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

              STATE LEADERSHIP TOWARDS A LOW-CARBON ENERGY FUTURE

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

                                    HEARING

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

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               NOVEMBER 14, 2007

                                   __________

                               Serial No. 110-20

                 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. Emanuel Cleaver II, a Representative in Congress from the
      State of Missouri, opening statement...........................     6
    Hon. John Shadegg, a Representative in Congress from the State of
      Arizona, opening statement.....................................     6
        Prepared statement...........................................     7
    Hon. John Hall, a Representative in Congress from the State of
      New York, opening statement....................................    11
    Hon. Jerry McNerney, a Representative in Congress from the State
      of California, opening statement...............................    11
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    11
    Hon. Earl Blumenauer, a Representative in Congress from the State
      of Oregon, opening statement...................................    12

                                   Witnesses

    Hon. Elliot Spitzer, Governor, New York..........................    17
        Prepared statement...........................................    20
    Hon. Janet Napolitano, Governor, Arizona.........................    25
        Prepared statement...........................................    27

                              Submitted Materials

    Letter of Governor Theodore R. Kulongoski of Oregon..............    13
    Testimony of Governor Deval L. Patrick of Massachusetts..........    53

         HEARING ON STATE LEADERSHIP TOWARDS A LOW-CARBON ENERGY FUTURE

                                  ----------

                          WEDNESDAY, NOVEMBER 14, 2007

                      House of Representatives,
                Select Committee on Energy Independence
                                           and Global Warming,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:05 a.m. in room
    2318 Rayburn, Hon. Edward J. Markey (chairman of the committee)
    presiding.
        Present: Representatives Markey, Blumenauer, Inslee,
    Larson, Solis, Herseth Sandlin, Cleaver, Hall, McNerney,
    Sensenbrenner, Shadegg, and Blackburn.
        Staff present: Joel Beauvais.
        The Chairman. Good morning. Welcome to the Select Committee
    on Energy Independence and Global Warming.
        Supreme Court Justice Lewis Brandeis famously called the
    States laboratories of democracy, the places where innovative
    solutions to the Nation's challenges are developed. Nowhere is
    the States' pioneering role in our system more vital today than
    in the area of energy independence and global warming.
        While the Bush administration has its head stuck in the
    sand on these critical issues, the States are in the vanguard
    of a green energy revolution. Twenty States have now set
    binding limits on global warming pollution, most of them more
    stringent than the Kyoto Protocol targets. Ten northeastern
    States have set up the Regional Greenhouse Gas Initiative,
    known as RGGI, the first regional cap-and-trade system in the
    country. Six western States have formed the Western Climate
    Initiative, which calls for a 15 percent reduction in emissions
    by 2020 and will establish a cap-and-trade system to achieve
    that goal. And in the next 2 days the 12-State Midwestern
    Governors Association is set to roll out yet another regional
    initiative to combat global warming and energy dependence. With
    each passing month it seems a new State joins this remarkable
    nationwide movement.
        This morning we welcome two Governors who have been
    national leaders in the campaign, Governor Eliot Spitzer of the
    State of New York and Governor Janet Napolitano of the State of
    Arizona. In addition to their participation in RGGI and the
    Western Climate Initiative, respectively, their States have
    established aggressive targets for reducing global warming
    pollution. Both New York and Arizona have adopted strong
    renewable electricity and efficiency standards. And together
    with 13 other States, both will soon adopt California's clean
    car standards. Those standards can reduce tailpipe
    CO2 emissions by 30 percent and dramatically curb
    our dependence on foreign oil, but only if the Bush
    administration gets out of the way by granting California's
    waiver request.
        Perhaps most important, these States are demonstrating that
    the choice between protecting the planet and robust economic
    growth is a false one. While continuing delay in addressing
    global warming will have a terrible cost, prompt action can
    save billions in energy costs, secure our energy independence
    and open the door to vast new markets for clean energy
    technology.
        We have a great deal to learn from these leaders'
    pioneering efforts, and I look forward to their testimony this
    morning. And although the States have taken the lead on global
    warming and energy independence, Congress must now put in
    practice what it has learned in these laboratories of
    democracy.
        First, we must send a strong energy bill to the President's
    desk in the coming weeks. By boosting fuel efficiency and
    renewable fuel use the energy bill would by 2030 reduce our
    demand for oil by nearly twice the amount we now import from
    the Persian Gulf.
        The best provisions of the House and Senate bills,
    including CAFE, a renewable electricity standard, and a
    renewable fuel standard, would achieve up to 40 percent of the
    emissions reductions needed to save the planet from global
    warming. With that down payment in place, we must then proceed
    as quickly as possible to enactment of an aggressive cap,
    auction and trade bill that will achieve the balance of the
    reductions needed.
        The States have shown us the way forward. On a bipartisan
    basis they have listened to the warning of science, recognized
    the looming danger to the people they represent, and acted to
    fill the void left by an administration which to this day still
    does not concede that CO2 emissions are a danger to
    public health and the environment.
        The State response has demonstrated that strong limits on
    carbon emissions have broad public support and that they are
    compatible with vigorous economic growth, and the States offer
    a message for the President as well, and I hope that he will
    listen.
        Let me turn and recognize the ranking member of the select
    committee, the gentleman from Wisconsin, Mr. Sensenbrenner.
        [The prepared statement of Mr. Markey follows:]

        [GRAPHIC(S) NOT AVAILBLE IN TIFF FORMAT]

        Mr. Sensenbrenner. Thank you very much, Mr. Chairman, and I
    want to thank you for holding this important hearing today. And
    I welcome both Governor Napolitano and Governor Spitzer.
        One of the purposes of this select committee, which does
    not have legislative jurisdiction, is to help provide Congress
    with additional guidance on how to address the sometimes
    related issues of energy independence and global warming.
    Therefore, I am very interested in what both the States and
    what local governments are doing to address climate change.
        So far the committee has twice heard from mayors of cities,
    big and small, most recently when the committee held a field
    hearing in Seattle to accompany a U.S. Conference of Mayors
    meeting on global warming where New York City Mayor Bloomberg
    called for a carbon tax. By watching and seeing what the States
    and localities do to address this issue, Members of Congress
    can get a sense of what works and what doesn't.
        To me, policies that help promote competition and
    technological change without driving up the cost of energy are
    policies that will work and will be supported by the American
    people. After all, what voter wants to see their energy bill
    rise. And as members of this panel and our witnesses must
    surely know, being on the opposite side of the voter definitely
    doesn't work. As I have said many times before, any global
    warming policy that costs jobs or hurts the economy doesn't
    work for me or for my Republican colleagues.
        Unfortunately, I believe that some of what I learned from
    the cities and the States will be what not to do, especially
    when it comes to using regulations to address this issue. These
    regulations may work if everybody all over the world agreed to
    them and then actually complied with them. Internationally,
    this means that China and India must be part of the program.
    Otherwise, for all the feel good, back patting that greenhouse
    gas regulations might create here, it is unlikely that it would
    actually lead to a worldwide reversal of greenhouse gas
    emissions. Here these regulations will lead to some drop-off of
    emissions here in the United States, but just look to China and
    India and increases will be found probably from a manufacturer
    who decided against making a big investment in the U.S. in
    favor of a smaller price tag in Asia.
        Additionally, without the transformational energy
    technologies that will allow for energy production without
    creating CO2 emissions, I seriously question whether
    the voters of our States will show the patience or have the
    resources needed for these regulations to work.
        So with that in mind I watch with great interest the
    States' efforts to regulate CO2. In the end the
    question for our committee will be not whether New York or
    Arizona lowered their emissions, but whether they also lowered
    their standards of living in an effort to do so. Obviously the
    Governors will do their best not to let this happen. It is my
    hope that the States can be a laboratory of government policy
    and help Congress learn what it will take to lower greenhouse
    gas emissions while raising everybody's standard of living.
        I thank the chair and yield back the balance of my time.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from Missouri, Mr. Cleaver.
        Mr. Cleaver. Thank you, Mr. Chairman. I will hold most of
    my comments for the question and answer period. I am very much
    interested in the regional system that has been implemented in
    New York, and I would like to delve into that after you,
    Governor Spitzer, speak to us. Thank you so much for coming.
        The Chairman. The Chair recognizes the gentleman from
    Arizona, Mr. Shadegg.
        Mr. Shadegg. Thank you, Mr. Chairman. In the interest of
    time I am going to ask unanimous consent to place my full
    statement in the record and simply say at this point that I
    appreciate your holding this hearing. I want to welcome both of
    our witnesses.
        I am especially pleased to welcome my Governor, Governor
    Napolitano. While she and I may not agree on every dot and
    tittle on this issue, I applaud her commitment to working on
    public policy problems, her devotion to public service. She and
    I had parallel careers before entering our current jobs. We
    used to litigate cases against each other and learn a lot from
    each other, and I enjoyed those days and I look forward to her
    testimony.
        [The statement of Mr. Shadegg follows:]

        [GRAPHIC(S) NOT AVAILBLE IN TIFF FORMAT]

        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from New York, Mr. Hall.
        Mr. Hall. Thank you, Mr. Chairman. And welcome to both
    Governor Spitzer from my home State of New York and also
    Governor Napolitano. I would like to hold my time for question
    and answer period and yield back. Thank you.
        The Chairman. The Chair recognizes the gentleman from
    California, Mr. McNerney.
        Mr. McNerney. Thank you, Mr. Chairman. While I am proud of
    the work that we have done in Congress, the States really are
    leading the way on this issue.
        Last year in my State of California we passed AB 32, which
    requires greenhouse gases to be reduced by 25 percent by the
    year 2020. This is landmark legislation. I am proud that my
    State is the one that is doing it. This may seem like a
    daunting task, reducing greenhouse gases by 25 percent. We are
    making great progress. And in fact the State is rallying around
    the need for change. And despite early opposition from
    businesses and industry, especially the large utility companies
    in California, they have now embraced this program and are
    starting to profit from it.
        Visiting businesses around the State, I can tell you I am
    very inspired by what is going on. There is a broad level of
    innovation and these companies are going to be making business
    opportunities available for us throughout the State and
    throughout the Nation.
        I believe we are at the tipping point on this issue. And
    the 30 States that have not adopted change are going to be
    doomed to be left behind.
        I want to thank the witnesses. I look forward to your
    testimony. And with that, I yield back.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentlelady from Tennessee, Mrs. Blackburn.
        Mrs. Blackburn. Thank you, Mr. Chairman. And I thank you
    for the hearing, and I thank our witnesses for taking the time
    to be with us today.
        We are all cognizant that addressing the need for energy
    independence and technological developments requires a
    partnership. And in Tennessee we have done a good bit of work
    on biofuels development and are using that as one of our
    focuses to do our part to help move our Nation toward energy
    independence. I fully believe that those are strategies where
    we are all in agreement and where our focus should be; on
    delivering that positive outcome.
        Now, where we differ I think is that many people claim that
    catastrophic climate change is imminent and will produce
    apocalyptic effects, such as massive flooding of coastal
    cities, extensive droughts, and the collapse of agricultural
    markets, rampant disease, poverty and hunger. They also claim
    that the only way to prevent these catastrophes is to eliminate
    all CO2 emissions and switch to renewable energy
    plans that do not produce greenhouse gases. These claims are
    not supported by scientific literature and merely represent
    alarmist views, views that will result in shifting economic
    investment away from present day global challenges like disease
    control, malnutrition and water sanitation. Mandating renewable
    portfolio standards will only reduce investment in cheap
    sources such as coal and nuclear and increase investment in
    costly unreliable power generation.
        Coal is a reliable low cost source of baseload power that
    is abundant within the United States, and to shift funds to
    more costly substitutes will significantly affect the economy,
    reduce household income, and give the loss of millions of jobs.
    Some estimates indicate that this reduced income and increased
    unemployment will cause premature mortality death rates to more
    than 150,000 annually.
        In certain instances wind, solar and other renewable
    energies can contribute to the energy mix of a particular
    region or business, but it will take vast amounts of land for
    renewable energy facilities to generate sufficient amounts of
    electricity now provided by coal and nuclear plants. For
    example, it would take 60,000 acres of wind turbines to
    generate the same amount of electricity from a typical 1,000-
    megawatt coal-fired plant.
        Mr. Chairman, the United States has the resources to become
    energy self-sufficient and renewable energy can and must play a
    part in this plan. But nuclear and coal also must play a part
    in this plan. And both Democrats and Republicans in Tennessee
    know this and are aware of this. Just this past month our
    former Lieutenant Governor, the longest serving elected
    official in the State, he is now State Senator, State Senator
    John Wilder, one of my constituents, a Democrat, wrote me a
    letter asking me to support responsible energy proposals such
    as coal-to-liquids and coal-to-gas because they will help
    promote America's energy independence. But many of the policies
    advocated by the witnesses today and items that we continue to
    hear will do little to prevent warming or future harm from
    CO2 emissions.
        I certainly believe that this Congress needs to address
    more immediate harms to national security, such as the pressing
    problems and concerns of terrorism and the impact of illegal
    immigration on our States and communities, and the need to push
    for energy independence with American solutions, rather than to
    focus on a problem that may or may not exist. We are still
    waiting to hear the science on that.
        I thank you, Mr. Chairman, looking forward to hearing from
    our witnesses, and yield the balance of my time.
        The Chairman. The gentlelady's time has expired. The Chair
    recognizes the gentlelady from South Dakota, Ms. Herseth
    Sandlin.
        Ms. Herseth Sandlin. Thank you, Mr. Chairman. And I thank
    the Governors for being here. But I too will forego my opening
    statement and reserve the time for questions.
        The Chairman. That time will be reserved. The Chair
    recognizes the gentleman from Oregon, Mr. Blumenauer.
        Mr. Blumenauer. Thank you, Mr. Chairman. And I deeply
    appreciate the committee having extended the courtesy of an
    appearance to my Governor, Ted Kulongoski from Oregon, who
    unfortunately could not attend. I would like permission to have
    his statement entered in the record if I may.
        The Chairman. Without objection, it will be included in the
    record at the appropriate point.
        [The statement of Governor Kulongoski follows:]

        [GRAPHIC(S) NOT AVAILBLE IN TIFF FORMAT]

        Mr. Blumenauer. And I will work real hard to resist the
    temptation for me to replicate what Ted would talk about if he
    were here, about joining with the Governors in the West Coast
    about a regional tailpipe initiative, clean cars corridor from
    Baja to Canada. We have already established in Oregon a 10
    percent target for reducing greenhouse gases. And the City of
    Portland, Oregon, which I am proud to call home, has already
    reduced per capita greenhouse gases 4 consecutive years. We
    think we are on line to be the first city in North America to
    be Kyoto compliant. We have got a portfolio standard of 25
    percent by 2025.
        And most important of what Ted would have talked about is
    the linkage in our State between the land use planning, the
    environment and energy. It has made us one of the few States
    where we are actually, even though we are a rural state in the
    main, we have been able to decrease the amount of per capita
    vehicle miles traveled, which is absolutely critical, and it is
    an important part of the success from the State of New York and
    it is a challenge I know, a continuing challenge in Arizona,
    having an opportunity to work there over the years.
        But I am looking forward to hearing from our two witnesses,
    to emphasize what our Governor would have emphasized; that this
    is an opportunity to improve the economy. Nothing here is
    talking about reducing quality of life. Indeed the status quo
    doing business as usual is a prescription for economic
    disaster, as we are seeing with spiraling energy prices. And I
    know that there are great examples in both States about how
    this is the future for not just energy security and a safer
    environment, but one that is going to revitalize economies, and
    I look forward to their testimony.
        The Chairman. The gentleman's time has expired. And all
    time for opening statements from the members of the Committee
    has expired. We now turn to our panel.
        Our first witness is Governor Eliot Spitzer of New York.
    Governor Spitzer was inaugurated as New York's 54th Governor in
    January of this year. Prior to being elected Governor he served
    for 8 years as New York State Attorney General, where he won
    national acclaim for protecting investors, consumers and the
    environment. Governor Spitzer has made New York a national
    leader in developing initiatives to combat global warming and
    promote renewable energy.
        Welcome, Governor Spitzer. Whenever you are ready, please
    begin.

      STATEMENT OF THE HON. ELIOT SPITZER, GOVERNOR, STATE OF NEW
                                  YORK

        Governor Spitzer. Thank you. Good morning, Mr. Chairman and
    members of the committee. I commend you for the critically
    important work you are doing to confront the threat of global
    climate change. Let me begin by putting the effects of climate
    change into real terms from my perspective as Governor of New
    York.
        Unless we take action now, by the end of the century New
    York's countryside will be altered permanently. Change in
    climatic patterns will push much of our State's agriculture
    towards collapse. Our abundant fisheries and forest ecosystems
    will be devastated. And the combined effects of rising sea
    levels and violent storms will threaten the future of our
    coastal communities. This is the path we are on. Unless we take
    bold action now to reduce greenhouse gas emissions this will be
    our future.
        Right now we find ourselves at a decisive moment. The
    Intergovernmental Panel on Climate Change predicts that between
    now and the end of the century global temperatures will rise
    between 2 degrees and 11.5 degrees Fahrenheit. That is the
    difference between climate change that is manageable and
    climate change that is catastrophic. The difference will be
    determined not by fate, but by whether or not we can rise to
    the occasion and make the sensible choices necessary to reduce
    our own greenhouse gas emissions.
        We must lead the global community in an effort to reduce
    emissions worldwide. As part of this effort I believe that the
    Federal Government must follow the State's lead in adopting a
    cap-and-trade program to reduce greenhouse gas emissions from
    power plants. Let me briefly describe this effort.
        Along with nine other northeastern States, New York has
    entered a historic cap-and-trade agreement known as the
    Regional Greenhouse Gas Initiative, or RGGI. In New York we
    will cap carbon dioxide emissions from power plants at
    approximately 64 million tons. The cap will hold steady until
    2014, but will then be reduced by 2\1/2\ percent per year until
    2019, resulting in a total reduction of 10 percent.
        Under the trade portion of the program New York will
    auction allowances to generators. Each allowance will represent
    one ton of carbon dioxide. Generators will be able to buy and
    sell allowances in a secondary market. Generators that obtain
    more allowances than their actual emissions will be allowed to
    sell their excess allowances, and those who are short must buy
    allowances.
        Our draft regulations for the entire program were published
    on October 24th and are now out for public comment. We expect
    permanent regulations to be in place by the spring of 2008. We
    hope that RGGI will ultimately serve as a model for national or
    international cap-and-trade programs to reduce emissions from
    power plants, which account for 40 percent of all greenhouse
    gas emissions nationally. In anticipation of launching RGGI,
    New York has aggressively pursued energy efficiency in
    renewable energy policies.
        With regard to energy efficiency we are implementing what
    we call the 15 by 15 plan to decrease the demand for power by
    15 percent from forecasted levels to efforts to increase energy
    efficiency. And with regard to renewable energy New York has
    adopted a renewable portfolio standard that requires at least
    25 percent of electricity used in New York State to be produced
    by clean renewable resources by 2013. Both programs will be
    supported by the RGGI auction revenue.
        There is another critical component in our strategy to both
    address the threat of global climate change as well as meet our
    energy needs. The government has the responsibility and
    obligation to help develop cleaner ways to generate energy if
    at the same time we impose new and stricter environmental
    standards. That is why New York State is actively researching
    the viability of carbon capture and sequestration in New York.
    We believe this technology holds tremendous promise in our
    fight against climate change and strongly urge the Federal
    Government to increase its focus and funding on this effort.
        Taken together, these efforts will ensure that New York
    will achieve the RGGI cap while also meeting our energy needs.
        Once again I strongly urge the Federal Government to follow
    the lead of the States in developing a nationwide strategy to
    reduce greenhouse gas emissions, a strategy that should include
    a cap-and-trade program to reduce emissions from power plants
    as well as incentives for energy efficiency, renewable energy
    and carbon sequestration. The government of New York State
    looks forward to working with you at the Federal level to make
    this happen. We will stand with you and assist you in any way
    that is needed.
        Thank you, and I look forward to answering your more
    detailed questions.
        [The statement of Governor Spitzer follows:]

        [GRAPHIC(S) NOT AVAILBLE IN TIFF FORMAT]

        The Chairman. Thank you, Governor, very much.
        Our second witness is Governor Janet Napolitano of Arizona.
    Governor Napolitano was inaugurated in 2003 and reelected in
    2006, and was the first woman in history to serve as the Chair
    of the National Governors' Association. Prior to her election
    as Governor of Arizona, she served one term as Arizona Attorney
    General and 4 years as U.S. Attorney for the District of
    Arizona. She has been one of America's top five Governors by
    Time Magazine and one of America's top women leaders by
    Newsweek.
        We welcome you, Governor Napolitano. When you are ready,
    please begin.

      STATEMENT OF THE HON. JANET NAPOLITANO, GOVERNOR, STATE OF
                                ARIZONA

        Governor Napolitano. Well, thank you, Mr. Chairman and
    members of the committee. It is a pleasure to appear before
    you. I especially appreciate appearing with my friend,
    Representative Shadegg. It is nice to see you in a venue other
    than a courtroom, and I look forward to the hearing today.
        Mr. Blumenauer. Should she clarify that?
        Mr. Shadegg. I did before you got there.
        Governor Napolitano. We were litigants in Federal Court
    many--several times actually.
        Arizona and other western States now suffer from prolonged
    drought and will continue to be particularly hard hit as the
    decade moves along. With respect to the issue before the
    committee, Arizona is the fastest growing State in our country.
    Between 1990 and 2005, Arizona's net greenhouse gas emissions
    increased nearly 56 percent. We are forecasted to increase by
    148 percent from 1990 levels by the year 2020. By way of
    comparison, national emissions are forecasted to rise by about
    42 percent over the same period. So Arizona needs to take
    aggressive action to reduce greenhouse gases.
        It is a matter of climate change, but it is also a matter
    of energy, energy independence and air quality, which is also a
    large issue for our State.
        In 2005, I established the Arizona Climate Change Advisory
    Group via Executive order. This group developed 49 policy
    recommendations which cumulatively could eliminate hundreds of
    millions of tons of carbon dioxide and other greenhouse gases
    by the year 2020. We estimate that by implementing the
    recommendations the net economic benefit to Arizona will be
    more than $5.5 billion. This of course involves new energy,
    energy infrastructure, and the like.
        I have accepted the recommendations of this group and we
    have agreed via these recommendations to reduce Arizona
    emissions to 2000 levels by 2020 and to 50 percent below 2000
    levels by the year 2040. I have further directed that we
    achieve as much of this goal as possible by the year 2012,
    which is the year that Arizona turns 100.
        In January 2007, I began moving the State fleet to low
    emission vehicles such as hybrids, E85 flex fuel vehicles,
    alternative fuel vehicles, and high mileage automobiles. Once
    EPA grants the necessary waiver we will implement the State
    clean car program to reduce greenhouse gases from new light
    duty vehicles starting in model year 2011.
        In February of 2006, the New Mexico Governor Bill
    Richardson and I created the Southwest Climate Change
    Initiative. And in February 2007 we joined with the Governors
    of Washington, Oregon, California and New Mexico to establish
    the Western Climate Initiative. As was mentioned, a number of
    other States have joined that initiative, as well as two
    provinces from Canada and the State of Sonora in Mexico.
        This initiative has a two-fold purpose: One, to reduce
    greenhouse gas emissions in the western region by 15 percent
    below 2005 levels by 2020 and, second, to develop a western
    regional cap-and-trade program for greenhouse gases. Each State
    in the initiative has also committed to implement the
    California greenhouse gas tailpipe emission standards, and we
    urge Congress to demand that the Environmental Protection
    Agency approve California's long-standing request for a Clean
    Air Act waiver.
        We also as a group of western States have laid out four
    basic principles for legislation: First, to set strong national
    goals; second, to have a comprehensive market-based approach to
    climate policy; third, to act quickly; and, fourth, Congress
    must support State programs and not preempt the leadership
    given by the States.
        Indeed, as was recognized by the ranking member, the States
    are the laboratory of democracy and a number of initiatives are
    under way that the Federal Government could take notice of. We
    must leverage action now to ensure that we can maximize the
    United States' competitive edge as we transition into a 21st
    century economy. And while we face great challenges in reducing
    greenhouse gases dealing with the effects of climate change, I
    am optimistic as always that the United States will be
    innovative and that we will meet these goals.
        I could have one final suggestion for the committee to lead
    by example, and that is to have hearings for those of us who
    must travel a great distance by teleconference so that our
    carbon footprint for attending these hearings does not have to
    be offset.
        I look forward to Congress' action and I look forward to
    answering the questions of the committee. Thank you.
        [The prepared statement of Ms. Napolitano follows:]

        [GRAPHIC(S) NOT AVAILBLE IN TIFF FORMAT]

        The Chairman. Thank you, Governor. And next year we are
    going to try to do that because I think that is an excellent
    suggestion.
        So the time for opening statements from our witnesses has
    expired. The Chair will recognize himself for a round of
    questions. Let me begin with you, Governor Spitzer.
        You have decided to auction 100 percent of the allowances
    under RGGI. That has not been tried by any other cap-and-trade
    system. Can you give us your rationale for it and how you will
    deal with those who are protesting that it will not allow
    proper relief?
        Governor Spitzer. Our premise, and as you point out quite
    properly, this has not been done before, so we acknowledge the
    possibility that it will not play out precisely as we
    anticipate. But we believe this is a better way to bring the
    market to bear on the decisions that will be made by the
    participants. The earlier we can create a market-based pricing
    for essentially the right to pollute, a price that will then be
    pushed back into the cost of the product that will create
    incentives for those who pollute to be more efficient, to use
    less energy, to generate less pollution, the more effective the
    entire system will be.
        Frankly, those systems in Europe where they gave away the
    opportunity to pollute, as it were, did not work terribly well.
    There was both an oversupply and there was no capacity to price
    this opportunity. And so our belief is, and the economic
    modeling suggests, that it will be a much more effective
    mechanism if you go to the 64 million tons of polluters, the
    power plants themselves, their owners necessarily, and say,
    purchase this right, we have priced it out, we believe the
    price will not be significant, and it will begin to send market
    signals back into the process.
        And to pick up on what my colleague said, this is an effort
    to use a market-based system rather than a regulatory
    framework. The market will push and create the incentives, and
    that is what the auction will do.
        The Chairman. Governor, have you had any ability to think
    about this question of auctioning of the credits?
        Governor Napolitano. In the Western Climate Initiative, Mr.
    Chairman, we are going to have a cap-and-trade program. We are,
    like you, looking at what is happening with RGGI to see how it
    works. In other words, the States can be laboratories for the
    Federal Government, but they can also be laboratories for other
    States, so we are exploring that.
        The Chairman. Could you, Governor Napolitano, talk to us
    about this request from California and other States for a
    waiver from the Federal Government you mentioned earlier? Could
    you talk about why that is important to Arizona?
        Governor Napolitano. Yes, Mr. Chairman. The waiver for
    California would enable California to set a Clean Air Act
    standard for emissions that is stricter than the EPA currently
    allows. And Arizona and the other western States want to share
    in that standard for a number of reasons. We estimate that
    around 77 percent of the greenhouse gas emissions in Arizona
    come from either cars or energy production. We also estimate
    that if we could implement the California standard in Arizona
    by the year 2020 we would significantly, by about a third,
    reduce greenhouse gas emissions in our State.
        And again, as a rapidly growing State, we want to be able
    to implement some of these things now quickly so that as we
    grow we have already taken these emissions into account.
        The Chairman. Governor Spitzer, the States are acting even
    though the Federal Government has yet to act. The argument that
    is often heard is we shouldn't act as a nation until China and
    India act. Could you give us some sense of why you feel it is
    appropriate for the States to move even though the Federal
    Government has yet to move and what lessons we might learn in
    our relationship then with India and China?
        Governor Spitzer. Certainly. It is a powerful question, and
    I think there is no doubt it would be desirable. And at the end
    of the day, indeed, it may be imperative that we seek and
    obtain the participation of economies such as those of China
    and India that are growing, that are an increasing percentage
    of the international GDP, to participate in this if we will
    reach our final targets in terms of greenhouse gas emissions.
        Having said that, the absence of their participation is not
    an excuse for our failure to act either at a moral level where
    we believe we have indeed almost a moral obligation to begin to
    confront what is very clearly an impending crisis. It is also
    too easy an excuse for inaction when we wait for that
    individual or entity who defines the lowest common denominator
    to do anything. We must define a higher level of behavior and
    lead by example, and also by leading generate the economic
    progress that is created by saying to the marketplace when you
    define products that are more efficient with lower emissions
    you define products such as the Prius and energy systems that
    will move us forward economically.
        Indeed, some of the fastest growing economic areas of New
    York State depend upon clean energy technology, where R&D is
    generating thousands of jobs, high paying jobs, that are based
    upon the innovative technical skills of New Yorkers to create
    the economy of the next century.
        And so at an environmental level, at an ethical level, in
    terms of the experimentation of the famous quote of the States
    as laboratories of democracy, we are the ones who can now begin
    to set those examples to find new boundaries and accomplish
    what is, in small steps initially but larger steps as we move
    along, the critical objective of controlling our emissions.
        The Chairman. Thank you. The time of the Chair has expired.
    The Chair recognizes the gentleman from Wisconsin, Mr.
    Sensenbrenner.
        Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
    President Clinton signed the Kyoto Protocol in 1998, but did
    not submit it to the Senate for ratification. Did he make a
    mistake in failing to submit the treaty to the Senate for
    ratification?
        Governor Spitzer. I will rarely say this. I think that is a
    question beyond the ken of my jurisdiction. That really relates
    more to a political judgment that was made back then.
        And I will say this. I wish we had an international accord
    with respect to the issue of greenhouse gas emissions, one that
    had as its membership and constituent members those very
    nations that I know you will focus on by virtue of their size,
    their hesitancy to participate right now. And I agree with your
    opening statement that we will do well to persuade them to
    participate as we go forward, and we need that.
        Mr. Sensenbrenner. Two years before Kyoto the United States
    Senate unanimously approved a resolution sponsored by Senators
    Byrd and Hagel stating that they would not ratify a treaty that
    was not worldwide in application and which hurt the United
    States economy. Do you think the Senate made a mistake in
    unanimously voting for that resolution?
        Governor Spitzer. Again, I will answer it in a slightly
    different way. I am not going to agree or disagree with the
    precise resolution whose terms I haven't read and passed in a
    context that maybe is different than that we face today. But I
    will challenge the premise that resolutions of that sort or
    behavior of that sort is harmful to our economy.
        I think just the opposite. I think the experience that we
    have seen is that energy innovation, moving towards greater
    efficiency, moving towards energy sources that do not depend
    upon greenhouse gas emissions, those types of actions and
    behaviors stimulate our economic growth, push us into frontiers
    where we have innovative products that we generate the sorts of
    creativity that drive our economy, and so I think that is where
    we want to go.
        Mr. Sensenbrenner. Well, the bottom line in this debate is
    whether there will be a cap and trade system or whether we
    would rely on technology and innovation to reduce greenhouse
    gases without the bureaucracy of cap and trade. Now, as you
    have described, Governor Spitzer, cap and trade will require
    certain electric utilities in your State to buy these offsets,
    and thus I would presume fold the cost of the offsets into
    their pricing mechanism on how much they charge consumers.
        Nine years ago Clinton's own appointed Energy Information
    Agency head testified before the Science Committee that this
    type of scheme would result in an increase in electric rates
    from somewhere between 14 percent to somewhere over 60 percent.
        How do we justify this indirect tax, and wouldn't it be
    better to go along with what Mayor Bloomberg said, if we are
    doing this, to have a direct carbon tax because at least then
    politicians are being honest to say that they are taxing
    consumers?
        Governor Spitzer. Well, let me answer you. You have a
    couple of statements built in there, of course. First, the
    percentage increases that you talk about are simply wrong based
    upon our calculations. In fact, we think consumers will save
    money because the efficiency savings that will result from our
    comprehensive energy approach will mean that there will be less
    energy consumed. And even if the unit price is stable or
    increased marginally the consumption will be lower so the total
    cost will go down.
        I also think it is important to recognize that what we are
    talking about here in our cap and trade system, and everything
    I have been talking about, and this goes back to our joint--I
    am not sure if Janet in Arizona were parties to this litigation
    when we were both Attorneys General--litigations we brought
    about the Clean Air Act. This is market economics. This is
    eliminating an externality, a cost that is being imposed upon
    us that is measurable, that has enormous impact upon us in
    terms of health, in terms of quality of life that is not
    measured that should be brought back into the unit cost of
    production. And any economist who has an understanding of
    welfare economics would acknowledge that. All we are doing is
    capturing that cost, bringing it back into the cost of the
    product so the consumer can actually see the total cost of the
    product.
        Mr. Sensenbrenner. I guess I would spin it a little bit
    differently, Governor.
        Governor Spitzer. Well, you acknowledge yours is a spin and
    mine is not.
        Mr. Sensenbrenner. Yeah. I think what you just described is
    a politician's dream because it is a tax that no politician has
    to vote for, and that is how you accomplish it. I will--I don't
    agree with what the Mayor of New York told us a couple weeks
    ago in Seattle. But what I will say is that at least he is
    honest and direct in stating that there ought to be a tax on it
    rather than this cap-and-trade system where the increased cost
    of doing what you want to do ends up being folded into the cost
    of the product that politicians can then scream and yell about
    because utilities in most areas are regulated.
        My time has expired, and thank you very much.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from Oregon, Mr. Blumenauer.
        Mr. Blumenauer. Thank you. I would just like to take up
    where my esteemed friend from Wisconsin left off about taxation
    and the burden that is being put on industry and consumers. Is
    it not safe to say that right now business as usual is imposing
    a huge tax in terms of the--and you mentioned the environmental
    items, Governor Spitzer. There is also escalating costs of
    doing business. I am just wondering if either of you would
    comment on what will be the economic consequences in your
    States if it is just business as usual, escalating energy
    prices and ignoring this until we are forced to make a change.
        Governor Napolitano. Yes, Representative. As I mentioned in
    my testimony, we actually did an economic analysis of what our
    program would be. And it showed a net positive effect to
    Arizona of $5.5 billion between now and the year 2020. But
    business as usual, as you comment, is really a silent tax as
    well, because we have escalating energy prices, and it is
    nonsustainable.
        The ranking member mentioned Kyoto and the need to have
    everybody participating. In a global climate change initiative,
    that is the ideal situation. But recognize there are two other
    domestic issues involved here as well. One is our own country's
    energy independence and, secondly, air quality. And air quality
    is a key concern for counties like Maricopa County in Arizona.
        So there is a domestic aspect to this in addition to the
    global climate change. But as your question is premised, yes,
    right now business as usual is a silent tax on Americans and it
    is nonsustainable.
        Governor Spitzer. If I may add two thoughts. We have an
    enormous asthma problem in the City and State of New York. And
    that asthma problem we have has been reported the highest
    asthma rates in our inner cities of any major cities in the
    Nation. That is, we believe, a consequence of the emissions
    from power plants outside of New York State. And I am not
    saying that to cast blame, but to say this is one of the
    enormous costs that is imposed upon us, the health cost, the
    medical cost, the limitations upon development that accrues to
    those who have the asthma, one of thousands of such costs that
    are not measured that should be brought back into the cost of
    the product that is being created.
        And I would also say to Mr. Sensenbrenner, I think that we
    really have a fundamental policy choice to confront. When we
    simply say let us maintain the status quo without involvement
    and we see the price of a barrel of oil having gone up to $100
    a barrel, money that leaves this Nation, goes elsewhere and is
    not used for any affirmative purpose here, and the alternative
    that we face which is that we can reduce that demand in
    multiple ways, increase efficiency and capture that money to
    use it here to create alternative sectors and creative
    products, I don't think anybody would rationally argue it is
    better to have the money flown overseas.
        Mr. Blumenauer. Terrific. There are some apologists for the
    administration's foot dragging at EPA in not granting the
    waiver saying, well, we can't have 50 State standards, the auto
    industry can't cope with that. But I am hearing from your
    testimony, Governor Napolitano, that there are a number of
    States that would unite around the standard that is already
    being argued for in California so that a major portion of the
    market would be this. Is that correct? Do I hear that right?
        Governor Napolitano. Yes, you are correct. Under the
    Western State Climate Initiative we would all move to the
    California standard, and that standard alone and the number of
    States that are involved in that represent I think at least one
    in four, maybe one in three automobiles sold in the United
    States. So you could have the EPA standard and a California
    standard and not 50 standards.
        Mr. Blumenauer. My final point just deals with the
    connection between land use and transportation, because we have
    two States that are sort of the book ends. The transportation
    efficiency for much of the State of New York is such that
    people have choices and there is very little demand,
    particularly in the Valley of the Sun until at least recently
    with work that you have done with mass transit. There were very
    few choices, and vehicle-mile standards were just going through
    the roof. Some sense about how you folks are looking to connect
    land use into this equation?
        Governor Napolitano. I have created actually what I call
    the Growth Cabinet, which is a subgroup of my own Cabinet
    dealing totally with issues of growth, involving interlocking
    issues of land use, transportation, environmental quality, and
    water resources that go with being the fastest growing State in
    the United States. We are, and I met yesterday morning actually
    in my State capital with a number of legislatures and then a
    number of representatives from power companies and the like,
    looking at a transportation measure for our own ballot that
    would include financing for rail, in addition to the light rail
    that is being installed in Maricopa County right now, as well
    as an aggressive road building program just to handle the
    traffic that we have.
        Governor Spitzer. I would just comment briefly. You are
    correct that New York State, because we have several large
    urban cities, in particular New York City, of course, is on a
    per capita basis more efficient in terms of our emissions
    because we have both more multiple dwelling units and a greater
    percentage use of mass transportation. Having said that, we are
    focusing on the construction, new construction in particular,
    to make it green construction so that as we build new office
    buildings and residential housing that those units will be more
    efficient and that will have an enormous impact on the
    emissions as we move forward.
        The remainder of the State are suburban and more rural
    areas. We have the same smart growth constraints and issues
    that other States have. And we are trying to use smart growth
    in planning to get us to the point where we will be more
    efficient in terms of energy demand.
        Mr. Blumenauer. Thank you very much.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from Arizona, Mr. Shadegg.
        Mr. Shadegg. Thank you, Mr. Chairman. And let me start with
    a personal peccadillo, Governor. As you know, recently there
    have been both news articles and editorials dealing with our
    high occupancy vehicle lanes in Arizona. You and I, I am sure,
    would agree that one way to reduce greenhouse gas emissions is
    to encourage people to carpool. And yet these reports indicate
    that Arizona has a very high rate of noncompliance. In some
    instances during rush hour it is 20 percent, some others say 23
    percent. Governor, I was driving to the airport in rush hour
    yesterday and I swear that at least a third of the cars that
    went by me had neither blue plates, which allow them to be in
    that lane, nor two people in the vehicle.
        I am anxious to hear if you are taking a lead, will push
    Arizona to put up signs warning violators of the carpool lane,
    and otherwise push our enforcement agencies, the DPS, which you
    control, to stop people from cheating on that issue.
        Governor Napolitano. The answer is yes. And I get as
    aggravated as you when I am driving and see single drivers in
    the high occupancy vehicle lane. So the answer is DPS is doing
    what it can, recognizing that DPS is stretched already because
    we have also been asked to help with the border situation and
    we have also been asked to do a number of other things that in
    an ideal world DPS would not be asked to do. But they are also
    directed to do that. But the answer is yes.
        Mr. Shadegg. We all go to California and we all see that in
    California nobody cheats in HOV lanes, at least not that I can
    see, and it frustrates me when I come home and see our people
    cheating.
        Governor Napolitano. Let me raise another point,
    Congressman, and that is I did take the lead in asking the
    Federal Highway Administration to allow us to put hybrid
    vehicles in the high occupancy lanes and to get a waiver from
    Federal regulations to enable us to do that so there would be
    an incentive for people to buy those kinds of vehicles. It took
    well over a year to get such a waiver, and to get a waiver to
    allow certain other types of single vehicle drivers to get in
    that lane I think would be doubtful.
        So yes, we will focus on enforcement now.
        Mr. Shadegg. I commend you for doing that. In the Arizona
    Climate Change Advisory Group they put forward 49 policy
    recommendations which you discussed in your testimony. I have
    reviewed those. And one of them touches upon the problem that
    we have here with this issue, and that was raised with Governor
    Spitzer already. And that is enforcement in one jurisdiction
    being taken advantage of by other jurisdictions. For example,
    if we go to a cap-and-trade system here will other countries
    not join in, and if so, and the Governor I think made a good
    argument for why we should be doing it on any basis. One of the
    49 recommendations to you was that we should set a maximum
    speed for commercial vehicles. In the Commerce Committee last
    winter when gasoline prices spiked I suggested that that was an
    issue we ought to consider, and it fell to the ground with a
    thud.
        Have you proposed to the Arizona legislature such a
    restriction on the speed limit for commercial vehicles because
    they consume much more fuel and emit much more greenhouse gas
    when they are running at high speeds? Question one, have you
    proposed it? And question two, do you worry about that placing
    Arizona at a competitive disadvantage with other States?
        Governor Napolitano. I have not yet proposed it, in part
    because the legislature hasn't been in session since many of
    those recommendations have been developed. We are in the
    process of developing an omnibus energy bill for this term of
    the legislature, so I am in the process of considering whether
    a segment of that bill will be a cap on speed limits.
        Mr. Shadegg. This one I would certainly discuss with you
    because it is something we could be doing, and it is something
    we could be doing immediately rather than kind of this esoteric
    out in the future.
        Governor Napolitano. Yes. And it is something that can be
    done at the State level, and again evidence as how the States
    can be laboratories for the other States.
        Mr. Shadegg. One small point. In your testimony at page 3
    you say that as of, I believe it is 2010, the State will no
    longer own any vehicle that is not a hybrid, alt fuel or low
    greenhouse gas emitting. In a previous setting you talk about
    few exceptions. Is it possible to achieve an absolute ban on
    those? That is, for our large trucks at the highway department,
    can we in fact have them fit in one of those three categories;
    hybrid, alt fuel or a low greenhouse gas emitting for the big
    trucks?
        Governor Napolitano. Mr. Chairman, it is our goal to be
    able to do that by 2010. Obviously if we can't, we can't,
    because it depends in part on manufacturers. The other possible
    exception is for certain law enforcement vehicles.
        Mr. Shadegg. Fair enough. I appreciate it. You have been
    very aggressive on this issue, and I commend you for it, both
    in the Arizona Climate Change Advisory Group and also in the
    Western--I forgot the phrase--Western Coalition. But I note
    that in neither of their recommendations, in the 49
    recommendations by the Arizona Climate Change Advisory Group,
    and in nothing that I have seen about the western States'
    effort is there an embracing or a recommendation of moving to
    second generation nuclear. Arizona, as you know, has a very
    large nuclear plant. We also produce a lot of hydroelectricity
    in Arizona. People don't know that. But hydro is not mentioned
    also. Some people believe that both hydro and nuclear are ways
    to get quickly away from greenhouse gas emitting energy
    production. Others have reservations.
        I would like to know, are you a supporter of second
    generation nuclear and are you willing to work on that or is
    there a reason that Arizona Climate Change Initiative left out
    nuclear and left out any recommendation on the hydro?
        Governor Napolitano. Yes. The answer is that I am in favor
    of second generation nuclear provided that we can get a better
    handle on the nuclear waste issue. I differ with some of my
    colleagues on that, quite frankly. But I believe our experience
    in Arizona with nuclear is a good example for other places.
    Even though our plant is an aging one it is overall well-
    maintained and well-operated. And I think that the second
    generation technology is feasible and is something that would
    make a major impact on greenhouse gas emissions.
        So the answer is that is something that I would favor.
        Mr. Shadegg. Governor Spitzer, is that your position as
    well or are you on the other side of that issue?
        Governor Spitzer. We have a number of nuclear facilities in
    New York State and we have a rather mixed record where some
    were constructed at enormous cost and never began operation
    because of construction issues and concerns about the capacity
    to evacuate. And we have one in Westchester, which I think all
    would agree and even point to, is poorly sited just from the
    perspective of the potential need to evacuate in the event of a
    disaster. Elsewhere in the State we have facilities in
    communities who not only welcome but are encouraging
    construction of additional nuclear facilities, and we are
    looking at that.
        Mr. Shadegg. He is tough with the gavel. Second generation
    support or not?
        Governor Spitzer. We support the possibility and continue
    discussion of it. I share my colleague's concern about disposal
    issues. Now, having said that, the disposal problem is so
    enormous one can rightly say it is there regardless. And in the
    context of greenhouse gases there is an argument for nuclear
    expansion.
        Mr. Shadegg. Is my time expired?
        The Chairman. It has.
        Mr. Shadegg. Mr. Chairman, if I might, I have a number of
    other questions. I presume we won't get to a second round.
    Might I submit those in writing?
        The Chairman. Without objection, and would ask the
    witnesses to answer them.
        Mr. Shadegg. Thank you, Mr. Chairman.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from Missouri, Mr. Cleaver.
        Mr. Cleaver. Thank you, Mr. Chairman. Governor Napolitano,
    Arizona has already joined the climate registry for tracking
    greenhouse gas emissions. If Congress should move to establish
    such a registry, what would the impact be on States that have
    already done it? Or will it be a negative impact in your
    opinion?
        Governor Napolitano. It depends on how Congress acts.
    Thirty-seven States have now joined the climate registry. So
    there is a broad bipartisan and biregional--multiregional
    participation already. And I would hope that should Congress
    establish a national registry, it incorporate that which
    already exists and certainly not go backwards.
        Mr. Cleaver. So if we were to do a best practices kind of
    legislation, which would require States then to conform to what
    we did even though they have already moved ahead? I mean, the
    States are the headlights and the Federal Government on this
    issue is serving as the taillight. So what do you think the
    response would be?
        Governor Napolitano. Well, I think the Federal Government
    should move to headlight status and then the States would meet
    that.
        Mr. Cleaver. So you would also agree--well, this--Governor
    Spitzer came close to this, this whole issue of climate change
    and our response to it, do you believe that it is a moral
    imperative or a political or ideological issue?
        Governor Napolitano. I think it is all. I think that I have
    been convinced that the science is there for climate change. I
    think there is some dispute about the rate with which that
    change will occur, but is definitely occurring, and that the
    sources of our energy production are a catalyst for some of
    that climate change. And this is a short-term political issue,
    but it is a long-term moral issue as well.
        Mr. Cleaver. Governor Spitzer.
        Governor Spitzer. I think my colleague got it just right.
    As I said earlier, there is a moral imperative based upon the
    science that we now understand and the political dynamics will
    ebb and flow perhaps, but I think in the context of history,
    when people look back 100, 200 years from now, they will be
    mystified at our failure to respond more rapidly and probably
    will blame the political backdrop but will conclude, no doubt,
    that we must do something.
        Mr. Cleaver. Thank you, Mr. Chairman. I yield back the
    balance of my time.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentlewoman from Tennessee.
        Mrs. Blackburn. Thank you, Mr. Chairman. And I, like my
    colleague from Arizona, have several questions. I am going to
    submit some of these in writing and request a response. As I
    said, I like to focus on the areas where we agree. And working
    for energy independence is something that I think we all agree
    on.
        And Governor Spitzer, I appreciate the plan that you gave
    us as to how you all are looking at emissions and renewable
    portfolio standards. And a question for each of you, since you
    represent States that have started working on this, a lot of
    our States have. In Tennessee, we are doing a good deal of work
    with biofuels and we have a governor that has made that a
    priority. So should the Federal Government come in now and
    mandate a standard? You know, my colleague was just talking
    about us kind of being the taillights on this. Should the
    States be allowed to work toward finding solutions with what
    they have? Should we just incentivize the work that they are
    doing? Or should we override and come in and say, no, you need
    to do it our way? So I would love to hear from each of you on
    that.
        Governor Spitzer. I think you stated as either/or
    propositions that can be combined into something that is better
    than either of the options you articulated because what--and I
    think, and Governor Napolitano and I both dealt with this issue
    of preemption when we were attorneys general and it is possible
    for the Federal Government to articulate a standard that might
    be a minimum threshold without preempting States that do more
    without overriding more creative or alternative approaches that
    States have adopted. I would not want to see the Federal
    Government come in on a renewable portfolio standard, for
    instance, and mandate a number that was lower than what we have
    set out to do, nor would I want the government to----
        Mrs. Blackburn. So you are saying, give us something that
    will challenge us and will not condescend to the work that we
    have in progress.
        Governor Spitzer. And will set a threshold, but will not
    preclude our surpassing that threshold, setting more rigorous
    standards or doing it in a marginally different way.
        Mrs. Blackburn. Okay. Anything to add, Governor Napolitano?
        Governor Napolitano. Well, I would echo what Governor
    Spitzer has said and also reiterate a point that is implicit in
    your question, which is the flexibility of how that renewable
    energy is met. Tennessee is biofuel. I believe Arizona should
    be the Persian Gulf of solar energy by way of comparison. So
    States have different resources available to them.
        Mrs. Blackburn. Right. And in Tennessee we are doing a lot
    with that second generation nuclear. We have two--TBA has two
    nuclear reactors that have come online since the 2005 Energy
    Act was passed and we are looking forward to having more of
    those. There are answers there to questions that you all have.
    And we think some shared work can be a good thing.
        Governor Napolitano, you mentioned an omnibus energy bill
    that you are planning before the end of the year. I would love
    to know in that if you are doing things that are going to
    incentivize clean coal, clean nuclear more on your renewable
    standard? And also if there is anything in there working with
    the educational community to incentivize the development of
    some of the bioscientists and the nuclear engineers that we are
    going to need to help solve this problem? Are you all
    incorporating that into your omnibus plan?
        Governor Napolitano. Yes. The answer is, we are looking at
    different types of incentives for renewables and for people to
    purchase renewables. For example, tax credits for the
    installation of solar.
        And the answer is, with respect to education, absolutely.
    And we have been doing that; for example, at Arizona State
    University, they have recently opened a whole college that is
    focused on sustainability. And a big part of that of course is
    our sustainable energy future. So we are working with the
    academic communities as well as looking at pure public policy
    on the ground level.
        Mrs. Blackburn. Governor Spitzer, anything to add on any of
    those initiatives?
        Governor Spitzer. I would echo what Governor Napolitano
    just said; we are trying to do the same thing in New York State
    and focusing to a great extent in the context of clean coal on
    the possibility of sequestration, whether it is going to be
    technically feasible, whether it will be economically feasible
    are two significant hurdles. So we need to overcome those, and
    we are trying to work them through. We have a number of
    projects we are examining right now that could be test
    opportunities to see if the economics work out. But certainly,
    clean coal is something we are looking at very, very seriously.
        Mrs. Blackburn. Thank you. Mr. Chairman, I will yield back
    and submit the balance of my questions.
        The Chairman. The gentlelady's time has expired. The Chair
    recognizes the gentleman from New York, Mr. Hall.
        Mr. Hall. Thank you, Mr. Chairman. Thank you, Governor
    Spitzer and Governor Napolitano, for your testimony. I just
    wanted to pick up on my colleague from Tennessee's mention of
    biofuels. We have heard testimony before this committee within
    the last couple of weeks that there is a surplus nationwide
    right now of biodiesel and ethanol because of a difficulty or a
    lack of infrastructure to get it to market. One of our district
    offices, my district office in Putnam County, New York, got a
    call from a very excited lady saying, I just bought a flex fuel
    vehicle. Where can I get some flex fuel? And we had to tell
    her--she was disappointed to hear that there are two pumps in
    New York State selling E85. So first off, I am curious,
    Governor Spitzer, if you can tell us what plans you have in the
    works and how we can help you in terms of getting that mixture
    of ethanol up or the delivery of any biofuels to the pump.
        Governor Spitzer. It is an excellent question you ask. The
    infrastructure has to follow the production of the product
    itself. So we are working with, for instance, the gas stations
    along the throughway to see if we can ensure that it would be
    possible to get ethanol mixed fuels at those gas stations. And
    the problems arose when the vehicle in which I drive as
    governor had a nice sticker on the side saying, ethanol
    powered. I said, that is great. Where do we get the ethanol? It
    turned out there were, as you point out, very few gas stations.
    So I was a little worried. So we are working vigorously to make
    sure pumps are accessible. And I think in due course--I can't
    give you a date right now, but in due course, that will happen.
        Mr. Hall. Governor Napolitano, you have done a quite a bit
    of preferential purchasing of alternative fuel vehicles. Have
    you had any success on getting more pumps for alternative
    fuels?
        Governor Napolitano. Like Governor Spitzer, we are working
    on that infrastructure and in part, it will follow the number
    of vehicles on the road because this is a market-driven system.
    And as we increase demand via these vehicles, I think
    infrastructure will be there as well. But yes, from time to
    time, I have wondered where the gas pump is going to be.
        Mr. Hall. Thank you. Both of you are governors of States
    which lie within the so-called national interest electric
    corridors, recently designated by DOE. With the mid-Atlantic
    corridor, it is likely that transmission could rely on old coal
    fired power plants. Would you be able to comment, Governor
    Spitzer, first, I guess, about how the NIETC designations would
    impact your efforts to formulate a regional response to
    greenhouse gas emissions?
        Governor Spitzer. You are exactly correct. It is something
    we find problematic. It is one of several issues we have with
    the designation because it will really lead to our perhaps
    forced importation of energy that does not satisfy the
    thresholds and the objectives we have laid out. It could be
    dirty energy in the sense of sort of old traditional coal with
    emissions we want to limit, and it would be beyond our power to
    limit it because of the designation. So we are pushing back to
    see if we can challenge the designation, and we are pursuing
    various options.
        Mr. Hall. Governor Napolitano.
        Governor Napolitano. Yes. On behalf of Arizona, we have
    serious questions about the imposition of those corridors with
    respect to their interference not just with the initiatives on
    greenhouse gases but with respect to the kind of infrastructure
    that will be crossing Arizona without respect to some of the
    land use issues that we all also have.
        Mr. Hall. Thank you. I am just recalling how when seat
    belts were first mandated and when airbags were first mandated
    and when the Clean Water Act first came out, and Clean Air Act
    first came out, that industry and certain representatives of
    government cried that this was going to kill jobs and it was
    going to kill industry, and it was going to cause economic
    dislocation. And in each case, it actually caused the creation
    of a new industry to create seat belts or to make scrubbers for
    exhaust for power plants or to make airbags and so on. Have you
    seen any evidence in your States so far of new industries being
    created to meet these green initiatives you are working on?
        Governor Spitzer. I would observe that one of the most
    dynamic sectors we have and has led recently to a very
    significant investment by General Electric in Schenectady is in
    renewable energy, wind power. Wind power is moving and growing
    at a remarkable clip, partly because of the incentives, partly
    because of programs such as the ones we are talking about this
    morning.
        So rather than inhibit growth, they are creating new
    products that are being engineered. And the wind turbines
    themselves are on the cutting edge of technology. They are
    being produced domestically and could not be more demonstrative
    of what I believe our underlying point is, this will generate
    economic growth and a better environment simultaneously.
        Governor Napolitano. Likewise. And there was a question
    raised about, well, what about China and India? They are not
    incorporating some of these standards yet. In my view, we are
    moving ahead on some of these technologies. They are new
    markets within the United States. But I also view China and
    India as possible huge markets for production of these
    technologies from the United States.
        Mr. Hall. Well, Governor Spitzer, in Westchester, as you
    are aware, the county executive has recently changed their
    fleet of hybrid buses in the county bus loop to hybrid bio-
    diesel buses. And I am wondering when he is going to go to
    plug-in hybrid biodiesel buses. And it seems to me that
    pyramiding more new technology on top of the other is a way to
    get even away from the amount of oil we are importing or
    burning. Does that figure into your plans as well?
        Governor Spitzer. We are trying to generate, as Governor
    Napolitano mentioned, in terms of the State fleets, greater
    efficiency, greater use of hybrids and County Executive Spano
    is always on the cutting edge. So I will have to call him and
    ask what the next addition to that litany of moves will be. But
    we will certainly be seeking to do the same thing with the
    State fleet and see if others also do it.
        Mr. Hall. You have mentioned NYCERTA in your testimony.
    NYCERTA, 35 years ago or so, had a study that showed that there
    were low head hydro sites of small waterfalls and dams in New
    York State that were not being used that were sufficient in
    their view to power the entire City of New York's consumption
    at that time. Of course, understanding that New York's
    consumption of electricity has grown since then.
        There was a study done by the Idaho National Laboratory
    maybe 44 years ago that located approximately 4,000 low head
    hydro sites in New York and said that they would combine if we
    harvested them by putting a turbine where the water is already
    falling and just capture that energy that is being lost every
    day, that it was greater than 1,200 megawatts, which is more
    than 60 percent of the Indian Point nuclear plant that you
    referred to at peak output. So I just wanted to know if you are
    planning on that as well. Is that part of your----
        Governor Spitzer. Well, I have to confess ignorance of that
    particular study. But I will tell you that obviously because of
    our renewable portfolio standard has targeted 25 percent, we
    are seeking to maximize our use of hydro. And this extends to
    our use of hydro internationally in terms of accessing the
    international market, hydro Quebec and Canadian generation as
    well. So we are doing what we can do.
        Mr. Hall. Thank you very much. I yield back.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentleman from California, Mr. McNerney.
        Mr. McNerney. Thank you, Mr. Chairman. I want to thank you
    for coming here today. And I hope to encourage my own governor,
    Arnold Schwarzenegger, to come and testify sooner or later
    because he brings a certain showmanship and a lot of flare to
    the job. And it is something that it actually helps. Not to
    denigrate you all, but----
        Governor Spitzer. We understand what you are saying.
        Mr. McNerney. I see global warming, as both of you do, as a
    tremendous opportunity for growth. If we encourage innovation
    and entrepreneurship, we will grow and broaden our economy not
    only in terms of domestic issues but in terms of selling
    American products to vast markets overseas. And my State and
    your States will benefit from this. Industries in America that
    resist this will be left behind. And I don't want to point too
    many fingers. But I hope that the American auto industry
    embraces this program for the sake of its own future and the
    sake of its own profitability.
        I will go into some questions here. I am very intrigued by
    your RGGI approach and program, the idea of auctioning off
    permits or--what was the word you used--allowances. In
    California, we have had a fairly negative experience with the
    sort of marketing of utility favors in the 2001 period. Do you
    have a way to prevent gaming of that system or some way to
    prevent that kind of outcome that we experienced in California?
        Governor Spitzer. The answer--I don't think I can say more
    than I think so. The regs are going to be finalized in the
    spring of 2008 and the system will be effective not long
    thereafter. We have created an auction system, spoken with all
    the regulators and examined the history of these types of
    markets. And so we think we have created a smooth and fairly
    transparent operating marketplace.
        And one other aspect of it that I didn't mention earlier
    that I think bears mention is that the revenue that we derive
    from the auction of these allowances will then be used to
    support clean technology and clean energy research and
    development. And so, instead of merely giving away the
    allowances and giving that value to the utilities themselves,
    we derive an opportunity here, have an opportunity to subsidize
    and create new research opportunities.
        Mr. McNerney. Well, I appreciate that. And I just caution
    you to look at what happened in California in 2001, make sure
    that that doesn't replicate itself there in some way. Because
    it seems like auctioning does open up an opportunity for gaming
    and problems like that. What is the plan in New York to
    encourage automobiles to become more efficient other than just
    making fuel available?
        Governor Spitzer. Well, we are a party with other States to
    the California standards. We are permitted to join with them
    and we consequently have joined in seeking to have EPA grant
    the waivers so the California standards can be embraced and
    then define a greater and greater share of the marketplace. I
    have long believed that the CAFE standards should be raised and
    raised significantly. That will move us dramatically in the
    context of efficiency. I agree with you, it will create new
    markets, force technology, and R&D that will create the
    products that the American consumer wants to buy, and I think
    the history of the Prius over the last number of years
    demonstrates that there is a real thirst in the marketplace not
    only for environmentally friendly products, but automobiles in
    particular with greater efficiency.
        Mr. McNerney. Thanks. I think Governor Napolitano mentioned
    some incentives that are in place or about to be in place in
    Arizona. Could you elaborate on those a little bit in terms of
    what consumers would benefit from buying a hybrid or more
    efficient vehicle?
        Governor Napolitano. Well, the incentive that I initiated
    via executive order once I got a waiver from the Federal
    Highway Administration was to allow hybrids to use the high
    occupancy lanes. And if you have ever driven in rush hour in
    Arizona, you will know what a value that is. Rush hour is sort
    of an oxymoron right now in Arizona. So we have done that. But
    we are also looking at other types of incentives, primarily
    through tax policy that would help people, for example, install
    solar in their homes.
        Mr. McNerney. Thank you. One last thing about
    sequestration. I know that sequestration is a technical hurdle.
    One of the problems with sequestration is that when you burn
    coal, you generate not only carbon dioxide but you generate a
    lot of other gases, especially if you use air. If you use pure
    oxygen then you just generate CO2. So you can have
    not only to bury carbon dioxide, but NOX and
    SOX, along with those which makes the problem a lot
    more difficult.
        You mentioned wind energy. I spent my career in wind
    turbines. And most of the wind turbine production, it is not
    baseload. It is intermittent. And so the intermittent energy
    can be used to create hydrogen oxygen and the oxygen can be
    used to burn with coal and then you get the clean
    CO2. So there is a lot of opportunities out there.
    And I am really anxious to see these things unfold in the
    future.
        Mr. McNerney. Thank you very much.
        The Chairman. The gentleman's time has expired. The Chair
    recognizes the gentlelady from South Dakota, Ms. Herseth
    Sandlin.
        Ms. Herseth Sandlin. Thank you, Mr. Chairman. Picking up on
    where Mr. McNerney left off with wind energy. Governor
    Napolitano, you mentioned that Arizona, in your opinion, and
    perhaps many other Arizonans, is the Persian Gulf of solar
    energy. In South Dakota, we viewed ourselves as the Saudi
    Arabia of wind energy. And so I am curious as it relates to
    your thoughts on transmission. In the Energy Policy Act of
    2005, there were provisions that dealt with energy corridors,
    dealt with FERC's authority to cite these authorities mostly
    over Federal lands. That has been controversial in some parts
    of the country.
        But to get our energy, renewable energy resources to other
    parts of the country, not just community-based and within the
    State, we have to upgrade our transmission capacity in this
    country and I am just curious to see your thoughts and Governor
    Spitzer, yours as well, as it relates to our transmission
    capacity in the country and what you think the appropriate
    Federal policy should be in the future to enhance it.
        Governor Napolitano. Yes, I agree with your statement that
    the transmission issues are large issues particularly in the
    western States. We would prefer to be able to work those out
    regionally as opposed to having Washington, D.C. dictate where
    the transmission corridors are to be located. Because in my
    view, FERC, in particular, has a very limited perspective on
    the western grid and how transmission can occur in the western
    States.
        Governor Spitzer. I would add merely that we have
    significant transmission issues in the east as well in the
    sense that we have just a geographic gap between where there is
    access to hydro power, wind power, for instance, or some of the
    clean coal facilities we are talking about, which might be
    sited on one of the regions of the State, and the energy demand
    may be elsewhere in the State. And siting transmission lines is
    often a rather knotty issue because people are not often
    thrilled to have the high tension wires proximate to their
    property.
        We are looking very hard at what rights of way the State
    already has, whether it is through throughways or railways,
    whatever it may be, to see if we can take advantage of those
    existing rights of way and thereby not need to encounter the
    very difficult problems of creating new rights of way.
        Ms. Herseth Sandlin. Do either of your States have a
    renewable fuel standard? Let me first clarify. You both have
    renewable electricity standard? Both States do? Either State
    have a renewable fuel standard, like the State of Minnesota and
    other States have passed, that would require a certain
    percentage of the gasoline sold to carry 10 percent, 15
    percent, 20 percent of ethanol biodiesel?
        Governor Spitzer. I am not sure.
        Governor Napolitano. We have standards in order to meet
    some ozone issues in the summer. So we have winter fuel and
    summer fuel. But we don't have a standard such as Minnesota's.
        Ms. Herseth Sandlin. I just raise that in response to Mr.
    Hall's questions as it relates to one of the barriers for
    biofuels being the infrastructure and the availability of the
    distribution system across the country. Certainly, I commend
    you for your efforts within the State and the throughways,
    trying to address--I know they are doing this in Texas as
    well--to get as many stations with E85 or biodiesel as possible
    along the routes most widely traveled. But the other issue here
    is that refiners, some refiners in the country are not blending
    more ethanol than they are required to blend.
        And this highlights the importance of the energy bill that
    is pending in the Congress, both as it relates to incentives
    for infrastructure and distribution as well as a more
    aggressive renewable fuels standard. And so taking that along
    with the renewable electricity standard, the issue of citing
    transmission, we just don't have time to be sitting around,
    waiting for refiners to decide they are going to blend more or
    utility companies to decide that they are going to figure out a
    way through efficiency and through other sources to meet these
    standards. And we don't have time for the NIMBY problem to hold
    us up for the importance of the next generation dealing with
    the energy issues, energy independence as well as the
    greenhouse gas problems of climate change.
        So again, I commend you for what you are doing at the State
    level. I hope that your Western Governors Association and the
    eastern--is it the eastern governor's? North Atlantic? What is
    your----
        Governor Spitzer. I am not sure. Too many associations, I
    lose track of them.
        Ms. Herseth Sandlin. If you would encourage, in a
    bipartisan way, support for the energy bill that is pending so
    that we can get the momentum before the end of the year to pass
    that legislation. Thank you both.
        Governor Spitzer. Thank you.
        The Chairman. The gentlelady's time has expired. The Chair
    recognizes the gentlelady from California, Ms. Solis.
        Ms. Solis. Thank you, Mr. Chairman. I want to thank both of
    our witnesses for coming here today, and also to thank you for
    joining in with California in our lawsuit against EPA. I really
    do want to commend you for that. But I wanted to ask a
    question, Governor Spitzer, that you kind of touched based on
    in terms of what impacts this has negatively on communities.
    And I am very concerned about low-income and underrepresented
    communities. And you mentioned asthma as one factor. And I
    wanted to read this if I could. I am concerned about climate
    change. And recently as of October, the CDC limited their full
    testimony and deleted very important material on information
    and impacts of climate change on racial and ethnic minority
    communities and recommended that public health preparedness for
    climate change was somewhat minimized and that assessments
    probably shouldn't take place.
        I want to get your opinion and hear what you have to say
    about that.
        Governor Spitzer. Well, I think the point you were making
    is a very valid one. The burdens of--the environmental burdens,
    the health burdens of where energy plants are sited and the
    consequential costs, the externalities I guess the economists
    would call them, fall disproportionately on the lower end of
    our economic spectrum and that often means on communities of
    color and the minorities in our community as well.
        So we need to think about this as a distributional issue.
    There is a very potent environmental justice advocacy community
    that argues with great merit that when we talk about siting
    energy facilities, we have to think about it in the context of
    environmental justice precisely because of the distributional
    issues you raised.
        Ms. Solis. Thank you. And for Governor Napolitano, thanks
    for also being here. And I know that you have a number of
    issues and challenges you face with respect to low-income
    communities, particularly farm workers and those rural
    communities that are also disadvantaged. And I wanted to hear
    if Arizona is developing any plans to do outreach to those
    communities to ensure that impacts, such as the ongoing
    droughts, fires and things and persistent heat waves, how those
    affect the community and what kind of efforts are you making to
    help inform those communities about prevention, awareness and
    what they can do?
        Governor Napolitano. Well, there are a number of efforts
    both at the State level primarily through the Department of
    Environmental Quality and the Department of Agriculture and the
    Department of Water Resources on the educational level and on
    the variety of issues that you list and also localities and the
    like. One of the things that we are really trying to now
    instigate in Arizona as we grow are transit options other than
    the automobile. And so, within for example, Maricopa County,
    our most populous county, we will be opening 20 miles of light
    rail by the end of 2008 with another 40 on the books to that.
    And as I said earlier, we are also looking at the possibility
    of rail, for example, between Phoenix and Tucson. In other
    words, there are environmental reasons for doing it, but there
    is also just pure transportation reasons to help people move
    from one place to another.
        Ms. Solis. One of the other issues I wanted to raise with
    Governor Spitzer was with respect to the ports and pollution.
    And of course, California just recently experienced a
    tremendous oil spill. And that is going to damage much of our
    ecosystem there. And I am wondering what is New York doing also
    to look at the negative impacts that vessels, marine vessels
    have on communities that are immediately affected by the air
    pollutants that are so devastating and have a very, very high
    negative impact on respiratory diseases, chronic illnesses and
    the like.
        Governor Spitzer. I will, with your permission, get back to
    you to see what, in particular, the Port Authority which has
    jurisdiction over the major ports in New York State is doing
    with respect to that. I will tell you I recall from my days as
    attorney general, we brought a number of cases with respect to
    the dumping of bilge water by ships which they would do in
    harbors and out in the oceans as well, which had accumulated
    all sorts of environmental pollutants that should have been
    handled different. So I know it is an issue we look at. I do
    not know precisely what the Port Authority is doing with
    respect to that issue. But I will get back to you.
        Ms. Solis. I just raise that because in Los Angeles, one of
    the largest points and Long Beach are both looking very
    aggressively at how to curtail that negative footprint there
    which has a tremendous impact on the entire region of Southern
    California. Yes, Governor.
        Governor Napolitano. I would like to add, that you also I
    would recommend look at land ports because we haven't improved
    the port infrastructure on the land ports between the U.S. and
    Mexico for years. That results in truck and car waiting lines
    that can be 5 or 6 hours long. They were 6 hours at the
    crossing at Lukeville, Arizona 2 weeks ago. And as you might
    imagine, sitting in an idling vehicle for that long is a
    problem. The whole land port infrastructure I would hope would
    be part of your recommendations.
        Ms. Solis. Thank you.
        The Chairman. The gentlelady's time has expired. The Chair
    recognizes the gentleman from Washington State, Mr. Inslee.
        Mr. Inslee. Thank you. You might sense there is tremendous
    jealousy from this end of the table when we listen to governors
    and mayors and see this spectacular progress and we haven't
    made it here. We are envious of your great progress. And one of
    the reasons is we have just got folks here in D.C. who are
    afraid of moving, to really move into this clean energy
    economy. I was hoping you might give our colleagues confidence
    in our ability to do so both economically and politically. I
    just wonder, if you could talk about the political lay of the
    land on these issues in your States to the extent they are
    bipartisan, to the extent there has been pushback or rollback
    since you have adopted these. My sense is there is great
    movement without great political risk, frankly, in your States
    moving forward on these issues. So I was wondering if you would
    address these issues.
        Governor Spitzer. I thank you for your kind words, but I
    would merely caution, that we have aspirational objectives that
    are still years out. We have not yet accomplished these
    thresholds. We certainly hope to and expect to. I would make
    this observation, in New York at least, the move towards an
    environmentally sound and environmentally conscious economy is
    bipartisan. Mayor Bloomberg is taking now an independent, ran
    as a Republican; my predecessor, Governor Pataki, a Republican
    were certainly very aggressive in this area as well. I think
    there is a bipartisan consensus that our economy will benefit,
    our environment will benefit simultaneously when we move in
    these directions in each of the various mechanisms through each
    of the various mechanisms we have been discussing.
        Governor Napolitano. I would note also that for example,
    the Western Climate Initiative is joined in by States like Utah
    which may be the most heavily Republican State by registration
    in the country, certainly must be close. And in my view, in
    Arizona, the politics have changed on this. As more information
    has become available to people, they have become more engaged
    in the issue and more concerned with the impact of greenhouse
    gas emissions, not just as a global warming issue, but on
    energy independence and on air quality overall.
        And so while there is always some pushback, oh, you are
    going to add to the cost of the car or this or that, it has not
    certainly been overwhelming and indeed the contrary is what I
    have been seeing is people really want to see that we are
    taking action in this area and see the possibility and the
    future and the opportunity for us to do so.
        Mr. Inslee. Well, we hope that bipartisanship will be
    coming in effect to Washington, D.C. too. And I know I have
    taken a scientific poll in New York City of the mayor's efforts
    to have hybrid taxis. Both taxi cab drivers--I was up there a
    week ago talking to the Wall Street folks who are already
    developing the infrastructure for national cap and trade
    system. But both taxi cab drivers wholeheartedly supported the
    move to hybrids. So that is a scientific poll.
        Governor Spitzer. That is.
        Mr. Inslee. Could you give us your thoughts about
    decoupling? Some of us think decoupling the revenues of
    utilities from the amount of electricity they sell immediately
    creates an incentive to help them finance infrastructure
    improvements and efficiency and conservation. I am told there
    has been some action in your States about that. Could you
    enlighten us at all?
        Governor Spitzer. Sure. I agree with you entirely.
    Decoupling so we actually create an incentive for the utilities
    to sell less energy. It sounds counterintuitive. We say to
    them, you can make more money by encouraging efficiency, which
    is, of course, the policy we want, is something we have sought.
    The Public Service Commission is studying that issue right now.
    It is something I have encouraged them to move forward on so
    the revenue of the utilities, the energy generators does not
    depend upon merely selling more. But we can say, by promoting
    efficiency, you will do better and the entire economy will
    thrive.
        Mr. Inslee. We have made efforts in our current energy bill
    actually have a Federal requirement for local communities to
    adopt energy efficient building codes. The first time ever the
    Federal Government would have any entry into that field. It
    does not have any sanction attached to it. It calls under local
    communities under Federal law required to do this, but has
    absolutely no sanction involved in it. If we do this, will that
    be of assistance to local leaders to get them to move forward
    to building codes or do we have to have a sanction associated
    with it to actually make this an effective tool of national
    policy?
        Governor Napolitano. Well, I always find the ability--I am
    a former attorney general--the ability of a sanction is nice
    leverage to get communities to move in the right direction. We
    are doing it voluntarily now and we are leading by example. And
    my executive order in Arizona I have directed that State
    buildings be built to lead standards in order to meet really
    the environmental requirements of the age in which we live
    moving forward.
        And I have encouraged our cities to follow that example. I
    have not mandated it. But if you are going to go and go vote
    for a mandate, it seems to me there ought to be something
    associated with it.
        Mr. Inslee. Well, we are pushing it. I haven't got there
    yet. Last question about auctions, some of us believe the
    larger percentage of auction the sooner the better as far as
    the real economic ramifications. Could you give us your
    comments about them and how you decided on a particular
    percentage of auction?
        Governor Spitzer. We moved to 100 percent auction on the
    theory that implicit in your statement, if you auctioned off
    the allowances, then you create a greater incentive and greater
    opportunity for the market to actually value the allowance, and
    so we just think it will work better. As I said in my
    testimony, I believe it has not been done elsewhere. So we will
    have to wait and see how it works before we can state
    definitively. But we believe theoretically, it is the right way
    to go.
        Mr. Inslee. Thank you very much.
        The Chairman. The gentleman's time has expired. And all
    time for questions has expired. Thank you, first of all for
    your bold leadership. It is a real example to the country. We
    do have an intention to bring an energy bill to the House floor
    in the next 4 weeks. We will hopefully increase the fuel
    economy standard to 35 miles per gallon, create 36 billion
    gallons of renewable fuels and have a 15 percent electricity
    standard for the whole country, in addition to having standards
    for all appliances and buildings going forward in the country.
    And that would have the effect of reducing by 40 percent the
    greenhouse gas emissions of our country by 2030 in terms of the
    goal for our country.
        But we need your leadership. And without question, you are
    driving this entire process. That is why the Congress is
    responding. Your leadership is very much appreciated. We thank
    you for it. And with that, this hearing is adjourned.
        [Whereupon, at 11:35 a.m., the committee was adjourned.]

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