[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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