[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]






 CLIMATE CHANGE FINANCE: PROVIDING ASSISTANCE FOR VULNERABLE COUNTRIES

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ASIA, THE PACIFIC AND
                         THE GLOBAL ENVIRONMENT

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             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

                              ----------                              
                                                                   Page

                               WITNESSES

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 
  Development....................................................    37
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

                                APPENDIX

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 
    Continues''..................................................   132

 
 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,
                                                    Washington, DC.
    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 
order.
    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 
their testimony.
    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 
sources.
    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 
        countries.''

    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 
stated,

        ``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 
        overseas.''

    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 
efforts.
    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 
Illinois.
    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 
warming.
    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 
correct.
    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 
theory.
    Frank Tipler, a professor of both mathematics and physics 
at Tulane University and one of the leading cosmologists in the 
world.
    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 
misrepresented it.
    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 
internationally.
    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 
Command.
    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 
School.
    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 
testimony.

 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 
countries.
    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 
global solution.
    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 
challenges.
    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 
choices.
    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 
impact.
    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 
climate proof.
    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 
path.
    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 
China.
    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.
    Thank you.
    [The prepared statement of Ms. Brainard follows:]
    
    
    
    Mr. Faleomavaega. Thank you, Dr. Brainard.
    Dr. Pershing.

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 
world work.
    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 
start'' finance.
    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 
catalytic effort.
    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 
adaptation investments.
    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 
changing climate.
    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.
    Admiral Titley.

 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 
the military.
    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 
any questions.
    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.
    Dr. O'Neill.

  STATEMENT OF MAURA O'NEILL, PH.D., SENIOR COUNSELOR TO THE 
  ADMINISTRATOR AND CHIEF INNOVATION OFFICER, U.S. AGENCY FOR 
                   INTERNATIONAL DEVELOPMENT

    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 
events.
    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 
fluctuations.
    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 
vulnerable.
    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 
from California.
    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 
this day.
    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 
ridiculous.
    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 
the beginning.
    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 
from it.
    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 
impact.
    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 
that?
    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 
question?
    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 
opinion?
    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 
tackle that?
    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. Chairman?
    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 
climate change?
    Dr. Brainard?
    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 
way.
    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, 
as well.
    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 
change.
    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 
countries.
    Mr. Faleomavaega. Okay. Would I be correct to say the 
least-developed countries are also identified as developing 
countries?
    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 
those governments.
    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 
future.
    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.
    Dr. O'Neill?
    Ms. O'Neill. I would just add to what Dr. Pershing said 
about the value of policy and tax certainty with respect to 
this.
    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 
science?
    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 
very involved.
    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 
regions.
    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 
military.
    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 
specific budget.
    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 
there.
    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 
negotiations.
    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 
and policy.
    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 
                        UNITED NATIONS)

    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 
now.
    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 
public.
    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 
legislation.
    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.
    Mr. Diringer?

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 
respective contributions.
    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 
have promised.
    Progress in the negotiations depends heavily on action here 
at home. We recommend three specific actions on climate 
finance.
    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 
objectives.
    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 
emission offsets.
    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.
    Mr. Hundt?

 STATEMENT OF THE HONORABLE REED E. HUNDT, CEO, COALITION FOR 
 GREEN CAPITAL (FORMER CHAIRMAN OF THE FEDERAL COMMUNICATIONS 
                          COMMISSION)

    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 
dropped.
    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.
    Dr. Clark?

   STATEMENT OF REDMOND CLARK, PH.D., CHAIRMAN AND CEO, CBL 
                      INDUSTRIAL SERVICES

    Mr. Clark. Thank you, Mr. Chairman. Thank you for inviting 
me back again. You are showing extraordinary patience in that 
regard.
    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 
have supplied.
    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 
a list.
    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.
    Thank you.
    [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 
receive them.
    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 
national interests.
    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 
highly unlikely.
    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 
needed.
    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 
world.
    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 
government.
    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 
that.
    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 
Illinois.
    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 
80 percent.
    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 
like that.
    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 
constituencies.
    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 
national security.
    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 
to address.
    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 
is theory.
    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 
offshore drilling.
    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 
certainty.
    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 
this.
    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 
our economy.
    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 
negative externalities.
    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 
productive.
    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

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     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 
committee records.]
                               __________
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




                                 
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