 nations there and 10,000 or 11,000 people, a little place 
no bigger than Delaware. How much concern there was for who 
paid or how much talk there was for who paid. It is something 
they don't want to talk about. And then the gentleman from 
Washington wanted to know, and it is a good question, of what 
is the incentive for use of coal.
    I don't know. I would ask you that question but I think you 
would probably agree with me the incentive is that there is a 
lot of it and it is in the right place. I understand we have 
more usable coal than just about anybody. Is that close to 
being correct?
    Mr. Connaughton. That is correct. The United States and a 
handful of other countries have lots of reserves of coal.
    Mr. Hall. Well, you call that agreement a road map, and I 
guess it is a road map just to guide them somewhere around 
2012. That gives me some concern too, that figure does. At my 
age, George Burns said he didn't buy green bananas. I don't 
know if I can wait until 2012 or not, but I do have children 
and grandchildren so I am interested in that. But I just 
wondered on a road map the building of the road is extensive. 
That is a major expense but there are a lot of other expenses 
to it. There are overpasses. There are grade separations, I 
think, engineers call them. There are detour signs. There are 
bridges, and I hope in this road map they got a lot of caution 
signs. You see a good many of those on roads and new roads. I 
hope they have some bad bridge ahead signs and a lot of stop 
signs.
    Somebody came along with a lot of no right turn signs in 
Washington. I don't know about left turns or who goes left or 
who goes right, but this is a situation that really ought to 
concern every one of us and our children, and the people we 
have to go home to to talk to, and we ought to be honest enough 
to talk to them about the cost and, by gosh, who pays. I want 
to ask you how different is this framework from the framework 
that they limped away from at the Kyoto meeting.
    Mr. Connaughton. Well, actually fortunately, Congressman, 
this framework is a step forward. The intensity of what you 
heard reported out of Bali before we reached final agreement 
was really about whether we would fall back to the flawed 
approach of Kyoto or step forward to constructive engagement 
especially with the major developing countries, and that was a 
big battle in Bali. Fortunately, we did come together 
recognizing that we have to move on this together if it is 
going to work and that the major developing countries have to 
take actions too if this is going to work, and now we have to 
open up our eyes consistent with your caution point. There are 
many, many difficult issues that we have to confront to take 
this seriously in particular with the developing countries 
because of the aspirations to lift their people out of poverty 
and energy is essential to that.
    Mr. Hall. How far down the road who pays to get to the 
point to where--and I am not among those who say that there is 
nothing to it. I think it is good common sense and logic to 
pursue it and to seek the technology and try to take care of 
the fossil fuels that has taken care of us for so many years or 
find technology to make a cleaner place for the people that 
will be here after we are all gone, but I think we need to talk 
about the cost and we need to have some way of paying that 
cost, and we may have some level of place to decide whether or 
not we are pouring that cost into something that won't ever 
come back to us, ever come to us. We are not assured that it is 
going to.
    So that is the reason we study and the reason you are being 
kind enough, and the President sent one of his finest men down 
there to work out something with these folks and you are trying 
to do it. I recognize that but we need to--I guess I may ask 
you what do you see as a role for the Major Economies meeting 
in the Asia-Pacific Partnership and the U.N. process. Do you 
want to address that just briefly because I have a lot more 
things I really want to say.
    Mr. Connaughton. Just the Major Economies we hope to focus 
on 5 or 6 elements of this much bigger Bali road map that 
relate to those of us who use a lot of energy and a lot of 
greenhouse gases. Can we agree to a long-term goal, can we find 
some key sectors like fossil power generation, alternatives to 
petroleum, forestry, a few others, where we can do joint work, 
set joint objectives and actually commit ourselves to achieve 
those objectives, and then come up with some broader and more 
innovative ways of financing goods and services and removing 
the trade barriers to those goods and services so countries 
will actually use the technology we have got. Right now we put 
up obstacles to that, and that is just nutty, and we can stop 
that this year if the leaders agreed on it.
    Instead, parochial interests get in the way so there are 
some very specific things we can achieve there, and then you 
asked about the Asia-Pacific Partnership, and I appreciate that 
because we started that 3 years ago, and it is actually 
working. We have India and China in key sectors making specific 
commitments and holding themselves accountable to meeting those 
commitments. We negotiated it in 6 months. This private sector 
is working well with the government people. You don't hear 
about it because nobody is complaining. Now I think the 
Congress didn't help this year that we have got some 
restrictions on the funding for that when it is going to 
deliver a 2-way trade in clean energy, goods and services in 
key sectors, so we hope to work with this committee and maybe 
you can help us persuade the appropriators that this very low 
cost taxpayer funded activity is going to yield massive 
dividends in getting cooperative action with the countries that 
we got to find that cooperative action.
    Mr. Boucher. Thank you very much, Mr. Hall and Mr. 
Connaughton.
    Mr. Hall. I wasn't really through, Mr. Chairman.
    Mr. Boucher. Well, Mr. Hall, the time unfortunately has 
expired. The gentlelady from Wisconsin is recognized for 5 
minutes.
    Ms. Baldwin. Thank you, Mr. Chairman. Thank you also, Mr. 
Chairman. My questions I think follow in an interesting way 
although I ask them from a different perspective. You were 
talking about some of the crux of the battles that were being 
fought and negotiations that were occurring in Bali, and many 
had an interest in seeing more specific targets and specific 
goals rather than a more generalized road map, and especially 
in light of the urgency that many people view this situation 
globally and here in the United States. And with the sort of 
foundation for a lot of the discussions being the U.N.'s 
intergovernmental panel on climate change, and their cited 
recommendations that we need to cut emissions by reaching 
specific targets of 25 percent to 40 percent for developed 
nations by 2020 and the credibility of that report with over 
600 participating scientists around the world.
    So the European Union obviously came to Bali. Other 
government delegations came to Bali wanting to officially 
recognize these findings, and yet the United States opposed 
having that specific scientific data a part of the agreement 
coming out of Bali and in fact you have to dig really hard. 
There is a footnote, and that footnote references the IPCC 
document in order to even find the reference that I just made 
of those strong and urgent recommendations. I am wondering if 
the Administration's decision to really obscure these IPCC 
findings and specific targets and goals if that decision was 
based on other scientific data or whether it was a non-
scientific negotiating position, and then I want to probe a 
little further of when do we get to the specifics and the 
targets whether it is through the Honolulu discussions or the 
ones in December of 2008, but please first tell me if this was 
a scientific driven negotiating position or other 
considerations.
    Mr. Connaughton. Very briefly on that, the work group 3 
report which is on mitigation strategies in the overall science 
summary effort and these reports summarize the state of the 
science. The report that we were dealing with has 177 different 
scenarios, the different scientific economists produced around 
the world, and so there is a band width of scenarios for how we 
can stabilize emissions and meet our goals. And so what 
happened is some participants wanted to pick one of the 
scenarios at the only path that we could pursue and our 
objection, and by this way this isn't just the U.S., it was 
many, many companies, not just U.S.
    Ms. Baldwin. I understand that. I understand that.
    Mr. Connaughton. Was that actually we were given a wide 
range of scenarios and I think those would be good for this 
community to explore. The U.S. has produced its own set of 
scenarios which were included in those and so it all turns on 
your curve for slowing, stopping, and then coming down what 
that curb looks like depending on your policy choices. If we 
could do 100 percent nuclear by 2030, hey, we are in great 
shape, but is that really feasible. And then you have other 
scenarios where how could you get renewable up to 20 percent, 
and what does that mean, and so you have to see what your 
policy path is before you can pick that curve.
    What was happening is the EU was trying to pre-judge that 
discussion and nobody came to Bali prepared to debate picking 
the one most extreme scenario when there is actually a range 
that are within the range of responsibility, and so that is 
really where we wanted to take the conversation.
    Ms. Baldwin. Well, I read their bargaining position as a 
little--just recognizing the urgent need to reduce emissions 
between 25 and 40 percent for developed nations by 2020 doesn't 
commit to one of those 176 particular paths. It is basically 
one of the headlines from that particular report, but let us 
move on. You are about to convene, I think it is next month you 
said in Honolulu?
    Mr. Connaughton. The end of this month, 2 weeks.
    Ms. Baldwin. Two weeks. The largest emitters will gather 
there--what are the specific goals for that conference? Will we 
see any targets, specific targets, specific goals for emissions 
reductions emerging from that particular conference?
    Mr. Connaughton. You will not see specifics out of this 
first meeting of several meetings leading to a leaders 
gathering later this year so the time to look for the outputs 
of this will be at the time of the leaders gathering.
    Ms. Baldwin. And when and where is that?
    Mr. Connaughton. We are working on that right now but as 
soon as we know, we will let you know. But I do want to let you 
know it is being debated and discussed though. We do want to 
see if we can get consensus on a long-term goal for reducing 
emissions. We do want to at least put in place the architecture 
for some sector agreements and some key benchmarks for real 
performance in key sectors, and we do want to see each nation 
come forward with a series of mid-term goals. Now I think the 
developed countries will be more likely to have that in place 
by the end of this year. I think for some of the developing 
countries it is just harder for them. They don't have a 
domestic process to produce mid-term goals yet, and we want to 
see how we can encourage that.
    Ms. Baldwin. Well, in terms of sector benchmarks, give me 
an example of what you would like to see, whether it is the 
leaders meeting in Honolulu, but we are looking, we are 
desperate for some specific targets and specific goals rather 
than generalized.
    Mr. Connaughton. Let me give you an example of a big sector 
relatively low on the priority list but it is a big sector, 
aluminum. Through the Asia-Pacific Partnership, we have 
international agreement now to cut fluorocarbons, which is 
1,000 times more potent than CO2, by 80 percent from 
aluminum manufacturing globally. They are going to reduce their 
emissions by a third by 2010, and then a 10 percent reduction 
in average smelting energy usage so these have very specific 
benchmarks for the global industry and then the programs----
    Ms. Baldwin. How many sectors do you think you might be 
able to tackle in the near frame?
    Mr. Connaughton. This will be the question. I mean that is 
the question. I am hopeful we will at least get 6 top tier 
ones, which is fossil power, alternative fuels, forestry, 
nuclear efficiency, and renewables, and then maybe a couple of 
industry specific sectors. The big ones are steel, cement, 
aluminum. Maybe I am leaving one off. And so if you take that 
basket, Congresswoman, you are capturing a lot of global 
activity and emissions. And then if you can create different--
look at your technology pathways we can create a more tailored 
set of commitments. We think that is an approach that will be 
more attractive to India and China. Why? Because they have done 
it with us this way. When you talk about going after their 
entire economy they sort of put up the walls, and they are even 
more adamant against the broader discussion in Bali than other 
countries.
    So we think this approach can draw forward the sectors 
because then you have done the math, and then it is 
technological feasibility, it is your investment cycles. It is 
just easier to figure out when you are breaking it into its 
smaller parts.
    Mr. Boucher. Thank you very much, Mr. Connaughton and Ms. 
Baldwin. The gentleman from Massachusetts, Mr. Markey, has 
joined us and is recognized for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much. Welcome, 
Mr. Connaughton. I think that 2008 is the year for us to take 
bold action to deal with this urgent problem of global warming. 
I think we should build on the energy bill's success and this 
year pass a mandatory cap-and-trade bill that reduces 
greenhouse gases by 80 percent by 2050, and we should do that 
here domestically. Internationally, I think we have to move 
from aspirational goals which can turn into procrastinational 
goals and reach an agreement internationally using the best 
science in order to insure that there are global targets that 
are going to be met by countries around the world led by the 
United States.
    My first question to you, Mr. Connaughton, is do 
CO2 emissions pose a danger to public health and 
welfare?
    Mr. Connaughton. CO2 emissions contribute to the 
warming of the atmosphere and there is a lot of studies about 
the positive and negative consequences of that and I would not 
want to get into particular conclusions because when you read 
the IPCC reports you have manifold conclusions so I just defer 
to the scientists on that.
    Mr. Markey. So you haven't reached a conclusion yet as to 
whether or not CO2 is a danger to the public health 
and welfare?
    Mr. Connaughton. With the exception of very high localized 
concentrations in terms of its present effects on health and 
the environment we are seeing observed effects when it comes to 
sea ice melt. You can then attribute to the extent that sea ice 
is on land that contributes to sea level rise and right now it 
is accelerating the rise.
    Mr. Markey. Is that a danger to the public health and 
welfare?
    Mr. Connaughton. There are a lot of studies doing forward 
projections as to whether and the extent to which that could 
be, and again there is a wide body of literature on that.
    Mr. Markey. So your Administration has spent billions of 
dollars trying to get an answer to that question?
    Mr. Connaughton. That is correct.
    Mr. Markey. And it is touted to be aiming towards the 
conclusion, and it just seems to me since the other 
industrialized countries in the world have all reached a 
conclusion that CO2 is a danger to public health and 
welfare, that it would help if this Administration reached that 
conclusion because that would then make it easier for us to 
reach the decisions as to what we should do about it. When can 
we expect a decision from the Bush Administration on the 
question of whether or not CO2 is a danger to the 
public health and welfare?
    Mr. Connaughton. You are speaking specifically, I think, to 
the Clean Air Act determination that was remanded by the 
Supreme Court to the EPA. That is in the hands of the EPA 
administrator. He is in the process of developing both our 
rules to implement the recent energy bill and taking a look at 
the process by which he will be making that determination one 
way or the other. I don't actually know his calendar.
    Mr. Markey. The EPA was tasked in the Supreme Court 
decision in April of 2007 to make that decision and it is a 
decision that is made separate from the energy bill. It is a 
specific question because obviously once the EPA makes that 
decision, once the Bush Administration makes that decision it 
not only triggers action on cars but also on stationary 
sources, on factories, on utilities, so it is important to know 
when the Bush Administration will be making that decision. And 
the longer we wait on that decision is the longer it then takes 
to begin to put into place the solutions to that set of 
problems that are identified. Can you give us any idea as to 
when those decisions will be made?
    Mr. Connaughton. Specifically on the endangerment finding, 
I can't yet because we are now going back--that was one of the 
issues that came up in the context of the development of the 
regulatory package we were working on, not as an alternative to 
congressional passage of the bill last year and so we didn't--
the President was dedicated to getting these policies through 
and we were delighted that Congress was able to act so quickly, 
and so now as a result we have to take on board what we just 
got from the energy bill and then put that in the context of 
what we were working on with the original rulemaking.
    Mr. Markey. I do understand that.
    Mr. Connaughton. So it has proven to be an interesting 
place for lawyers and scientists to engage, and I wish I could 
tell you specifically but I really don't know when that will be 
made.
    Mr. Markey. It is a separate question though. And finally 
the Treasury Department recently announced its intention to 
establish a multi-million dollar multi-lateral fund for 
transfer of clean technology to developing countries. Why given 
that initiative did the United States simultaneously oppose 
strengthening international technology transfer mechanisms in 
the U.N. negotiations in Bali?
    Mr. Connaughton. Those are 2 different issues. The fund 
that we are working on we hope to provide you details on soon 
is our thinking. We have to get other countries to subscribe 
to--reach agreement on that is aimed at getting the best of 
today's technologies out into the marketplace on a much, much 
greater scale. The technology transfer discussion, those are 2 
interesting words which in the U.N. context bring with them 
many different interpretations, one of which on the part of 
some developing countries, is that U.S. technology innovators 
should give up their intellectual property and their right to 
make any profit off of their innovation, and of course most of 
us understand the dramatic negative consequences if we were to 
agree to that as a matter of international commitment.
    It is our view that innovators are entitled to a reasonable 
return on their innovation, and what we want to do then is 
facilitate the cost-effective purchase of that while protecting 
those rights.
    Mr. Markey. We are discussing a specific fund at Bali and 
it just seems to me that was a great opportunity for the United 
States to be a leader. The Treasury Department had made a 
statement and I just think it was a real opportunity for the 
United States.
    Mr. Connaughton. Those are 2 different issues. We weren't 
talking about--those are 2 different issues. There is a lot of 
support and interest in the major fund that we are going to be 
creating hopefully with your support because it will only work 
if we have congressional support. The tech transfer issue was 
more one of a matter of policy and principle, not a matter of 
funds, and so I want to be clear that those are 2 different 
discussions.
    Mr. Markey. Thank you, Mr. Connaughton, and thank you, Mr. 
Chairman.
    Mr. Boucher. Thank you very much, Mr. Markey. And, Mr. 
Connaughton, thanks to you also for a very enlightening 2\1/2\-
hour conversation. We will look forward to your return to this 
subcommittee in the future as we consult further on the work 
that lies ahead for us and for you on climate change during the 
course of this year. That being said, there being no further 
business to come before us at this time, the subcommittee is 
adjourned.
    [Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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