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



 
      ROADMAP FROM POZNAN TO COPENHAGEN--PRECONDITIONS FOR SUCCESS

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


                                HEARING

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 4, 2009

                               __________

                            Serial No. 111-2


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

                        globalwarming.house.gov



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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

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

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     6
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     7
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, prepared statement..........................     9

                               Witnesses

                                PANEL I

John Bruton, Delegation of the European Commission and Ambassador 
  to the United States, briefing to Select Committee, prepared 
  statement......................................................    11

                                PANEL II

Elliot Diringer, Vice President of International Strategies at 
  the Pew Center on Global Climate Change........................    23
    Prepared statement...........................................    26
Rob Bradley, Director of the International Climate Policy 
  Initiative at the World Resources Institute....................    35
    Prepared statement...........................................    37
Karen Alderman Harbert, President and CEO, Institute for 21st 
  Century Energy.................................................    50
    Prepared statement...........................................    53

                          Submitted Materials

Commission of the European Communities, ``Communication from the 
  Commission to the European Parliament, The Council, The 
  European Economic and Social Committee and the Committee of the 
  Regions: Towards a Comprehensive Climate Change Agreement in 
  Copenhagen,'' January 28, 2009, Submitted by John Bruton.......    73


HEARING ON ROADMAP FROM POZNAN TO COPENHAGEN--PRECONDITIONS FOR SUCCESS

                              ----------                              


                      WEDNESDAY, FEBRUARY 4, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10 a.m., in room 
2318 Rayburn House Office Building, Hon. Edward Markey 
(chairman of the Committee) presiding.
    Present: Representatives Markey, Blumenauer, Inslee, 
Cleaver, Sensenbrenner and Blackburn.
    Staff present: Joel Beauvais and Camilla Bausche.
    The Chairman. Good morning. Today the Select Committee on 
Energy Independence and Global Warming will have a briefing 
from the Ambassador of the European Commission to the United 
States regarding the EU's progress toward the Copenhagen 
negotiations. And then we will have a hearing to learn about 
our country's progress.
    Despite the chill in the air today, global temperatures 
remain high. Two thousand eight was tied for the eighth warmest 
year on record. The evidence of shrinking ice caps and 
increasingly violent storms reminds us of the danger and 
challenges we face due to climate change. The debate is no 
longer about whether humans are causing global warming but what 
we are prepared to do about it.
    Now that the United States has a President committed to 
action, Congress is poised to help resolve it. Last Congress 
made progress with the passage of the 2007 energy bill, which 
by raising fuel economy and appliance efficiency standards will 
reduce global warming pollution in the future.
    Now the task confronting us is how to construct policies 
that meet the scientific need and the political will. To 
accomplish this, we will build and improve upon the good work 
from the 110th Congress. During this economic crisis, we must 
find a way to ``lay a new foundation for growth,'' as President 
Obama said in his inaugural address. That is our challenge: to 
embrace the opportunity to create sustainable jobs and a 
resilient economy, to reduce our dependence on oil, and to 
prevent human misery.
    But the United States cannot solve the problem alone. The 
only prospect for success exists if the global community 
engages in a joint effort. This is the challenge the 
international community accepted in Bali in 2007. At that 
meeting, delegates from almost 200 countries met to discuss 
international climate protection. They decided on a path of 
negotiations leading to a comprehensive future climate regime 
to be adopted in 2009 in Copenhagen. The Select Committee one 
year ago heard testimony about the progress made at the Bali 
meeting.
    Today we are at the halfway point on the road to 
Copenhagen. This hearing will examine what progress has been 
made in answering the four main questions posed by the Bali 
roadmap: how to fulfill the needed greenhouse gas reductions 
outlined by science, how to adapt to impacts we can no longer 
avoid, how to answer the need for technology cooperation, and 
how to support poor countries as they struggle to cope with the 
realities of climate change.
    It is time to take stock and to plan ahead. There are 
encouraging signs all across the globe. Mexico, South Africa, 
the EU and others have made significant domestic commitments. 
China's recent five-year plan makes energy efficiency, 
renewables, and carbon reduction a priority. Carbon markets are 
being implemented all across the world.
    The next step from Bali was Poznan, Poland. In December, 
almost 4,000 government officials met to negotiate the next 
steps on the path to Copenhagen. Today we will examine the 
concrete results of the conference, the progress of the 
international community on the Bali agreement, and whether that 
progress is enough to guide us out of the climate crisis.
    There are only 305 days left until the final negotiations 
in Copenhagen. Three hundred five days from today, the United 
States and the world will have to reach an agreement that 
reduces global warming pollution and facilitates cooperation on 
adapting to unavoidable climate impacts, developing and 
deploying low-carbon technology, and financing aid to 
developing countries.
    The road to Copenhagen will require the determination of 
heads of state and the hard work of negotiators, policy-makers, 
scientists, and economists alike. It will not be easy, but 
there is no alternative to a global solution. We must find a 
way to protect the planet while ensuring prosperity for those 
on it.
    That concludes the opening statement of the Chair. We now 
turn to recognize the Ranking Minority Member, the gentleman 
from Wisconsin, Mr. Sensenbrenner.

    [The prepared statement of Mr. Markey follows:]
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    Mr. Sensenbrenner. I thank the Chair.
    Global warming is a universal challenge. The logic 
supporting global treaty is, therefore, obvious, but a global 
agreement without global commitments is not a solution. With 
the United Nations' self-imposed deadline to replace the Kyoto 
Protocol approaching, we can't allow expedience to dictate a 
costly and ineffective response.
    Opposition to Kyoto was bipartisan. In 1997, the Senate 
voted 95 to nothing to pass the Byrd-Hagel resolution, stating 
that the United States should not be a signatory to a treaty 
that does not include binding targets for developing nations or 
that would result in serious harm to the economy. Because Kyoto 
failed on both counts, President Clinton never submitted the 
treaty to the Senate for ratification.
    Kyoto's principal failure was its lack of inclusiveness. By 
only requiring commitments from developed countries, Kyoto does 
not place restrictions on a majority of countries, including 
three of the world's five largest emitters: China, India, and 
Brazil. A treaty cannot reduce emissions without their 
participation.
    Even Al Gore, Al Gore, conceded that binding commitments 
from developing countries is essential. But I was the only 
member of the House to attend the U.N. Climate Conference in 
Poznan last December. The negotiations are now headed in that 
direction.
    I met with delegations from both China and India, and I 
asked pointblank, ``Will you agree to mandatory emissions 
cuts?'' Both countries said no.
    The emissions in the developing world are rising so rapidly 
that reductions from developed countries will be entirely 
offset by countries without binding commitments.
    The Battelle Memorial Institute recently calculated that 
based on business as usual projections, developing countries 
will produce more emissions than developed countries within the 
next ten years. And there is a graphic over there that 
demonstrates that fact.
    A recent article in Foreign Affairs magazine quantified 
China's growth. By 2050, China is expected to have more cars 
than the United States. China's grand-scale urbanization plan 
will aggravate matters. China's leaders plan to relocate 400 
million people, the newly developed urban centers between 2000 
and 2030. In the process, they will erect half of all of the 
buildings expected to be constructed in the world during that 
period.
    That is a troubling prospect considering the Chinese 
buildings are not energy-efficient. In fact, they are roughly 
two and a half times less so than those in Germany.
    Rather than accept mandatory limits or increase its 
efficiency, China and other developing countries hope to sell 
offsets to the developed world. Accepting foreign investment is 
hardly a sacrifice comparable to binding limits on emissions. 
But beyond the unfairness, there is no way to guarantee that 
the offsets will actually happen.
    The theory is sound. Instead of limiting emissions where 
they are the most costly, companies can make the same cuts for 
less money abroad. The problems, however, are twofold. First, 
the money that should be invested in our own economy is sent to 
China. And, second, many of the offsets won't happen.
    A recent project demonstration demonstrates the problem. 
Germany recently agreed to purchase offset credits from Chinese 
developers to build a new dam. The U.N. approved more than 16 
million credits for the project. This legitimizes 16 million 
tons of emissions in Germany and generates tens of millions of 
dollars of revenue for China. The problem beyond the massive 
transfer of wealth is that developers began constructing the 
dam two years before applying for the credits.
    According to the British Times Online, one U.N. official 
estimated that 20 percent of the carbon credits failed to 
result in actual reductions. Karen Harbert, the President and 
CEO of the Institute for 21st Century Energy, will testify that 
the 2007 U.N. negotiations in Bali and Indonesia produced 
positive steps towards a new treaty.
    In Bali, developing countries agreed to actions that were 
measurable, reportable, and verifiable. This fits with the 
principle of common but differentiated responsibilities and 
respective capabilities that I support and that is fundamental 
in these negotiations.
    An agreement to handicap the handful of economies won't 
change economic realities. Consumers will still buy goods. The 
manufacture of these goods will result in the same emissions. 
And America will simply outsource more emissions and more jobs.
    Every country has the right and every government has the 
obligation to pull its citizens from poverty and advance their 
way of life. The current global downturn historically 
demonstrates that wealth isn't a fixed pie. It can increase and 
decrease in absolute terms and America prosperity doesn't come 
at the expense of the world.
    The entire economic world can grow, but all that growth 
must be subject to the same limitations. We cannot self-impose 
costs while foreign markets grow freely. The result is too 
predictable: a long-term contraction of the U.S. economy 
coupled with the continued explosion of global markets. In the 
face of intense pressure to find a solution, we can't adopt a 
costly one that won't work.
    And I thank the Chair.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you.
    I would like to make three points. First, I want to answer 
the question of why we are here when we have such an economic 
meltdown underway, why we are talking about global warming. And 
I want to suggest there are two reasons for it.
    Number one, the Arctic as it melted this summer did not pay 
any attention to the Dow Jones average. The Pacific did not pay 
any attention to the Standard and Poor's as it became 30 
percent more acidic in the last 50 years.
    Mother Nature does not wait for us. We have a necessity of 
acting now. And, secondly, anyone who looked around, the best 
opportunities for economic growth in this country are 
associated with beating global warming.
    We know there is a world out there that is going to want 
these technologies, and we believe and we took a first step 
with our economic recovery package to develop these 
technologies. This is an economic recovery mission that we are 
on as well as a global environmental one.
    Second point as to why we should act while China has not 
entered into an agreement yet with us, let me suggest that I 
believe the road ahead, the single most important thing we can 
do is for the United States to regain its moral authority to 
lead the world.
    We are not in a real strong position to lead right now 
because we haven't acted. And I would suggest that we need to 
act domestically before Copenhagen so that we have moral 
authority to lead the world into an international agreement.
    I believe it is in our American destiny to do this. And 
what we did last week in adopting our economic recovery plan, 
which has about $88 billion of investment in these new 
technologies, we are on our way to restoring our moral 
authority to lead the world.
    The moral of the story is you can't blame everything on 
China when you haven't done anything at home. And I wish we 
would spend more time figuring out how we are going to have a 
domestic response to this and a little less time blaming all 
the problems of the world on China when we are the ones who 
have three to five times more CO2 output per capita 
than the Chinese.
    A third point, just real quickly, I met with the Deputy 
Minister of Environment for Czechoslovakia yesterday. He had 
some very interesting ideas about what we should ask the Chinas 
and Indias of the world. I believe there are many things we can 
obtain by agreement with the developing world, but we need to 
regain our moral authority first.
    Thank you.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    And I appreciate what my friend, the Ranking Member, from 
Wisconsin outlined. There are real considerations we need to 
take into account to be able to do this right. But while 
Germany may be two and a half times more energy-efficient than 
China, the United States doesn't look all that good in 
comparison with Germany itself, despite our advanced economy 
and having talked about this for some time.
    I do feel very strongly that Mr. Inslee's point about this 
being the path for the new economy, for one that is sustainable 
and has economic opportunity, is spot on.
    I think that with the benefit of this hearing and the work, 
Mr. Chairman, you are doing with the Select Committee, we can 
refine proposals to make sure that we don't outsource pollution 
and jobs.
    There is no reason we can't refine our own trade and 
environmental policies to make sure that there is, for example, 
a carbon tariff to avoid that. These are things that are within 
our capacity.
    Now that the United States has ended an eight-year hiatus 
where it was not part of the global process, working in tandem, 
that we have a President that is committed to our international 
cooperation and our international leadership, I look forward to 
hearing from the witnesses and devising legislation and ideas 
that are based on the experience around the world, good and 
bad, so that we can meet this global climate change.
    Thank you.
    The Chairman. I thank the gentleman. Time has expired for 
opening statements.
    [The prepared statement of Mr. Cleaver follows:]
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    The Chairman. And we will now begin with a briefing from 
His Excellency, John Bruton, who is the Ambassador of the 
European Commission to the United States.
    As a reminder, we are not receiving testimony from a 
witness but a briefing by a foreign dignitary. The Select 
Committee is honored to hear from Ambassador Bruton. Before 
accepting his current position, Ambassador Bruton was the Prime 
Minister, the Taoiseach, of Ireland, where he helped to 
transform the economy and enhance the peace process.
    Your Excellency, thank you very much for joining us today. 
Whenever you are comfortable, it is our honor to have you here. 
Thank you, sir.
    [The prepared statement of Mr. Bruton follows:]
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    [Brief recess.]
    The Chairman. And we have a second panel, which will also 
now please move up to the witness table, and would ask our 
first witness when he is ready to begin with his five minutes 
of opening testimony. And that would be Elliot Diringer, who is 
the Vice President of International Strategies for the Pew 
Center on Global Climate Change. Mr. Diringer served in the 
Clinton administration as Deputy Assistant to the President and 
Deputy Press Secretary. He now directs the Pew Center's 
outreach to key governments and actors involved in 
international climate change negotiations.
    Mr. Diringer, whenever you are ready, please begin.

 STATEMENTS OF ELLIOT DIRINGER, VICE PRESIDENT, INTERNATIONAL 
 STRATEGIES, PEW CENTER ON GLOBAL CLIMATE CHANGE; ROB BRADLEY, 
   DIRECTOR, INTERNATIONAL CLIMATE POLICY INITIATIVE, WORLD 
RESOURCES INSTITUTE; AND KAREN ALDERMAN HARBERT, PRESIDENT AND 
             CEO, INSTITUTE FOR 21ST CENTURY ENERGY

                  STATEMENT OF ELLIOT DIRINGER

    Mr. Diringer. Mr. Chairman, members of the Committee, thank 
you for the opportunity to appear before you today.
    In summarizing my written testimony, I would like to 
emphasize four points: the progress made since Bali, what is 
needed in a post-2012 climate framework, what will constitute 
success this year in Copenhagen, and how the United States can 
best ensure that success.
    While global greenhouse gas emissions continue to rise at 
an alarming rate, governments have made important progress 
since the Bali conference. Ambassador Bruton has just described 
efforts under way in Europe. Other developed countries also are 
moving forward. Australia is planning a cap-and-trade system 
and other measures to reduce its emissions 15 percent by 2020. 
Japan will announce its own mid-term target later this year.
    Even more encouraging is that several major developing 
countries have now adopted national climate strategies. China, 
which adopted a national climate program in 2007, was joined 
last year by India, Brazil, Mexico, and South Africa. Brazil is 
proposing to reduce deforestation rates by 70 percent by 2017. 
Mexico has set an aspirational goal of reducing emissions 50 
percent by 2050. And South Africa has pledged to stop its 
emissions growth by 2025, with absolute reductions to begin 10 
years later.
    Internationally as well, we have seen progress since Bali. 
President Bush and other G8 leaders supported a global goal to 
reduce emissions at least 50 percent by 2050. Then the major 
economies, China, India, and other developing countries 
acknowledged that their emissions must deviate from business as 
usual. And in the U.N. climate negotiations, governments have 
put forward dozens of concrete proposals for fashioning a 
comprehensive post-2012 agreement.
    In anticipation of new U.S. leadership, governments 
resolved two months ago in Poznan, Poland to shift this year 
into full negotiating mode. After years of stalemate, 
conditions are finally set for genuine negotiation to begin.
    The Pew Center believes that to be effective, a post-2012 
climate agreement must establish verifiable commitments by all 
major economies, including economy-wide emission targets for 
developed countries and a range of policy commitments for 
developing countries.
    We see four major challenges between now and Copenhagen. 
The first is agreeing on a range of comparable emission targets 
for developed countries. President Obama has called for 
reducing U.S. emissions to 1990 levels by 2020. The European 
Union, as we have just heard, has set a target of 20 percent 
below 1990 levels.
    Measured against a 1990 baseline, these goals appear very 
much at odds. However, circumstances today are different. 
Measured against a more current baseline, these goals appear 
considerably more comparable. Both, in fact, would reduce 
emissions roughly 15 percent below 2005 levels. Targets under 
consideration in Australia, Canada, and Japan fall in a similar 
range.
    The second challenge is defining developing country actions 
in a way that works for developing countries and can be 
accepted by the United States and other developed countries as 
a genuine commitment.
    Developing countries are not prepared at this stage to 
assume economy-wide targets. Commitments to implement 
nationally defined policies, such as energy-intensity goals, 
efficiency standards, or sectoral targets are a reasonable 
alternative provided that these policies are defined in clear 
metrics and produce verifiable emission reductions.
    The third major challenge is agreeing on the appropriate 
means and level of support for developing country action. 
Mobilizing support will be difficult under current economic 
conditions, but early progress in this area will be essential 
to reaching agreement in Copenhagen.
    The fourth major challenge is deciding how countries' 
efforts are to be measured and verified. A credible 
verification system is key to establishing and maintaining 
parties' confidence in their efforts in the overall regime.
    We cannot realistically resolve all of these issues in the 
next ten months. As such, we believe that the Copenhagen 
Conference should be considered a major success if it produces 
a strong interim agreement that puts a full, final, and 
ratifiable treaty within reach.
    This interim agreement should do three things. It should 
establish the basic architecture of a post-2012 framework. It 
should indicate the range of emission reductions and level of 
support that developed countries are prepared to commit to. And 
it should initiate a process to determine the specific actions 
to be undertaken by developing countries. This would settle 
fundamental, legal, and design issues, and create a positive 
dynamic for concluding the final agreement.
    To ensure success in Copenhagen, the United States must 
first and foremost lead at home by quickly enacting 
comprehensive mandatory legislation to reduce U.S. emissions. 
The United States must also lead abroad through a full-fledged 
diplomatic strategy.
    Congress can help strengthen the hand of U.S. negotiators 
through its design of domestic climate legislation. Congress 
could, for instance, authorize immediate assistance for 
capacity building in developing countries with assistance for 
technology development to be made available upon U.S. 
ratification and entry into force of a new climate agreement.
    Similarly, Congress could set aside allowance auction 
revenues to be made available on entry into force for emission 
reductions overseas above and beyond a U.S. domestic target. 
The targets set under domestic legislation must fundamentally 
guide the U.S. negotiating position, but room to bargain could 
provide the negotiating leverage needed to secure stronger 
commitments from others.
    I thank you for this opportunity and would be happy to 
answer your questions.
    [The prepared statement of Elliot Diringer follows:]
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    The Chairman. We thank you very much, Mr. Diringer.
    Our second witness is Rob Bradley. He is the Director of 
the International Climate Policy Initiative at the World 
Resources Institute. Mr. Bradley, a trained physicist, now 
manages a variety of projects, including clean energy 
technologies for poverty reduction and adaptation strategies 
for climate change.
    We welcome you, Mr. Bradley.

                    STATEMENT OF ROB BRADLEY

    Mr. Bradley. Mr. Chairman, members, thank you and good 
morning. My name is Rob Bradley. I am Director of the 
International Climate Policy Initiative at the World Resources 
Institute. Thank you for the opportunity to join you today.
    I would like to make three points, each of which I treat in 
more detail in my written testimony, which I hope can be 
included in the record. First, success against climate change 
will mean both strong federal policy in the United States and 
action from major developed and developing economies.
    Second, the world has changed dramatically from the days of 
the Kyoto Protocol. Major developing countries are ready to 
take significant action on limiting emissions.
    Third, the Bali Action Plan provides a solid foundation for 
a new international agreement that meets key U.S. interests.
    The United States is an indispensable leader in the fight 
against climate change. Without the world's largest economy and 
biggest historical emitter, other countries cannot fix the 
problem, but nor can the U.S. do it alone. Almost 80 percent of 
global emissions are produced by 15 countries, counting the EU 
as one country, 9 of which are in the developing world.
    The Kyoto Protocol, the main climate agreement to date has 
been rejected by the U.S., in particular, because of the 
concern that without meaningful participation from major 
developing countries, it would be ineffective and excessively 
costly to the U.S. economy.
    Developing countries have historically argued that with 
their poverty and small historical contribution to the climate 
problem, they should not be responsible for curbing emissions. 
But in recent years, there has been a flood of developing 
country climate plans. For example, Brazil announced that it 
would reduce its deforestation rate over 50 percent from the 
recent levels by 2017, avoiding an estimated 4.8 billion tons 
of CO2 emissions.
    China committed to reducing national energy intensity--that 
is energy use per unit of GDP--by 20 percent by 2010 and looks 
on course to meet that goal with programs expected to cut 
emissions by 550 million tons of CO2. Investment in 
wind, hydro, nuclear, and biomass are expected to save an 
additional 640 million tons by 2010.
    India has a number of states that are taking forward-
aggressive renewable energy targets with renewable portfolio 
standards.
    Mexico aims to halve its greenhouse gas emissions by 2050 
and is considering employing a cap-and-trade policy akin to the 
one recently considered by the U.S. Congress.
    South Africa has presented a detailed and highly ambitious 
plan to peak its national emissions by 2020 and to bring them 
down to low levels in 2050 in accordance with the science.
    These policies will often not be in the same form as the 
cap-and-trade approach favored in the U.S. and Europe, but that 
need not make them any less ambitious. They are the more 
impressive when we consider the poverty of many of these 
countries.
    As has already been mentioned, in India, 550 million people 
still lack any access to electricity. And they, just like 
Americans and Europeans in the last century, legitimately 
aspire to get it. But they are seeking to do so on a lower-
carbon pathway. Indeed, countries such as China and India see 
their future as leaders in the clean energy revolution.
    Significant questions do remain. Many of these countries 
have a poor record of implementing national plans. Reliable 
data are hard to obtain. Standards of enforcement, governance, 
and transparency are very variable.
    It will certainly not be enough for countries to take each 
other's plans at face value. This is where the international 
agreement comes in. It must enhance collective willingness to 
act by establishing accountability, to build trust that 
countries are taking real action to cut emissions, and framing 
those actions in the context of global goals.
    The Bali Action Plan provides for a radically different 
agreement from the Kyoto Protocol. Mitigation actions from both 
developed and developing countries are to be ``measurable, 
reportable, and verifiable.'' This language also applies to 
finance, technology, and capacity-building support to 
developing countries.
    This body can shape the success of the international 
process. Most importantly, adopting an ambitious federal 
climate policy will unleash action not only in the U.S. but 
also from countries that have been waiting on the world's 
biggest economy. Second, U.S. policy should include provisions 
for financing international action on adaptation, forest 
protection, and clean technologies.
    I don't want to imply that this will be easy. Many 
countries remain wary of commitments. And their rhetoric will 
stress these fears. But the world has moved on a lot in ten 
years. There is a real willingness to tackle emissions and a 
potential agreement that can turn this willingness into 
verifiable action. For the United States and for the world, the 
time is right to rise to this challenge.
    Thank you. And I look forward to your questions.
    [The prepared statement of Rob Bradley follows:]
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    The Chairman. Thank you, Mr. Bradley, very much.
    Our final witness is Ms. Karen Alderman Harbert, who is the 
President and CEO of the U.S. Chamber of Commerce's Institute 
for 21st Century Energy. Prior to her time at the Institute, 
Ms. Harbert served as the Assistant Secretary for Policy and 
International Affairs at the U.S. Department of Energy.
    We welcome you, Ms. Harbert. Whenever you are ready, please 
begin.

              STATEMENT OF KAREN ALDERMAN HARBERT

    Ms. Harbert. Thank you, Chairman Markey and Ranking Member 
Sensenbrenner, other members of the Committee for holding 
today's very important hearing on climate change.
    Climate change is undoubtedly one of the most complex 
issues facing the international community today. And I want to 
focus on some of the major challenges to a new agreement and 
where I believe the U.S. needs to play a constructive role.
    However, it is important to keep in mind the global context 
in which these negotiations are occurring has changed. The 
world has changed considerably since the UNFCCC was launched in 
1992. Energy demand is going to increase by 50 percent between 
now and 2030. And 75 percent of that growth is going to be in 
the developing world.
    Next year CO2 emissions from the industrialized 
nations will account for 47 percent of emissions. The 
developing world will be 53 percent. In 2030, that will be a 
very different picture. The industrialized world will be 38 
percent. and the developing world will be 62 percent.
    So to be effective, therefore, any new arrangement should 
take into account changing trends in global economic 
development, energy demand, and emissions. The old model of 
donor and recipient countries simply will no longer work.
    Climate change needs to be addressed as part of an 
integrated agenda that proceeds from a clear understanding that 
for many countries, energy security is a greater concern right 
now than climate change. Too often energy is vilified in these 
international discussions. Yet, in reality, affordable energy 
is central to addressing climate change because it underpins 
economic growth, which is necessary to drive technology 
creation and employment and definitely environmental 
protection.
    International strategies that recognize the reality can 
raise the level of trust between and among developed and 
developing nations. In addition, in these negotiations, which 
were going to be very difficult to begin with under the very 
best of circumstances, are now complicated further by the 
recent financial crisis.
    Looking ahead, the U.S. must be the voice of reason in 
these negotiations. Permeating much of these negotiations is an 
air of unreality that ultimately could derail an agreement. 
Unachievable emission reduction targets, the weakening of 
intellectual property protections, and unrealistic demands for 
financial support, for example, are now all on the negotiating 
table.
    We must temper our ambition with realism, which means that 
while we promote a positive, pro-growth agenda that will 
attract developed and developing nations and will improve 
environmental stewardship, we must also be willing to walk away 
from a bad deal.
    Further, to ensure our economy retains its competitiveness, 
any new domestic climate policy should be conditioned on an 
international agreement that has full international 
participation. The idea that if the U.S. goes first, China, 
India, and other nations will follow is just simply an 
unjustified article of faith that carries with it tremendous 
economic risk and potentially no environmental benefit.
    We have seen with the Kyoto Protocol that top-down 
approaches simply do not work. A new agreement needs to 
accommodate a wide range of national circumstances and 
approaches, and it should be very simple to implement and 
oversee.
    A long-term global emissions reduction goal should be 
realistic, achievable, and take into account emerging science, 
the pace of technology development and diffusion, and should 
not undermine economic growth or simply shift jobs or pollution 
overseas.
    To be effective, a new agreement must include the 
participation of countries like China and India. In this 
regard, the Bali Roadmap was very welcome in that we saw an 
indication of their willingness to participate in activities 
that were measurable, verifiable, and reportable.
    A new arrangement should include commitments by all 
countries in accordance with the common but differentiated 
responsibilities. However, we should not use that as a source 
for inaction. We believe the notion of responsibilities and 
capabilities ought to evolve as economic conditions evolve and 
countries evolve. And we must recognize that countries should 
graduate from developing to developed status.
    At the cornerstone of any success is technology development 
and deployment. And that will determine how quick and how 
costly any future agreement will be.
    We know that the world will use coal, will use natural gas, 
and will use oil. And we must fashion policies to accommodate 
their exploitation in the developing world, yet being mindful 
of environmental stewardship.
    We, of course, are paying close attention to China and the 
G77 weaken intellectual property as part of their proposal. We 
have to resolve what place nuclear power and carbon capture 
storage and sequestration will be in any new agreement.
    We can lead by example. And we can accelerate nuclear power 
in this country. And we can invest seriously in CO2 
carbon capture and storage. So we have opportunities to exert 
leadership here at home by making wise, smart energy policy 
choices.
    And through the WTO, we should eliminate tariff and non-
tariff barriers to environmental goods and services, which will 
lower the cost of any eventual agreement. But it is important 
that climate change not be invoked as an excuse to erect tariff 
barriers to gain competitive advantage or redistribute wealth.
    And we also have to remember that financing is critical. 
This will not be cost-free, as Ambassador Bruton said. We need 
international concessionary financing. And we need to re-look 
at the financial instrumentation we have here at home.
    So, in sum, what would a new international approach look 
like? The following eight principles. It should consider 
growing energy needs, circumstances, and resource endowments of 
all countries. It should set realistic and achievable. It 
should strike a good balance between environmental protection, 
energy security, and economic growth. It should ensure global 
participation. It should allow for diversified approaches. It 
should ensure that mitigation actions are all measurable, 
reportable, and verifiable. And it should place technology at 
the cornerstone while protecting intellectual property and the 
rule of law. We should keep business at the table. We should 
keep the energy sector at the table because they will be key to 
the success of any ultimate agreement.
    Thank you.
    [The prepared statement of Karen Alderman Harbert follows:]
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    The Chairman. Thank you, Ms. Harbert, very much. I will 
turn and recognize the gentleman from Washington State, Mr. 
Inslee.
    Mr. Inslee. Thank you.
    I would like to ask about alternative ways to deal with the 
situation if countries do not enter into this new international 
framework. We have heard some discussion of potential--Mr. 
Blumenauer threw out the idea of some tariffs to be an 
adjustment. Let's assume that country X does not enter into 
this international agreement, the possibilities to have some 
tariff associated with their failure to do so associated with 
the costs of noncompliance.
    Mike Doyle and I are working on an approach a little 
different that would essentially provide free permits to 
energy-intensive industries as an approach to prevent leakage 
overseas. It wouldn't be directed to any one country. It would 
simply say that energy-intensive industries would receive some 
free permits, as opposed to having to buy them at what is 
supposed to be an effective auction.
    I just wonder if you would like to comment on those two 
different approaches. Mr. Diringer, would you like to speak?
    Mr. Diringer. Thank you, Mr. Inslee.
    Let me distinguish between two scenarios, then: one, 
domestic action in anticipation of an international agreement; 
and the second scenario being once we have reached an 
international agreement.
    I think in the first scenario, the approach you and Mr. 
Doyle have put forward seems rather workable. In our analysis 
of potential competitiveness impacts, they actually appear 
reasonably modest and can be addressed through the allocation 
process.
    Ambassador Bruton described how Europe has chosen to go 
that route. Australia also is using free allocation to energy-
intensive industries to address this issue. And we would prefer 
that to the imposition of border measures, unilateral border 
measures, in the absence of an international agreement.
    Assuming that we are able to achieve an international 
agreement. It seems as if there are two options. One would be 
to try to structure into the agreement the use of some types of 
tariffs or border measures as a means either to enforce the 
agreement or as a tool to encourage action by parties that have 
not yet entered into the agreement.
    The other option would be not to have those as an explicit 
tool of the agreement but for countries again to choose to do 
that unilaterally but now with an agreement in place.
    Either of those options, assuming an agreement in place, to 
my understanding would be more effective and more legitimate 
under the WTO than choosing to go the route of unilateral trade 
measures in the absence of an international agreement.
    I should emphasize I am not an attorney and by no means a 
WTO expert, but my understanding again is that if parties have 
reached an international environmental agreement, then the use 
of trade measures, either as a means of enforcing that 
agreement or as a unilateral tool to guard countries against 
impacts, would be both more legitimate and more effective.
    Mr. Inslee. Thank you.
    I am going to just take Mr. Diringer's answer--it kind of 
covered several things--because I wanted to ask another 
question. Let me start with Ms. Harbert, if I can. I really 
appreciated your comment about trying to drive technology is 
the answer to this problem. It is one thing I wholeheartedly 
embraced. And I appreciate you bringing that up.
    I want to ask you about what you believe, what your 
organization believes should be the relative contributions of 
the world's citizens to this problem. So I will invite you to 
play Slumdog Millionaire with me for a minute.
    Take two world citizens: one in India, one in Mumbai, one 
living on a dollar a day with no legal place to live; and then 
a middle-class American living in the First Congressional 
District, where I live, my constituents, myself included, about 
ten times more per capita than the Slumdog Millionaire.
    So I guess the question is, what do you think our relative 
expectations should be of one another in this international 
agreement? How should we quantify that? Should they be 
dependent on our gross domestic products? You know, what should 
we expect of each other? Should we have the same per capita 
emissions, in which case Indians could go up by a factor of 
five and ours come down by 50 percent? That seems not very 
attractive to me, but it might be seen as fair to the Indians. 
In fact, Prime Minister Singh has said as much. What do you 
think it should be?
    Ms. Harbert. Well, first of all, the first thing I am going 
to do after this hearing is go see the movie since obviously 
you are enamored with it.
    Mr. Inslee. Great.
    Ms. Harbert. First of all, we want to presume that any 
agreement that anybody ever is going to be party to is going to 
be a success. In order for it to be a success, it has to be 
binding. And, therefore, there have to be responsibilities that 
everybody is going to agree to.
    There is a precursor agreement that the developing world 
will have common but differentiated responsibilities. But if 
there is a binding agreement, that means that over time those 
will increase.
    And so we have to be willing to sit at a table and look 
across the table at our counterparts in the developing world 
and have them agree to binding agreements. Therefore, it will 
not be incumbent. And our taxpayers and our citizens will not 
be the ones paying continuously over time for the compliance of 
the developing world.
    If we erect tariff barriers at our borders because either 
they have not signed onto an agreement or they are not in 
compliance with their agreements, that basically is just going 
to put on the burden of the American citizen that cost. And 
that would be unfair, whether it is in your district or anybody 
else's district, that we were paying for the failure of the 
agreement. And it is either an enforcement or whether it was 
just never successfully negotiated to begin with.
    So we have to recognize the aspirations of the developing 
world. They have a right to develop. But they also have an 
obligation to enter into a binding, enforceable agreement that 
will really and materially reduce greenhouse gas emissions 
every time. If they do not participate, we will not succeed. So 
if the goal is to succeed, they have to be party to it. And 
they have to have binding, enforceable obligations.
    Mr. Inslee. So what I hear you saying, it needs to be 
binding, but it can and should be differentiated. And so the 
cut or the difference from the business as usual approach that 
the Indians may take may be different than the percentage we 
would take. You would accept that as a principal?
    Ms. Harbert. Well, certainly every country is different in 
the type of natural resources it is endowed with, with the 
types of industries that its economy relies upon. So every 
country should have the sovereign right to decide how it is 
going to get to the target and to the binding obligations that 
it has agreed to because a country that has a lot of oil and 
gas and coal is going to go about it differently than a country 
that may be of a declining population that has a huge wind and 
solar base.
    And so we should not be trying to enter into this with a 
prescriptive formula. It should be flexible. There should be 
different sectoral approaches to this. But at the end of the 
day, if we allow countries to be exempt from any obligations, 
our industries, our jobs will go overseas, and our citizens 
will pay the price. And it will do nothing to improve the 
environment.
    Mr. Inslee. Thank you.
    The Chairman. The gentleman's time has expired.
    The gentle lady from Tennessee, Ms. Blackburn, is 
recognized.
    Mrs. Blackburn. Thank you, Mr. Chairman. And thank you all 
for your patience today and for the good conservation about 
this because I think it is something that does concern us all 
and especially in this economic environment in which we find 
ourselves.
    Mr. Bradley, I wanted to come to you. One of the things 
that I hear from my Ag. Committee quite a bit, they are very 
concerned about livestock emissions and regulations that might 
be forced on them. I want to know what your opinion is on that.
    Mr. Bradley. Agricultural emissions are a significant 
source of emissions in large parts of the world. And certainly 
when we look at some of the developing countries that we have 
been talking about here today, finding reliable ways to address 
emissions from rice patties, from cattle, for instance, in 
places like India is going to be a large part of the overall 
solution that we need to explore in those countries.
    I would say that while there are a range of things that can 
be done within the agricultural community, this is probably 
something that is going to be somewhat more detailed than 
perhaps inclusion in the cap-and-trade mechanisms of the kinds 
that we have been talking about here more generally.
    Certainly I think these are areas where there is some ripe 
scope for technology cooperation. Agricultural research is 
actually an area which has quite a good traditional of 
international collaboration. And certainly it would be I think 
a very promising area to try and find some constructive ways in 
which the U.S. and developing countries can work together to 
explore solutions through emissions in that sector.
    Mrs. Blackburn. Well, I will tell you that it is something 
that does concern us because you are talking about an issue 
that would end up affecting every single U.S. farm. And the 
impact of that on our food security supply and network is 
something that is not lost on us. So any further detail that 
you have on that that you could submit in written form I would 
definitely appreciate having.
    Another question for you. Reading some of the economists' 
writings on climate change and dealing with the economic 
situation that we are currently in, the jobs retention issues 
that are in front of us, a large number of them have stated 
that spending billions of dollars on climate change right now 
is unnecessary. And they say the money probably would be better 
spend going toward projects such as clean water and sanitation, 
that that would be a more effective route in developing 
countries than putting the focus on climate change. And I would 
like to hear you address that.
    Mr. Bradley. So, just to make sure I understand your 
question, it would be more effective in that view to spend 
money on water systems in developing countries than on cutting 
emissions----
    Mrs. Blackburn. Clean water and sanitation, correct, 
instead of addressing the emissions and climate change issue.
    Mr. Bradley. There are two ways in which this interacts 
with climate change. One is--and this is something you alluded 
to with the agricultural question as well--it is not going to 
be possible to build effective water and sanitation and similar 
infrastructure in developing countries unless, first of all, we 
take into account the climate impacts that they will already be 
facing because those water systems will have to exist and 
provide their service within those stressed environments.
    And, secondly, simultaneously we do need to ensure that 
climate change doesn't race ahead and perhaps outstrip some of 
the values that those systems are going to bring.
    If you are asking, though, does it make sense for a country 
like India to be spending more of its effort proportionately on 
providing those kinds of services than on cutting emissions at 
this stage in its development, then yes, I would agree.
    I think that this is an issue we have sort of patched back 
to a number of times in this hearing. And it is important to 
understand how heterogeneous these countries are. There is a 
so-called Germany within India.
    You have 70-80 million people in India who live what would 
be largely viewed as a Western lifestyle, you know, drive 
Mercedes, have air-conditioned apartments, and so forth. Simply 
because they happen to be lodged in the middle of a very poor 
country should not exempt those kinds of communities for taking 
action.
    And this is why some of the discussions we have been having 
around developing countries emphasizes taking specific actions, 
rather than necessarily starting from a national emissions 
limit because within that national emissions limit, you 
potentially end up dragging down the Slumdog Millionaires, whom 
we desperately need to help get out of poverty, provide water 
to, provide energy to, and so on.
    Mrs. Blackburn. Thank you. Yield back.
    The Chairman. The Chair recognizes the gentleman from 
Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chair, Mr. Diringer, and Mr. 
Bradley.
    Mr. Diringer, in your testimony, you suggest that the U.S. 
move swiftly to cap and reduce emissions, which I agree with, 
incidentally. In fact, I had hoped that it would have been 
something that we moved early in this Congress. But with the 
hemorrhaging economy, my fear is that that will take such a 
precedent that some of the issues that some of us, at least on 
this side, are extremely concerned about are going to be 
delayed.
    We already I think have somewhat of a damaged image in this 
area internationally. That is where Mr. Bradley comes in as 
well. Does a delay in moving in this area of cap and then 
reducing emissions further damage our international credibility 
as it relates to climate change are the effort by the world 
community to begin to address this serious problem?
    And, secondly, if I can ask both questions? And then I will 
just let the two of you speak. Having family in Tanzania, 
Tanzania as they call the country--we changed it over here--
where they have a $1,500 a year annual income--and I have seen 
the devastation there of the environment--they are really 
suffering there. Even in the shallows of Kilimanjaro, they have 
serious water problems.
    The only way we are going to address the developing 
countries is if the First World countries understand that issue 
and then spend whatever is necessary. Deforestation, I mean, 
probably they have knocked over an acre since this Committee 
has been in session today.
    So I would like to get you to discuss without rambling as I 
did the two issues that I raised.
    Mr. Diringer. Let me try to address the first. And perhaps 
Rob will want to pick up on the second. Absolutely further 
delay in domestic action by the United States will delay and I 
think actually would preclude the possibility of an effective 
global agreement in action to date by the United States, which 
is not only the largest economy in the world but also the 
largest historic emitter of greenhouse gases, has been the 
single greatest impediment to progress in developing an 
effective global agreement. I think that we have been in a very 
prolonged period of stalemate and then prenegotiation with 
countries waiting to see what the U.S. is prepared to do.
    You know, we did see some progress over the past year. We 
saw some progress in the major economies dialogue that 
President Bush initiated. There was initially some great 
skepticism from other countries, but I think other countries 
came to recognize the value in that type of dialogue. But I 
think the reason it didn't produce any more is because 
President Bush didn't put anything on the table in terms of 
U.S. action.
    There are great expectations right now about the new 
administration and what it will be prepared to do, both in 
terms of moving forward with domestic action and bringing 
something into the negotiations. So I think that, frankly, 
domestic action in the U.S. is essential. It may not be 
sufficient, but it is the first essential step towards moving 
forward internationally.
    If I could, you mentioned, you know, concern about the 
current economic situation perhaps delaying action. I just want 
to note that the Pew Center along with the World Resources 
Institute are both members of the U.S. Climate Action 
Partnership Coalition of major companies and nongovernment 
organizations calling for mandatory action and enactment of 
cap-and-trade legislation this year.
    One of the points made by the CEOs of the companies is that 
there is a cost to regulatory uncertainty. For them, this is 
actually a very strong economic rationale to move as quickly as 
possible to enact the kind of legislation we need.
    Mr. Cleaver. Thank you.
    Mr. Bradley.
    Mr. Bradley. As briefly as I can, absolutely without the 
United States taking a leadership position on domestic policy, 
I see very little prospect for an international agreement.
    And it is striking we focus a lot in these conversations on 
the sort of differences with China, but in many ways, the 
conversations that we hear when we go to China are extremely 
similar to the ones being held here in Washington around 
climate change.
    They completely get how bad the climate change is. They 
really worry about the impacts that they face. But they say, 
``Listen. We are trying to do some things right now, but 
without the world's biggest economy moving on this, how can we 
move much faster than we are now?'' They have been extremely 
explicit.
    I would depart a little bit from Mrs. Harbert's framing of 
it. The idea that China and India will to a certain extent wait 
on U.S. leadership before following suit I don't think is an 
article of faith. I think it is something they have repeatedly 
and publicly stated and that, at the very least, is worth 
trying to take them at their word for one part of that 
conversation.
    Certainly the issue of countries like Tanzania and the 
kinds of impacts that they face from climate change is one of 
the things that should galvanize us all. I was on Mount 
Kilimanjaro a couple of years ago. And you see the pictures 
from the '50s and '60s with this kind of shaggy mane of snow on 
Mount Kilimanjaro. And it is now thinner than my hair. It is 
something which really underlines the incredible difficulties 
that many of these countries are going to face.
    One of the things that I think was very praiseworthy in 
many of the discussions around the climate bills last year was 
a fairly consistent intent on the part of Congress to provide 
finance for international adaptation.
    It was interesting to see the religious community, in 
particular, fall full square behind that. I think that is an 
important recognition of the moral case that there is there to 
provide that kind of assistance to the countries that are going 
to be most effective.
    The Chairman. The gentleman's time has expired.
    Let's go back to this issue of a Germany inside of India. 
What country would be inside of China given their economic 
development right now? Even larger than a couple of Germanies 
inside of China.
    So, Ms. Harbert, what do you think about the prospects of 
us reaching an agreement with the well-to-do in Shanghai, the 
well-to-do in Bangalore, the interests that they represent? At 
least in sectoral agreements on steel and cement, we are there 
modernizing. We are there building these new plants.
    There is a good reason to believe, do you not believe, that 
we could, in fact, reach differentiated agreements with these 
countries so that wherever they are modernizing, wherever they 
are building, wherever their wealth is great, they are bound by 
the same rules? But we can take into account the Slumdog aspect 
of it in the movie that you haven't seen, but you can only 
assume that it is that dollar-a-day resident of both of those 
countries.
    Ms. Harbert. Well, there are ongoing efforts right now that 
are succeeding on a sector-by-sector basis: the Asia Pacific 
partnership. You have the aluminum industry working amongst 12 
or 13 countries to find ways to produce aluminum in a much more 
energy-efficient manner, the same in the area of cement and 
steel, et cetera. And that is because we are using technology 
and reality and economics as the base for making decisions on 
how to modernize these systems.
    One of the most important things we could do is reduce the 
tariff barriers on clean energy goods and services. And we have 
not been successful in the Doha round. We may need to look at 
different ways of doing this.
    Why are we making clean energy more expensive in the 
developing world? That is needless, and we could reduce that. 
Those would be American jobs and American exports.
    If you listen to the Chinese--and I spent a lot of time in 
China, as have you--the Chinese have said, yes, we're willing 
to sit at the table. It's going to be very costly.
    Our priority is economic growth, bringing our people out of 
poverty so that we don't have these pockets of Germany, that 
everybody has a much better baseline and we should afford them 
the right to have their people have a better way of life.
    But they said, ``It is going to cost money. And we don't 
have it. And, therefore, we expect to be paid.'' In fact, they 
have said they want .7 percent of the industrialized world's 
GDP on an annual basis to be able to sit at the climate 
negotiating table and agree to something.
    Well, that would mean $80 billion every year from the 
American taxpayer to fund China's compliance with an 
international agreement. That is a heck of a lot of money. And 
that is just the U.S. obligation.
    So we have to be very careful in how we approach bringing 
them in and that it ultimately doesn't fall just purely on an 
economic basis on the people inside the United States that for 
a long time have been more prosperous.
    The Chairman. Mr. Diringer, do you agree with Ms. Harbert? 
Is that a good formula for us to use?
    Mr. Diringer. Well, first, on the question of sectoral 
agreements, we think that is certainly something worth 
exploring. I don't know about the practicality of trying to 
negotiate something with a national government with respect to 
action in specific geographic areas, but in terms of action 
within certain economic sectors, that is certainly something we 
should be discussing. And, in fact, if we were able to reach 
agreements around specific sectors, particularly the energy-
intensive sectors, that would be one very effective way to 
address the competitiveness concerns that we have.
    I mean, as far as the formula, the quid pro quo, if you 
will, that needs to be reached in order to move forward 
internationally, I think we need to be very clear. We need to 
see commitments. We need to see reasonable commitments. We also 
need to be prepared to provide some support to those countries 
that need it to achieve those commitments.
    In the case of China, when you have conversations, I mean, 
the impression I get is that they understand that: (a) they 
have lots of money and that is not really the thing they need 
from us; and that lots of money is probably not forthcoming 
from the United States toward China. What they do need is some 
assistance on the technology front.
    The Chairman. So what do you recommend? You know, Ms. 
Harbert said the same thing. So how do we handle this issue of 
technology----
    Mr. Diringer. I think----
    The Chairman [continuing]. And its transfer? What would you 
have built into the agreement, first, you, Mr. Diringer? Then 
we will go back to you, Ms. Harbert. What are the specifics 
that you would like to see included?
    Mr. Diringer. Well, I think an immediate priority for this 
administration is to initiate a high-level dialogue with China 
to have an honest conversation about what they are prepared to 
do and what they need to do that.
    I think in terms of the types of measures that we build 
into an agreement, we need specific commitments from them and 
we need to help establish financial mechanisms that provide 
support, although that will be differentiated support and you 
need to evaluate on a case-by-case basis based on the types of 
actions countries are prepared to do, the types of assistance 
that would be available to them given their national 
circumstances.
    And for a country like China that has considerable 
financial resources available to it, then that may not be the 
most appropriate form of support to provide----
    The Chairman. So you are not that sympathetic to China in 
terms of our need to provide them with technology transfer in 
order to deal with their issues? You think that they have 
sufficient technological capacity and resources to do it the--
--
    Mr. Diringer. Well, I think they have sufficient financial 
capacity, but I do think that there may be areas where we can 
assist them in terms of technological capacity provided--I 
mean, we need to have not as conversations----
    The Chairman. Just so that I can understand what you are 
saying----
    Mr. Diringer. They need----
    The Chairman [continuing]. So what do you recommend 
specifically that we do in those areas that you think----
    Mr. Diringer. Coming to clear terms about the sharing of 
technology in a way that allows them access to the state-of-
the-art clean technologies that will enable them to reduce 
their emissions while at the same time protecting and 
preserving----
    The Chairman. But what are those----
    Mr. Diringer [continuing]. Intellectual property of U.S. 
companies.
    The Chairman. But what are those clear agreements? How do 
we make it----
    Mr. Diringer. There are many companies that operate day to 
day right now in China, U.S. companies, that have technology-
sharing agreements and are able to do business in China in ways 
that they don't feel is undermining their intellectual 
property.
    So I think those are the types of agreements that we need 
to work out with respect to the clean energy technology.
    The Chairman. Ms. Harbert.
    Ms. Harbert. I think there are three things. First of all, 
the United States has already put on the table the 
International Clean Energy Fund. They were joined by the U.K. 
and Japan for a facility housed at the World Bank that would 
provide concessionary financing to the developing world for 
clean energy projects.
    That would do a lot for us in this economy and generate 
jobs here at home, and it would do a lot to have commercially 
viable projects built on the back of the private sector, rather 
than on governments around the world that would distribute 
clean energy. We should fund that effort.
    Secondly, we should be serious about reducing tariffs on 
clean energy goods and services around the world that reduces 
the cost of clean energy. And if the priority is economic 
growth in Bangalore and Shanghai, that will reduce the cost of 
providing that.
    And we have to recognize that the technologies are not 
owned by governments. The United States government can't just 
go over to the Chinese government and give it away. They don't 
own it. GE does. Dow does. Dupont does. And they are not going 
to give it away. That is not the way that our system works.
    And so we need to have very strong intellectual property 
protections in place so that we can cooperate with China, but 
we're not. We should disabuse ourselves. And we should stop 
using the words ``tech transfer'' in the negotiations.
    The Chinese, the Indians, and the others are expecting to 
receive a big bundle of technology one day. And it's not 
forthcoming that way. It just doesn't work. And so we have to 
find a way to make it work and for that technology commerce to 
be technology transfer.
    The Chairman. Mr. Bradley, let's go to Mexico for a second. 
They are talking about a cap-and-trade system. That would come 
as kind of a shock to most people, I think. Mexico has decided 
to take a leadership role.
    How realistic is it for us to expect that Mexico would 
adopt a meaningful cap-and-trade system that could be looked to 
with some confidence as something which is binding, 
enforceable, confidence-building?
    Mr. Bradley. Thank you. I will certainly address that 
question. I wonder if I could ask your indulgence just to make 
one comment on the China and technology question?
    The Chairman. Please do so.
    Mr. Bradley. The Chinese government strong-armed Huaneng 
Power, which is China's largest power utility, into setting 
aside capital to put into the FutureGen project. In other 
words, the Chinese were proposing to pay money towards the 
construction of a power project in Illinois.
    The project was canceled by the Administration. And the 
Chinese found out about it in the Washington Post. They have 
repeatedly emphasized that in many contexts. And it is true 
that in the negotiations, they do have some very, I would say, 
unrealistic sort of starting negotiation positions about 
financial transfers.
    In many cases, they are seeking to jointly and equally co-
fund research and development and to share the intellectual 
property that arises from it.
    The Chairman. And that is a good model, Ms. Harbert?
    Ms. Harbert. To share the intellectual property?
    The Chairman. Jointly fund and develop.
    Ms. Harbert. To the extent that the intellectual property 
that is generated there can be common and differentiated 
benefits, sure.
    Mr. Bradley. On the question of Mexico, I don't want to 
imply a cap-and-trade bill. My colleagues have been working in 
Mexico now for seven or eight years helping build up the 
databases and inventories necessary for some key sectors to 
monitor and verify their emissions effectively.
    The climate change strategy that the Mexican government 
came up with last year has talked about setting targets for 
specific sectors. It probably would not be economy-wide in the 
first instance. Mind you, neither is the EU's emissions-trading 
system economy-wide. The kinds of sectors that we are talking 
about are similar to those in the EU sector, heavy 
manufacturing and the power sector.
    The dynamic by which that will be put in place may be a 
little bit different than in the United States. So, for 
instance, in many instances, the companies involved actually 
stayed home, most particularly, for instance, the refining 
sector and some of the power generation.
    So I would say that Mexico is not on the brink of a cap-
and-trade bill, as we would recognize it here, but I would say 
that there is a very realistic prospect that significant 
sectors will have a cap-and-trade-type policy applied to them 
in the kind of time scale which we will be bringing in the 
timed agreement.
    The Chairman. Thank you.
    There is a national teach-in today on global warming that 
is taking place on hundreds of campuses, in college and high 
school alike, all across the country. In my district, Brandeis 
University has asked me to participate. But, rather than me 
teaching them, I thought it would be important to let Congress 
hear from the students. So today at this hearing, I am going to 
put Brandeis University in the chairman's seat and ask a 
question sent to me by Matthew Schmidt, who is a sophomore, who 
heads the Students for Environmental Action at Brandeis.
    Here is the question. After World War II, the United States 
played a crucial role in the rebuilding of Europe. Has the time 
come for the United States to consider a similar role in 
spreading clean energy technologies throughout the world?
    Mr. Diringer.
    Mr. Diringer. I would say absolutely, but the United States 
will not be in a position to do that on its own, obviously. It 
will need to work in partnership with other developed countries 
and potentially with other developing countries, who 
increasingly have the financial and technological wherewithal 
to assist in the diffusion of technology worldwide.
    I think it is also interesting to reference the 
institutions that emerged in the post-World War II environment. 
We are now approaching a point where it is time to reconsider 
the mission of those institutions.
    And I think that in moving forward on technology to address 
climate change, it is worth considering reinvention of the 
Bretton Woods institutions and making this one of their 
missions going forward so that we can move beyond the 
traditional donor-recipient model, as Ms. Harbert put it, to a 
new model in which countries work in partnership to advance the 
types of technologies we need.
    The Chairman. Mr. Bradley.
    Mr. Bradley. I think a sort of reservation on that model is 
that, as Ms. Harbert has been saying, it is not as though the 
U.S. sort of owns all of these technologies and it is a 
question of transferring them overseas.
    I do think that some of our international partners don't 
completely understand that. And certainly I think some 
commentators and certainly some climate negotiators imagine 
that we have a lot of great technologies in a basement 
somewhere that we are deliberately not sharing. This is more of 
a collaborative effort.
    I do think that the model that is going to work and the 
model that ultimately will invalidate some of the longer 
projections that we see in models, the thing that isn't 
captured in models is that we must get to a point where some of 
the technologies that are going to let us have zero carbon 
energy really break through to the point of competitiveness.
    The one thing that can do more than anything else in the 
world to drive that is by setting a carbon regime in the United 
States which will allow the world's biggest, most 
technologically advanced, and most innovative economy to start 
really pushing those technologies forward. That will be 
America's biggest gift to the world.
    Those technologies that ultimately will drive that 
revolution will come from all kinds of places, but they will 
come from America more than from any other single place.
    So does America play a role in a way that looks exactly 
like the Marshall Fund? Not quite. But does America play that 
incredibly important core role in driving an energy technology 
revolution? I certainly hope so.
    The Chairman. Ms. Harbert.
    Ms. Harbert. I guess I would make three comments to the 
wonderful question posted by the student. First, you know, we 
are investing less in clean energy R&D in this country than we 
did since the 1970s.
    So we have not put our money where our mouth is. And we 
need to be serious about not just the R&D but, as you said, in 
the deployment and providing the incentives out there to 
actually have these technologies penetrate the marketplace, 
which will generate exports and generate innovation revolution 
of clean energy.
    To do that, we need sufficient loan guarantees in this 
country. We need a clean energy bank. We need production tax 
credits that will incentivize. There are a lot of financial 
instrumentation that is very valuable that could be put in 
place absent having an over-arching mandate.
    Secondly, he brought up World War II. Our infrastructure in 
this country was built right after World War II. And we really 
haven't done anything to modernize it since.
    And if we are going to have a growing economy and fuel an 
economic recovery, we have got to get serious about 
infrastructure in this country. Otherwise we are going to have 
brownouts that certainly would not do anything for our economic 
recovery. And we can demonstrate huge leaps of technology in 
our electricity grid since it has not really been modernized 
since World War II.
    And that will certainly help with the 1.6 billion people 
that don't have electricity around the world to have it in the 
advanced technology state.
    Last, but not least, and maybe the most important is this 
question from a student at a university. And we are not 
graduating enough scientists, enough engineers, enough math 
students to actually have the intellectual feedstock we need 
for the innovative transformation that we need.
    We need more engineers. We need more scientists. We need 
more academic institutions that have teachers that are capable 
of doing it. It starts in pre-kindergarten all the way through 
Ph.D. So we have got to get serious about the intellectual 
foundation of what we are talking about here because we don't 
have the people that we need for all of these goals that we are 
talking about.
    So we talk about importing oil all the time. We are going 
to be talking about importing all of our intellectual feedstock 
to feud this revolution. And that really won't sit well here at 
home.
    The Chairman. Thank you, Ms. Harbert, very much. And we 
thank the Brandeis student for his question.
    You know, President Kennedy in his inaugural obviously 
uttered that famous statement, ``Ask not what your country can 
do for you, but what you can do for your country.''
    He also then followed it by talking to the world and saying 
to the citizens of the world, ``Ask not what the United States 
can do for you but what we can do together working for the goal 
of freedom and progress in the world-at-large.''
    I think here we have many countries that will be able to 
contribute. Germany is the leader in photovoltaic solar 
technology, and Denmark the leader in wind. And obviously there 
are many parts of the world that can play leadership roles with 
the United States, of course, as the largest industrialized 
county, hopefully playing the largest role of them all.
    In the stimulus package that is now under consideration 
between the House and Senate, there is a large, large infusion 
of funding for education. We agree with that insight that you 
made, Ms. Harbert, that we have fallen behind. We have to make 
the investment in education because without that in the long 
run, we cannot be leaders.
    To a very large extent, our leadership now is based upon 
the huge investment, which we made a generation ago. That is 
why we win the Nobel Prizes now. That is why we are the 
leaders. But we can't know 30 years from now whether or not we 
are going to be the winners over India and China and Germany 
and other countries until we first determine how much we want 
to invest once again in our technologies and our young people 
to make sure that they are competitive. That is still an 
unknown result because we have yet to make those decisions.
    However, a renewable electricity standard would give an 
incentive for the development of new technologies, the tax 
breaks, the incentive for the development of a new modern 
technology-driven, telecommunications-driven grid is also a 
part of the solution.
    We have to get to the business of developing those new 
technologies. And then the United States will be the leader 
amongst other countries, as well, in solving this problem.
    Does the gentleman from Missouri have any other comments?
    [No response.]
    The Chairman. This has been a fabulous introduction where 
we now stand in the world on these issues. It is going to be a 
very, very fast-paced race for 305 days to Copenhagen. And we 
intend to ensure that this Congress and the American people are 
informed of all of the choices which we have to make this year 
if the United States is to be the leader when that meeting is 
convened.
    Thank you all so much for your testimony.
    [Whereupon, at 12:08 p.m., the committee was adjourned.]
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