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


 
         BUSINESS OPPORTUNITIES IN A LOW-CARBON ENERGY ECONOMY 

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

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 10, 2007

                               __________

                           Serial No. 110-13


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov

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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr, 
JAY INSLEE, Washington                   Wisconsin
JOHN B. LARSON, Connecticut            Ranking Member
HILDA L. SOLIS, California           JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN,           GREG WALDEN, Oregon
  South Dakota                       CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri            JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York               MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                     David Moulton, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director



















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared Statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     6
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     6
Hon. John B. Larson, a Representative in Congress from the State 
  of Connecticut, opening statement..............................     6
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................     7
    Prepared Statement...........................................     8
Hon. Jerry McNerney, a Representative in Congress from the State 
  of California, opening statement...............................     9
Hon. Candice S. Miller, a Representative in Congress from the 
  State of Michigan, opening statement...........................     9
Hon. Stephanie Herseth Sandlin, a Representative in Congress from 
  the State of South Dakota, opening statement...................    10

                               Witnesses

Mr. Ralph Izzo, Chairman, President and CEO, Public Service 
  Enterprise Group Incorporated (PSEG), member of the Clean 
  Energy Group and its Clean Air Policy Initiative...............    10
    Prepared Statement...........................................    13
    Answers to Submitted Questions...............................    91
Mr. Neil Carson, CEO, Johnson Matthey plc, member of the UK 
  Corporate Leaders' Group.......................................    29
    Prepared Statement...........................................    31
    Answers to Submitted Questions...............................    97
Mr. Alain Grisay, CEO, F&C Investments, member of the UK and EU 
  Corporate Leaders' Groups on Climate Change....................    61
    Prepared Statement...........................................    63
    Answers to Submitted Questions...............................   102
Mr. Jonathan Lash, President, World Resources Institute, member 
  of the U.S. Climate Action Partnership.........................    67
    Prepared Statement...........................................    69
    Answers to Submitted Questions...............................   106

                           Submitted Material

Hon. Edward J. Markey, a letter from Prince Charles of Wales, 
  October 3, 2007................................................    26


         BUSINESS OPPORTUNITIES IN A LOW-CARBON ENERGY ECONOMY

                              ----------                              


                      WEDNESDAY, OCTOBER 10, 2007

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:39 a.m. in Room 
2172, Rayburn House Office Building, Hon. Edward J. Markey 
[chairman of the committee] presiding.
    Present: Representatives Markey, Blumenauer, Inslee, 
Larson, Herseth Sandlin, Cleaver, McNerney, Sensenbrenner, 
Shadegg, Walden and Miller.
    The Chairman. If the world is to increase energy security 
and avoid the worse impacts of global warming, a large-scale 
transition to a low-carbon energy economy will be necessary. To 
achieve success, governments, businesses and the public must 
work together to increase energy efficiency and the use of 
renewable energy and decrease global warming in ways that 
maintain economic vitality and create jobs. We must harness the 
power and creativity of the global economy to meet the global 
energy challenge.
    Business leaders, better known for green eye shades than 
fondness for granola, are increasingly asking governments 
around the world to adopt smart long-term policies that ensure 
the true cost of energy and global warming is fully reflected 
in economic transactions and capital investment. They are 
seeking certainty for business decisions but also the 
opportunity to make a buck.
    According to the Stern Review of the Economics of Climate 
Change, the value of the global environmental market could be 
$700 billion as soon as 2010 with the adoption of smart 
policies. Companies are already jockeying to gain the most 
advantageous position to capitalize on these new opportunities. 
Rather than a drain on the economy, energy and global warming 
policies can be a boon.
    The European Union has adopted ambitious mandates for 
increasing energy efficiency and renewable energy use and 
decreasing global warming pollution. Instead of hindering the 
EU's economy, it is roaring.
    As we have seen both in Europe and the United States, smart 
regulation drives innovation. In 1975, cars in the United 
States averaged just 13.5 miles per gallon. Fuel efficiency 
standards pushed the auto industry to innovate, and the fuel 
economy of cars rose to the height of 27.5 miles per gallon in 
1987.
    In the 10 years from 1977 to 1987, U.S. oil imports dropped 
from 46.5 percent to 27 percent. Rather than build on that 
progress, efficiency standards have remained untouched for 20 
years. Our reliance on imported oil has risen to 60 percent 
today, and dioxide emissions from the transportation sector now 
make up a third of total global warming pollution in this 
country.
    After years of stagnation, Congress has an opportunity to 
move our vehicle fleet into the 21st century by passing a 
strong 35 miles per gallon fuel economy standard this fall. By 
2030, the fuel economy language in the Senate energy bill would 
reduce American oil consumption by 4 million barrels per day, 
almost double what we currently import from the Persian Gulf 
and reduce global warming pollution by more than 350 million 
tons per year. By passing the energy bill that couples this 
language with an increase in the renewable fuel standard and 
establishing a renewable electricity standard, Congress can 
initiate the transformation of a low-carbon energy economy and 
make a significant down payment on the reduction of global 
warming pollution necessary to save the planet.
    The United States and the United Kingdom have been 
described as divided by a common language, but, as we will hear 
from our witnesses today, business leaders from both countries 
are united on the need for energy and global warming policies 
that drive innovation and investment towards the creation of a 
low-carbon energy economy.
    I look forward to their testimony; and I will now recognize 
the ranking member of the Select Committee, the gentleman from 
Wisconsin, Mr. Sensenbrenner.
    [The statement of Mr. Markey follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
    Global warming is a complicated problem that can't be 
solved by the United States alone. International partnerships 
must be an essential part of any global warming policy, and I 
am pleased that today's hearing will feature the perspective of 
two CEOs from the United Kingdom who will be able to add some 
insight from across the pond.
    Technology will be another essential part of any essential 
global warming policy, and all four of today's witnesses will 
be able to give us more perspective on the technology that 
holds the best hope of reducing greenhouse gas emissions. 
Because it is clear that there will be a continued demand for 
energy from increased economic growth here and around the 
world, it is clear that the technological breakthroughs are the 
only real way for countries around the world to continue to 
meet their energy demands without raising greenhouse gas 
output.
    While today's witnesses may share some views on technology, 
it seems that there are at least some differences between them. 
Some investors have different ideas than others about where the 
future of technology may go. Some consumers will obviously have 
different ideas about what type of cars they want to drive; and 
perhaps they won't be the same ideas as government regulators 
in Washington, London or other parts of the world. I support 
the development of these new technologies; and I want nothing 
to stand in their way, especially government mandates.
    While I agree with our witnesses that technology needs 
substantial further development, I am afraid I don't think 
government mandates will get us there. By picking winners and 
losers, the government could act to block worthwhile technology 
development while advancing substandard technology. It is far 
too early for Congress or any government regulators to begin 
deciding what technology will be right for our future energy 
needs.
    Another concern I have with mandates is that it will result 
in economic harm. Technological transitions can benefit the 
economy, and the Internet is an example of that. However, if 
government regulations thrust technology into an economy that 
is not yet ready for it, the results will likely be havoc.
    I believe that the free market is powerful enough to sort 
out the variety of emerging new technologies and integrate them 
into the economy without hitting our constituents in the 
wallet.
    At the end, we all want to see greenhouse gas reductions, 
but getting there is not going to be easy. One recent report 
from a group called Open Europe shows that European-based 
facilities covered by the EU emissions trading scheme have 
actually seen an increase in CO2 emissions by 1 
percent. While that is not a tremendous increase, it is 
certainly not a reduction either; and it goes to show what a 
difficult task lies ahead.
    And nowhere does this task become more difficult than 
dealing with countries like China and India, whose emissions 
continue to grow. Already one report puts China's total 
emissions ahead of the U.S. Countries like China and India will 
need revolutionary technology of their own in order to slow 
their emissions growth.
    There will be an increasing demand for cutting-edge energy 
technology in the United States and Europe, Asia and elsewhere 
around the world. So there will clearly be business 
opportunities. I am just concerned that if the government gets 
into that business, like it has in Europe, the result might not 
be the ones we expected or hoped to achieve.
    I thank the gentleman and yield back the balance of my 
time.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    I am looking forward to the conversation today. The 
gentlemen that are represented here today are part of what I 
think is perhaps the single most important element we will be 
dealing with in climate change and that is the billions of 
decisions that are made every day by businesses and consumers 
in our country and around the world. I am interested in being 
able to explore with them the way that the government can 
provide a framework to help advance this, to give stability to 
business, to send a signal about where we are going.
    I am pleased to represent a community, Portland, Oregon, 
where there is a strong commitment to green business 
initiatives, sustainable development and trying to have a 
regulatory framework for energy, transportation and housing 
that helps those pieces work together. I am looking forward to 
having this conversation here, and I appreciate your scheduling 
the hearing.
    The Chairman. Thank you. The gentleman's time is expired.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. Thank you. I appreciate the witnesses being 
here.
    When you think about this, America does well any time there 
is a large economic transition, a technological transition. 
That has been our forte. It is where we have had our growth. 
When there was a transition to aeronautics, we have done very 
well. Where there was a transition in the Internet, we have 
done very well. And now when we go into a transition to other 
than carbon-based fuels we are going to do very well if--if--
the U.S. Congress adopts the free market principles that my 
friend, Mr. Sensenbrenner, referred to when it comes to the 
limited capacity of the atmosphere to carry CO2. And 
that is why I hope that all of us here will work on a cap-and-
trade system that uses the power of the market to drive these 
technologies forward once there is a price of carbon associated 
with a, quote, market, a free market on the carrying capacity 
for CO2; and I look forward to getting that done.
    I just want to note that folks have entered this discussion 
with fear, and I enter it with amazement at how smart people 
are. Every time I turn around, there is a new technology. I 
just got a little BlackBerry about a group called Konarka that 
is developing a clear, affordable technique for, actually, 
clear windows. It is just amazing what is going on out there, 
and I look forward to a way to help these folks move forward.
    The Chairman. The gentleman's time is expired.
    The Chair recognizes the gentleman from Connecticut, Mr. 
Larson.
    Mr. Larson. Thank you, Mr. Chairman.
    Mr. Chairman, like the other members, some here on the 
dais, I look forward to the discussion.
    I have a keen interest in fuel cell technology, but also I 
am interested in the contrast and discussion that exists down 
here between a cap-and-trade system and a carbon tax and am 
interested in what the panelists have to say about that in 
terms of the dynamics, the leverage and how successful they 
think, for example, European Union's are. And I want to commend 
the chairman again for his efforts in putting this panel 
together.
    The Chairman. I thank the gentleman.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Thank you for calling 
the hearing.
    I would like to express appreciation to our guests for 
being here. I am particularly excited about your presence 
because of the advancements that we have seen in the EU and, of 
course, Chancellor Merkel calling for the need for a global 
emissions trading system, and I am certainly interested in 
whether or not you think that is practical and workable.
    Of course, the issues that we face here are global because 
there is no such thing as pollution and greenhouse gases just 
settling over parts of the world; and so we look forward to 
your statements and the opportunity to become dialogical.
    Thank you.
    [The prepared statement of Mr. Cleaver follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you. The gentleman's time is expired.
    The Chair recognizes the gentleman from California, Mr. 
McNerney.
    Mr. McNerney. Thank you, Mr. Chairman, for holding this 
important hearing; and I thank the panelists, some who have 
come from quite a distance to participate.
    This is an important topic because it brings in both the 
international players and a strong business interest. It is my 
strong belief that the solutions to global warming will make us 
more prosperous and sustainable. It will create jobs and 
enhance international cooperation and understanding. I look at 
this as an opportunity to be exploited in making this a better 
world. We here in the United States can learn from Europe's 
experience and from known business successes.
    With that, I look forward to a future of cooperation and 
understanding; and I yield back the balance of my time.
    The Chairman. I thank the gentleman. The gentleman's time 
is expired.
    The Chair recognizes the gentlelady from Michigan, Mrs. 
Miller.
    Mrs. Miller. Thank you, Mr. Chairman. I want to thank you 
for holding this hearing.
    I certainly want to thank all the witnesses as well for 
your attendance today. I am certainly looking forward to 
listening to you as you share your expertise.
    Coming from Michigan, the home of the domestic auto 
industry, I am interested to hear the testimony regarding the 
economic impact of legislation on vehicle technology. I do 
believe that there may be a number of business opportunities in 
a low-carbon economy.
    However, as you might imagine, I am also very concerned by 
some of the proposals that we should enact legislation to 
mandate a low-carbon economy. These proposals are making the 
assumption that the low-carbon technologies exist or will exist 
in the near future and that, some of these proposals, people 
would assume that the reason that these technologies have not 
yet been delivered is because businesses do not choose to 
develop or integrate them into their business model. And 
obviously one of the leading examples of this is in the 
domestic auto industry, constantly suggesting that if CAFE 
standards were increased or other form of binding legislation 
were enacted that the automotive industry would just respond 
with technologies to meet these demands. However, the burden 
that these regulations would place upon the domestic auto 
industry could be very severe, particularly at a time when it 
is well known about the decline that is happening, the economic 
transition that is happening to the domestic auto industry.
    So I would just--as I say, I am very interested to hear 
about all of the different expertise on this issue. I think it 
is clear what is happening in other countries around the world 
where they are investing in R&D and new alternative 
technologies, et cetera. At the same time, our country really 
looks to the domestic auto industry to do all of the R&D 
themselves to work it into their business model and to produce 
cars that their customers may not be interested in purchasing. 
So I will be very interested to hear your testimony.
    I thank you again, Mr. Chairman.
    The Chairman. I thank the gentlelady. The gentlelady's time 
is expired.
    The Chair recognizes the gentlelady from South Dakota, Ms. 
Herseth Sandlin.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman; and thank you 
for holding this very important hearing.
    I look forward to hearing from our witnesses today and 
exploring with them the business opportunities that do exist 
based on their experience and insight in a low-carbon energy 
economy. But, more specifically, in representing a rural 
district, a farm State, the role that American agriculture and 
rural America can play in helping find solutions and what the 
business opportunities are in a low-carbon energy economy in 
reducing greenhouse gases, what the role of American 
agriculture can be, whether it be certain farming practices or 
grazing practices, that relate to participation in a cap-and-
trade system, if indeed the United States ultimately adopts 
one.
    So this is an area, whether it is biofuels, wind and solar, 
carbon storage, I look forward to exploring with our witnesses 
today; and thank you very much, Mr. Chairman, again for holding 
this important hearing.
    The Chairman. The gentlelady's time has expired, and all 
time for opening statements has expired, so we will now turn to 
our very distinguished panel.
    I would first like to recognize Ralph Izzo, who is the 
Chairman, President and Chief Executive Officer of Public 
Service Enterprise Group, Incorporated, since April of 2007. 
This is a company which has electric generating capacity in New 
Jersey, New York, Pennsylvania, Connecticut, Texas, California, 
New Hampshire and Hawaii.
    He first joined PSEG in 1992 and has served in a number of 
leadership positions in that company. He is trained as a 
physicist, and he has also spent time in the offices of Senator 
Bill Bradley and New Jersey Governor Tom Kean working on 
science and technology policy.
    We welcome you, Mr. Izzo. Whenever you are ready, please 
begin.

 STATEMENT OF RALPH IZZO, CHAIRMAN, PRESIDENT AND CEO, PUBLIC 
                 SERVICE ENTERPRISE GROUP INC.

    Mr. Izzo. Thank you. Good morning.
    Chairman Markey, Ranking Member Sensenbrenner and members 
of the committee, I am honored to appear before you today on 
behalf of PSEG.
    As the chairman has already told you, PSEG is an energy 
services company headquartered in New Jersey. But in addition 
to our regulated utility we own and operate competitive 
electric generating consisting of coal, natural gas and nuclear 
power.
    We believe that climate change is the preeminent challenge 
of our time, and with it come significant business 
opportunities and responsibility. Our company has been a leader 
in the effort to limit greenhouse gases for more than 15 years. 
Some of the steps we have taken include being the first utility 
in the country to sign a pre-Kyoto voluntary greenhouse gas 
reduction accord. We voluntarily agreed in 2004 to reduce our 
carbon dioxide emissions by 18 percent from 2000 levels by 
2008, and we have been a leading advocate for a national 
economy-wide cap-and-trade program to reduce greenhouse gas 
emissions to 1990 levels by 2020 and 80 percent below current 
levels by 2050. We are also improving the efficiency of our own 
electric delivery system.
    Some initiatives include investing in state-of-the-art 
distribution cables and energy efficient transformers, using a 
biodiesel fuel blend in our vehicle fleet and replacing 1,300 
cars and light trucks with hybrid electrics and retrofitting 
450 bucket trucks with electric drives to power the lifts.
    Mr. Chairman, if you ask whether climate policies have 
influenced our business decisions and whether we think there 
are significant opportunities for businesses to participate in 
the climate challenge ahead, the answer is a resounding yes. To 
do so, PSEG and other companies will need to apply our 
expertise in new ways to reduce energy demand, spur development 
of renewable resources and develop carbon-free central station 
power. In short, we will have to change the way we run our 
businesses and enter into a new era of collaboration with State 
and Federal policymakers.
    Energy efficiency offers one such opportunity, but it will 
require a new regulatory compact. These are investments that 
can be made right now using existing technology. For example, 
in 1970, a typical refrigerator consumed around 2,000 kilowatt 
hours of electricity annually. Today, an Energy Star 
refrigerator of the same size consumes about one-fifth of that 
amount.
    The problem is that customers are not making decisions to 
invest in energy efficiency opportunities like this 
refrigerator. Energy utility companies are uniquely positioned 
to change this dynamic by investing in energy saving appliances 
and fixtures ourselves and receiving compensation as we do for 
investing in pipes and wires.
    Consider the fact that utilities engage in millions of 
interactions with customers daily and employ a highly skilled 
work force that can be engaged to promote efficiency. Also, 
utilities can make long-term investments and can assure that 
all customers, especially low-income customers, benefit from 
energy efficiency.
    On the renewable energy front, PSEG has requested State 
approval to invest $100 million to finance solar projects in 
New Jersey. PSEG proposes to provide loans to solar developers, 
making solar energy more accessible and affordable for 
households and businesses. We are also anxious to explore 
direct investment in solar energy if Congress enacts a 
provision in the energy tax package that allows utilities to 
claim the investment tax credit available to others at present.
    Mr. Chairman, I conclude by saying what you already know. 
For the U.S. to meaningfully address climate change, a uniform 
national greenhouse gas reduction policy that establishes a 
market price for carbon is needed. This will drive development 
of new low-carbon technologies. This should be a single, 
economy-wide cap-and-trade program and a single greenhouse gas 
trading market with consistent emissions reduction targets 
across all States.
    Congress should take its cue from the 10-State Regional 
Greenhouse Gas Initiative and develop a comparable national 
program that will render regional programs unnecessary. By 
``comparable'' I mean requirements that are at least as 
stringent as the so-called Reggie States.
    Other key components of a national program should include 
transition to a Federal allowance auction over a 10-year period 
and using proceeds to fund research and development and low-
income assistance programs. Allocating a portion of allowances 
at no cost to electric generators based on an updating output-
based formula, this approach will spur investment in higher 
efficiency power plants and provide incentives for investing in 
advanced low- and zero-carbon technologies.
    Mr. Chairman and members of the committee, thank you again 
for the opportunity to participate in these important hearings. 
I look forward to your questions.
    The Chairman. Thank you, Mr. Izzo, very much.
    [The statement of Mr. Izzo follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Before turning to our next two witnesses, who 
are members of the Prince of Wales Corporate Leaders Group on 
Climate Change, I would like to include in the record a letter 
that Prince Charles, the Prince of Wales, has sent to the 
Select Committee. Members have a copy of the full letter, which 
is in front of them.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. I would like to just read a brief excerpt 
from Prince Charles' letter to us. He said:
    ``I have been following with the greatest attention the 
most recent policy evolutions in key industrialized countries. 
To secure the future for generations to follow, I hope that the 
boldest possible targets can be set, together with the policies 
needed to implement them. Otherwise, how can we expect 
developing countries such as India and China to take action? 
The legally binding targets that will be put in place in the 
United Kingdom through the climate change bill, together with 
those being put in place in the State of California and steps 
being undertaken in numerous other States and cities in the 
United States, are evidence of how policymakers in both our 
countries are moving to address this problem. A challenge of 
the magnitude of climate change requires a coordinated response 
based on actions across every sector of society, and the 
business community is going to be critical in achieving this. 
The companies which are members of my Corporate Leaders Group 
are playing a highly strategic role, essentially helping to 
create a political space in which effective policies can be 
introduced and global progress can be achieved. I very much 
hope that the hearing this week will be productive and that 
members of my Corporate Leaders Group will be able to work with 
members of the Select Committee on Energy Independence and 
Global Warming in the future to develop further policy 
responses to the most pressing of problems. This brings you my 
warmest good wishes. Prince Charles.''
    So we thank him for that letter, and we thank the next two 
witnesses for coming here today.
    I would like to recognize a member of the Management 
Committee for the Prince's Business and Environment Program and 
the Chief Executive of Johnson Matthey, Neil Carson. He joined 
the company in 1980 and has served in a variety of positions 
within the company and on the board before becoming CEO in 
2004. He is currently the Chairman of the Business Task Force 
on Sustainable Consumption and Production.
    Mr. Carson, welcome; and whenever you are ready please 
begin.

  STATEMENT OF NEIL CARSON, CHIEF EXECUTIVE OFFICER, JOHNSON 
                          MATTHEY PLC

    Mr. Carson. Chairman Markey, thank you very much and thank 
you, members of the Select Committee. This is an important 
issue, energy independence and global warming; and I am very 
honored to be here to present evidence.
    As the chairman stated, my name is Neil Carson. I am Chief 
Executive of Johnson Matthey and a member of the Corporate 
Leaders Group, which I represent today.
    Johnson Matthey is a specialty chemical company. It is 
nearly 200 years old. Our core skills are in catalysts, in 
pressures metals and in fine chemistry; and our largest 
business, as many of you will be aware, is in the business of 
auto catalysts, that is, supplying catalysts to the exhaust of 
cars. Lately, trucks and buses also have been included in the 
legislative framework and other pollution control systems. 
Also, we are a developer of fuel cell technology and have been 
for many years.
    Our business model at Johnson Matthey is to invest in R&D, 
to invest in technology; and this we hope will maintain 
leadership positions in our markets by continuously improving 
the performance of our products and then better servicing our 
customers as a result.
    I won't go into great detail about the rest of Johnson 
Matthey's business, because I think the main points of my 
evidence today to you is that both Johnson Matthey and the 
Corporate Leaders Group believe that, to address climate change 
and energy independence, industry and government need to work 
together and that time is of the essence and that our goals can 
be met at the same time as growing our economies and growing 
prosperity.
    The idea is not a new one. The idea to set long-term and 
binding legislation, in this case for CO2 emissions, 
is a powerful incentive then for industry like ours and others 
to invest in technology to find solutions to that issue. And I 
have got a classic example, which doesn't really need to be 
raised at this meeting, but, of course, California in 1970 
realized that its environment was hostile to human life and it 
was identified that cars were the culprit. They set demanding 
legislation into the future, 5 years ahead, and made it clear 
that in order to sell cars in California that legislation would 
need to be met. They didn't have very much idea about how the 
legislation would be met, nor do I think they cared much. They 
didn't choose a technology. They just set the outcome that they 
wanted in terms of reduced emissions from vehicles. That was in 
1970. And from 1970 to today the population has grown 38 
percent in California, the miles traveled has grown 155 
percent, GDP has grown 164 percent, but the relevant emissions 
have fallen 31 percent. A good example that prosperity can 
thrive over the years and that this has been a low-cost 
exercise for California.
    Now I think we can do the same thing with CO2. 
There are many mechanisms. The cap-and-trade mechanism has been 
mentioned today. There is, of course, taxation as well as an 
option. However, it is done from an industrial perspective the 
essence must be to set clear targets for the future and then 
not pick a technology, not pick a winner, but to allow business 
to find a solution. The solutions will be higher cost than 
currently but perhaps not as high cost as clearing up the 
mitigating, mitigating for the effects of global warming 
looking forward as identified by the Stern Review.
    Other issues for electricity generators are carbon capture 
and sequestration. These are technically possible, feasible, 
but expensive mechanisms. But, again, they can be invested in 
because of the cost of future emissions from carbon.
    That brings to the end my summary. Climate change is an 
urgent issue. With wealth comes responsibility. We should look 
after the planet for future generations; and the Corporate 
Leaders Group look forward to working with governments, your 
government and other governments, to find the solutions.
    The Chairman. Thank you, sir, very much.
    [The statement of Mr. Carson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. I would now like to recognize Alain Grisay. 
He is Chief Executive of F&C Asset Management. He was also 
appointed an Executive Director and a member of the Executive 
Committee of Friends Provident on January of 2006. Prior to 
joining F&C in April of 2001, Alain Grisay was at JP Morgan for 
20 years as a Managing Director responsible for the investment 
bank's market client business in Europe.
    Mr. Grisay, please begin when you are ready.

 STATEMENT OF ALAIN GRISAY, CHIEF EXECUTIVE OFFICER, F&C ASSET 
                        MANAGEMENT, PLC

    Mr. Grisay. Mr. Chairman and members of the committee, on 
behalf of F&C Management and fellow members of the U.K. and EU 
Corporate Leaders Group on climate change, I would like to 
thank you for giving me this opportunity to testify before the 
congressional Committee on Energy Independence and Global 
Warming.
    F&C is a leading European asset management company, nearly 
140 years old, that serves a wide range of institutional and 
retail customers with assets over $200 billion. Our mission is 
to deliver competitive investment returns to our clients and to 
act on their behalf to ensure that investee companies generate 
profits for their shareholders, while ensuring that their 
businesses will be around for the long term. We take our role 
as active investors very seriously and, in so doing, do not shy 
away from taking a strong stand on matters of public policy 
where we believe these to be a vital interest to our clients. 
Climate change is one such issue.
    I have traveled here today from London to share with you 
the fruits of our thinking and experience both as an 
institution investor and as a business that has played a 
leading role in voicing the concerns of business to U.K. and EU 
policymakers on climate change.
    My message is simple: Business and investors can only play 
their part in tackling climate change if government takes 
decisive action to make this possible. The costs of moving 
forward today in a planned and deliberate way are modest and 
will even yield profitable business opportunities for many 
innovative companies along the way. These costs are dwarfed by 
the costs of inaction when one considers the human, natural and 
economic consequences of a business-as-usual approach. In 
short, we simply cannot put our heads in the sand.
    Most important of all, this problem will not get solved 
through market forces alone in the time that we have left to 
act, because climate change presents a textbook example of 
market failure. This means that voluntary targets won't do. 
Business needs a level playing field in order to take on the 
financial risks that adequate action on climate change require. 
Business will play a pivotal role in marshaling capital to fund 
the innovative technologies that will overcome climate change, 
but it needs government to set clear long-term rules and 
standards.
    I have therefore come here to ask you as legislators of the 
most powerful nation to play a historical part in this effort. 
Only with long-term legislative clarity can investment 
companies like mine return to their day jobs and begin the task 
of shifting capital on the scale that is needed to transform 
the global economy to one that runs on low-carbon energy.
    What does this mean in practice? That we investors and the 
companies in which we invest need the U.S. Government to, 
first, define climate change policy as a top national priority 
and set binding national targets that will be translated into 
clear, long-term rules, regulations and standards; secondly, 
play a leadership role in engaging other national governments 
to establish binding global targets and standards; and, 
thirdly, to introduce policy instruments, including cap-and-
trade mechanisms, fiscal measures and regulatory standards that 
would result in a viable carbon price. So as long as carbon is 
valued at zero, capital investments in innovative low-carbon 
technologies will remain embryonic and fail to deliver the 
economy transformation that is needed.
    In conclusion, Mr. Chairman and members of the committee, 
we have two choices: We can act now, with the benefit of a bit 
of time and planning, thereby enabling business to manage the 
transition efficiently and government to cushion the blow for 
those affected by the inevitable disruption; or we can act 
later and pay a much higher price. There is no third option. 
Innovative companies and investors stand ready to act, but we 
cannot compromise our economic survival without clear signals 
from government that reflect the new economy reality.
    I hope that the work of this committee will help you lead 
your nation and the community of nations in embracing this 
challenge and create the conditions for businesses to play a 
vital role in delivering the solutions to climate change. Thank 
you very much.
    The Chairman. Thank you, Mr. Grisay.
    [The statement of Mr. Grisay follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. I would like to now recognize our final 
witness, Jonathan Lash. He is President of the World Resources 
Institute and a founder of the U.S. Climate Action Partnership. 
In 2005, Rolling Stone described him as the environmentalist 
who has done the most to bridge the bitter divide between 
industry interest and green groups committed to halt global 
warming. His long career in State and local government and 
environmental organizations as a litigator and a leader is a 
testament to this well-deserved description.
    We welcome you, Mr. Lash. Whenever you are ready, please 
begin.

    STATEMENT OF JONATHAN LASH, PRESIDENT, WORLD RESOURCES 
                           INSTITUTE

    Mr. Lash. Thank you, Mr. Chairman and members of the 
committee.
    I appreciate the opportunity to appear before you and 
particularly appreciate the energy the committee is putting 
into addressing a compellingly important issue for the country, 
to develop legislation that will be both in our national 
environmental interest and in our national economic interest. I 
think that is really our subject today.
    My organization, the World Resources Institute, is an 
environmental think tank that works on global issues, including 
global climate change, and has partnered with businesses for 15 
years developing low-carbon alternatives, finding ways for them 
to reduce emissions to purchase green power and developing the 
accounting protocol which virtually all companies that measure 
greenhouse gases now use to measure and report greenhouse gas 
emissions.
    I am here today on behalf of the United States Climate 
Action Partnership, a group that now includes six national 
environmental organizations and 27 companies from virtually 
every sector, including GE, GM, Ford, Chrysler, Caterpillar; 
six utilities, including Duke Energy, the third largest user of 
coal in the United States; Dupont, Dow, Pepsi, Rio Tinto, which 
is the third largest producer of coal in the United States; 
Conoco, John Deere and many others.
    The group last January issued a call to action, which, 
first of all, emphasized our agreement that climate change is 
real, immediate and urgent. In fact, it is proceeding more 
quickly than the scientists predicted, with impacts that are 
occurring earlier than we expected.
    The group, of course, shares the committee's perception 
that we must and can address climate change in ways that help 
the U.S. economy to move forward and compete when tomorrow's 
markets begin to demand low-carbon alternatives. Specifically, 
the United States Climate Action Partnership has recommended 
that Congress adopt a mandatory economy-wide cap-and-trade 
system that slows, stops and then reverses the growth in U.S. 
emissions, that achieves 10 to 30 percent reductions within 15 
years and 60 to 80 percent reductions by 2050. The group urges 
the inclusion of the capacity to use graphics in order to meet 
reduction targets and that the policy be complemented by other 
policies to accelerate efficiency improvements and advance 
technology.
    So why? Why are 27 major companies, many of them heavy 
energy users and heavy coal users, recommending stringent 
action on climate change?
    First, they believe we have to act and that it is better to 
get started sooner, that delay will be expensive and increase 
the eventual cost to them.
    Second, they want to compete in tomorrow's markets; and 
they believe tomorrow's markets will be demanding low-carbon 
technology, services and products. There will be booming 
demand. They want to be there to meet that demand.
    Third, they are making massive technology investments in 
technology that will be in use for 50 years; and they want to 
know what the rules will be in the future.
    Fourth, they need a carbon price. You have already heard 
several times from this panel the importance of a carbon price. 
If we want to let the market choose winning technologies, the 
market has to have a price signal to be able to do it.
    Finally, they want a level playing field. We now have 17 
States that represent the majority of the U.S. economy that are 
imposing their own carbon restrictions. It is an impossible 
environment for multi-national companies to operate in in the 
United States.
    I would make one quick comment that does not represent the 
U.S. Climate Action Partnership findings. Since you are in the 
final process of approval of an energy bill, there are 
extraordinarily important provisions in the energy bill which 
would help both energy security and climate change. Those 
include efficiency measures and renewable measures.
    But it is important to realize that not all measures that 
would improve energy security will help with climate change. An 
example is the proposed subsidies for coal to liquids. Since 
the process of producing liquid fuel from coal is energy 
intensive, it results in far higher GHG emissions than other 
liquid fuel alternatives.
    Thank you very much, Mr. Chairman. I look forward to your 
questions.
    The Chairman. Thank you, Mr. Lash, very much.
    [The statement of Mr. Lash follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. The Chair will now recognize himself for a 
round of questions. We will begin with you Mr. Izzo.
    PSEG is primarily a northern company. A couple of weeks 
ago, we actually had the Vice-President of the Southern Company 
who testified before us. He told us that solar energy would not 
work for the Southern Company down in Florida and Georgia. And 
yet we hear from you today up in New Jersey and the States 
surrounding New Jersey that you are making a massive investment 
in solar energy.
    And it seems kind of curious, because I think that New 
Jersey seniors as they leave New Jersey to go to Florida say 
the same thing that Massachusetts seniors say as they leave for 
Florida, which is I hate the winters up here; I am going to 
Florida. So why is it that you, a northern company, can make 
such a massive investment so optimistically in solar energy, 
but the Southern Company says that it won't work down there?
    Mr. Izzo. Well, I can't talk for the Southern Company. I 
can tell you the logic that we put into this.
    Solar energy will work in New Jersey. Its estimate, 
depending upon assumptions you make, is it would cost anywhere 
from $5,000 to $8,000 per kilowatt. That is more expensive than 
conventional gas-fired power. So one could take the approach 
that, quote, it doesn't work. I would simply say it is more 
expensive.
    However, that would be looking at only one side of the 
equation. Clearly, the benefits of solar are not only in terms 
of greenhouse gas reductions but also in terms of traditional 
pollutant reductions: NOX, SO2, mercury, 
fine particulates. So it is our responsibility, I believe, to 
educate consumers that, while there are some places energy 
efficiency, where you can improve the environment at a lower 
cost, there are other technologies where improving the 
environment will result in higher cost, but it will work.
    The Chairman. Now, we just voted in the House a standard 
that would be national, 11 percent renewable electricity by 
2020 and 4 percent from efficiency. Can you meet that up in New 
Jersey?
    Mr. Izzo. The answer to that is yes. The question that 
others will ask is, at what cost? And my response is--that is 
for policymakers to decide. We will do it at the least cost 
possible.
    But to answer your question, Mr. Chairman, yes, we can meet 
it. And I think through using utilities we have a lower cost to 
capital, more patient capital, longer amortization schedules, 
and by removing the investment tax credit exclusion which right 
now undermines a utility's ability to invest in that we can do 
it at the least cost for customers.
    The Chairman. Thank you.
    Mr. Carson, we are also debating auto efficiency here in 
the United States. Can you bring us up to speed on what is 
going on in Europe? What are the standards that are being 
debated across the EU?
    Mr. Carson. Yes certainly, Chairman. I don't have the 
actual numbers to hand, but we talk in Europe about fuel 
economy in terms of grams of CO2 per kilometer. I 
think the average for the fleet is about 160 grams of 
CO2 per kilometer, and I would imagine that relates 
to about 40 miles to the gallon. They may be slightly more. I 
think that compares to the fuel economy in the U.S. of maybe 
20. Again, I don't have those figures to hand, but they are 
rough numbers.
    The auto makers in Europe have been working to a voluntary 
program to reduce their emissions of CO2 for the 
fleet, and that has had some success. But, more recently, the 
governments have decided they want more success than that and 
are pressing the car companies to reduce from 160 to around 140 
in a couple of years time and then 120 and ultimately to below 
100. So very significant miles per gallon that equates to.
    Having made that announcement earlier in the year, the 
Frankfort Motor Show, which was in September, it was 
interesting to note that every single car company showcased 
high-fuel-efficiency vehicles. So these fuel efficiency 
vehicles are available.
    Of course, it is easy to blame the car companies for 
selling vehicles that don't have high efficiency. So the 
consumers take some blame here in what they want to purchase. I 
accept that point. But the other thing that has happened in 
Europe is that there has been a push to diesel vehicles which 
are 19 percent more fuel efficient on a like-for-like basis; 
and now 50 percent of new car sales in Europe are for diesel 
fuel vehicles, up from something like 32 percent 5 years ago. 
So quite a dramatic change in the engine type used in Europe.
    The Chairman. My time is expired.
    The Chair recognizes the gentlelady from Michigan, Mrs. 
Miller.
    Mrs. Miller. Thank you very much, and I will follow up on 
my chairman's comments.
    Mr. Carson, as I mentioned to you, coming from the Motor 
City, Detroit, Michigan, I obviously have a very large interest 
in this; and I appreciate the fact that you are trying to 
articulate the differences in what we have as the government 
regulation for CAFE standards, as we call them here, and in 
Europe, of course, they are voluntary.
    I will just make a personal observation. As you travel to 
many of the major European cities, whether it is Brussels, 
Berlin, Rome or whatever, you see all these buildings that are 
practically blackened. We don't have that here, and that 
obviously has had an impact. I am not sure how all the 
voluntary standards are working there, but I certainly commend 
the European automobile industry to be looking at doing these 
kind of things as well.
    I might ask, if I could, when--and you mentioned in your 
comments, Mr. Carson, as well, about that you were heavily 
invested in hydrogen fuel cell technologies, et cetera. Perhaps 
you could flesh that out a bit for me. How does your company 
interact with your government as far as any research and 
development dollars either for hydrogen fuel cell or lithium-
ion batteries or some of the various alternative energy 
sources?
    Mr. Carson. Well, firstly, the comment on the black 
buildings, if I may, in Europe. I don't know the cause exactly 
of that. But the latest technology which has been driven by 
legislation for the emissions of diesel vehicles, it is now 
possible to get diesel vehicles to exactly the same emissions 
performance as petrol vehicles; and that is for U.S. 
legislative limits, too. So I think that the emissions from 
diesel and petrol vehicles in the future will actually be the 
same, so not a differentiating factor.
    The fuel cell business is focused on many applications. The 
biggest one in the future we believe will be cars, and we are 
stimulated to work on fuel cells by the car companies who 
pretty much all have some kind of programs to put fuel cell 
engines into vehicles at some stage in the future.
    This is quite a long-term issue. I think influential here 
has been California in driving towards zero emission vehicles 
which the car companies obviously have their eye on.
    So our main motivation is to work with our customers. We 
are the recipients and grateful to be the recipients of some 
government funds in the area of fuel cells, but our main 
expense and our main driver is through our desire to develop 
products for future generation cars and residential buildings 
in collaboration with our customers.
    Mrs. Miller. Thank you.
    Another difference, of course, between our two continents 
is the way that we tax the usage of gasoline, petrol, and a 
huge tax burden in the EU which we don't have here, although 
there is a lot of talk about using taxes as a way to disincent 
driving.
    One of the things I think that is very important between 
the U.S. and the EU is that we do have an overlay, a mesh of 
the regulatory standards between our two economies and that we 
don't have any kind of unintended consequences with some of the 
various regulatory policies that we have had, as we did with 
the Sarbanes-Oxley. Unfortunately, with the financial services 
there was an overreaction, I guess, in some ways and we didn't 
really talk to our European friends about that. So we want to 
make sure in the environmental area that we do so.
    If I could ask a question, again to my European friends 
here, and we certainly appreciate you coming, I was very 
interested in what is happening with the focus of the entire EU 
really on the airline industry, although that is apparently 
only 3 percent of the emissions as you have interpolated it 
there, but yet there is a huge focus in Europe to utilize the 
emissions trade. If you could just talk a little bit about 
that.
    Because I noticed in your written background, Mr. Grisay, 
that you were saying the emissions trading scheme really hadn't 
delivered on its promise. How is that all working?
    Mr. Grisay. Well, that is a very interesting point. It is 
certainly one that attracts a lot of attention in the public 
and a growing awareness of the public in respect of the 
responsibility of airline companies, and you see quite a bit of 
lobbying in that respect.
    As a fund manager, I can assure you that, for instance, in 
the case of the socially responsible funds that we run, and 
they happen to be the largest in Europe, we exclude investments 
in airline companies for that reason. I think that it is also 
linked to a degree to the growing success in alternative public 
transportation, in particular fast trains. So this is indeed a 
comprehensive review of what the alternatives are and certainly 
a growing pressure for greater efficiency. I don't believe 
airlines will disappear. I don't believe we should stop flying. 
But putting pressure on both airlines and airports for greater 
efficiency is certainly the right thing to do.
    Mrs. Miller. Thank you. Has my time expired?
    The Chairman. Yes, your time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    Mr. Izzo, in your testimony, you indicate that there is 
going to be a paradigm shift that is going to be necessary in 
terms of how utilities are regulated to provide some incentives 
for reasonable return on energy efficiency. In my community, 
our gas company actually was a pioneer in decoupling to 
disconnect the rate of return from just the volume of gas. Are 
there other specific ideas that occur to you that we should be 
considering in terms of changing that regulatory scheme?
    Mr. Izzo. Yes. Decoupling is a necessary but not sufficient 
condition, to use an old mathematics expression, in that it 
holds a utility harmless. But, today, if I invest in a bigger 
wire so that more electricity will flow, I can get a return on 
that investment. If I subsidize a compact fluorescent light 
bulb, I get zero return on that investment. It is strictly what 
is known as a pass-through. There is only so much time in a 
day, there is only so much management attention I can put to 
certain things, and at the end of the day I have to show a 
certain amount of earnings growth. So I tend to therefore focus 
on the things that produce the profitability that my investors 
seek. So what I would encourage is truly putting energy 
efficiency on a level playing field with supply options and 
allowing you to at least earn returns on energy efficiency.
    Mr. Blumenauer. I would welcome some thoughts that you or 
any of the other panel members might have in specific ways that 
we might adjust the State regulatory scheme. This looks to me 
to be one of the real gaps; and I, for one, am willing to 
encourage higher rates of return for the types of behaviors we 
want. The specifics would be of great interest.
    Mr. Blumenauer. Mr. Lash, on page 5 of your testimony you 
have these charts here that----
    Mr. Lash. The bubble charts.
    Mr. Blumenauer. The bubble charts. There is one bubble that 
I noticed that was not there, and that is vehicle miles 
traveled. We have people, Urban Land Institute, Smart Growth 
America, a number of folks who have done an analysis that 
suggests that even if the Chairman's CAFE standards are 
reached, that the exponential increase in vehicle miles 
traveled from outdated regulatory schemes, land-use patterns 
and fewer transportation choices for folks will overwhelm any 
energy savings.
    Do you have any thoughts about that missing bubble and 
policy initiatives that might help address that balance?
    Mr. Lash. I do. I would make two comments.
    First, the explanation of why the bubble isn't there is, in 
order to make it readable, we tried to only portray those 
policy initiatives that seemed to be immediately before the 
Congress. So we put CAFE there because there was an ongoing 
debate on CAFE. The same with coal liquids. We didn't see a 
proposal that was before the Congress, when we developed it, on 
vehicle miles traveled.
    You are absolutely right. In fact, the evidence is what has 
happened over the last 20 years, the U.S. auto industry has 
made spectacular increases in performance and efficiency, but 
they have been erased by increased size of the vehicles and by 
increased vehicle miles traveled. So our consumption has gone 
up. We have not put it into reduced consumption of gasoline.
    The recommendations of the United States Climate Action 
Partnership include the recognition that any policy on 
transportation has to address the technology of the vehicle, 
the fuels and vehicle miles traveled. That means a combination 
of policies that address alternative transportation means and 
getting at some of the land-use issues that tend to force us to 
travel long ways to get to work.
    Mr. Blumenauer. Mr. Chairman, I would hope that there would 
be time in our agenda at some point, actually maybe even a 
hearing in Oregon, where we have done some of this work--Mr. 
Inslee has some of it in his book--where we could look at some 
of the policies that would give people more choices that would 
end up reducing vehicle miles traveled.
    In our community, because we drive four miles-per-day less 
on average than the national average, we are saving hundreds of 
thousands of gallons of gasoline and over a billion dollars in 
savings to our constituents. I think it is something that would 
be a lot of fun to explore, and would love to offer some 
suggestions about where to do it.
    The Chairman. We will be in Portland, Oregon, before long, 
we promise.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    The gentleman's time has expired. The Chair recognizes the 
other gentleman from Oregon, Mr. Walden.
    Mr. Walden. And after the Portland hearing, you could come 
out to, say, Burns or somewhere and look at great distances 
traveled and the need for bigger vehicles. We would like to 
take a look at that, because we need to get efficiency in those 
as well.
    I want to talk--Mr. Izzo, you made a statement, and I just 
want to make sure I heard it correctly, that solar power was at 
$5,000 a kilowatt hour to $8,000 a kilowatt hour?
    Mr. Izzo. Hopefully I did not use the units kilowatt hour.
    Mr. Walden. You did.
    Mr. Izzo. Okay. Kilowatt. The installed value is $5,000 to 
$8,000 per kilowatt installed.
    Mr. Walden. Now, could you translate that, as a rate payer, 
what is it per kilowatt hour?
    Mr. Izzo. Per kilowatt hour, depending upon the amount of 
sun and the conditions, but in New Jersey that would be 
typically about 70 cents per kilowatt hour, which is quite a 
bit more expensive than fossil fuel.
    Mr. Walden. And what would the fossil fuel rate be today?
    Mr. Izzo. Typically, about 7 cents per kilowatt hour.
    Mr. Walden. So about 10 times.
    Mr. Izzo. Yeah, some would say that it could be as little 
as seven times, but it is many multiple times more expensive.
    Mr. Walden. And what is the energy efficiency rating for 
solar versus some of these other----
    Mr. Izzo. If I am interpreting your question right, in 
terms of dollars per ton of CO2 saved, solar would 
cost about $500 in New Jersey for a ton of CO2. But 
that, then, doesn't account for any of the NOX 
savings, SO2 savings, the mercury savings, the 
particulate savings.
    Mr. Walden. Sure. But what about energy generation 
efficiency?
    Mr. Izzo. About a 15 percent conversion rate in New Jersey.
    Mr. Walden. Okay. Now, I want to make sure you and I are 
talking the same talk here, because, like, I am told for hydro 
power, which we have a lot of in the Northwest and in other 
select areas around the country, we are almost 90 to 100 
percent efficient in generation conversion. So are we talking 
the same thing here? The solar is what percent?
    Mr. Izzo. No, we are not talking the same thing in that 
regard.
    Mr. Walden. All right.
    Mr. Izzo. I was talking about how often the solar energy is 
available to be converted into electricity.
    Mr. Walden. Right.
    Mr. Izzo. I don't know the answer to that question about 
the overall efficiency of the solar panel in converting the 
sunlight into electricity. We could get that for you. I don't 
know that.
    Mr. Walden. Okay. We are actually working on a project in 
my district that would incorporate at least solar and perhaps 
wind on an old military installation. And I am fascinated by 
the prospect. We are working with the Air Force to try to work 
with the National Guard to try to free up the site with the 
State and develop these alternative sites. And I am just 
curious as to the efficiencies and the costs and all and how we 
can move that one forward.
    Mr. Carson, I think, back to the issue of vehicle emissions 
and all, it seemed to me, when I was on the Energy and Air 
Quality Subcommittee trip to Europe, there was a lot of 
discussion we had about the differences in air quality legal 
standards in Europe versus the United States, and perhaps we 
have a much higher standard under the Clean Air Act than 
Europe.
    And I am curious if you know about that and what the 
differences are, especially as they relate to diesel fuel usage 
in Europe and the emissions there and the deaths that are 
attributed to that versus here. I think it is about 10 times as 
many people die from the dirty air in Europe as here. And we 
don't want to go down a path that exports that here, for 
example.
    Mr. Carson. I think, yeah, the issue you are referring to 
is that, in Europe, the strategic decision was made by the 
governments to give a different emissions standard to petrol 
vehicles than to diesel vehicles.
    Mr. Walden. Okay.
    Mr. Carson. Different in that it was recognized that diesel 
vehicles were much lower emitters of CO2----
    Mr. Walden. Sure.
    Mr. Carson [continuing]. But they were higher emitters of 
other pollutants like NOX and particulates. So 
Europe has been tolerant to that issue and had two different 
standards for the different vehicles, whereas here in the U.S. 
there was no tolerance to that issue. So the standards are the 
same, whichever kind of engine is used. And that made the 
supply of diesel-engined vehicles in America very difficult----
    Mr. Walden. And if you----
    Mr. Carson [continuing]. For a number of years until now--
sorry to interrupt you--where the technology has been driven 
forward.
    Mr. Walden. Right.
    Mr. Carson. And now it is possible to meet the same 
standards in diesel and petrol engines with more advanced 
catalyst technology.
    Mr. Walden. Did I hear you say the standards in Europe for 
the petrol vehicle are the same as in the United States now for 
emissions?
    Mr. Carson. Broadly, yes, and they always have been 
broadly.
    Mr. Walden. So the new standard for diesel in Europe would 
pass air quality standards in the United States?
    Mr. Carson. It is very hard to do a like-for-like, because 
the drive cycles are all so different in Europe. The driving 
pattern in Europe is somewhat faster than in the U.S., so the 
test is actually different. But broadly, the emissions 
standards in 2010 in Europe for both diesel and petrol vehicles 
will be pretty much the same as the emission standards in the 
toughest States in North America.
    Mr. Walden. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you.
    Mr. Lash, I wanted to ask about your suggestions, cap 
suggestions about the cap-and-trade system. You testified 
that--you suggested that a significant portion of the 
allowances be initially distributed free to capped entities and 
economic sectors particularly disadvantaged by the cap.
    Could you talk about what you think should be that 
targeting of those? If we are going to have some free 
allocation, you know, how should that be targeted?
    Mr. Lash. On behalf of USCAP, I can't tell you very much 
more, because, for now, what we have agreed on is the language 
you just read outloud. So let me offer some thoughts as an 
individual.
    There are 20, 25 States in the country whose electrical 
utilities are heavily dependent on coal. And any way you look 
at it, if we begin to put a price on carbon, the rates will go 
up more quickly in those States than the others that have 
nuclear, hydro, et cetera. So there is a belief that an 
allocation to those utilities for some transitional period will 
help ease any price shock.
    A second option is to look at earned allocations. So if a 
utility proposes, for example, to make a major investment in 
carbon capture and storage, free allocations would be one way 
that the legislation could reduce the cost, which is another 30 
percent or so on the cost of a power plant to set up carbon 
capture and storage.
    A third option would be to look through the utilities to 
the rate payers and try to find some way of equalizing burdens 
for rate payers. I personally believe that is quite 
complicated.
    Mr. Inslee. You went on, ``CAP also suggests the free 
allocations be phased out over a reasonable period of time.'' 
Why? I mean, could you give me the rationale for an auction, I 
guess, to begin with?
    Mr. Lash. An auction is economically most efficient. You 
are assuring that those who make the biggest investment in 
reducing CO2 get the biggest economic benefit. So a 
covered entity, whether it is an industry or a utility that 
makes major investment, for example, in methane to electricity 
from a landfill and is essentially operating at zero 
CO2 emissions, ought to get a very large benefit. 
One way to assure that is to have an auction of credits, and 
then they don't have to buy any credits.
    A second question is how you use the revenues from the 
auction. It gives you a chance to put the revenues back into 
programs, as I think Mr. Izzo recommended, to accelerate the 
adoption of technology or offset costs to low-income consumers.
    Mr. Inslee. And, by the way, we haven't talked about this, 
and I agree with you that a huge portion of investment would 
come from the private sector, but would any of you like to talk 
about the pathetically weak U.S. R&D budget from the Federal 
Government, which is one-sixth of what it was on the Apollo 
Project? Would any of you like to agree with my assessment on 
that?
    Thank you. That is unanimous. I will take that.
    I want to ask my friends from Europe, if you want to give 
us a critique of the cap-and-trade system, maybe the top three 
lessons you have learned from your experience. We were in 
Europe looking at it, and we drew some conclusions. I would be 
interested in yours.
    Mr. Grisay. Well, I think that is a very interesting 
question. Europe has a trade system in carbon certificates 
which did not work at the beginning. And I think we should 
learn from that. It did not work because there were simply too 
many certificates issued at the beginning. And the reason for 
that was that each country was allowed to issue as many 
certificates as it felt was necessary. So they all protected 
their own industry and issued as many as possible.
    So, as a result of that, the price of carbon collapsed, and 
it obviously failed to reach the objectives set. The lesson is, 
obviously, to be much more restrictive of the level of the 
number of certificates to be issued. And I think you can expect 
the European Commission, at the end of this year, to set 
targets for 2009 that will be a lot more restrictive.
    The second observation is that it is probably wrong to let 
every national entity decide how many certificates they need to 
issue. This should be brought at E.U. level, for obvious 
coordination reasons.
    And, in fact, that leads to a third lesson, which is 
probably to say at some stage, recognizing that the fight 
against global climate change is a global fight, one could 
envisage a situation where it would be a supranational entity 
that would be in charge of issuing carbon certificates. Whether 
that is some sort of subset of the U.N., some sort of 
equivalent to the World Bank for carbon trade, I leave open to 
your own wisdom.
    Mr. Inslee. The presidency of that would be determined by 
the winner of the World Cup, too.
    The Chairman. Thank you.
    The gentleman's time has expired. The Chair recognizes the 
gentleman from Connecticut, Mr. Larson.
    Mr. Larson. I thank the Chairman, and I thank the 
panelists.
    And I want to continue along this same line of questioning, 
having had the fortunate opportunity to travel to Europe with 
the Chairman and the Speaker. But my question is a little bit 
different. I believe that the best system for us to proceed on 
is a carbon tax. I believe that it is more simplified, it is 
more direct, and you don't have to have any specific economic 
knowledge to implement it. You don't create any new 
bureaucracy. Many countries in Europe have utilized it 
successfully and are greener and farther ahead.
    I understand the pragmatic political applications here in 
our own country. You say ``taxes'' and our colleagues on the 
other side of the aisle just go into almost apoplectic seizure. 
And there isn't, you know, in election years oftentimes the 
desire to move forward, albeit I am agnostic with respect to a 
cap-and-trade system.
    But on an issue as vital as this, as critical as this is to 
the Nation and, as Mr. Grisay said, to the globe--and we 
project out into the future, and while it is very important for 
the United States to step up to the plate and lead the way, 
ultimately we are looking at major nations on the verge of 
industrial lift-off, like India and China, whose major resource 
is carbon, and ironically turn to Western Europe and the United 
States and say, ``So, you want to put a cap-and-trade system on 
us after you have already put up most of the carbon into the 
atmosphere.''
    So my question is, isn't it fairer and more direct and more 
efficient to go to a system that taxes carbon, taxes something 
that we know is bad and know is harmful, and, in return, have 
payroll deduction relief for American citizens? Your response?
    Mr. Carson. Chairman, can I make a quick comment on that? I 
am sure my colleagues will also want to comment.
    But I guess the beauty of the cap system is that, in 
Europe, the debate has been revolving around how do we keep the 
level of CO2 in the atmosphere below a certain 
level, be it 550 parts per billion or whatever that level is, 
in order to limit the temperature rise of the planet in the 
future. And if you have a cap, I guess you have some certainty 
that you will get to that.
    Mr. Larson. Where is the transparency and the 
accountability in that?
    Mr. Carson. Well, there could be some calculations done, I 
am assuming, that will mean a cap has more bearing on the 
outcome than a tax, which I guess, ahead of time, you don't 
know how much tax you have to set, and then you don't know the 
effect of that tax in reducing CO2 output. Again, I 
guess the experts are the governments of Europe who have come 
to that decision.
    Mr. Grisay. What I would like to add to that is I don't 
think any measure taken on its own is going to provide the 
right solution. So I think that, if we take a long-term view, 
you are probably looking at a mixture of cap and trade, fiscal 
and long-term standards.
    Now, to comment on the long-term standards, I think it is 
really, really important that we provide industry with a long-
term certainty in respect of the standards they will have to 
meet, because that will drive them to do the long-term, very 
expensive investment that they would be required to do to meet 
or beat those standards. And by setting them up front now, we 
give our respective industries the opportunity to become market 
leaders in those technologies. And that is how we will 
basically be able to deal with the threat, the competitive 
threat of emerging countries.
    The reality is I don't think we can escape the consequences 
of climate change. And what looks like moderately embarrassing 
or annoying regulations today or taxations today would be very 
mild compared to what will be needed in 10-years' time or 15-
years' time if we don't do this. So by pushing it now, by 
incentivizing this research now, we give industry the chance to 
really become very, very competitive by the time it would be 
required.
    Mr. Larson. Mr. Lash.
    Mr. Lash. As you know, USCAP recommended cap and trade 
rather than a tax, although a tax could be included as a 
complementary measure to pick up those parts of the economy 
that a cap system isn't applied to. The reasons are really the 
ones that were just explained by Mr. Grisay, the wish for 
certainty as to the level of emissions and the path of reducing 
emissions.
    I would add one observation, myself. I know, Congressman, 
that you have been looking closely at the idea of tax shift, 
which is very appealing as a way of improving equity as well as 
the environment. Our experience in working with companies for 
15 years now has been that price signals don't work as quickly 
as they should. I know economists say there are no $10 bills 
lying on the floor, but with the companies we have worked with 
there have been some, quite a lot. And this is a case where we 
need to get the action started from large emitters quickly.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Carson, we are, of course, having some debate here over 
a carbon tax. And as Mr. Larson mentioned, you know, the word 
``tax'' in some quarters is almost reason for civil war. But is 
it at all possible for Europe to have one system and the United 
States another, considering the fact that we are if not already 
a global economy, we are moving almost hourly toward that?
    Mr. Carson. I think the important issue is that all the 
economies get to do something, and harmonization of that 
something is something that ought to follow later. That is my 
personal view. We have never had the same system of tax regime 
on fuel for cars for a very long period of time. And that has 
driven differences in the market. And I understand that, you 
know, a tax on fuel is an emotive issue here. It seems it has 
been less emotive in Europe over the last 20 years.
    So I think if there is a view that we must wait until 
everybody is lined up with the same system before implementing 
it, then that will take too long, is my personal view. And some 
action, just like in Europe with the action on cap and trade, 
which wasn't perfect--at least it was a starting point from 
which we can build. And I think that ought to be the way we 
operate and head toward a global agreement later.
    Mr. Cleaver. Do you or Mr. Grisay have any idea of the 
estimate of the carbon dioxide output per individual in the 
U.K.? I think Germany, for example, is around 11; the United 
States is 20.
    Mr. Grisay. I think the U.K. has a modest, but nevertheless 
frightening, 2 percent contribution to total emissions, so one 
reason why the action needs to be lower and not just restricted 
to the U.K.
    But if I can come back just to what----
    Mr. Cleaver. Yes.
    Mr. Grisay [continuing]. He was saying a second ago, I 
think there are two different objectives in my mind. One is to 
get the carbon level down fast across the globe, and that may 
imply indeed different approaches on different continents and 
different countries.
    But there is a second objective, which is to make sure that 
industry remains competitive, that we create a growing economy, 
that we do create jobs. And that is about making industry 
competitive. And that is where I am coming back to making sure 
that standards are being set so there is a long-term guidance 
as to where industry needs to reach. It would be much more 
practical to have similar standards, because, otherwise, those 
countries that have the strictest standards are, by definition, 
going to be a lot more competitive, going forward.
    So I would add a word of warning there. You may take a 
different point of view on taxes, but on standards I think it 
would be very useful if we had some sort of global approach.
    Mr. Cleaver. Thank you.
    Just one last question. Mr. Lash, are you at all familiar 
with the American Electric Power settlement with the EPA and a 
number of other not-for-profit entities?
    Mr. Lash. Yes.
    Mr. Cleaver. Do you think that settlement, $4.6 billion 
over a 10-year period, will have any impact upon corporate 
America? I mean, a positive impact, where people recognize that 
if you pollute, you are going to have to pay enormously, and 
therefore people will move into some kind of compliance without 
Government?
    Mr. Lash. Congressman, I started working on environmental 
issues in Washington about the time that Congressman Markey 
arrived in Washington. And I started as a litigator for NRDC, 
suing companies because they seemed to just refuse to meet 
national standards.
    Mr. Cleaver. My kind of lawyer.
    Mr. Lash. Yeah. And I have moved to a completely different 
approach to these issues. Now I spend half my time working with 
the CEOs of big companies. I don't think that is just because I 
have, you know, crossed the 60-year-old line. We have seen a 
huge change in approach and attitudes from companies, as a new 
generation has taken over. They see it as in their commercial 
interests to address environmental issues proactively. And I 
think that is what gives me hope that we are going to be able 
to address the climate change issue.
    I do think that the good companies need to be backed up by 
EPA, by knowing that if there are companies that violate the 
laws, they are going to be penalized. Otherwise, there is 
always the risk that a company that is meeting high standards 
has to compete with somebody who isn't.
    The Chairman. Great.
    The gentleman's time has expired. The Chair recognizes the 
gentlelady from South Dakota, Ms. Herseth Sandlin.
    Ms. Herseth Sandlin. Thank you.
    And thank all the witnesses today.
    I would like to explore an area that we haven't touched on 
yet, and that is agriculture as a participant in a cap-and-
trade system.
    And in response to Mr. Inslee's questions, Mr. Grisay, I 
think you had a number of helpful observations on what has 
worked effectively, maybe what hasn't worked effectively, and 
lessons to be learned.
    We did come to find, when we traveled earlier this year in 
some meetings in London, that agriculture is not a participant 
in the European emissions trading system. I, for one, feel 
strongly that if the United States adopts a cap-and-trade 
system that agriculture must be a participant, and have some 
constituents and companies in South Dakota and throughout our 
region that are working on appropriate measures for how you 
value what grazing or farming techniques and how you measure 
those.
    The response that I received in the London meeting about 
why agriculture isn't part of the European system is sort of 
disagreement of how you accurately measure and appropriately 
measure. So I am wondering if you would cite that as a lesson 
learned and, moving forward, including agriculture.
    And, Mr. Lash, if you have any thoughts, as well.
    Mr. Grisay. I think it is a very relevant question. 
Agriculture, in my mind, should be included. I think the whole 
issue about biofuels is really one of first recognizing that 
there is probably very substantial potential in that industry, 
but that we need to do a better job at understanding the full 
life cycle of the development of those products. Because it 
appears that the so-called first generation of biofuel products 
may not come from sustainable sources, and that we may, in the 
course of producing them, either be totally inefficient or 
actually cause damage.
    So the issue, in my mind, is to be very open-minded toward 
agriculture and biofuels, but making sure that we have a number 
of new technologies and the so-called second generation of 
biofuels, which would come, for instance, from sustainable 
lands, probably not from food crop, and probably use mostly 
waste land or high-fiber-contained products.
    So there is a future there but, again, one that requires 
investments and investigation.
    Mr. Lash. I was hoping you were going to bring up this 
issue. One aspect of it needs to be addressed in whatever 
climate change legislation you pass, and that is the question 
of whether agriculture can participate as a seller of credits 
into a trading system under a cap. It is an opportunity for 
farmers and larger-scale operators to make reductions to 
sequester carbon and then to get credits for it.
    A second--the question of measurement I think we have made 
some progress on. The Voluntary Carbon Exchange that operates 
in Chicago, Chicago Climate Exchange, has, in fact, done quite 
a lot of work on measurement of agricultural offsets so that 
they could be included in the CCX system. The USCAP 
recommendations would allow agricultural offsets to be 
included.
    The second set of issues are ones that would be covered in 
other legislation relating to the whole issue of biofuels, 
technical assistance to the agricultural community, and the 
movement from corn-based ethanol to cellulosic ethanol from 
waste materials or forest products.
    Ms. Herseth Sandlin. Thank you.
    And that leads to my other questions, in terms of beyond 
biofuels, wind, solar, the health of our forests and enhancing 
them as carbon sinks.
    But would you agree with me that to achieve the potential 
that we have with the renewables of wind and solar, in 
particular, but then with biofuels and the flex fuel vehicles 
that are being manufactured and getting CAFE credits, but yet 
the availability of the fuel not being as comprehensive as we 
would like, that, in addition to whatever investments we make 
at the Federal Government level and R&D combined with private-
sector investment in technology, that the Federal Government 
has to make investments and perhaps impose requirements as it 
relates to transmission capability across the country to get 
the wind resources from the Great Plains to other parts of the 
country, as well as the fuel distribution infrastructure to 
make sure that we are achieving both the objectives of energy 
security and the positive climate impact?
    Mr. Lash. Again, not speaking on behalf of USCAP, because 
we haven't addressed this, the transmission issues are very, 
very real, particularly because wind power is growing so fast.
    I would defer to Mr. Izzo in terms of the specifics of how 
best to address that.
    Mr. Izzo. We are a firm believer in open access to 
transmission; however, not simply designating what type of 
supply would get earmarked a slice of that transmission, but 
letting the market determine what the best solutions are for 
moving power back and forth.
    But the specific answer to your question is, yes, there is 
clearly a need for transmission infrastructure to move 
renewable energy from the places that are more suitable for 
siting and building those facilities.
    Ms. Herseth Sandlin. Thank you.
    And thank you, Mr. Chairman.
    The Chairman. The gentlelady's time has expired.
    Here is what I would like each of you to do: Give us a 2-
minute summation of what you want the committee to remember as 
we are moving forward. We have an energy bill that we are 
trying to resolve between the House and the Senate over the 
next 6 weeks, which would be the most historic energy bill in 
the last 30 years here in the United States.
    And subsequent to that, we have an intention to take up the 
debate on climate change in terms of a cap-and-trade system or, 
as Mr. Larson is saying and Senator Dodd, a carbon tax. But the 
Speaker of the House has said that she wants a bill that passes 
that has a mandatory cap-and-trade system that reduces our 
emissions by 80 percent here in the United States.
    So this energy bill is up right now, and hopefully we can 
resolve that in the next 6 weeks, and then we will move on.
    So let us go in reverse order, give each one of you a 2-
minute summation so that you can tell us how you believe we 
should be viewing these issues and your recommendations as to 
how we should proceed.
    We will begin with you, Mr. Lash.
    Mr. Lash. Thank you, Chairman.
    I would begin by echoing what you were saying just a moment 
ago. The energy bill is a very good first step. The energy 
efficiency provisions, the renewable provisions will make a 
significant difference for both of the issues mentioned in the 
title of this committee. And it is there, it is available, it 
is waiting to be passed. It will reduce costs for the country, 
ultimately.
    Secondly, we should not assume that it isn't possible to 
pass strong greenhouse-gas-reduction legislation in this 
Congress. I met with Senator Lieberman yesterday. I believe 
that the Senate Environment Committee will get a strong bill 
out this year, and I think there is a real potential.
    The important thing is to keep our eye on the ball, to 
remember that we need legislation that gives industry and 
investors a long-term road map that we are going to start 
reductions and continue reductions over a period of decades, so 
that they can make investments in light of those signals.
    The Chairman. Thank you, Mr. Lash.
    Mr. Grisay.
    Mr. Grisay. Thank you, Chairman.
    I would just summarize conversations I have had before with 
Prime Minister Blair, Brown, and President Barosso on that very 
question. And I think the strong message that I would like to 
share with you is that there is a need for urgent action. We 
just cannot wait. And there are opportunities and risks in 
front of us, but the costs of delay are just absolutely 
staggering.
    And maybe one suggestion there is to see the U.S. Congress 
supporting the equivalent to a stern review, as was done in the 
U.K., in case there were still people around who had some 
doubts.
    Practically speaking, I look forward to implementing, as 
part of the energy bill, binding regulations. And I would 
certainly welcome a mixture of cap and trades, fiscal measures, 
and standards for energy efficiency going forward, because I 
think all three are necessary for the reasons that we 
discussed.
    The Chairman. Thank you, Mr. Grisay.
    Mr. Carson.
    Mr. Carson. Similar message from me, Chairman. Urgent 
action required. Not one solution, but very many solutions to 
this issue. Some are simple, and some we must be getting on 
with right away.
    And I am sure business is now getting on with its resource 
efficiency issues, because that is going to save money. But the 
others that need a technology solution also need to go hand in 
hand with a framework for future binding targets, in order that 
industry can spend its own money in finding those solutions. 
And we and our colleagues are very keen to work together with 
governments to try to make that happen sensibly.
    The Chairman. Thank you, Mr. Carson.
    Mr. Izzo.
    Mr. Izzo. With regard to the energy bill before the 
Congress now, there are two imperatives that we would identify. 
Number one is elimination of the investment tax credit 
exclusion for utilities to participate in solar energy so that 
we can help develop solar power in a least-cost method. Number 
two would be incentives for States to encourage utility 
participation in energy efficiency in ways that benefit both 
customers and investors.
    On the broader issue of the global climate change 
legislation, we would argue that a bill with reduction targets 
and timetables that are strong enough to obviate the need for 
regional and State programs is an imperative. Regional and 
State programs will create competitive distortions that could 
actually not only raise rates for customers, but result in 
environmental degradation through a phenomenon known as 
leakage. We have heard already about the importance of 
harmonization at the international level and at the E.U. level. 
It seems to me that a single national greenhouse-gas-emissions 
credit-trading market would be an obvious first place for us to 
begin here in the United States.
    Thirdly, a fair allocation approach in the electric sector 
that acknowledges the investments already made by companies in 
cleaner technology and incents those types of investments going 
forward.
    And lastly, consumer protections in the form of assistance 
for low-income customers from any proceeds that are derived 
from the auctioning of allowances.
    The Chairman. Thank you, Mr. Izzo, very much. And as you 
know, much of what you are recommending is in either the House 
or the Senate energy bill right now. And we will fight to 
maintain that, because I do agree with you that the utility 
sector has a huge role to play, and we have to construct a 
newer and smarter set of incentives for the utility industry to 
fully participate.
    And I want to actually tell you this, too, especially our 
friends from across the ocean, that the energy bill that we are 
considering and we are debating over the next 6 weeks, if the 
best elements of it remain intact and are in the final package, 
it would meet, by 2030, 40 percent of the United States' goal 
to reduce heat-trapping gases that the United States has to do 
in order to save our planet--40 percent of our goal.
    So, because we are dealing with the electric utility 
industry and the automotive sector, buildings, all of the 
appliances in our country, combined, that 40-percent number is 
something that is very realistic in terms of contribution to 
climate change, and I think sets the stage, as Mr. Lash said, 
for a more comprehensive climate change bill. But not to 
understate what 40 percent means in terms of demonstrating the 
resolve that the United States has to deal with these issues 
and send a signal to the rest of the world that we no longer 
will be the laggard but, rather, a leader in setting standards. 
And I think that is a very important statement for us to make.
    So this bill that is pending before us is very, very 
important. And if we have a 40-percent solution by 2030, I 
think that the rest of it will be able to be followed on, 
because it will give the utility industry, the automotive 
industry and all other sectors a stake, then, in finding a way 
to put together a comprehensive cap-and-trade system, which, 
ultimately, I think will become a model for the rest of the 
world, partnering with the E.U.
    So we thank each of our witnesses. We thank Prince Charles 
for his contribution to our hearing today.
    And, with that, this hearing is adjourned.
    [Whereupon, at 11:15 a.m., the committee was adjourned.]

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