[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
CLIMATE CHANGE FINANCE: PROVIDING ASSISTANCE FOR VULNERABLE COUNTRIES
SUBCOMMITTEE ON ASIA, THE PACIFIC AND
THE GLOBAL ENVIRONMENT
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
JULY 27, 2010
Serial No. 111-120
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS
HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey
Samoa DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey ELTON GALLEGLY, California
BRAD SHERMAN, California DANA ROHRABACHER, California
ELIOT L. ENGEL, New York DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York RON PAUL, Texas
DIANE E. WATSON, California JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri MIKE PENCE, Indiana
ALBIO SIRES, New Jersey JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York J. GRESHAM BARRETT, South Carolina
THEODORE E. DEUTCH, CONNIE MACK, Florida
FloridaAs of 5/6/ JEFF FORTENBERRY, Nebraska
10 deg. MICHAEL T. McCAUL, Texas
JOHN S. TANNER, Tennessee TED POE, Texas
GENE GREEN, Texas BOB INGLIS, South Carolina
LYNN WOOLSEY, California GUS BILIRAKIS, Florida
SHEILA JACKSON LEE, Texas
BARBARA LEE, California
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
Richard J. Kessler, Staff Director
Yleem Poblete, Republican Staff Director
Subcommittee on Asia, the Pacific and the Global Environment
ENI F.H. FALEOMAVAEGA, American Samoa, Chairman
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
DIANE E. WATSON, California BOB INGLIS, South Carolina
MIKE ROSS, Arkansas DANA ROHRABACHER, California
BRAD SHERMAN, California EDWARD R. ROYCE, California
ELIOT L. ENGEL, New York JEFF FLAKE, Arizona
GREGORY W. MEEKS, New York
C O N T E N T S
The Honorable Lael Brainard, Under Secretary for International
Affairs, U.S. Department of the Treasury....................... 11
Jonathan Pershing, Ph.D., Deputy Special Envoy for Climate
Change, U.S. Department of State............................... 20
Rear Admiral David W. Titley, Oceanographer and Navigator of the
Navy, U.S. Department of the Navy.............................. 28
Maura O'Neill, Ph.D., Senior Counselor to the Administrator and
Chief Innovation Officer, U.S. Agency for International
The Honorable Nancy E. Soderberg, President, Connect U.S. Fund
(Former Alternate Representative to the United Nations)........ 57
Mr. Elliot Diringer, Vice President, International Strategies,
Pew Center on Global Climate Change............................ 67
The Honorable Reed E. Hundt, CEO, Coalition for Green Capital
(Former Chairman of the Federal Communications Commission)..... 79
Redmond Clark, Ph.D., Chairman and CEO, CBL Industrial Services.. 93
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Eni F.H. Faleomavaega, a Representative in Congress
from American Samoa, and Chairman, Subcommittee on Asia, the
Pacific and the Global Environment: Prepared statement......... 4
The Honorable Lael Brainard: Prepared statement.................. 14
Jonathan Pershing, Ph.D.: Prepared statement..................... 22
Rear Admiral David W. Titley: Prepared statement................. 30
Maura O'Neill, Ph.D.: Prepared statement......................... 39
The Honorable Nancy E. Soderberg: Prepared statement............. 60
Mr. Elliot Diringer: Prepared statement.......................... 69
The Honorable Reed E. Hundt: Prepared statement.................. 81
Redmond Clark, Ph.D.: Prepared statement......................... 96
Hearing notice................................................... 118
Hearing minutes.................................................. 120
The Honorable Donald A. Manzullo, a Representative in Congress
from the State of Illinois: Commission on Growth and
Development, Working Paper No. 60.............................. 121
The Honorable Dana Rohrabacher, a Representative in Congress from
the State of California
List of 100 scientists......................................... 129
The Wall Street Journal article, ``The Climategate Whitewash
CLIMATE CHANGE FINANCE: PROVIDING ASSISTANCE FOR VULNERABLE COUNTRIES
TUESDAY, JULY 27, 2010
House of Representatives,
Subcommittee on Asia, the Pacific
and the Global Environment,
Committee on Foreign Affairs,
The subcommittee met, pursuant to notice, at 2:22 p.m., in
room 2172, Rayburn House Office Building, Hon. Eni F.H.
Faleomavaega (chairman of the subcommittee) presiding.
Mr. Faleomavaega. The subcommittee hearing will come to
This is the Subcommittee on Asia, the Pacific and the
Global Environment of the Committee on Foreign Affairs. The
topic of discussion this afternoon is Climate Change Finance:
Providing Assistance for Vulnerable Countries.
As is the procedure in most hearings, I am going to give my
opening statement; and then my good friend, the ranking member
of the subcommittee, the gentleman from Illinois, Mr. Manzullo,
will give his opening statement. He will be followed by my good
friend from California, Congressman Rohrabacher, who will give
his opening statement. Then we will invite our guests to give
Today's hearing on climate change finance is the third in a
series focused on the impact of global warming on the most
vulnerable nations. Last December in Copenhagen, President
Obama, along with other developed country leaders, pledged to
raise $30 billion between 2010 and 2012 for ``fast start''
adaptation and mitigation efforts for countries most in need.
Developed countries also committed to providing $100 billion
annually by 2010 to developing nations, conditioned on all
major economies agreeing to ``meaningful mitigation actions and
full transparency as to their implementation.''
While the accord did not delineate precisely where the
funds would come from or how they would be disbursed, Secretary
of State Hillary Clinton said funding would be derived from
public, private, bilateral, multilateral, and alternative
The commitments made by the developed world to developing
nations were essential to achieving the Copenhagen Accord
during the much-anticipated 15th session of the conference of
the parties. Negotiations nearly faltered until developed
nations agreed to contribute resources to counter the effects
of climate change in developing countries.
As the Copenhagen Accord itself states,
``Enhanced action and international cooperation on
adaptation is urgently required to ensure the
implementation of the convention by enabling adaptation
actions aimed at reducing vulnerability and building
resilience in developing countries, especially in those
that are particularly vulnerable, especially the least-
developed countries, small island developing states and
Africa. We agree that developed countries shall provide
adequate, predictable and sustainable financial
resources, technology and capacity building to support
the implementation of adaptation action in developing
The Accord was an important step forward in achieving a
legally binding global agreement to limit greenhouse gas
emissions, a step which is essential to avoiding the worst
consequences of climate change. While the pledges made by
developing countries are substantial, they are both necessary
and very much in our own interest. Ironically, the poorest
countries, those that have contributed the least to global
greenhouse gas emissions, will suffer 75 to 80 percent of the
cost of climate change-induced damages, according to the World
Development Report of 2010.
Moreover, as Anthony Zinni, retired Marine Corps General
and former Commander of the U.S. Central Command, succinctly
``We will pay for this one way or another. We will pay
to reduce greenhouse gas emissions today, and we will
have to take an economic hit of some kind; or we will
pay the price later in military terms, and that will
involve human lives. There will be a human toll.''
General Zinni's views were confirmed by the 2010
Quadrennial Defense Review, which states,
``While climate change alone does not cause conflict,
it may act as an accelerant of instability or conflict,
placing a burden to respond on civilian institutions
and militaries around the world. Extreme weather events
may lead to increased demands for defense support, to
civil authorities for humanitarian assistance, or
disaster response both within the United States and
Last week, I introduced House Resolution 1552 supporting
finance for developing countries consistent with the Copenhagen
Accord's goals and calling for enactment of comprehensive
energy and climate change legislation that includes provisions
for international finance.
Meanwhile, my good friend, Congressman Russ Carnahan from
Missouri, is working on introducing the Global Climate Fund Act
which will lay out a pathway for distribution of funding for
mitigation and adaptation based on the Copenhagen Accord and
modeled after the successful Global Fund to Fight AIDS,
Tuberculosis, and Malaria, which received essential U.S.
financial support under the George W. Bush administration.
In addition, Congressman Pete Stark introduced H.R. 5873,
the Investment in Our Future Act, which would direct revenues
from a small tax on all currency transactions involving U.S.
purchases to fund domestic child care programs and global
health and climate change mitigation initiatives.
These legislative efforts will help us meet the pledges of
the Copenhagen Accord, provide essential assistance to the
countries most vulnerable to climate change, and help avoid the
mass migration, diminished food production, and competition
over resources that could lead to conflict and instability
requiring costly international response.
Examples of the impact of developed countries' emissions on
poorer countries can be found around the world, including the
South Pacific, where my own home lies.
As Ambassador Marlene Moses of Nauru has said,
``The Pacific island developing states bear almost no
responsibility for the onset of climate change, yet we
are suffering the consequences today. It is undermining
our food security, water security and territorial
integrity. Climate change is a man-made disaster, and
redress for the damage being done to our island nations
is long overdue.''
We convene today's hearing as the Senate takes up energy
legislation, albeit vastly diminished in scope from the Waxman-
Markey bill that was passed last year by the House. Among many
other issues, the Waxman-Markey bill included provisions for
international finance. Senate legislation does not consider
such funding, let alone a cap on greenhouse gas emissions.
Indeed, as rolled out yesterday, the bill is simply focused on
raising the liability caps on spills for oil companies and
encouraging modest energy efficiency improvements.
The Senate's small bill is discouraging for those of us
committed to addressing climate change, but we will not give up
the fight. I hope that today's hearing will contribute in some
small way toward that effort.
Today's hearing was organized by Melanie Mickelson-Graham,
a presidential management fellow on rotation to the
subcommittee from the Department of Energy. And I just want to
note this personally. Melanie is a specialist on energy and
climate change in Asia. She has lived and traveled in China and
is fluent in Mandarin. She previously worked with the Cohen
Group and the U.S. Department of Defense and the U.S. Senate.
She graduated with distinction from the Nitze School of
Advanced International Studies at Johns Hopkins University and
received her bachelor's degree in economics with honors from my
alma mater, Brigham Young University. She is also the proud mom
of an active 1-year-old boy who is learning Chinese.
We deeply appreciate the work that Melanie has done for the
subcommittee and look forward to the testimony from government
officials and experts in the fields of climate change and
finance who will share their thoughts on the Copenhagen Accord
and on meeting its promise to raise and disburse funds for
climate finance efficiently, effectively and transparently.
Given that we have eight witnesses testifying before us
today, I ask that you limit your testimony to 5 minutes and
submit your complete statements which will be made available
for the record, without objection. And I also ask members to
limit their opening statements and questions to 5 minutes each.
I now recognize my good friend and ranking member from
Illinois for his opening statement.
[The prepared statement of Mr. Faleomavaega follows:]
Mr. Manzullo. Thank you, Mr. Chairman, for calling this
hearing on foreign assistance funding for climate change and
the U.N. climate change negotiations.
This is an issue that generates a lot of strong feelings on
both sides, and I know your keen interest in this matter. I
applaud your passion for tackling challenging problems under
the subcommittee's jurisdiction, but this topic has a lot of
agreements and a lot of disagreements.
The current problem with addressing climate change through
a massive cap and trade scheme and related energy tax is that
it will do little to prevent the harm that is occurring to
people on a daily basis. When the House of Representatives
passed cap and trade legislation last year, supporters of that
legislation included 1,000 pages of new government spending on
programs that fail to stop global pollution.
I have long proposed that the best approach to addressing
chemical pollutants is to attack the problem at its source:
Work with foreign countries to stop emitting harmful pollutants
into the atmosphere, the ground, and our water through
practical and technical solutions. Unfortunately, the term
``climate change'' only encompasses narrowly what happens in
the air and not on the ground and in the water. These
pollutants do not respect boundaries and have found their way
into our food system.
During the 110th Congress, I authored legislation to
address this during the debate on the International Climate
Reengagement Act in the Foreign Affairs Committee. Given the
fragile state of our Nation's economy, particularly the
unacceptably high unemployment rate, how can we seriously ask
the American taxpayer to dig deeper into their pockets so that
yet another government program gets funded? It is hard to tell
good, hardworking Americans who have either lost their jobs or
are in fear of losing them that borrowing money from China,
which is now the world's largest consumer of energy and emitter
of greenhouse gases, to provide climate change mitigation
assistance to the foreign nations is a good idea.
The U.S. already provides over $23 billion a year on
foreign assistance funding. Under the Obama administration,
funding for climate assistance rose from $315 million in Fiscal
Year 2009 to $1.3 billion in Fiscal Year 2010, and the Fiscal
Year 2011 budget request for climate change assistance is over
40 percent above current levels, to $1.9 billion.
The unemployment rate in Rockford, the largest city that I
represent, is officially 16.1 percent. Add 7 percent to that,
and one out of four people are out of work. I know that cities
across America are experiencing the same tragic job losses that
my constituents are in Rockford.
Policies such as cap and trade will do nothing other than
to push America's already fragile manufacturing sector over the
cliff; and it will do nothing to reduce global levels of
greenhouse gas emissions, because then other emerging economies
would be doing the manufacturing in a less energy efficient
manner that used to be done in our country.
Thus, I want the American people to clearly understand that
the intention of the administration and the majority party in
Congress is to contribute more funding toward the U.N.'s $200
billion green climate fund. To underscore this point, the World
Bank and Dutch Foreign Ministry sponsored a paper by renowned
Yale economist Robert Mendelsohn confirming the largest threat
to long-term economic growth is excessive near-term mitigation
The report also notes that the total cost for mitigation
could top $2 trillion. That is almost equal to the total amount
of foreign assistance funding that the entire developed world
spent in 50 years.
In this document, Mendelsohn says grim descriptions of the
long-term consequences of climate change have given the
impression that the climate impacts from greenhouse gases
threaten long-term economic growth. However, the impact of
climate change on the global economy is likely to be quite
small over the next 50 years. Severe impacts, even by the end
of the century, are unlikely. The greatest threat that climate
change poses to long-term economic growth is from potentially
excessive near-term mitigation efforts.
We are looking at a marathon and not a short sprint. Thus,
it is our duty to ensure that we do not waste precious
resources. And I respectfully ask that this report be included
in the record.
Mr. Faleomavaega. Without objection, so ordered.
Mr. Manzullo. Finally, Mr. Chairman, I want to welcome Dr.
Redmond Clark to testify before the subcommittee. Dr. Clark is
a constituent from northern Illinois. It is an honor to have
him here today. He is a business and community leader who has
real-world insight on climate change, renewable energy, and
global pollution; and he is my constituent.
Thank you for calling the hearing.
Mr. Faleomavaega. Thank you. I thank the gentleman from
I recognize my good friend, the gentleman from California,
for his opening statements.
Mr. Rohrabacher. Thank you very much, Mr. Chairman.
Let us just note it is a bit unnerving that we are here at
a time when we have such widespread economic hardship going on
in our country and that we are seriously then talking about
borrowing even more money from China in order to help other
nations that might be affected by so-called man-made global
Mr. Chairman, even if the whole concept of global warming
was not fraudulent, we can't carry this burden for the whole
world. And I happen to believe, of course, that the premise
that we are talking about is wrong. I am a senior member of the
Science Committee. I have gone through hearing after hearing on
this, and it is evident to me that there are prominent
scientists throughout the world who totally disagree with this
concept that humankind carbon dioxide emissions are going to
make the world warmer and warmer and that it is going to have
such a deleterious effect and it is having a deleterious effect
on the world.
For the record, I would like to place the names of at least
100 of the 1,000 prominent scientists, by the way, thousands of
prominent scientists who put their names to petitions
suggesting that the concept of man-made global warming is not
Mr. Faleomavaega. Without objection.
Mr. Rohrabacher. Thank you.
I would highlight three of these incredibly respected
scientists who have been published in peer-reviewed research
that contradicts the orthodoxy of man-made global warming.
By the way, these three scientists were recently included
in a blacklist by the National Academy of Science in a last-
ditch effort to save some vestige of their own credibility
after the revelations that we found recently from purloined e-
mails that underscore and tend to prove that there has been
fraud involved in this whole effort.
The first one is Freeman Dyson, who is a professor of
physics at the Institute for Advanced Study at Princeton and
one of the world's most respected physicists. He was put on a
blacklist for not going along with the man-made global warming
Frank Tipler, a professor of both mathematics and physics
at Tulane University and one of the leading cosmologists in the
Roy Spencer, a climatologist and a principal research
scientist at the University of Alabama at Huntsville, and
through his decades of work at NASA is a leading expert in the
use of satellites to measure the temperature of the Earth.
Now as you review the blacklist, it becomes very clear that
these are leading experts in every scientific and technological
field, and they have been blacklisted because they disagree
with the so-called consensus which we hear every time in
discussing global warming.
The debate is over. Now how many times have we heard that?
Debate over; case closed. For everybody who has heard that
expression, which we have heard hundreds of times, it just
underscores the fact that we have a con game going on, and
people want to shut off debate, and there has not been an
honest debate on this issue.
Let us note that the purloined e-mails that were made
public about 6 months ago now did demonstrate that those
climatologists and researchers who had very generous research
grants, both at East Anglica and their communication with
researchers here, had conducted themselves in a very
unprofessional way. They had talked together about suppressing
dissent. They talked about constructing data and building up
fraudulent claims against people who disagree with them. They
actually used data that was based on idle speculation by
graduate students, rather than by research, especially when it
came to glaciers retreating and rainforests that are supposedly
disappearing. Sometimes, they actually used data and wildly
And then there are actually e-mails suggesting that they
are going to hide and destroy data if asked for it by people
who were questioning their results.
This type of arrogance on the part of those engaged in
global warming research should be an alarm bell for all of us.
We should not be basing our policy on this type of scientist
who has benefited from major research grants and would do
anything to protect their turf because that is their rice bowl.
We should make sure that we have an honest and open look at
this issue before we commit billions and billions of dollars
that should be going to help our own people in order to give to
other countries in order to balance off the effects of
something that these scientists believe doesn't really exist,
and that is man-made global warming.
I thank you very much for permitting me to at least insert
in this part of the debate, when we are talking about these
issues, into this discussion. It is important for us to note
that this is not a fait accompli and that all people agree that
man-made global warming is the threat that justifies some of
the actions that are being advocated.
Thank you, Mr. Chairman.
Mr. Faleomavaega. I thank the gentleman from California.
One thing I will say is that over the years, my good
friend, the gentleman from California, and I have had healthy
disagreement on certain issues. I think he was very poetic in
his previous expression that global warming is global baloney,
or something to that effect.
I do respect my good friend's opinion. It is unfortunate to
hear that somebody blacklisted a group of scientists who may
have differing views on global warming and climate change. The
very reason we are having this hearing this afternoon is to
have an open debate. I hope the gentleman will stay here so we
will have this interesting dialogue with some of our expert
witnesses and see how it goes.
We have invited a very distinguished panel of experts, in
my humble opinion, in their given fields to be with us this
afternoon, and to share with us their expertise and
understanding of the issue before us.
With us this afternoon is Dr. Lael Brainard, the Under
Secretary for International Affairs at the U.S. Department of
Treasury, a position for which she was confirmed in the U.S.
Senate. Dr. Brainard advances the administration's agenda of
strengthening U.S. leadership in the global economy to foster
growth, create economic opportunities for Americans and address
transnational economic challenges, including development,
climate change, food security and financial inclusion.
Most recently, Dr. Brainard was vice president and founding
director of the Global Economy and Development Program at the
Brookings Institution, where she held the Bernard L. Schwartz
chair in international economics and directed the Brookings
Initiative on Competitiveness.
Previously, Dr. Brainard was also an associate professor of
applied economics at the Massachusetts Institute of
Technology's Sloan School of Management. Dr. Brainard received
her master's and doctoral degrees in economics from Harvard
University, where she was a National Science Foundation fellow.
She graduated with the highest honors from Wesleyan University.
She is also the recipient of a White House Fellowship and a
Council on Foreign Relations International Affairs Fellowship.
With us also is Dr. Jonathan Pershing, deputy special envoy
for climate change at the U.S. Department of State. Dr.
Pershing was appointed deputy special envoy for climate change
last year. In his capacity he serves as the head of the U.S.
delegation to the U.N. climate change negotiations and reports
to Special Envoy Todd Stern, responsible for U.S. international
climate change policy.
Prior to arriving at the State Department, Dr. Pershing was
at the World Resources Institute, a non-profit think tank,
where he headed their climate and energy program and undertook
research and policy analysis, and facilitated government,
business and NGO climate efforts both domestically and
Dr. Pershing holds a Ph.D. in geophysics, has worked as an
oil geologist, served as a faculty member at American
University and the University of Minnesota and is the author of
dozens of articles and a number of books on climate change and
climate change policy.
There you go, Mr. Rohrabacher. I think we are going to have
a very good dialogue this afternoon.
With us also is Rear Admiral David Titley, oceanographer
and navigator of the U.S. Navy. A native of New York, Rear
Admiral Titley was commissioned through the Naval Reserve
Officers Training Commission in 1980. He has served several
assignments on several ships.
Admiral Titley has commanded the Fleet Numerical
Meteorological and Oceanographic Center in Monterey,
California. He was the first commanding officer of the Naval
Oceanography Operations Command. He served his initial flag
tour as commander at the Naval Meteorology and Oceanography
He has had assignments in Pearl Harbor and Guam--both very
interesting. Admiral Titley also served on the U.S. Commission
on Ocean Policy, as special assistant to the chairman, James
Watkins, for physical oceanography, and as senior military
assistant to the director of net assessment in the office of
the Secretary of Defense.
Admiral Titley has a bachelor's degree from Penn State
University, a master's in meteorology and physical oceanography
and a Ph.D. in meteorology, both from the Naval Postgraduate
I am very glad to have you, Admiral, this afternoon.
Last but not least is Dr. Maura O'Neill. Dr. O'Neill is the
senior counselor to the administrator and chief innovation
officer of the U.S. Agency for International Development. In
the public, private and academic sectors, Dr. O'Neill has
focused on creating entrepreneurial and public policy solutions
for some of the toughest problems in the fields of energy,
education, infrastructure financing, and business development.
Before coming to USAID, she served as chief of staff and
senior advisor for energy and climate at the U.S. Department of
Agriculture, and before that as chief of staff for U.S. Senator
Maria Cantwell from Washington State. Dr. O'Neill has started
four companies in the field of energy, digital education and
high technology. She received her MBAs from Columbia University
and the University of California at Berkeley and currently
serves on the faculty of the Lester Center for Entrepreneurship
and Innovation at U.C. Berkeley. She earned her Ph.D. at the
University of Washington.
I would like to have Dr. Brainard start us off with her
STATEMENT OF THE HONORABLE LAEL BRAINARD, UNDER SECRETARY FOR
INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF THE TREASURY
Ms. Brainard. Thank you, Chairman Faleomavaega, Ranking
Member Manzullo, and Congressman Rohrabacher. I appreciate the
opportunity to discuss climate finance for vulnerable
In his national security strategy, President Obama
highlighted the national security imperative of global climate
change. With environmental degradation fueling instability and
conflict, addressing climate change in developing countries
protects our national security no less than it promotes our
national interest and values.
The President also noted there is no effective solution to
climate change that does not depend upon all nations taking
responsibility. Climate change is a global problem requiring a
Climate and development are increasingly two sides of the
same coin. Choices surrounding climate will greatly determine
the fate of the poor, just as choices on the path out of
poverty will greatly influence the fate of the climate.
Let me make three brief observations about our work on
climate and development, focusing on how Treasury directs and
leverages multilateral financial tools to tackle these
First, we believe U.S. investments in the multilateral
trust funds are highly efficient, effective, and transparent.
The funds are highly leveraged, ensuring a high return for U.S.
taxpayer investments. By leveraging other donors, these funds
maximize contributions which amount to nearly $5 for every
dollar the United States invests.
Moreover, because these investments are centered in the
multilateral development banks, we utilize our leadership of
those institutions to mainstream climate change considerations
into their core lending portfolios in addition to the trust
funds, which is a force multiplier. This is most evident in the
more than tripling of World Bank core lending for renewable
energy and energy efficiency over the last 5 years from $1
billion to nearly $3.5 billion a year. In short, these are wise
investments at a time when we are faced with difficult fiscal
The multilateralism of the funds also give the
contributions to them additional legitimacy. The cooperative
and inclusive nature of those investments where developing
countries sit on the governing boards are valued in
international negotiations, and we design the funds to be
innovative. They include country-owned plans and flexible
financing mechanisms that catalyze private-sector investment
and civil-society involvement, which means more traction, more
scale, and more sustainability for the people they are intended
to protect and serve; and they focus tightly on results and
Second, our investments in the multilateral climate trust
funds strengthens the resilience of the most vulnerable
nations. As this subcommittee recognizes, the countries most
vulnerable to the impacts of climate change have the least
capacity to respond. Therefore, one of our primary policy goals
of our climate financing must be to help these countries
The pilot program for climate resilience, for example,
works to integrate climate adaptation into core development
planning, coastal and water management, food security and
production, risk management and early warning systems, and
infrastructure adaptation. It does so in a number of the
poorest countries and regions, including the South Pacific,
Bangladesh, Cambodia, and the Caribbean, helping to restore
livelihoods and protect against natural disasters.
Third, our investments in these funds promote low carbon
development by protecting forests and promoting clean energy.
Since emissions from deforestation constitutes about 17 percent
of the global greenhouse gas emissions, we must successfully
protect forests if we are to successfully address climate
change. The Forest Investment Program addresses the underlying
causes of deforestation in places like Ghana that are
especially dependent upon forest resources.
The Tropical Forest Conservation Act forgives official debt
owed to the U.S. in return for local in-country conservation
activities in places like Indonesia. In the area of clean
energy, multilateral climate funds are focusing on spurring the
development and deployment of energy efficiency in wind, solar,
and geothermal technologies to help curb the growth of
greenhouse gas emissions, spur private sector investment, and
provide clean energy jobs into the future.
The Clean Technology Fund catalyzes shifts to cleaner
energy in emerging economies while the Scaling-Up Renewable
Energy Program helps the poorest countries grow on a cleaner
These activities supported our efforts to secure the deal
in Copenhagen where we had the experience and the credibility
to talk about future financing arrangements, providing
resources for the most vulnerable nations and creating the
Copenhagen Green Climate Fund in exchange for commitments to
mitigation and transparency from key emerging countries like
So, in sum, congressional support of our efforts is vital
to sustaining U.S. engagement leadership in the multilateral
climate finance area.
For Fiscal Year 2011, the administration requested $830
million for Treasury programs to strengthen resilience and
promote low-carbon development. We welcome congressional
support of this request, which will help to galvanize action on
adaptation and on mitigation by developing countries and
leverage burden sharing contributions from other countries.
[The prepared statement of Ms. Brainard follows:]
Mr. Faleomavaega. Thank you, Dr. Brainard.
STATEMENT OF JONATHAN PERSHING, PH.D., DEPUTY SPECIAL ENVOY FOR
CLIMATE CHANGE, U.S. DEPARTMENT OF STATE
Mr. Pershing. Thank you very much.
Mr. Chairman, Mr. Manzullo, and Mr. Rohrabacher, thank you
very much for taking the time for this hearing and your
interest in this particular issue.
The reason for global change in my mind, notwithstanding
what Mr. Rohrabacher has suggested, are I think quite clear. In
spite of the minority views of a very few skeptics, the global
community is in broad agreement that, left unchecked, climate
change would lead to very dramatic shifts in the way the world
lives. We understand that it will lead to significant
population displacements and sea level rise. It will lead to a
decline in global food supply. It will lead to massive losses
in species biodiversity and to major shortages of water. These
are quite fundamental elements of the way the economies of the
And to solve this problem, we have to shift the way the
economy works to a low-carbon structure, and we need to move
quickly if we want to avoid the kinds of damages that are
anticipated. And, unfortunately, we are late in getting going,
and so we are going to have to develop strategies to adapt to
the change that we already see and the anticipated change that
will occur in the future.
While we know what needs to be done, we also know that
there are limits to the capacity, particularly in developing
countries and specifically among the most vulnerable and the
poorest. These countries are going to need assistance to change
their development trajectories and to adapt to the unavoidable
consequences of climate change.
To this end, of course, all nations need to rapidly and
substantially ramp up domestic investment. The wealthier
countries are going to have to do some work providing new
financing, along with technical and technological assistance to
encourage new private investment in a more sustainable future.
It is unsurprising that mitigation and adaptation, as well
as financing to help poor countries deal with both, have been
the central themes in the Copenhagen Accord; and I note that no
deal would have been possible without both elements.
First, on the action side. All majors economies in
Copenhagen, both developed and developing, committed to take
actions to limit their emissions, to list those actions in
appendices to the agreement, and committed to implement those
actions in an internationally transparent manner.
To date, 136 countries have associated with the accord; and
more than 75, including all of the major economies, have
inscribed domestic targets or actions. We in the United States
have to do our part.
Second, the agreement included provisions for significant
new financial assistance in the context of action by all major
economies. And there were three elements in these financing
components: First, developed countries committed to provide
short-term ``fast start'' finance approaching $30 billion over
the period 2010 to 2012 to support adaptation and mitigation in
developing countries. It is vitally important for our overall
climate diplomacy goals and for the credibility of the accord
that developed states make a strong contribution to ``fast
The President's Fiscal Year 2010 budget and the 2011 budget
request puts us on track to meet our share, and we thank you
here in the House for your support of the past budget and look
forward to your support for the 2011 budget.
Second, although the goal of mobilizing long-term public
and private finance of $100 billion per year by the year 2020,
again in the context of meaningful action on mitigation and
transparency implementation, is a package, it is part of a
deal, the goal must be seen for what it is, a catalytic effort
to help jump-start the world onto a pathway to a cleaner
economy. It is a large figure, but a shift to a low-carbon
global economy will only result from private investments in
clean and sustainable energy and economic growth. This is a
Third, we have agreed to establish a new Copenhagen green
fund. Under Secretary Brainard spoke about it. The U.N.
Convention already has one financial operating entity, the
Global Environment Facility, to which the U.S. is a donor. And
where the GEF might focus more on capacity building, the new
fund could concentrate on financing larger-scale mitigation and
Overall, our finances are divided among multilateral
initiatives and institutions as well as bilateral programs and
activities. The balance provides us with maximum value.
Leveraging contributions in the global community and
multiplying our finances, as Secretary Brainard suggested, and
on the bilateral side, as Maura O'Neill is likely to speak to,
targeting key allies, promoting specific initiatives, generated
the most value in the policy arena.
Let me leave you with a couple of points in closing.
In our view, the U.S. and the world must act quickly and
aggressively to curb our emissions if we are to avoid the most
damaging effect of climate change. A key element will be robust
actions here at home. For that, we need a combination of
legislation, regulation, American ingenuity, and investments.
At the same time, we must assist the world's poorest and
most vulnerable people to adapt to the effect of climate change
and help support developing countries in setting low emissions
and sustainable development pathways that are resilient to a
Finally, I believe that taking domestic and international
action are not choices we can politely turn down. Rather, they
represent both an opportunity and a responsibility. We look
forward very much to working with you here in Congress as we
take on this task.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Pershing follows:]
Mr. Faleomavaega. Thank you, Dr. Pershing.
STATEMENT OF REAR ADMIRAL DAVID W. TITLEY, OCEANOGRAPHER AND
NAVIGATOR OF THE NAVY, U.S. DEPARTMENT OF THE NAVY
Admiral Titley. Mr. Chairman, Congressman Manzullo,
Congressman Rohrabacher, I want to thank you for the
opportunity to address you today regarding climate change and
I am Rear Admiral Dave Titley, and I am the Oceanographer
of the Navy, Director of the Navy's Task Force on Climate
Change. The Chief of Naval Operations, Admiral Gary Roughhead,
established the Task Force on Climate Change in May 2009 to
address implications of climate change for national security
and naval operations. Today I am speaking something about the
impacts of climate change on the Navy.
Rather than read from my written statement, I would like to
provide some introductory remarks on the topics and then invite
The 2008 National Defense Authorization Act, the 2010
Quadrennial Defense Review, and 2010 National Security Strategy
all required the Department of Defense to take action regarding
climate change by recognizing the effects climate change may
have on the operating environment, roles, missions, facilities,
and military capabilities. Taking into account this guidance,
the Navy recognizes the need to adapt to climate change and is
closely examining the impacts that climate change will have on
military missions and infrastructure.
The Navy is watching the changing Arctic environment with
particular interest. The changing Arctic has national security
implications for the Navy. The Navy's maritime strategy
identifies that new shipping routes have the potential to
reshape the global transportation system, possibly generating
sources of competition for access and natural resources. For
example, the Bering Strait has the potential to increase in
strategic significance over the next few decades, and China is
actively exploring ways to increase its presence in the Arctic.
There are other impacts of climate change on missions that
the Navy must consider, including water scarcity and fisheries
redistribution that may influence future Navy missions
regarding humanitarian assistance and disaster relief.
Conversely, some areas of the world such as Russia may
benefit from longer growing seasons and an increase in water
availability, providing opportunities for economic growth.
Large-scale redistribution of fisheries is a concern in areas
of the world that depend heavily upon this industry as a
primary food source.
The Navy must understand where, when, and how climate
change and its silent cousin, ocean acidification, will affect
regions around the world and work to build resilience and
partnerships with foreign militaries.
The Navy must also be aware of impacts to military
infrastructure, both within and outside the continental United
States, due to increased sea level rise and storm surge. The
Navy's operational readiness hinges on continued access to
land, air, and sea training and test spaces; and many overseas
bases provide strategic advantage to the Navy in terms of
location and logistic support.
Any adaptation efforts undertaken are required to be
informed by the best possible science and initiated at the
right time and cost. The Navy is currently beginning
assessments for areas of major potential funding that will
inform Navy strategy, policy, and plans to guide future
investments. The Department of Defense is already conducting
adaptation efforts through a variety of activities, including
two road maps on the Arctic and global climate change and the
leveraging of cooperative partnerships to ensure best access to
science and information.
The Navy understands the challenges and opportunities that
climate change presents to its missions and installation. We
are beginning to conduct the assessments necessary to inform
future investments and are initiating adaptation activities in
areas where we have enough certainty with which to proceed.
Thank you, sir. I stand ready to answer any questions the
subcommittee may have.
[The prepared statement of Admiral Titley follows:]
Mr. Faleomavaega. Thank you, Admiral.
STATEMENT OF MAURA O'NEILL, PH.D., SENIOR COUNSELOR TO THE
ADMINISTRATOR AND CHIEF INNOVATION OFFICER, U.S. AGENCY FOR
Ms. O'Neill. Thank you, Chairman Faleomavaega, Ranking
Member Manzullo, and Congressman Rohrabacher. Thank you for the
opportunity to testify today.
I will briefly summarize my written testimony, which I ask
to be submitted for the record.
Mr. Faleomavaega. Without objection, all statements are
made part of the record. If you have any additional materials
that you want to include to be made part of the record, you are
welcome to do so.
Ms. O'Neill. I am pleased to be here today with my
colleagues from State, Navy, and Treasury. Our agencies work
closely to ensure a robust response on the part of the U.S.
Government to the critical threat of global climate change.
In my role as Senior Counselor to the Administrator and
Chief Innovation Officer, I have been working with the agency's
significant technical expertise to spearhead our approach to
innovative climate financing.
Climate change is one of the century's greatest challenges;
and low-carbon, climate-resilient growth must be a priority for
our diplomacy and development work for years to come. Climate
change is not just an environmental problem but a problem with
huge human consequences of hunger, poverty, conflict, water
scarcity, infrastructure integrity, sanitation, disease, and
survival in the region, as well as U.S. security.
It is imperative to address climate change in Asia and the
South Pacific. Over half of Asia's 4 billion people live near
the coast, and about 87 percent of the world's small-scale
farmers operate in Asia. They are susceptible to sea level
rise, stronger cyclones, changes in monsoon patterns, and
either too much or too little water.
The small island states of the Pacific are among the
world's most vulnerable to climate change. The small size of
the islands and the concentration of their economies into a few
climate-sensitive activities such as tourism and fishing limit
the adaptation options of many of these states. However, by
improving the management of the limited fishery and other
resources and reducing the stresses within the island's
control, the resilience can be greatly improved and with it the
lives and livelihoods of the people.
USAID's expertise in agriculture, water, biodiversity,
health, and other climate-sensitive sectors provide an
opportunity to implement innovative cross-sectorial climate
change programs in partnership with these countries.
Together with State and Treasury, USAID's climate programs
are budgeted according to three climate change pillars:
Adaptation, clean energy, and sustainable landscapes. We
received $308 million in Fiscal Year 2010 appropriations and
have requested $491 million for these efforts in Fiscal Year
2011 and appreciate your support.
The USAID is especially attuned to the unique threats small
island developing states and other coastal areas face. We have
developed tools for assessing their vulnerability and
adaptation options at the national and local levels. For
example, recently, we worked with the Marshall Islands group
developing a guidebook for development planners to help them
identify areas that are most vulnerable to extreme weather
The Asia Pacific region is of particular importance in
conversations about climate impacts because of the vast wealth
of highly sensitive coral reefs. These are among the most
vulnerable ecosystems due to threats from rising surface
temperatures and sea levels, increasing frequency of storm
surges, and ocean acidification. Healthy and resilient coral
reefs are vital to the well-being of many small island states
and communities contributing to the food security of over 1
billion people around the world.
As you know, Mr. Chairman, the coral reefs are a critical
spawning habitat for tuna and other profitable fisheries in the
region. The United States was the first donor to support the
Coral Triangle Initiative for Coral Reefs, Food Security, and
Climate Change, and provide early and sustained support to this
diplomatic and development initiative.
Investment by the private sector in the developing world,
including foreign direct investment, plays a dominant role in
whether these countries will have the infrastructure and
economic basis to prosper or be damaged by climate
USAID seeks innovative approaches to climate change that
draw upon scientific research, technologies, and strength in
partnerships with the private sector. We have a number of
ongoing efforts which I would be happy to elaborate on, either
in this hearing or in follow-up.
In Indonesia in particular we are creating an innovative
public-private partnership to develop new business
opportunities at scale throughout the country and create good
business and employment income for local people.
USAID Administrator Shaw, whether it is in his strategic
direction on food security or governance and stability work or
economic development assistance, has conveyed the importance to
all of us of reducing emissions and increasing the climate
resilience of all partner countries. He knows that the
countries in which we work and the people who live there are
the most vulnerable in the world to adverse effects.
In closing, I would like to emphasize the seriousness with
which we view this threat both to U.S. national interests and
to the prosperity of our future country partners around the
world and the commitment we bring to the efforts to mitigate
the worst impacts and improve resiliency of the most
Thank you. I am happy to take any questions.
[The prepared statement of Ms. O'Neill follows:]
Mr. Faleomavaega. I thank the members of the panel for
their most eloquent statements.
Before I turn the time over to my colleagues for their
questions, I just want to get a sense of your views. Do I get a
strong feeling that all of you are very much in support of the
climate change crisis that we are faced with?
Mr. Manzullo. In support of the climate crisis?
Mr. Faleomavaega. Recognizing that there is such a thing as
climate change--is that a better phrase?
Admiral Titley. I am not sure I would call it a crisis. It
is a strategic challenge. It is a challenge that we have to
understand better. It is always easy when looking back to say
whether something was or was not.
Mr. Faleomavaega. So you are saying it with qualification.
I am going to let my colleagues ask the direct questions.
The gentleman from Illinois for his questions.
We will switch a little bit and start with the gentleman
Mr. Rohrabacher. Admiral, you mentioned the change that is
taking place in the Arctic and the waters there are now
navigable. Has that ever happened before in history?
Admiral Titley. It has not happened in the recorded
history. If you talk to the tribal elders who were up there--I
had the opportunity to ride the U.S. Coast Guard cutter Healy
last year, and they had some of the tribal elders on board.
They said in their oral history--the Native tribes----
Mr. Faleomavaega. Inuits or Eskimo?
Admiral Titley. Yes, from the Barrow area of Alaska. They
in their time did not know of a time when the Arctic was
navigable. So that goes back about 10,000 years.
Mr. Rohrabacher. And 10,000 years is relatively short in
the history of the world, of course.
At times, I know in the case of Greenland and Iceland,
where there were dramatic changes--for example, when you talk
about adaptation of different peoples, there were large
populations in Greenland and Iceland, and they were farmers at
one point, and that changed, did it not? At some point, it
became not navigable anymore for people to live in Iceland;
isn't that correct?
Admiral Titley. There were certainly times when people have
lived in Iceland and Greenland. They continue to live there to
Also, I believe what you are referring to, perhaps, is the
medieval warming period, sir?
Mr. Rohrabacher. Actually, I am referring to the period of
cooling that happened after the medieval warming period. I am
glad that you recognize that there was a medieval warming
period. Because, as we know, one of the fraudulent attempts by
the head researchers of this global warming effort was trying
to erase that from the charts, that there had actually been a
warming period and how high and what level of temperature that
raised to. Because if indeed there was a warming back in
medieval times, it would be hard to suggest that it was modern
technology or carbon-related energy that was creating the
change in the weather.
Dr. Pershing, do you discount or discard Richard Lindzen,
who is one of the most distinguished scientists at the
Massachusetts Institute of Technology, and these other
thousands of scientists? Are they just a few skeptics, I think
is what you called them? You don't pay attention to their
arguments at all? You just sort of brush them aside?
Mr. Pershing. No. I think you know I don't brush them
aside. I have done a fair amount of work with Dr. Lindzen. I
have had a number of opportunities to interact with him. My
sense about it is that there are elements of his analysis that
are certainly worth considering. He has done some of the best
cloud seeding theory that is out there. Collectively, it is one
of the unknown issues about the details.
But on the basic issue, I think he is wrong. My own sense
about it is the skeptical scientists who you have been citing
represent a very small minority.
I know that you commented in your opening remarks about the
e-mails coming out of East Anglia. There have been a series of
analyses done by the research community, both at the university
and by others, and they have concluded resoundingly that there
was no malfeasance. There was perhaps some inappropriate or
inadequate release of data, and on that context we should be
very careful, and we should hold the scientific community
accountable to be transparent. But there is a different model
here about the adequacy and results.
Mr. Rohrabacher. Mr. Chairman, I would like to place in the
record a column that was written for the Wall Street Journal
about the point just made by our witness about the supposed
investigation into East Anglia where it points out that this
so-called investigation into the charges was done by people who
they themselves had benefited from many of the research grants
that they themselves were investigating and also that they
neglected to call anyone as a witness who was a critic of those
people who were being charged with wrongdoing. I submit this
for the record at this point.
Let me just note that what we have heard time and again,
even today, as we talk about climate change--and, first of all,
we all remember for a decade it was global warming and now it
is climate change. But even that isn't adequate to really lay
the foundation. What we are really talking about is man-made
climate change. Because there has been climate change
throughout the history of the word. I mean, I was trying to
review that with the admiral.
Clearly, we have cycles of warming and cooling, and the
only question is whether or not, as is being proposed to us by
this very what I consider to be fanatic clique of scientists
who have big research grants, is that it is mankind's
production of carbon dioxide which is causing this particular
change in the climate. And up until 9 years ago the word was
always global warming, but then it started getting cooler for a
number of years, so they had to change it to climate change.
Mr. Chairman, people have always had to adapt to changes in
climate; and that is why when we hear the testimony from some
of our witnesses, all I am doing is calling into question
basically the premise that humankind is causing this. We are
going through a period of change in our climate, just as we
have in the past. It does not then justify the dramatic
controls and taxation that are being proposed by this
administration, but it does suggest that we should be working
with peoples, vulnerable peoples, to help them adapt as the
climate changes. Not that we can change. The climate will
continue to change throughout our history.
But as we go through the hearing today, I would be in
agreement with those who are saying how do we adapt, not how do
we confront a change in the climate of the earth and how is
mankind going to change the weather patterns. That is
But there is very substantial--when the Admiral talks about
the changes in the Arctic and, as you are fully aware, the
changes in what is going on among island life and the Pacific
and various peoples who live along the oceans, I would suggest
the best way is to focus on adaptation rather than trying to
think that we are going to halt the climate evolutionary
processes that have been going on for millions of years.
Thank you very much, Mr. Chairman.
Mr. Faleomavaega. I thank the gentleman from California.
The gentleman from Illinois.
Mr. Manzullo. I thought we would get that out of the way at
Thank you, Mr. Chairman.
Dr. O'Neill, let me ask you a question. Let's say that you
were ambivalent on the question of whether or not the earth is
warming. In other words, you didn't have an opinion one way or
the other on it. I looked at your suggestions in your
testimony. Am I incorrect in assuming that, even if you had
that view, you would still promote many of the programs and
adaptations that you state in your testimony?
Ms. O'Neill. Thank you, Congressman.
There is clearly extreme weather conditions; and, as you
say, one could debate exactly the causes, et cetera. But Asia
and the island nations in particular are extremely vulnerable.
So, yes, we would support the adaptation work and the planning
work that goes on to assess that, to plan and to put these
nations in the best position to be climate resilient or, as
Under Secretary Brainard said, climate-proof their economies.
Mr. Manzullo. I am looking at page three of your testimony,
and you talk about--let me see--new approaches to conservation,
including using genetically modified organisms (GMOs) on crops.
Am I reading that correctly? Genetically modifying crops to
withstand heat and insects and things of that nature?
Ms. O'Neill. We do believe that new variates of drought-
resistance agriculture is one of the key adaptation efforts
available to, not only the U.S., but the rest of the world that
can be quite effective.
Mr. Manzullo. So the answer would be yes?
Ms. O'Neill. Yes.
Mr. Manzullo. Okay. I find that encouraging.
I guess what I am trying to--in the midst of this debate
that is going on, and with all deference to my colleague, I
don't think a person has to arrive at a decision as to whether
or not global warming is, in fact, occurring to come to the
conclusion that we have to do everything possible to stop
global pollution, regardless of the impact that one may see
Would you agree with that statement?
Ms. O'Neill. I would agree.
Mr. Manzullo. And as I shared before we started, my brother
is deeply involved in anti-litter, organized an entire county,
of cleaning that up and that doesn't go into the waters, et
cetera. I was just in Jordan last year, where they are having a
lot of problems with the plastic grocery bag that they now call
the ``Jordanian state flower.''
I am not trying to insult my friends in the plastic
industries, but I am trying to find a way here where the
emphasis can be upon remediation or attacking global pollution
on a nonpartisan, non-theoretical level, to simply recognize
that all the stuff we put in the air and bury and put into the
waters somewhere along the line is going to have a significant
Ms. O'Neill. Could I add something?
Mr. Manzullo. Sure.
Ms. O'Neill. So, yes, I think you are absolutely right. And
I also believe that in addition to GMOs or technology, we also
have the opportunity to identify existing native plants or
existing hybrids that actually perform much better under a
range of climate conditions. So I think that both, in terms of
new discoveries but also existing discoveries, are out there
for us to help with this challenge.
Mr. Manzullo. Admiral Titley, would you like to comment on
Admiral Titley. What the Navy is working on on their Task
Force Climate Change--and I should mention that when I say the
Navy is working on this, we are working with over 125 other
Federal agencies, international partners, academic partners,
NGOs--is primarily adaptation. It is kind of what you said,
sir, in that, whether or not you believe or don't believe
climate change is occurring, what we do see, the data tells us,
not the models, not theory, but the observations are telling us
that there are some very, very significant changes going on in
the Earth's ocean atmosphere system. And it would, frankly, be
negligent for the Navy not to plan for future contingencies or
future states of the world if we just assume that, all of a
sudden, the changes are just going to stop in 2010 or 2011.
So we are taking a look at these multiple types of
adaptation. Where can we work with partners? The Quadrennial
Defense Review states that, in many countries, the militaries,
foreign militaries, are perhaps the one component of a country
that really has the capacity and capability to adapt. So just
right now, I mean, the United States Navy is working with
Cambodia, with Vietnam, Indonesia, Thailand, we have done
visits in Palau, Papua New Guinea, all at building
partnerships. And those partnerships can, when and if required,
lead to mutual cooperation on adaptation for climate change.
Mr. Manzullo. Dr. Pershing, do you want to tackle that
Mr. Pershing. Yes, thank you very much. I think there are
two items that I would just like briefly to speak to.
The first one is that I certainly agree with the admiral
and with Dr. O'Neill that there is a component that has a value
both for climate and for local changes. And we can speak to
both of them on the adaptation side. So I think there is not
really a question about that.
But I want to come back a bit to the diplomatic side.
Because, clearly, we are also immersed in a diplomatic
conversation with countries around the world in the context of
the international negotiations. And on that side, climate
change is actually the basis for our effort. And if we are not
acting on that basis as well as on other bases, we will be
accused of gross negligence, of inadequate performance, and
there are consequences to that.
So there has to be, I think, some balance----
Mr. Manzullo. Well, I--let me--I mean, the issue is
pollution. I mean, pollution is what causes this, correct?
Mr. Pershing. I think the issue is more complicated than we
think of, in terms of criteria pollutants like sulfur and----
Mr. Manzullo. Well, I mean, it is something that is going
into the air, the ground, or the waters that may or may not be
causing the change in the climate. Is that correct, in your
Mr. Pershing. That is correct.
Mr. Manzullo. So my question is, I mean, it is the politics
of polarization I think is very--it is very hurtful here.
Mr. Pershing. I agree with that.
Mr. Manzullo. And I am not being critical of you. I am just
trying to find--not a middle ground, but there are a lot of us
that are very concerned about global pollution. I mean, at one
time, ships used to dump their waste and--I mean, you know the
stories. And now they have equipment on the ships that
discharge clean water, et cetera.
But I interrupted you, and I wanted to let Under Secretary
Brainard also have a stab at that question.
Mr. Pershing. No, I was going to say, I think that is
completely correct, sir. And my sense is that, in the larger
context of what we do, I think that we need to be bold and look
at the opportunities for coexisting benefits, on climate, on
security, on food and climate, on pollution and climate. They
are a set of these pieces. But I am not clear that if we only
do those pieces we would do enough on the climate side, and I
think that is what we have to consider more extensively.
Mr. Manzullo. Under Secretary Brainard, do you want to
Ms. Brainard. I appreciate very much that I am hearing from
all of the distinguished members here that there is a common
concern, how do we frame it, about helping the poorest
countries become more resilient to pollution of our climate. I
mean, that is a common ground.
I think the question that we are all very seized with, is
how best to work with other donors, to work with nations that
are vulnerable to the effects of pollution of the climate, of
climate change, to steer of course into the future that makes
them more resilient, that allows them to adapt their food
production systems, to engage in much more effective disaster
preparedness, to grapple with a whole host of existential
threats that they are likely to confront into the future.
I also think it is very important for us to work to move
our economy and the major economies of the world onto greener
development paths. And so the tools that you are focusing on
here in this hearing today I think are the right focus. How
most effectively do we leverage very scarce resources to get
the international commitment to action on the part of some of
the largest emerging economies, which my colleague from the
State Department is very focused on; how best to leverage
assistance to help developing countries steer a path into the
future that is less prone to conflict and more promising, both
for their people but also for our national interests here.
Mr. Manzullo. Thank you.
Mr. Faleomavaega. I thank my colleagues for their
questions. I have a couple of questions myself that I would
like to ask of the members of the panel.
Obviously, in our own country, we face some very tough
economic times. How do I explain to my constituents that we
should be adding to the U.S. Federal deficit by sending money
abroad to our industrial competitors? How do we justify
increasing the deficit and giving more money to help our
competitors if we are to seriously address the question of
Ms. Brainard. For the most part, the clean energy programs
that we are investing in through the Clean Technology Fund,
through the multilateral development banks more generally, are
really designed to address the needs of developing countries as
they move onto cleaner energy paths. They are really not
providing financing to industrial competitors in any direct
What we are doing is building legitimacy in the
international community by helping those nations that need the
most help, charting a more climate-resilient and a greener path
into the future, and building agreement among those fastest-
growing emerging markets that they, too, as they did in the
Copenhagen Accord, for the first time need to take on
commitments to reduce their carbon emissions, commitments that
are verifiable by the international community.
So what we are trying to do is invest in climate resilience
on the part of the poorest countries, invest in mitigation on
the part of a set of developing countries who are moving onto
cleaner energy paths, but build international legitimacy to get
other of the fastest-growing emerging markets to take
meaningful actions, which, of course, we will be taking here,
Mr. Faleomavaega. Dr. Pershing?
Mr. Pershing. Yes, thank you very much.
I think that is the question that I have also heard when I
have been around the country and having conversations with
people. I think there are two answers that are also compelling
in addition to the ones that Dr. Brainard suggested.
The first is that there is a cost to inaction. And the cost
comes in the context of climate change and its consequences.
When we look at the world, we say, well, ``if I don't pay
anything now, what is the alternative going to look like?'' If
nothing were to change, then my cost is a sunk cost with no
value. But if I can prevent a damage--and that is a great deal
of what I think we try do in the government collectively, is to
manage damages and manage risks--then I have a clear value. So
that is the very first point.
And the second one has to do with what kind of investments
are we making, and where do they go, and can they redound to
our benefit and our credit. And this is very much what I think
Mr. Manzullo had suggested earlier in his question. Are there
aspects of things that we are doing that we will start with
that are good for our economy, that create jobs for us at home,
that create political and diplomatic initiatives and tie-ins
that we seek. I think the answer is yes.
If we can reduce the cost of energy around the world by
lowering the price of solar, that is good for us as well as the
world. If we can change the dynamics and the food issues that
Dr. O'Neill was speaking to, that is good for the world by
reducing security risks where there are tensions over food
quality. The same for water, the same for disease. There is a
set of those things that I think are part of the puzzle, as
well, that we can address.
Mr. Faleomavaega. Transparency is always a beautiful word
when we talk about the ability of governments to function.
There was a recent report that our Government had spent about
$100 billion that it cannot account for. This is our own
Government. This is not a case of us telling other countries
how terrible they have been operating their systems of
government. It is within our own Government, $100 billion of
waste. That is not pennies.
And I was wondering--I am sorry, I didn't mean to--I want
to go to Admiral Titley and Dr. O'Neill for their response to
the question that I raised.
Admiral Titley. Just very, very briefly, sir, I would
absolutely concur with Dr. Pershing's response there. Whenever
our country spends money, we need to understand what its return
on that investment is, be it for security, be it for social
means, be it for whatever.
The maritime strategy, our Navy's maritime strategy states
that preventing wars is as important as winning them. Make no
mistake, our Navy will prevail in any kind of conflict, but it
is very, very important that we prevent wars. As the
Quadrennial Defense Review states that climate change can be an
accelerant to instability, it is therefore just logical that we
would want to take a look at how can we minimize or lessen that
potential or decrease that accelerant, if you will, minimize
the destabilizing impacts of climate change.
Nobody wants additional conflicts, least of all anybody
inside the Department of Defense. So it just makes sense that
we would look at all options--all options--to minimize the
chance of conflict over something whose cause could be climate
Mr. Faleomavaega. Dr. O'Neill, I know you are our expert
this afternoon on our foreign assistance programs. We love to
give money away to foreign countries, sometimes even to those
countries that spit at us. I wonder if, in terms of your
understanding, this proposed funding for addressing of the
issue of climate change is fully justifiable.
Ms. O'Neill. Thank you, Mr. Chairman.
I would say that I would second most, if not all, of what
my distinguished panelists have said. So rather than repeat it,
I would just add one note that hasn't been discussed yet, and
that is that developing countries represent one of the most
important emerging markets for U.S. goods and services.
And so, to the extent that these countries are functioning,
that people are being fed, that economies are working----
Mr. Faleomavaega. I don't mean to interrupt you, but of the
some 192 countries that make up the United Nations, how many
are least-developed countries? What is the number? With a total
number of countries before the U.N. at about 195 or 198, how
many are LDCs? Anybody have that?
Ms. O'Neill. We operate in 80 countries around the world
and have non-presence relationships with about 20 others.
Mr. Faleomavaega. Dr. Pershing?
Mr. Pershing. Yes, I think it is about 50 countries
technically in the U.N. system are titled least-developed
Mr. Faleomavaega. Okay. Would I be correct to say the
least-developed countries are also identified as developing
Mr. Pershing. Oh, yes. The least developed tend to be about
$1 a day of income.
Mr. Faleomavaega. Is one of the biggest problems that we
have in providing funding the transparency of these least-
developed countries? Some of these countries spend more money
on their military budgets than they do in actually giving help
to their citizens. How do we justify giving them money if the
leaders turn around and spend it for programs that don't
provide for the needs of the people?
Dr. Brainard and then Dr. Pershing.
Ms. Brainard. Yeah, just for most of these countries, when
we are providing them climate financing, we also normally have
multilateral programs with them through the multilateral
development banks, through the World Bank, through the regional
development banks, and also often with the IMF.
As a result of that, there are a lot of safeguards that are
put around that financing. They are generally placed in the
context of overall governmental budgets. And there is auditing
and transparency requirements, procurement requirements. There
are a whole host of safeguards that we built up through the
multilateral institutions over the years that gives us a high
degree of assurance, not a complete degree of assurance but a
very high degree of assurance, that we can see that these funds
do go to the adaptation programs that they are intended to fund
and that they are additional to other efforts and that, more
broadly, these are programs that the governments themselves and
the people themselves are committed to and the priority of
So we have a broader architecture of assistance and
engagement, diplomatic engagement, engagement through USAID as
well as through the multilateral development institutions, so
that these funds go into environments where we are broadly
engaged with the governments on increasing transparency and
effectiveness of our development funds.
Mr. Faleomavaega. Dr. Pershing?
Mr. Pershing. No, that was excellent. I wouldn't add
anything to that.
Mr. Faleomavaega. Are we realistic enough to suggest that
by the year 2020 we could come up with $100 billion in funding
for this climate change program, given the deficit problems we
are having right now in our country? I am not an economist, so
you are going to have to help me on this.
Ms. Brainard. So I think as Dr. Pershing was saying
earlier, the size of the likely investments to transition to a
greener economy worldwide is a large multiple of that number.
And the $100 billion number itself, I think it is very
important to recognize that that is a combination of public
sources but also, importantly, we think the majority will be
coming from private investment.
And that is why it is so critically important for us to be
able to enable those market mechanisms to send the right price
signal, to ensure that investments, private investments, are
going to be the primary mechanism for moving us all onto
greener development paths. Public financing will be very
important, particular in the area of adaptation, but will not,
we don't foresee, be the majority.
The other thing I think is very important is to remember
that the point of working with other countries in the
multilateral context, in the context of the Copenhagen Accord,
is the burden-sharing. So this is not a burden that we plan to
shoulder alone. We plan to shoulder it with other countries who
have capacities and only in return for verifiable actions on
the part of some of the largest developing emitters.
Mr. Rohrabacher. Mr. Chairman, I am going to have to leave.
We a vote on.
Mr. Faleomavaega. That is all right.
Mr. Rohrabacher. I thank you very much for this hearing. I
am sorry I won't be able to join you more.
Just one point. Pollution--I have always said that global
pollution should be the focus of our efforts. However, let us
note that where we disagree and where Dr. Pershing and I
disagree and these very prominent scientists is whether or not
CO2 is a pollutant, the CO2 that we pump into our greenhouses
in California to grow bigger plants and things, that CO2 does
not hurt human beings. Focus on those other pollutants, we have
an agreement. Focus on CO2, that is another matter.
Thank you very much, Mr. Chairman.
Mr. Faleomavaega. No problem, Dana.
I think getting back to the basic arguments that we made
since the time of the Kyoto Protocols, to such an extent that
by a vote of 93 to 0 in our own U.S. Senate rejecting the Kyoto
Protocols about the climate change issue, how serious is it in
the private sector to realize that the more demands made to the
private sector about gas emissions and all of this, that is
really going to cause economic chaos in our own economy? Is
that true? I mean, is there really a serious problem where the
private-sector community, corporations and industries, are
going to be so--you know, they are just not going to operate
properly because of the expectations and demands made by this
climate change issue?
Ms. Brainard. Well, let me just speak briefly, that I think
the President has been very, I think, compelling on this point.
I think that a large majority, actually, of businesses here in
the U.S. agree with this perspective: That the country that
figures out how to produce and distribute energy in the
cleanest possible ways, that country is going to be the most
competitive nation of the next century; and that, for the U.S.,
it is critically important for us to be that nation, to be the
most innovative, the most focused on cleaner energy, more cost-
effective cleaner energy in the future. And so it is a huge
competitiveness opportunity for us.
In order to get from here to there, we need to make sure
that the investment environment is rewarding investments in
those technologies of tomorrow, that the price signals are
there. So I think there has been a huge change in our business
community, and they are clamoring to be able to take full part
in the opportunities presented by the transition to a greener
Mr. Faleomavaega. Well, this seems to be the other reason
why the Senate has had a very difficult time working on the
climate change issue--simply because the corporate community
feels that there will be too much regulation, too many demands
made of them, to the point where they can't make a reasonable
profit. And so therefore kill the legislation.
And now we end up with a stalemate in the Senate. Of
course, their rules are quite different from ours. This is what
makes our democracy very unique.
Dr. Pershing, I am sorry, I didn't mean to----
Mr. Pershing. Thank you. I wanted to add just one more
point to the one that was just made, which has to do a little
bit with certainty in the environment. We try on a regular
basis to engage with the private community as part of our
negotiations process. We do regular briefings to make sure
people know where the administration is going and how the
process is working. And there have been two consistent messages
that have come back.
The first one is that, over the long term, the private
sectors do expect action. They expect Congress to act, the
United States to have laws in place that would move to us a
lower-carbon economy. And they look at the rest of the world
and expect to see the rest of the world acting. And the
consequence of our inaction and other action is a degree of
investment uncertainty, which they are concerned about. They
come back and they say, ``We would like to do something, but we
don't know which way you are going to move, and therefore we
can't invest without that greater certainty.''
There is this hang-up in terms of where things are and a
degree of tension around the domestic politics and domestic
policy and domestic investment, and those same companies
working very profitably in places around the world that have
chosen to make those investments already.
Mr. Faleomavaega. I believe the latest reports now are that
China is the largest consumer of energy, past us now, to the
extent that, of course, providing for the need of 1.3 billion
people. I also believe China is one of the leaders in such
innovative technologies as wind power. And here we are still
sitting, fighting with each other, wanting to know if we are
going to excel and do more things to enhance the technologies
of wind, solar, and other green technologies.
Ms. O'Neill. I would just add to what Dr. Pershing said
about the value of policy and tax certainty with respect to
Prior to joining the administration, I was an entrepreneur
and a technologist. And what you care about is building markets
for the long term. We actually had all of the leadership in
this country in solar. We have had the leadership in a number
of electric technologies. And, yet, we have not always given
policy and tax certainty as well as regulatory, and there are
other countries that are bypassing us.
So I think that that speaks to the issue that Under
Secretary Brainard talked about, is there is a choice that we
have before us, whether to be a leader or a lagger in the new
clean-energy economy. And I think that there is a huge prize
out there for the ones who really go boldly into that future.
Mr. Faleomavaega. Well, the fact that we import over $700
billion worth of oil from foreign countries should tell us
about the reality that we are faced with and why we have not
really gotten off in doing what we should be doing and
developing better sources of energy.
Admiral Titley, you mentioned--and I am very impressed in
terms of how much the Navy has gotten into this. Do you work
with the Coast Guard also? Or, this is a smaller branch, I
suppose, and it doesn't deal that much with meteorological
Admiral Titley. Yes, sir, actually, we work very, very
closely with the Coast Guard. When we stood up our Task Force
on Climate Change back in May of last year, at the very initial
meeting, in addition to having flag officers and Senior
Executive Service from the Navy as my executive steering group,
we have a Coast Guard senior officer and one from the National
Oceanic and Atmospheric Administration. We realized from the
very first start that we could not do this and should not do
this by ourselves.
I have gone up to Juneau, Alaska, in addition to Barrow,
talked to Admiral Chris Colvin. He is the commander of the 17th
Coast Guard District, which is the Coast Guard district
responsible for all the arctic waters. We have a good
professional as well as personal relationship, because we
really see the challenges in the arctic really as spanning the
lower end of maritime security, which is very, very
appropriately a Coast Guard mission--search and rescue, some of
the humanitarian assistance. If, God forbid, there was a
significant oil spill up in the arctic, the Coast Guard will be
The cruise ships which are going up there now--I mean,
cruise ships go up there, and where do they go? They go to the
most dangerous places, because that is what people want to see.
They want to see wildlife and ice, and those are poorly charted
So the Coast Guard has tremendous challenges. And we, in
the Navy, are looking to see how we can assist them. And
between NOAA, the Coast Guard, and the Navy, we can
collectively show U.S. Government presence in an area that is
rapidly growing in what we believe is strategic importance.
Mr. Faleomavaega. Don't get me wrong by thinking that I
don't want a strong defense. I think we are now at about a $760
billion budget for expenditures of the entire military forces
of our country for a period of 1 year. And I am told, according
to reports, it is almost 50 percent of the entire military
budgets of the entire world. Half, almost half of the entire
world's budgets of their militaries is the U.S. budget on the
Do you think perhaps we can shave a little bit off some of
those things that we might need in our military requirements,
Admiral? Now, I am not suggesting that we ought to be passive.
We want a strong military, but at $760 billion?
Admiral Titley. I think Secretary Gates has talked
previously about how he sees the future of the Department of
Defense's budget goes. I know he has publicly stated very
strong support for the Secretary of State and their budget. But
I really would defer to the Secretary of Defense on this
But I believe the senior leadership is very aware of the
size of the budget and the large-scale fiscal environment, sir.
Mr. Faleomavaega. 20,000 subcontractors in Iraq doing
business for Uncle Sam--unbelievable.
Well, ladies and gentlemen, I know I have detained you long
enough, and I do want to sincerely thank all of you for your
statements. Thank you very, very much.
We now have on our next panel Ambassador Nancy Soderberg,
Mr. Elliot Diringer, Mr. Reed Hundt and Dr. Redmond Clark.
See if we have the right parties there.
I really want to thank all of you for your patience. This
is the problem with having hearings. Thank you very much for
joining us this afternoon.
Our first witness this afternoon is Ambassador Nancy
Soderberg, president of the Connect U.S. Fund. With well over
20 years' experience in foreign policy, Ambassador Soderberg
has served in the United States Senate, the White House and in
the United Nations. She has a deep understanding of
policymaking negotiations at the highest level of the U.S.
Government and at the United Nations.
She has promoted democracy and conflict resolution
worldwide. She has achieved international recognition for her
efforts to promote peace in Northern Ireland and advised the
President on policies toward China, Japan, Russia, Angola, the
Balkans, Haiti, and various conflicts in Africa.
Ambassador Soderberg is a distinguished visiting scholar at
the University of Northern Florida in Jacksonville and
president and CEO of Soderberg Global Solutions--quite a
tremendous depth of experience that Ambassador Soderberg has.
She served as president of the Sister Cities Program for the
city of New York. And she earned a master's degree from
Georgetown University's School of Foreign Service, a bachelor's
degree from Vanderbilt University and speaks fluent French.
You certainly will be welcome in Tahiti, if you ever come
With us also is Elliot Diringer. Mr. Diringer is the
director of international strategies at the Pew Center on
Global Climate Change. He oversees the center's analysis of the
international challenges posed by climate change and strategies
for meeting them. And he directs the center's outreach to key
governments and actors involved in international climate change
Mr. Diringer came to the Pew Center from the White House,
where he was deputy assistant to the President and deputy press
secretary. In this capacity, he served as principal spokesman
for President Clinton and advisor to the senior White House
staff on press and communications strategy.
Mr. Diringer holds a degree in environmental studies from
Haverford College and also is a Nieman Fellow at Harvard
University, where he studied international environmental law
Mr. Reed Hundt is the CEO of the Coalition for Green
Capital, a nonprofit based in Washington, DC, as well as a
principal at REH Advisors. He is the chairman of the
International Digital Economy Accord Project and was a member
of President Barack Obama's Presidential transition team where
he was the economic agency review group head. Mr. Hundt is on
the Board of Directors of Intel Corporation, a public company--
a tremendous background here for this gentleman.
He graduated from Yale magna cum laude with a bachelor's
degree. He also graduated from Yale Law School and is a member
of the executive board of the Yale Law Journal.
Dr. Redmond Clark, whom I believe my colleague from
Illinois had introduced earlier. I would like to welcome him as
well. Dr. Clark completed both his master's and doctoral
programs in human-induced climate change and the effects of
climate change on natural systems.
He has served as an assistant professor at the college and
university level, providing instruction and performing research
in human-climate interactions. He is a graduate of Boston
University, as well as Elmhurst College. He has a tremendous
variety of experience in dealing both in the private as well as
in the public sector.
Thank you very much for accepting this invitation to
testify before the subcommittee.
And I would like to begin with Ambassador Soderberg.
STATEMENT OF THE HONORABLE NANCY E. SODERBERG, PRESIDENT,
CONNECT U.S. FUND (FORMER ALTERNATE REPRESENTATIVE TO THE
Ambassador Soderberg. Well, thank you very much, Chairman
Faleomavaega, of an island that not only speaks French but also
has really already been experiencing the damaging effects of
climate change on your coral reefs.
And I commend the subcommittee for recognizing the
economic, human, and national security implications of climate
change and for giving me the opportunity to comment on how the
U.S. can make smart public investments today and combat these
threats tomorrow and to continue to grow the green jobs sector.
Investing in climate change in the developing world will
benefit the American people and the world's most vulnerable
populations. It will create jobs here at home, advance our
national security, and reduce global poverty. These investments
will also enhance our national security, as mentioned in the
Defense Department's Quadrennial Defense Review and in your own
resolution introduced last Thursday.
Climate change will contribute to food and water scarcity,
will increase the spread of disease, and may spur or exacerbate
mass migration. It may act as an accelerant of instability or
conflict, placing a burden to respond on civilian institutions
and militaries around the world.
And as someone who has worked at the National Security
Council, as well as at the United Nations Security Council, I
strongly believe the national security concerns of inaction on
climate change are clear. In addition to the destabilizing
effects of climate change in unstable countries, our reliance
on fossil fuels adversely affects our foreign policy. Russia is
playing hardball with its oil, our ongoing military presence in
the Middle East, and the tragedy in the gulf near Louisiana is
linked to our dependence on petroleum. And we need American
leadership to change this dangerous course.
So what specifically can be done? One clear, far-reaching
idea is for America to invest. In order to prevent the economic
and security costs of current and future climate stresses and
in order to ensure that the United States acts as a leader and
standard-bearer for the new global energy economy, we need to
invest in climate mitigation and adaptation solutions right
Investments in international climate financing, however,
will not occur on the scale that is necessary without the
support of public institutions, both domestic and
international. And that is why public financing is critical.
There is a wide array of feasible innovative public
financing sources being considered at the moment, which the
U.S. could and should implement. Among other benefits, these
financing options help reduce the amount of money the U.S.
Government would need to appropriate from Congress to meet the
administration's Copenhagen commitment. In a difficult fiscal
environment, these are very attractive solutions. I will
briefly just mention five of them and then be happy to go into
any details during the questions.
The first is to redirect fossil fuel subsidies. The Obama
administration has begun taking steps to phase out fossil fuel
subsidies and has been a global leader in moving the G-20
toward that same goal. It has yet to embrace the opportunity,
however, to move these revenues into climate and energy
investments for the developing world. And in light of the
tragedy on the gulf coast, this is a simple and politically
powerful case of stop funding the problem and start investing
in the solution.
Second is international aviation and shipping mechanisms.
This proposal would raise revenue for climate financing from
aviation and shipping through a variety of proposed mechanisms.
And it would constitute a tiny cost compared to the overall
cost of airline and shipping travel. And, furthermore, the
political will exists. The Waxman-Markey bill approved by the
House in June 2009 included a version of this proposal.
Three is special drawing rights. These are reserve assets
that are created at no cost and issued by the International
Monetary Fund to member countries. Philanthropist George Soros,
the IMF, and a broad cross-section of the NGO communities have
offered proposals for generating $100 billion worth of SDRs for
capitalizing or collateralizing a green climate fund or
regularly converting SDRs into hard currency for climate
financing. These are an untapped resource that should be
considered a boost, not a burden, for a struggling American
Fourth is a financial transaction tax. And this would
entail a very small levy on the international financial
transactions, such as currency exchanges, stock trades, and
bond trades. And it would take advantage of the current
sentiments of regulating the finance sector.
Lastly is setting aside a dedicated portion of the emission
allowances. And this would offer an important avenue for
generating climate finances that is connected directly to the
source of emissions and, therefore, the cost of the climate
changes. There is also one included in the Waxman-Markey
In conclusion, a full range of sources of public
investments are needed in order to meet and hopefully exceed
U.S. Commitments made at Copenhagen and bring us closer to
resolving a crisis which could put many Americans at risk. It
is time to recognize that global warming is directly linked to
our core national security interests and act accordingly.
Once again, let me commend you, Mr. Chairman, for your
leadership on this issue and for the committee for taking on
this important issue. And I would be happy to answer any
questions. Thank you.
[The prepared statement of Ms. Soderberg follows:]
Mr. Faleomavaega. Thank you, Madam Ambassador.
STATEMENT OF MR. ELLIOT DIRINGER, VICE PRESIDENT, INTERNATIONAL
STRATEGIES, PEW CENTER ON GLOBAL CLIMATE CHANGE
Mr. Diringer. Thank you, Mr. Chairman, for the opportunity
to appear before you today. I would like to begin by thanking
you also for drawing attention to this critical issue and by
voicing our full support, Mr. Chairman, for the resolution that
you have introduced.
I would like to emphasize three points. We believe, first,
that it is in the strong national interest of the United States
to provide sustained support for climate efforts in developing
countries; second, that Congress should consider a dedicated
source of funding for this support; and, third, that stronger
climate finance should be accompanied by stronger
accountability from the major developing countries on their
efforts to reduce greenhouse gas emissions.
Some developing countries have adequate resources to
finance their own climate efforts, but most do not. You have
heard already why supporting these countries is important from
a national security perspective. It is also in our economic
interest. Other countries, including China, are taking a lead
in the global clean-energy market. As the United States
positions itself to compete, U.S. assistance will help foster
strong, stable markets for American technology.
Beyond that, sustained support for developing countries is
essential if we are to achieve a meaningful global response to
climate change. Strong action on a global scale requires
durable agreements, ensuring that all major economies are doing
their fair share. Developing countries will sign on to such
agreements only with a reasonable assurance that the United
States and other developed countries will significantly scale
up their support. Stronger U.S. support is therefore essential
for the global deal we need to reduce our exposure to
potentially catastrophic climate impacts.
The Copenhagen Accord represents an important political
consensus among leaders that provides a basis for negotiating a
strong international framework. We believe our goal should be a
binding agreement with commitments from all major economies,
but we will have to get there in stages. The objective for
Cancun should be to build on the Copenhagen Accord, with
operational decisions in key areas.
On finance, three steps are needed in Cancun. The first is
creation of the new multilateral climate fund envisioned in the
Copenhagen Accord. We favor a fund with an independent board,
balanced between contributor and recipient countries.
Contributions should be based on an indicative scale of
assessment, establishing countries' relative shares, with an
aggregate funding target set through periodic pledging. Donor
countries should decide for themselves how to generate their
The second step is creation of a new finance body to advise
the conference of parties on finance needs and policy and to
promote coordination among the multilateral and bilateral
programs providing climate finance.
The third priority in the finance area in Cancun is
agreeing on ways to verify financial flows and the actions they
are meant to support. Further agreement on this financial
architecture must come, however, as part of a balanced package.
An absolutely essential element of this package is a system to
verify the mitigation actions taken by developing countries
without international assistance. These unsupported actions
represent a substantial majority of the efforts pledged by
China and other major emerging economies. It was agreed in
Copenhagen that these actions would be subject to international
consultations and analysis. We need an open process that lets
us see clearly whether countries are, in fact, doing what they
Progress in the negotiations depends heavily on action here
at home. We recommend three specific actions on climate
First, we strongly urge Congress to increase appropriations
for climate assistance, as proposed in the President's Fiscal
Year 2011 budget. These funds would help address urgent needs.
They would enable the United States to provide a reasonable
share of the $30 billion in ``fast start'' resources pledged by
developed countries in Copenhagen. And, as an important signal
of Congress's intent, they would help advance U.S. negotiating
Second, we urge Congress to consider a dedicated source of
funding to maintain higher levels of support over the longer
term. We believe the best source would be a set-aside of
emission allowances under an economy-wide cap-and-trade system.
Others that we believe are worth exploring include revenue
generated through an agreement addressing emissions from
international aviation and shipping, some redirection of U.S.
fossil fuel subsidies or royalties, or a levy on international
Third, Congress should establish a standing body, comprised
of Cabinet Secretaries, to coordinate U.S. climate assistance
and to allocate funds across bilateral and multilateral
programs, with appropriate congressional oversight.
In conclusion, Mr. Chairman, we believe sustained U.S.
support for climate efforts in developing countries is a sound
and prudent investment in the environmental, economic, and
national security of the United States.
I again thank you for your attention to these issues, and I
would be pleased to answer any questions.
[The prepared statement of Mr. Diringer follows:]
Mr. Faleomavaega. Thank you, Mr. Diringer.
STATEMENT OF THE HONORABLE REED E. HUNDT, CEO, COALITION FOR
GREEN CAPITAL (FORMER CHAIRMAN OF THE FEDERAL COMMUNICATIONS
Mr. Hundt. Thank you very much, Mr. Chairman. It is an
honor to be here.
The Coalition for Green Capital comprises business
investors, financiers, project developers, and technology
companies that are involved in either the production or the
consumption of clean energy.
There are, in our view, three fundamental inputs to global
development. They need to be affordable, they need to be
universal, and they need to be continuously available. And they
are communications, finance, and energy. No economy in the
world can develop without these three inputs; no economy that
has developed has been able to do so without them.
We urge Congress to create, as a vehicle to facilitate the
development all around the world of clean energy, something
called the Energy Independence Trust. It would be what the law
recognizes as a patriotic organization. An example would be the
Red Cross. There are more than 90 such examples. The Boy Scouts
of America is an example. Congress, from time to time, has
created these corporations for special purposes.
They are typically charitable organizations, and so they
are used to aggregate charitable contributions from all around
the world. Like the United States Postal Service, we would urge
that Congress permit the Energy Independence Trust to borrow
from the United States Treasury. It is also the case that the
Energy Independence Trust, while it would not seek regular
annual appropriations, could on an ad-hoc basis be the subject
of specifically designated appropriations.
Most importantly, on an international level, this would be
a vehicle to complement and supplement the multilateral
development banks that already exist, so that we would have
another institution on the landscape but one that was not an
agency or instrumentality of the United States Government.
The reason we are urging a new institution is because the
status quo is not adequate. The global need for sustainable and
affordable electricity is staggering. Roughly 3 billion people
in the United States burn wood products in order to live day to
day. About half of those people, about 1.5 billion, have no
access to electricity at all.
The problem in the developing world is that electricity is
not affordable, and that is the reason that it is not
available. The problem in the developed world, in many cases,
is that it doesn't contain a price for carbon. It is a very,
very different problem. In Kentucky, electricity is all based
on coal, or almost all based on coal, and is very, very cheap.
But when we turn to the developing world, it either doesn't
exist at all or the only source of it is going to be some
carbon-emitting and nonsustainable resource.
Roughly speaking, the total amount of foreign investment
that occurs from one country into another on a global basis
every year, even in the downturn that we are now in, is about
$1 trillion. And it is more than that when the global economy
is growing faster. We need, in order to have the world wrapped
in affordable and sustainable electricity, we need about 10
percent of that $1 trillion every year to be dedicated to clean
electricity. Instead, less than 1 percent is dedicated to that
purpose. And that number has fallen as the global economy has
So that gap between 1 percent of total FTI and 10 percent
of FTI has to be met by some set of governmentally led actions
and, most importantly, private-sector-led actions. So
Ambassador Soderberg has suggested a number of very, very
creative ideas for how money could be obtained. I have just
heard testimony that also supports this basic idea. And what I
am suggesting, Mr. Chairman, is a legal framework for
receiving, aggregating, and mobilizing the kinds of capital
that is necessary.
Just 2 weeks ago, the United Nations, in a meeting hosted
by the richest man in the world, Carlos Slim, in Mexico City,
said that it is clear now that the private sector has do more
and that governments are unfortunately going to be constrained
and are going to end up doing less to meet the funding gap.
Just within the same month, the 11 nations in the Pacific
Small Island Developing States said that they were worried
about the bureaucratic red tape that is already ensnaring the
fairly limited government funds that are available, as they
think about their threatened future.
So what we are suggesting here is this new institution that
can provide a new channel for low-cost, long-term financing of
clean energy in the developing world.
Thank you very much.
[The prepared statement of Mr. Hundt follows:]
Mr. Faleomavaega. Thank you, Mr. Hundt.
STATEMENT OF REDMOND CLARK, PH.D., CHAIRMAN AND CEO, CBL
Mr. Clark. Thank you, Mr. Chairman. Thank you for inviting
me back again. You are showing extraordinary patience in that
When I listen to all the comments that have been made here,
a number of points that I wished to make have been covered, so
I will excerpt remarks from some of the written testimony I
In terms of my background, I am different, I think, than a
number of people who have testified today because I am at the
other end of the feeding chain. I am one of the doers. We are
the people that actually go out, if you will, and execute on a
whole host of different policies. In that regard, our view is a
little bit different; perhaps the way we look at these problems
is, as well.
I would like to touch on the fact that there are a number
of different definitions of adaptation that are being used
today. Mine is narrower. I am simply talking about the measures
necessary to reduce vulnerability, primarily focused on natural
hazards. And when I use the term ``mitigation,'' I am not
talking about cutting down on carbon emissions; I am just
talking about responses to natural hazards.
Well, climate change--if and when it happens and wherever
it occurs--means that the local climate is going to change.
Distributions are going to change. And, as a result, it changes
risk that we are all exposed to. Ultimately, therefore,
adaptation to these new hazards or newly defined hazards is
local. The idea of adaptation/response to climate change is not
a single problem. It is from a policy standpoint and from a
financing standpoint. But from an operational standpoint, it is
not one problem, it is 10,000 different problems, all culture-,
location-, and climate-specific.
Here in the U.S. over the last 40 or 50 years--which,
unfortunately, has been the bulk of my career--we have hammered
out a way to deal with environmental hazards. We study the
magnitude and frequency of the risk; we quantify them. We
develop options. We look at cost-efficiency of those options
and try to come up with a priority methodology for dealing with
those hazards, and then we execute those plans. We try to spend
the least amount of money and get the most amount of coverage.
We don't do a perfect job, and we don't come up with a way of
climate-proofing anything. We reduce risk.
If you look at the literature surrounding estimates of the
cost of global adaptation, you come up with extraordinary
ranges of numbers. In the past 5 years, I have run across
studies that talk about a $9-109-billion-a-year cost. The
ranges that we see here are important because of the
differences that we see. Each report is assuming a different
discount rate to look at future damages. They range upwards
from 0 percent, and, therefore, they look at problems very
differently and over- or understate problems as a result.
Secondly, everyone is looking at a different universe of
impacted systems, of cities, countries, at different stages of
preparation and evolution, and all dealing with different
hazards. Third, we don't have an inventory of problems at the
project level yet. Everyone is still feeling their way forward.
And, finally, there is no clear climatic path ahead.
When we talk about the climate change issue--and you are
going to ask me a question, as you have, Mr. Chairman, in the
last two sessions that I attended. You asked the same question
about whether we are comfortable with climate change. I held my
tongue before, and now I will say: I don't know, because I
don't know which change we are talking about.
The IPCC has said we have a vast array of possibility out
there to deal with. Well, when you talk about hazard
quantification, identification, and response, ranges aren't
good. They increase risk, and they increase cost. If you will,
uncertainty equals height in a seawall. Uncertainty equals
increasing cost. And when we don't know what the future holds
and we have to design today, we build and waste extraordinary
amounts of money as a result.
If we look at New Orleans, they are estimating $15 billion
just to bring the levees up to a Category 3 hurricane capacity.
I think the costs are in the area of $100 billion to get the
city ready for a Category 5 storm. They are not talking about
spending that kind of money.
My point is that figuring out what we are responding to is
going to be a big, big deal when we try to figure out where
money goes. Spending on structures in addition to all the other
developmental dollars that out there is going to be a major
sink for money in this area.
So how does that tie back to financing? Well, if we look at
what the private sector is doing in this area--and I am by no
means capable of covering every element of this--what I see is
that there isn't a lot of investment happening right now for
one very simple reason: Risk. There is too much risk. Not only
the risk that the companies have the ability to pay back any
money that they would borrow from the private sector, but we
don't know what we are spending the money on. When it comes to
climate response, we don't know what we are responding to. And
that is probably a single largest issue that we are going have
to get past sometime in the next decade.
Earlier this week, the U.N. Secretary-General's High-Level
Advisory Group on Climate Change Financing Report came out, and
one of the members of the committee, Koch-Weser from Deutsche
Bank, indicated $400 billion a year is available right now from
the private sector in Europe, but they can't put the money in
because the risks are too high. There is no insurance. They are
not prepared to put the money forward, as a result.
So one of the questions we may want to consider from a
policy standpoint is, what can the government do to reduce
risk? And I am over time here, but I will just briefly run down
First and foremost, we have to improve the accuracy of our
models. We have to make them more local and not so much global
in scale. We have to slow our heavy-lift investments. We are
not in a position to invest widely in large-scale construction
from a hazards-management standpoint because we don't have the
data in most of the areas that we are concerned about. And
then, finally, of course, we are going to prioritize our
projects and standardize our evaluation criteria, as I know
agencies have a desire to do at any rate. And, finally, develop
some level of guarantees, which a number of the other panelists
here are, I think, already taking about.
[The prepared statement of Mr. Clark follows:]
Mr. Faleomavaega. Thank you very much for your statements.
Without objection, all your statements will be made part of
the record. If there are additional materials you want to add
to your statements, please do so. I will be more than happy to
You have already heard some of the dialogue and opinions
that were given by my colleagues before they left. This is not
new. I have always had a healthy disagreement with my good
friend from California over whether there is such a thing as
climate change and whether it really is affecting our own
I think, Ambassador Soderberg, with your background at the
National Security Council and the White House, security issues
seem to be another factor mentioned quite often when we talk
about climate change. Is this really a matter that should be
part of the debate and part of our substantive review of the
issue of climate change? It does have serious implications
about our national security, does it not?
Ambassador Soderberg. Thank you, Mr. Chairman.
In my opinion, and this is based on decades of experience
in national security issues, it is absolutely a key challenge
for our national security officials. And I was pleased to see
the Pentagon officials are in fact a little ahead of the game
in some cases on thinking and planning about this.
I did have the opportunity to hear a little bit of the
debate in the last panel; and I just find it perplexing that
those would question, first of all, the science and, second of
all, the need to move and move quickly on this issue. We are
behind the curve. If we fail to act, fail to come up with
creative solutions and fail to have the United States in a
leadership position there, we will not meet this challenge.
If we fail to do so, the facts are simply very clear. We
will have more violence, more poverty, more race to scarce
water, which is already becoming a source of conflict in
central Asia, and I think we need to show U.S. leadership in a
much stronger level than we have to date. I commend your
leadership on this issue and am happy to continue to make the
case that we need to act and act now.
Mr. Faleomavaega. Over the months following the Kyoto
Protocols, I always felt there was no question about the
understanding and the technology for the developed countries.
They know what is going on.
But what I am more concerned about is, if we are focusing
also on the needs of some 50 least-developed countries and if
they are impacted also by climate change, and I think if some
of you were here and heard from witnesses from State, Defense,
Navy, and from USAID, this is what the focus of this
subcommittee is trying to bring out. I let Congressmen Henry
Waxman and Markey and Senator Kerry and the others take on as a
policy what is being developed in our country. My concern is
should we also focus on the situation dealing with the least-
developed countries? Because it seems that they are the ones
crying for help. I am sure that the developed countries have
the resources. But what do we do with those that are not at the
same level of development technologically, socially,
economically, and all of that? Where does it leave us? This is
where we are trying to keep plugging along and trying to see--
this $30 billion that seems to be a commitment among the
Copenhagen member countries of the accord, any comments on this
amount that has been deliberated? Is $30 billion a good amount
to consider or should it be more? Obviously, it should be more,
but what can we do, given the economic straits that we face
right now in our own country?
Ambassador Soderberg. I believe it is actually $100
billion. The commitment in Copenhagen was to come up with $100
billion to help address the cost of climate change by 2020, and
a lot of estimates believe the actual figure will be much
higher than that.
Initially, advocacy groups were calling for $150 billion.
They came up with 100, and other estimates say it will be five
times that. But we cannot expect others to pay for this and
shoulder the burden on their own. We simply have to do it or
they will not be able to do it.
I have laid out some financing. We need both a public and
private commitment to that. There is concern that the
administration, while strongly committed to it, has not figured
out the financing of it and is relying very heavily on the
private sector to come up with the $100 billion, which is
I was encouraged to hear the comments from my colleagues at
the table for some additional ideas, but unless we come up with
some creative solutions to come up with that, and probably
more, we will be failing in that challenge.
Mr. Faleomavaega. I think Mr. Diringer made some
recommendations to Congress to increase the funding.
Mr. Diringer. Yes. The goal of $30 billion you referenced
with respect to the fast track funding from now through 2012, I
think that is an achievable goal. Should it be more? Perhaps.
But it reflects a significant political consensus, and I think
the objective of the moment should be to ensure that we deliver
on that promise.
If one looks at the pledges on the table from the developed
countries, I think we are approaching $30 billion. But I will
emphasize the word ``pledges.'' The delivery over the next
couple of years will be vitally important.
The European Union has pledged on the order of $9 billion,
Japan on the order of $14 billion, and with the increase of
appropriations approved by Congress for Fiscal Year 2010 and
with the proposed increase for Fiscal Year 2011 that the
President has proposed, the U.S. contribution would be on the
order of $3 billion. So, together with some others as well,
that is beginning to approach $30 billion.
We have talked a lot about why this type of funding is in
the U.S. interests from an economic perspective, security
perspective, and diplomatic perspective. I think it is worth
noting that it is also quite consistent with some of our
cherished American values, and here I would emphasize our
humanitarian values. Time and again we have seen the generosity
of the American people when others around the world are in
need. Most recently, the earthquake in Haiti, for instance.
Increasingly, I think the U.S. humanitarian record will be seen
against the backdrop of increased climate impacts. So I think
it is not only in our interest but very consistent with our
values to step up and to provide the increased support that is
Mr. Faleomavaega. Mr. Hundt.
Mr. Hundt. I think that it is going to be necessary to
supplement these government commitments by something like the
energy independence trust which would aggregate charitable
contributions from many sources, the exact same way that the
Red Cross currently operates and does so in an international
concert of similar institutions created in other countries.
The reason is that the essential problem here is a great
deal more has to be invested in alternative energy production
and consumption everywhere in the world.
In addition to the fact that this is consistent with
American values, as Mr. Diringer has correctly said, it is also
the case that when we mobilize resources to create alternative
energy markets in the developing world we are creating markets
for the export of some our highest value goods and services.
We are right now a significant exporter to China of solar
technologies. We are a significant exporter and we are a
significant investor in R&D in alternative energy. In fact, we
are probably leading the world right now in the wake of the
Stimulus Act in investment in research and development in
alternative energy. So if we create in new, developing
economies growth markets for alternative energy, we are not
only doing the right thing for the world and the right thing
for the climate, but we are also doing the right thing for
American businesses and American workers.
Everywhere in the world the imperative is to have scale,
massive investment and massive deployment in wind and sun and
all other alternative energies. If we have that scale built in
part of the developing world, it will lower the overall cost
and make it easier for us to deploy those exact same products
and technologies here in the United States.
Mr. Faleomavaega. Dr. Clark.
Mr. Clark. I have to agree with the comment Mr. Diringer
made about American values. Ranking Member Manzullo brought up
the counterpoint, which is an extraordinary challenge for us
right now. We have people here that are also in need, people
that are today feeling a great deal of pressure.
I don't envy your position. I know that simple spending,
simple additional spending without a larger plan, without a
larger context I think is, from a taxpayers' perspective, is
going to be very, very difficult to push in this country.
It is worth the effort. I certainly agree it is worth the
effort. I don't see an immediate solution, but the one item of
hope I guess that I would bring and the comments I made were
these changes that we are looking at are--the changes now, not
preventive action--are gradual. They are not going to be upon
us in a matter of 3, 4, or 5 years. There are a number of other
significant economic forces that are at work right now that may
come in and significantly alter our plans. I have spoken to
this committee before about some of the issues of energy supply
and the importance of alternatives within that context.
So we face a significantly uncertain future. I don't see a
clear path through. But I understand the effort that you are at
least in concept committing to, and I certainly support it.
Mr. Faleomavaega. Do you agree with the administration's
initiative in making more investments into the alternative
energy sources other than just our dependence on fossil fuels
as we have been for all of these years? And I guess your talk
about green energy seems to be the spoken word and that we are
doing this. It seems we are not moving fast enough, or am I
wrong on this? Any comments on this?
Mr. Hundt. I will say one thing, if I might.
The Department of Energy is making the single largest
focused commitment of funds and brain power to alternative
energy that any government in the world has ever done, and I am
talking about over the last 2 years and on into the next year.
The central problem is we actually don't have a large market
for alternative energy here in the United States. The reason we
don't is because of the economic slump. The overall demand for
electricity in the United States dropped in 2009, and it will
be down in 2009 and 2010, the only 2 years since World War II
that demand for electricity in the United States is down.
And because we haven't taken the measures that encourage
people to phaseout their existing generation sources based
principally in coal, since we haven't taken those measures,
people are not phasing out and moving to alternative; and they
are not turning to their customers and saying I guess I need to
get new electricity for you.
The last couple weeks in Washington have been an exception
in the local area, but, in general, this is the big truth:
Where is demand? It is in China, and it is in the developing
world. We need to recognize that the Chinese Government is
awake and alert and is meeting that demand, and they are
bringing low-cost financing tools to the whole rest of the
world with this one little proviso: You have to buy the Chinese
products in order to have the financing.
So as a matter of geopolitical strategy, as a matter of
opening export markets and as a matter of having markets to
sell our wonderful taxpayer-paid research into, we have to have
a plan to create alternative energy markets all around the
Mr. Faleomavaega. You might also be interested to know
that, as of March, 2010, China has a foreign exchange reserve
of almost $2.5 trillion. I don't know how this compares to us.
I turn the time to my good friend, Congressman Inglis, for
his set of questions.
Mr. Inglis. Thank you, Mr. Chairman.
I was interested in that last exchange and wondering
whether you all might want to comment on this. It seems to me
that, broadly speaking, there are three approaches we can take.
One is to subsidize various technologies by having the
government basically pick winners or losers. The second is to
mandate certain technologies, which is sort of like the first
except it is a more direct mandate. And the third is just to
set an elegant price on carbon and watch the free enterprise
system in all of its creativity solve the problem.
The third, obviously, the way I am describing it, is what I
prefer. I wonder whether you might want to comment.
My sense is cap and trade soon is going to have a death
certificate. When that death certificate is issued, and it
seems to be in the process of being issued now, we have an
alternative; and the alternative is a revenue-neutral tax swap.
Basically, what you do is reduce payroll taxes or marginal
rates or corporate taxes, pick one, but the one that I picked
in a bill was FICA taxes. Reduce FICA taxes, and then in equal
amount shift the tax to emissions so that it is revenue
neutral. The government is not taking any additional money out
of the economy, and then you apply that mixture to imported
goods as well as domestically produced, and it is a border
adjustable tax. It is removed on export and imposed on import,
we think in a WTO-compliant way.
What I think would happen is the free enterprise system
would figure out all kinds of ways to fix this problem. But the
challenge is you can't get there from here because the
incumbent fuels, being petroleum and coal that we are mostly
concerned about, natural gas to some extent--when it comes to
petroleum, we are concerned about it for national security
reasons. When it comes to health indicators, we are concerned
about coal, very much concerned about coal. But the negative
rationalities are not recognized, and, therefore, there is a
market distortion, and fixing that market distortion is what we
should be about. It seems to me that is a key role of
Does anyone want to comment on that, that the pricing of
carbon is really the thing that would cause the free enterprise
system to deliver a solution?
Mr. Clark. I appeared before the committee about a year
ago, and a year before that, and in the course of those
discussions, especially in the Q&A afterwards, one of the
comments that I made--which is in line with Congressman
Manzullo's comments earlier today--was that there is a
presupposition here when we talk about policy: The price of
carbon is going to remain relatively stable. In the past
roughly 12 to 14 months, data that has been coming out of the
IEA and other like agencies indicates that oil may very well be
the first of the global fuels that may experience some form of
supply-related upset. Their suggestion was that as early as
2016 we could, in theory, have some supply-side problems where
supply can't meet demand, in which case we would have an
insertion of an ``elegant price for carbon,'' I think you
called it. It would be something more than elegant, I suspect.
And one thing we want to avoid is speed of onset.
Obviously, what you are talking about is not fundamentally
different than other approaches that look at ways of putting a
price on carbon, that buys us time to begin to adjust away from
My second comment would be, in 1980, U.S. EPA designated a
category of waste as hazardous waste, and the market that
evolved from that regulation drove the cost of treatment and
disposal to somewhere in the 400 to $1,200 a ton range. At that
time, the U.S. was generating 300 million tons of hazardous
waste a year. Today, the U.S. generates 4 million tons of
hazardous waste, and the disposal price for most of it is now
under $50 a ton. It is precisely the kind of model that you are
talking about, and the question is, how do we do it in a way
that is economy-neutral?
One other point I would make is, today, the greatest
negotiating lever the U.S. has is access to its own markets. We
are a necessary part of China's economic renaissance, and we
are a necessary part of the European Union's economic
activities. As long as we limit access to our market and as
long as China doesn't fully swing over to more of an
internalized demand and supply system, we have an opportunity
to use that lever in a manner that you are describing. If we
don't take that step probably within the next decade, I expect
that China will simply be immune to that influence. But since
China is now the leading energy consumer and expects to
continue to grow through 2030 in terms of energy demand, if we
are going to deal with the problem, we have to start there.
Mr. Faleomavaega. Go ahead, Mr. Diringer.
Mr. Diringer. Mr. Inglis, we would wholeheartedly endorse
your preference for choice number three, the use of market-
based mechanisms to price carbon for a wide range of reasons,
first because we believe that they would provide for the most
cost-effective means of reducing our emissions but also because
the pricing mechanism provides an ongoing incentive to
companies to innovate and to develop the technologies that
would be needed to cost-effectively reduce emissions and
thereby allow the market to pick the winners, as you say.
I am not sure that we are quite prepared just yet to join
in signing the death certificate on cap and trade, but we would
certainly be happy to explore with you any alternative market-
based mechanisms that you think might find some favor in the
near future in the Congress.
Beyond pricing mechanisms, though, we believe there are
probably some other targeted policies that we would need to
ensure that certain types of technologies that might not get
the necessary incentive through a pricing mechanism are
developed and demonstrated and deployed, in particular, carbon
capture and storage.
Mr. Inglis. Thank you, Mr. Chairman, for the time.
I might just point out that cap and trade is 1,200 pages.
The bill I just described is 15 pages, 15 pages. So it can be
done much more elegantly than 1,200 pages.
Thank you, Mr. Chairman.
Mr. Faleomavaega. Thank you.
I yield to my good friend, the gentleman from Illinois, for
any further questions.
Mr. Manzullo. Thank you, Mr. Chairman.
I am concerned by statements by Ambassador Soderberg
quoting the World Wildlife Fund that 850,000 new permanent jobs
will be created if U.S. businesses capture 14 percent of the
export market in just four clean energy technologies. Then they
are laid out there.
Government doesn't create jobs. The cap and trade, even the
threat of it, cost a $1-billion investment in Rentech over on
the Mississippi River in East Dubuque, Illinois, in my
district. They were going to have the first Fischer-Tropsch
conversion in the United States, using coal coming up the
Mississippi River as a feedstock for anhydrous ammonia, urea,
and other agriculture application products. When then-candidate
Obama in June 2008 made the statement about taxing carbon
emissions, the banks pulled the plug on that.
You would have had diesel fuel. Airplane fuel would have
been a by-product of that. It would have triggered a green
technology revolution across the top part of the State of
There wasn't a time when 535 Members of Congress woke up at
6 o'clock on a Tuesday morning and decided that Congress knows
how to invent green technology. Green technology is nothing
more than what is called productivity; and, given to its own
devices, the private sector can well take care of that. Let me
just give you an example of that.
Epson is a German-equity-owned company in the congressional
district that I represent. They make the world's only vacuum
hardening machine. It sells for less than $20,000. It is very
efficient. It is portable. It is programmable in different
languages. Their issue is not getting Congress involved in more
tax breaks, because it is a very efficient machine, but a free
trade agreement with Brazil.
Danfoss is a Danish firm that has about 400 jobs in the
congressional district that I represent. They make a machine
that hooks onto other machines that modulates the exact amount
of electricity that goes in to run a power system.
All World manufacturing in Harvard, Illinois, makes a
machine that replaces a tank into which you pump air to run a
hydraulic pump, whereby the amount of electricity is reduced by
This goes on all the time in manufacturing; and
manufacturers are really upset, very upset when Congress says
it can create jobs. Congress is destroying jobs in
manufacturing. This cap and trade and the health care bill that
we passed have made the manufacturers so jittery about business
expansion that jobs are going to China. I mean, if you really
want to help out manufacturing to make us in a better position,
then we need to back off things such as cap and trade and get
back with more expensing and more bonus depreciation and items
If anyone wants to comment, that is fine. And I picked on
you, Ambassador, so you have the first response. I did withdraw
the word ``bothered'' and substituted ``concerned.'' The record
will note that.
Ambassador Soderberg. Thank you very much.
I appreciate being both bothered and concerned,
particularly when you represent a district that gets so
directly impacted by many of the decisions in this issue. Any
government approach for trying to change the mix that is used
to address the problem of climate change has to take into
effect the impact on real people whenever you change industry
approaches. And that is real, the stories are real, those
people are real, and I think that is an impact that has to be
taken into account in any public decision. So I understand your
concerns about the impact of some of these decisions on your
I look at it as a national security expert, and as a
national security expert I don't have to represent people in
your home district or any home district. But I look at the U.S.
national interest as a country.
Mr. Manzullo. Well, my district isn't much different than
the other congressional district with regards for the need for
Ambassador Soderberg. That is true. And I would argue that
the national security of this country has to take a hard look
at our dependence on fossil fuel in terms of the national
security both on the countries on whom we rely for those fossil
fuel imports, which will not change even if we increase our
domestic energy sourcing exponentially in any significant way
in the next decade or several decades, probably a generation,
and the climate change impact for our reliance on fossil fuel
from a national security perspective is something that we need
Mr. Manzullo. But the coal comes up the Mississippi River
from central Illinois, that is not being imported.
Ambassador Soderberg. No, but what we are talking about
here is how to address the issue of our reliance on fossil fuel
for our main sourcing of energy and how can we expand that so
we are not reliant on the most polluting sources of energy.
That is what all of us are trying to address.
To do that, we are going to have to have a shift away from
the fossil-fuel reliance on our industry. The way we can do
that is there are elegant ways. The pricing of the carbon tax
is one way to do it, I would argue.
Mr. Manzullo. But that destroys jobs. You go out there and
you tax people for using carbon-based energy. Solar and wind
power make up about 1 percent of our energy today in the United
States, 1 percent.
Ambassador Soderberg. The challenge is, if you can invest
more in some of these alternative energies, people in your
district may have alternative options of job-creating sources.
Mr. Manzullo. But the government cannot create jobs. That
Ambassador Soderberg. I am not saying that the government
should create these jobs. But the government can, for instance,
stop supporting fossil fuels with subsidies, which it is
already very much involved in supporting that industry.
Mr. Manzullo. So that would do away with ethanol.
Ambassador Soderberg. The point is the government is
already very involved in some of these issues, and the question
is can you come up with a mix that is both promoting less
reliance on fossil-fuel industries and creating jobs in other
areas. I am convinced there is a mix there.
Mr. Manzullo. At the same time, the government--to use that
term--is in the process of shutting down offshore drilling
where we get the source of 30 percent of our oil, will not
allow drilling to take place in the ANWR, will not allow the
new pipe to come through Canada to the United States, and has a
moratorium on offshore drilling in a good part of Alaska. So
where is the energy supposed to come from?
Ambassador Soderberg. Well, that is our point, is we are
supposed to try and invest, as we have heard today, in ways of
getting past--and you can look at what is happening in the
Gulf--and there are lots of problem with offshore drilling, and
this is not a hearing on offshore drilling, nor am I an expert
on that--but I believe we need to look at a creative mix of how
you get past it.
Mr. Manzullo. But it won't work. If you take all of the
windmills that are going to go up on Cape Cod, they will put
out as much energy as an oil well that is pumping about 10
barrels a day. It is not very much. I mean, wind power is fine,
but there is never going to be enough wind power and never
enough solar power, maybe 100 years down the line, to be able
to compensate for arbitrarily in my opinion shutting down
Ambassador Soderberg. Let me just close and give my
colleagues a chance to respond.
On your original point on investment, I think it is
important to just come back to you on the 14 percent of the
export market. The fact is, if we can invest in smart grid
equipment, mass transit, wind turbines, solar, investing in the
technology, we will----
Mr. Manzullo. But the technologies are there. Why is the
government investing in technologies that the private sector
has already developed? I mean, Nissan has the Leaf and GMC has
the Volt; and now the President was in Holland, Michigan,
opening up a factory to invest in developing an automobile
battery. I mean, what these manufacturers want is just to be
left alone. They don't want the help of Washington.
I have to go vote in Banking in about 3 minutes.
Mr. Diringer. Before you go, Mr. Manzullo, I agree
completely with you that it is the private sector that we have
to look to to deliver, whether it is jobs or technology. But
when we have important social priorities, I think that the
market may need some regulatory incentives and some regulatory
You cited the example of a Danish firm. I am not familiar
with the particular example, but I do know when we look
globally at the countries that have established themselves as
leaders in the clean energy marketplace, each of them has
accomplished that by adopting policies at home to create
incentives for those technologies. They have provided their
private enterprises with the incentive to develop those
technologies, to market those technologies, and now they have
surpassed the United States in that marketplace. Whether we are
talking about Denmark or Germany or China, each of them has
quite strategically made use of public policy to advance those
technologies and to advance their economic position globally.
I think it is important for us to look at the policy
choices. Our preference among instruments would be a market-
based approach that in fact harnesses market forces to achieve
our objectives as cost effectively as possible.
Mr. Clark. Congressman Manzullo, as you know, among other
things, I have manufacturing operations inside your district.
It is very easy to operate at a policy level and lose sight of
the fact that there is trench warfare going on right now for
all our manufacturers. What we are all struggling with--and I
heard some very impressive things said about an hour ago when
people were talking about getting beyond the gridlock, the
problem--the transition we are talking about today is if a
laborer in China is put into the appropriate factory resources
and is satisfied living at $5 a day in salary--compared to a
laborer here in the U.S. that is barely getting by with $30 or
$40 an hour in total cost--it is extraordinarily difficult for
a U.S. company to compete. We are at that point in many of our
manufacturing industries, and we cannot look at the U.S.
economy as a functioning entity absent manufacturing. That is a
simple truth. There is no easy way through this transition.
I truly believe that--looking 60, 70 years down the road--
we are going to be looking at a fundamental energy
transformation globally. It has to happen just because the way
energy supply and demand is working right now. It is coming.
Whether we deal with climate change or not, it is coming. So
the question is how effectively can we maneuver our way through
I don't have a lot of answers, but I can you this: China is
dominating in solar cell production because they are well on
their way to turning it into something that is not different
than making hamburgers. They are talking about making
incredibly low-cost cells in order to justify the technology
and make it work.
Their operating plan is no different than any other
manufacturer: Find a way to make it as incredibly cheap as
possible, utilize your domestic resources as much as you can,
and the chances are you are going to win. That is exactly what
they are doing.
So we are fighting them directly and indirectly in a number
of different industries. They are all playing the same game.
Right now, they have fewer regulations, lower labor costs and
fewer taxes from their government, and it gives them a
competitive advantage that is greater than the freight cost to
ship their goods into the United States.
If we are going to legislate, if the legislature is going
to get involved and do anything at all, they had better take
real care and pay real attention to the impact on this major
portion of the U.S. economy.
Congressman Inglis, you were referring to an idea where
there would be effectively a carbon tax that would equalize
energy costs. Well, that doesn't cut both ways, because a
carbon tax equalizes imported products, but it doesn't equalize
exported products. What we have to do is we have to get to a
uniform global price for carbon. We are not there yet. We want
the price to be very high because of the environmental
ramifications. The rest of the globe--Europe aside--generally
does not want that to occur.
China is engaging in neocolonial activities right now by
going out and buying out vast amounts of energy--carbon energy
resources--because they fully intend to use those to fund the
expansion of their economy.
I mean, this is a trade war--if you will--that is evolving,
and our challenge isn't just to find a way to make a technology
operate so it can generate energy. Our challenge is to find a
way to deal with the international trade implications of a
transfer away from carbon fuels in a way that doesn't destroy
Mr. Inglis. Just to follow up on that briefly, actually, my
idea is a border adjustable tax. So it is removed on export,
imposed on import. So it is like the VAT in Europe. The
European VAT is removed on export, imposed on import. So your
goods would actually leave here without the revenue-neutral
carbon tax attached to them.
Mr. Clark. That is a great step in the right direction.
Mr. Inglis. Then you don't decimate American manufacturing.
That is the problem with cap and trade, it seems to me. It
decimates American manufacturing. That is the problem with cap
and trade. That is where I agree with Mr. Manzullo.
Where I disagree with Mr. Manzullo is that he is
overlooking the fact that in South Carolina we would love to
have more nuclear power plants, but the Public Service
Commission probably wouldn't approve a private investor-run
utility constructing a nuclear power plant because it is more
expensive. It is more expensive power. It is a great source of
power, in my view. It is very clean, but that is because coal
doesn't have to be accountable for all of its emissions. If you
force that recognition, you force the accountability, coal is
nowhere near as cheap as it looks. Talk to the pulmonologists
about that. The small particulates involved in coal, even if
you think climate change is hooey, the small particulates
associated with hospital admissions that the pulmonologist
would tell you about, it is a real and quantifiable cost.
So force that recognition and say to coal, be accountable.
Then all kinds of other technologies become possible. Nuclear
becomes possible. Right now, it is not possible.
The same with petroleum. If you did just a little bit of
cost accounting and said, listen, some of the costs that we are
spending right now in the Straits of Hormuz to keep that supply
line open for that product that we have to have, that we are
absolutely addicted to, just attribute some of it to gasoline.
Gasoline is not $2.50 a gallon. It is way higher than that.
It is just it is hidden from the consumer. So the consumer
can't make a choice. It makes a logical choice, because it is a
subsidized price. It is hidden. But if you force that
recognition, wow, all things would start happening.
We would be doing what Israel is doing. We would be trading
out batteries in cars, right? The reason we don't do batteries,
as Mr. Manzullo mentioned, is it is expensive and cumbersome.
But if you are in need, like Israel is, then you figure out a
way to swap out battery packs, and it becomes cost effective in
a situation where you force the recognition of all of these
Thank you, Mr. Chairman. I am going on and on. I am
preaching about my bill. I hope you will take a look at it. It
is 15 pages. It is a quick read.
Mr. Faleomavaega. I thank my colleague and friend for his
line of questions.
I just want to comment on Dr. Clark's earlier statement
about China's development. I think it is not so much out of
greed but out of necessity that we find that China has no
choice. To provide for the needs of some 1.3 billion, we have
to give those people some sense of credit. How is it possible
that they have to feed some 1.3 billion people? We can't even
feed our own 300 million that we have here in our own country,
it seems like.
But I want to thank all of you for your participation. We
kind of nibbled at how to come up with better ideas for
financing the needs of least-developed countries in terms of
climate change. But I think we were able to discuss quite well
issues related to climate change. I think it was very
So I sincerely want to thank you for your patience and for
your being here to testify before the subcommittee.
With that, the subcommittee is adjourned.
[Whereupon, at 5:03 p.m., the subcommittee was adjourned.]
A P P E N D I X
Material Submitted for the Hearing RecordNotice deg.
Material submitted for the record by the Honorable Donald A. Manzullo,
a Representative in Congress from the State of Illinois
[Note: The full report is not reprinted here but is available in
Material submitted for the record by the Honorable Dana Rohrabacher, a
Representative in Congress from the State of California
Material submitted for the record by the Honorable Dana Rohrabacher, a
Representative in Congress from the State of California