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


 
PREPARING FOR COPENHAGEN: HOW DEVELOPING COUNTRIES ARE FIGHTING CLIMATE 
                                 CHANGE

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

                                HEARING

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 4, 2009

                               __________

                            Serial No. 111-4


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

                        globalwarming.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
62-186                    WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  

                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

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

                           Professional Staff

                   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. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................     6
Hon. John Hall, a Representative in Congress from the State of 
  New York, opening statement....................................     6
Hon. John T. Salazar, a Representative in Congress from the State 
  of Colorado, opening statement.................................     7

                               Witnesses

Mr. Carter Roberts, President and CEO, World Wildlife Fund.......     8
    Prepared Statement...........................................    11
    Answers to Submitted Questions...............................    95
Ms. Barbara Finamore, China Program Director, Natural Resources 
  Defense Council................................................    25
    Prepared Statement...........................................    28
    Answers to Submitted Questions...............................   108
Mr. Lee Lane, Resident Fellow, American Enterprise Institute.....    39
    Prepared Statement...........................................    41
    Answers to Submitted Questions...............................   118
Mr. Ned Helme, President, Center for Clean Air Policy............    61
    Prepared Statement...........................................    65
    Answers to Submitted Questions...............................   123

                          Submitted Materials

``Important Transitions in Emitting Countries Over the Coming 
  Century'', of 2007 from Global Energy Technology Strategy, 
  Addressing Climate Change: Phase 2 Findings from an 
  International Public-Private Sponsored Research Program, 
  Battell Memorial Institute.....................................   166


PREPARING FOR COPENHAGEN: HOW DEVELOPING COUNTRIES ARE FIGHTING CLIMATE 
                                 CHANGE

                              ----------                              


                        WEDNESDAY, MARCH 4, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:35 a.m. in room 
210, Cannon House Office Building, Hon. Edward J. Markey 
(chairman of the committee) presiding.
    Present: Representatives Markey, Cleaver, Hall, Salazar, 
Herseth Sandlin, and Sensenbrenner.
    Staff present: Joel Beauvais and Camilla Bausch.
    The Chairman. Good morning, and welcome to the Select 
Committee on Energy Independence and Global Warming. Over the 
last 2 years the Select Committee has examined closely how the 
U.S. can fight climate change and improve our energy security. 
But we are not in this fight alone, and the progress that our 
country can make is deeply dependent on the progress that 
developing countries are making.
    That is the focus of today's hearing, to take an assessment 
based on the facts that exist in 2009, not as they existed 5 or 
10 years ago, of steps taken by the key developing countries to 
address global warming. This inquiry is important because 
Americans rightly want to know that they are not the only ones 
altering their policies to combat global warming. This inquiry 
is also important because many Members have rightly expressed 
concern about maintaining the competitiveness of critical 
industry sectors, and they want to know that other countries 
are joining the fight and requiring their industries to move 
away from business as usual.
    Our discussion on what developing countries are doing needs 
to be fueled by current facts and not by old perceptions. One 
old perception is that China is unwilling to join the fight 
against climate change and is wedded to growth at any cost. Our 
current reality is that China has already adopted an energy 
efficiency law that far exceeds anything on the law books of 
our country.
    Other examples abound of how developing countries are 
making progress. I am not suggesting that the developing 
countries are doing everything they can do, and they are 
certainly not doing everything that needs to be done. But as we 
undertake climate change legislation in our country, we should 
understand the steps taken by key developing countries around 
the world.
    China, India, Brazil, Mexico, South Africa are some of the 
biggest emitters of the developing world. Over the last years, 
all of these countries have displayed an increasing awareness 
of the need to act. Just last week President Obama acknowledged 
China in his speech to the Joint Session of Congress for having 
launched the largest effort in history to make their economy 
energy efficient.
    Also last week Greenpeace welcomed India's national climate 
plan's first step, a market mechanism that could phase out 400 
million incandescent bulbs by 2012.
    In December last year, Mexico set an aspirational target to 
cut in half its 2002 carbon emissions by 2050, and the 
Brazilian Government released its national plan on climate 
change.
    These are encouraging signs of action, but the world has to 
do more, and the world has to act together. Despite the action 
and efforts shown around the world, emissions continue to rise. 
We have to reverse this trend, and certainly developed 
countries will have to show clear commitment and live up to 
their promises and developing countries will need the support 
when accelerating their action.
    To ensure that the world achieves the needed reductions, we 
need a strong agreement in Copenhagen, and we need to monitor 
and verify the efforts all across the world. We need to be sure 
that promises lead to action, that plans get implemented, that 
results live up to expectations. The United States must show 
that it will lead this effort. Only by doing so will we 
collectively be able to win the fight against dangerous climate 
change.
    Let me turn now and recognize the ranking member of the 
Select Committee, the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]

    [GRAPHIC] [TIFF OMITTED] T2186A.001
    
    [GRAPHIC] [TIFF OMITTED] T2186A.002
    
    Mr. Sensenbrenner. Well, thank you very much. I guess the 
cash register is on this side of the aisle because last week we 
learned how expensive our response to climate change is going 
to be. President Obama's budget blueprint established potential 
domestic costs in today's hearing will highlight the mounting 
international demands. The world is expecting increased energy 
efficiency from the developing world, and the developing world 
is demanding compensation in return.
    We have known for a while that the cap and tax policy, 
which is my name for the carbon trading system President Obama 
is advocating, will significantly harm the U.S. economy. In his 
budget blueprint last week President Obama sketched out a cap 
and tax plan that will require approximately $80 billion a year 
from U.S. taxpayers. By 2020, Americans will have paid $646 
billion to fund this scheme. And while $646 billion is a 
shocking number, or at least it used to be, it pales in 
comparison to the demands of developing countries.
    India's government stated that the developed nations owe 
billions of dollars to developing nations to compensate for 
climate change. In its submission to the U.N. Framework 
Convention on Climate Change, the Indian Government argued that 
this funding should be a legal obligation for developed 
countries that cannot be subject to the decisions of developed 
country governments or legislatures. How that flies in the face 
of our Constitution's requirement that nothing be paid out of 
the Treasury except by appropriation, I don't know. They added 
that this funding should not be in the form of loans and that 
the providers of finance cannot be discretionary donors but 
must be legally obligated assessees.
    In its own submission, China argued that the developed 
nations should provide new additional adequate predictable and 
sustainable funding at least half to 1 percent of the Nation's 
GDP over and above the existing foreign aid.
    The Massachusetts Institute of Technology's Joint Program 
on the Science and Policy of Global Change, a supporter of cap 
and tax policies, estimated that welfare costs to developed 
countries could be over $400 billion per year in 2020, rising 
to over $3 trillion per year in 2050. And over $1 trillion of 
this would come from the United States. As the MIT study notes, 
this scheme goes well beyond compensating for mitigating costs 
and turns the mitigation policy into an instrument for global 
income redistribution, unquote.
    Several developing countries have made effort to increase 
their energy efficiency, which is good. But many of these 
countries have publicly stated their good intentions and 
aspirational goals to reduce their emissions but it is their 
willingness and ability to actually implement these policies 
that will determine the ultimate success of our global efforts.
    China has already resisted enforcement of WTO's trade 
rules. The U.S. Trade Representative found in its 2008 report 
to Congress on China's WTO compliance that, quote, China has 
yet to fully implement important commitments and in other areas 
significant questions have arisen regarding China's adherence 
to ongoing WTO obligations, including core WTO principles.
    In my role as a member and the former chairman of the 
Judiciary Committee, I sure found that out due to the lack of 
enforcement by China of intellectual property rights laws even 
though the Chinese law on the books looks as good as the United 
States' law or the laws that are in the European Union.
    A post-Kyoto Treaty cannot succeed without China's 
participation, but can we expect China's compliance with the 
climate change treaty given its history with the WTO? I think 
the answer is obvious.
    Today's witness Lee Lane, a Resident Fellow at the American 
Enterprise Institute, rightly recognizes that technological 
development is the crucial long-term priority. Politics is the 
art of the possible, but current proposals for emissions 
reductions go beyond not only what is politically possible but 
also what is actually achievable.
    Nations cannot afford to meet greenhouse gas reduction 
goals without substantial advances in energy technology. The 
development of technology, not higher taxes or global wealth 
redistribution schemes, should be where Congress focuses its 
efforts to confront climate change.
    I look forward to hearing from our witnesses today and 
learning more about what role technology can play in these 
important climate change negotiations leading to the U.N. 
conference of the parties in Copenhagen this December. Thank 
you.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Thank you for this 
opportunity.
    Mr. Chairman, I am absolutely convinced that the American 
economy can be retooled to meet the challenge of climate change 
and that the second industrial revolution of this country can 
be a revolution that would green our economy in more ways than 
one. But I think that we are really in a unique position, maybe 
even an awkward position because of the last decade, almost a 
decade, of ignoring the science of climate change. And we are 
faced now with an opportunity for the President to go to 
Copenhagen in December of this year. And I think that in 
Copenhagen the President is going to be watched and listened to 
perhaps in a more serious way than maybe ever a President or 
American official has dealt with this issue of climate change.
    And so I am interested in hearing from the panel the things 
you think we must do before Copenhagen, before next December, 
in order to have credibility when the President speaks on the 
last day of the conference.
    So I appreciate your presence. I hope to be able to probe 
your considerable knowledge of the subject in order to 
ascertain information that will be helpful as this committee 
continues to study this issue and make recommendations to the 
Speaker.
    Thank you, Mr.Chairman. I yield back the balance of my 
time.
    The Chairman. Great. I thank the gentleman.
    The Chair recognizes the gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, for holding this 
hearing, and also for our panel of witnesses today. The world 
is on the cusp of exciting developments following the Bali 
meetings of framework for negotiations, developing what could 
lead to the first real international climate change ever. At 
least that is my hope for the Copenhagen meetings.
    An international agreement must have enforceable targets, 
must take care to rein in irresponsible practices by developing 
countries, particularly China and India. But we must realize 
that, while large and growing, these nations have much lower 
standards of living than ours, and we need to be sympathetic to 
their desire to achieve what we in this country have been 
calling the American dream for more than two centuries.
    At the same time, our economy is suffering and 
manufacturing is on the decline here at home. Any climate 
legislation that this Congress needs to consider needs to take 
into account the impact it will have on people and businesses 
in the United States. So there are twin challenges. How do we 
get China and India and the developing world to agree to 
climate change goals that do not stifle their own growth? And 
how do we limit our own contribution of greenhouse gases 
without further crippling the United States economy?
    I believe in that answer we can find opportunity. American 
businesses can lead the way in renewable and energy efficient 
technology. For example, just last week we had several 
witnesses testify about the work their companies are doing on 
energy efficiency and smart growth technology. In the Hudson 
Valley of New York we have innovators working on waste to 
energy, solar, biomass, and investors looking to fund renewable 
projects, and such low-tech solutions as weatherization, which 
would hopefully capture the 30 to 40 percent heat loss or air 
conditioning loss, as the case may be, from individual homes. 
We in our stimulus recovery package passed a large enough 
amount that New York State this year will be receiving about 
twice for weatherization what the entire country received last 
year, and a proportionate effort is being made nationwide. It 
is a serious conservation effort, and I am very proud of it and 
proud of the fact that my county, Duchess County, will be 
hiring five times as many workers to go out and do insulation 
of storm doors, storm windows, weather stripping. We are not 
talking high-tech new inventions. We are talking basic good 
building practices to save those homeowners money.
    It is time to harness our ingenuity to solve the climate 
crisis and export manufactured goods once again. We can fuel 
the carbon efficient global economy with just a little bit of 
investment. The economic stimulus was a good start but more can 
be done, and if we can do that we can help the developing 
countries meet their targets and make the planet a better place 
and make some money or save some money for our people at the 
same time. We should not be afraid of this challenge. We should 
welcome it.
    I thank you, Mr.Chairman, and yield back.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Colorado, Mr. 
Salazar.
    Mr. Salazar. Well, thank you, Mr. Chairman. It is an honor 
to be here with you here today and with you, Mr. Sensenbrenner. 
I share some of the same values as you do.
    I come from the Colorado San Luis Valley, which is very 
rich in solar. We have 150-day average of sunshine in Colorado. 
And I believe that, you know, in renewable energy and the 
world's need for energy conservation and development of 
renewable sources of energy, I think that the world has a real 
need for some type of moderate commonsense legislation and 
talks and negotiations to move our climate change issues to the 
forefront.
    I also share the concerns of Mr. Sensenbrenner and Mr. Hall 
when we talk about what our current economic situation is in 
this country, but I want to talk a little bit today about how I 
believe that we can actually curb some of our carbon emissions. 
I want to make sure that agriculture is heard in all this 
debate. I believe that agriculture can be a part of our carbon 
sequestration issue.
    I am looking forward to today. Today is my first day, and 
the Speaker asked me to serve on this committee. While I am not 
an expert in energy issues, I do want to be part of the 
solution.
    So thank you very much, Mr. Chairman. And I yield back.
    The Chairman. I thank the gentleman very much. And whether 
it be solar or wind or fossil fuels or agriculture, Colorado in 
a lot of ways is a microcosm of all of the solutions that we 
can propose.
    Mr. Salazar. Mr. Chairman, if I may just say that in 
Colorado and the Colorado San Luis Valley we had up until last 
year the largest solar farm in the United States, an 80-acre 
solar farm that produced close to 12 megawatts of solar power. 
They are looking now at building somewhere in the neighborhood 
of a 550-megawatt concentrated solar farm in that area. So I am 
very interested in those issues.
    The Chairman. I thank the gentleman. I thank the gentleman 
for serving on the committee. It is going to make an invaluable 
contribution.
    Let me now turn to our panel. And our first witness is Mr. 
Carter Roberts. Mr. Roberts is the President and the CEO of the 
World Wildlife Fund. WWF is supported by close to 5 million 
members globally, and its affiliates work in more than 100 
countries. Before joining WWF, Mr. Roberts worked on strategic 
planning and new international programs with the Nature 
Conservancy.
    We welcome you, Mr. Roberts. Whenever you are ready, please 
begin.

STATEMENT OF CARTER ROBERTS, PRESIDENT AND CEO, WORLD WILDLIFE 
                              FUND

    Mr. Roberts. Thank you, Mr. Chairman. And thank you to the 
committee for your leadership and educating the American public 
and Congress about the threat of climate change and what we 
need to do about it. And I am grateful for the opportunity to 
provide testimony today on behalf of our 5 million members and 
on behalf of our programs around the world.
    As you point out, we operate in all these countries around 
the world, often with programs led by nationals, leaders in 
those countries who have a deep appreciation for the context in 
these countries, and we have an observer status for the UNFCC 
process, and often we serve as members of delegations from 
these countries to the negotiating process. So it is from this 
vantage point and with this perspective that I offer my 
testimony today.
    Conventional wisdom says that developing countries do not 
take climate change seriously and that they will be an obstacle 
to a global deal. Nothing could be further from the truth. Key 
developing countries are taking concrete steps to reduce 
emissions at home. They are also leading in many ways the 
international negotiations as we speak. For the sake of our 
climate, our economy, and our international competitiveness, I 
urge us to follow their lead.
    I have three key points today that I want to make. One is 
that things have changed. The other is that they have changed 
for good reasons, and finally that the U.S. needs to respond in 
kind both in our domestic legislation and in our international 
negotiations.
    So first, throughout much of the 1990s the developed world 
looked to developing countries to take the lead in solving the 
climate change problem. That was clear. Their posture was 
understandable. They contribute little in the way of emissions 
and were suffering some of the greatest impacts, all at the 
same time that the world's largest emitter was doing very 
little. Over the past year in particular, developing countries 
have taken action to reduce their own emissions at home and 
have been constructing advancing solutions at an international 
stage.
    Two examples: Renewable energy and deforestation or avoided 
deforestation. Renewable energy standard is a classic part of 
any country's seriousness in replacing high carbon fuels with 
ones that produce zero emissions. During the past several years 
as the U.S. has debated whether or not to have a renewable 
energy standard, Brazil, India, China, Mexico, the Philippines 
and many others have adopted their own and have begun 
implementing it with some success.
    Second, deforestation. You know that deforestation is the 
second largest sector in terms of CO2 emissions 
around the world, more than all the cars, trucks, planes, 
trains and boats in the world, bringing Brazil and Indonesia to 
the top five emitters around the world. In December, Brazil 
announced a bold plan to cut their emissions from deforestation 
by 70 percent in 10 years. This would avoid 4.8 billion tons of 
CO2 emissions, equivalent to over two-thirds what 
the U.S. produces alone.
    To back this up, Brazil has made a number of commitments at 
home. First, they have created one of the most impressive 
forest conservation programs in the world, creating a series of 
parks in the Amazon roughly equal to the size of the State of 
California.
    Second, they developed a world class system of monitoring 
that has few peers around the world and is now regularly 
reporting on their progress in avoiding deforestation.
    And finally, they are creating governance systems, 
particularly at a state level, that provide the resources and 
the enforcement with local communities to reduce deforestation 
right at the edge of the forest frontier.
    Meeting all these goals will be tough. Brazil is committed 
to it, but it can't do it alone. It will need our help. It will 
need technology. It will need know-how, and it will need some 
financial flows to make this happen.
    The reason these developing countries are taking these 
steps are pretty obvious. They are very similar to our own, 
risk and opportunity. The risks that they see are even far 
greater than ours because they have billions of people who live 
below the poverty line and they lack the capital and the 
financial resources to respond, to adapt, and to change. And so 
for nations with populations living at the a subsistence level, 
even modest amounts of climate change change their water 
supplies, change their food supplies, and runs the risk of 
severe crop failures. Wait and see is not an option.
    They also see that addressing climate change produces the 
promise of economic security and even growth. Dramatic swings 
in energy prices are problematic for countries with little 
financial reserves, and those countries who are able to develop 
homegrown energy supplies are able to become leaders in areas 
like renewables.
    Right now China leads the world in installed renewable 
energy capacity and is projected to be the world leader by the 
end of this year in exports of renewable energy solutions.
    Finally, my last point, the U.S. as we enact cap and trade 
legislation here at home and enter international negotiations, 
we should do so with developing countries in mind. Why? First, 
it is a global crisis and it requires a global solution just as 
the economic crisis requires countries to come together.
    Second, a ton emitted in China or a ton emitted in Brazil 
is just as costly to us at home as a ton emitted in Ohio. We 
need to ensure just as we are creating green jobs at home and 
sending funds at home to drive solutions that we also ensure 
that funds flow to those countries where low-cost solutions can 
be found. We need to solve the problem by solving it globally.
    Third, by building the capacity of other countries, we are 
building more stable societies. We are also building potential 
markets for technological solutions. For too long the U.S. has 
invented renewable technologies only to see other countries own 
those markets by having the right regulatory framework and by 
having good relations in markets of other countries.
    Last but not least, the U.S. has had a long legacy of 
reaching out to other countries and solving global problems, 
bringing our know-how, our capacity, our money and our 
resources to help countries in need and to create a leadership 
role for us abroad. We have done it with HIV/AIDS. We have done 
it on security issues. We need to do it on climate change.
    In summary, the developing world has changed as we speak. 
They are playing a leading role. They are taking action at 
home. It is time for us as we pass cap and trade legislation 
here at home and enter international negotiations to respond to 
their leadership and to respond in kind. It is in our best 
interest to do so.
    Thank you very much.
    [The prepared statement of Mr. Roberts follows:] 

    [GRAPHIC] [TIFF OMITTED] T2186A.003
    
    [GRAPHIC] [TIFF OMITTED] T2186A.004
    
    [GRAPHIC] [TIFF OMITTED] T2186A.005
    
    [GRAPHIC] [TIFF OMITTED] T2186A.006
    
    [GRAPHIC] [TIFF OMITTED] T2186A.007
    
    [GRAPHIC] [TIFF OMITTED] T2186A.008
    
    [GRAPHIC] [TIFF OMITTED] T2186A.009
    
    [GRAPHIC] [TIFF OMITTED] T2186A.010
    
    [GRAPHIC] [TIFF OMITTED] T2186A.011
    
    [GRAPHIC] [TIFF OMITTED] T2186A.012
    
    [GRAPHIC] [TIFF OMITTED] T2186A.013
    
    [GRAPHIC] [TIFF OMITTED] T2186A.014
    
    [GRAPHIC] [TIFF OMITTED] T2186A.015
    
    [GRAPHIC] [TIFF OMITTED] T2186A.016
    
    The Chairman. Thank you, Mr. Roberts, very much.
    And our next witness is Ms. Barbara Finamore. She is a 
senior attorney at the Natural Resources Defense Council and is 
the founder and Director of NRDC's China Program. She is also 
cofounder and President of the China-U.S. Energy Efficiency 
Alliance. She has worked and lived in greater China for nearly 
20 years and she has flown in from Beijing for this hearing, 
for which we are very grateful. Whenever you are ready, please 
begin.

STATEMENT OF BARBARA FINAMORE, CHINA PROGRAM DIRECTOR, NATURAL 
                   RESOURCES DEFENSE COUNCIL

    Ms. Finamore. Thank you, Chairman Markey, Ranking Member 
Sensenbrenner, and distinguished members of the committee. It 
is my pleasure to be here today to discuss China's national 
greenhouse gas mitigation efforts and achievements and 
challenges.
    I also have three major points. One is that China is 
currently pursuing an aggressive and ambitious greenhouse gas 
mitigation program, as indicated by its 11th 5-year plan, which 
runs from 2006 to 2010. That plan includes a goal of reducing 
its energy intensity, energy consumption per unit GDP, 20 
percent from 2005 levels to 2010, which equals 4 percent 
reduction per year. It also sets a target of increasing the 
share of renewables in the energy mix by 10 percent by 2010 and 
15 percent by 2020. If China succeeds in achieving this goal 
and reducing its energy intensity by 20 percent, it will avoid 
emitting approximately 1.5 billion tons of CO2, 
which constitutes the largest single greenhouse gas mitigation 
program by any country. And I will detail what that progress is 
on that in a moment.
    But I would also like to emphasize that China has reasons 
for the greenhouse gas mitigation programs that it has already 
achieved that provide a lot of room for reaching mutually 
beneficial common ground between the United States and China as 
they seek to achieve an international climate treaty. And these 
include, in particular, China's growing awareness of the severe 
impacts on its own country of climate change.
    I think the turning point first came in 2006 when China 
issued a national climate change assessment program by 40 
different ministries, a 400-page report which for the first 
time detailed the impacts that climate change would have on the 
areas where China is already most vulnerable. Its water 
supplies. It has only one-quarter of the average water 
resources per capita as the world average. They have already 
seen increasing droughts, increasing flooding in other regions. 
And just yesterday they announced their plan to build 59 new 
reservoirs to capture water resources in the west due to rapid 
melting of the glaciers. So the cost of adaptation is becoming 
increasingly apparent to China.
    Also impacts on their agricultural productivity and also on 
the economic development which is located primarily along their 
very long coastline and how it would be impacted by sea level 
rise.
    I would also mention energy security as a primary 
motivating factor for China in its greenhouse gas mitigation 
efforts. And also social stability. They are quite concerned 
about the high cost of its unsustainable energy path on the 
health of its people and on the environment. The World Bank, as 
you may have known, has estimated that 750,000 people die each 
year from environmental air and water pollution in China. Also 
the economic downturn as it has affected China these days is 
going to lead to increased social instability if they don't 
create more green jobs.
    So there is a real opportunity here for holding hands 
across the ocean and finding green technologies that will 
benefit the global economic recovery.
    The third point is, despite all that China is doing, there 
is a tremendous amount more that needs to be done and that can 
be done, particularly through strengthening U.S. and China 
engagement on clean energy issues.
    But just to highlight a few of the efforts that China is 
already making in its greenhouse gas mitigation program, one of 
their major motivation factors is the desire to restructure 
their economic system away from the heavy industry that is the 
cause of the largest percentage of their greenhouse gas 
emissions, and in fact it is approximately 77 percent of all 
their energy demand. They have instituted policies already to 
help move their economy away from high-polluting, highly 
inefficient steel, chemical, cement industries. Not only that 
but even though they are continuing to grow their thermal power 
capacity to the tune of two coal-fired power plants a week, it 
is important to note that that is accompanied by the shutting 
down of the smallest, most highly inefficient power plants. So 
that there is a net increase in the efficiency of their thermal 
powered generation, which is leading to a dramatic reduction in 
greenhouse gas emissions from that sector.
    In the energy efficiency side, they are also closing 
backward production capacity, slowing the expansion of high-
energy consuming industries through the elimination or 
reduction of export tax rebates for energy intensive products.
    They have a renewed emphasis on energy efficiency, 
particularly in the industrial sector, focusing on the top 
1,000 highest energy-consuming industries, and our evidence 
indicates that they are on track to meet or surpass their 
target savings for that particular top 1,000 factories, which 
would translate into a reduction in CO2 emissions of 
300 to 450 million tons of CO2.
    They are putting money into funding energy efficiency at 
the national and provincial level. In 2007 they allocated 3.4 
billion U.S. dollars to promote energy efficiency and reduce 
emissions and 41.8 billion renminbi, or $6 billion in 2008 for 
the same purpose. They are beginning to implement provincial 
and municipal demand side management programs which use a 
portion of the revenue that utilities collect from their 
customers to reduce peak load and overall energy demand through 
large-scale investments in energy efficiency. And a World Bank 
study concludes that with the proper policies and incentives, 
these programs could avoid the need to build more than 100 
gigawatts of electric capacity by 2020.
    The Chairman. Could you summarize, please?
    Ms. Finamore. Yes. Although they have made significant 
progress, much more can be done. China's energy intensity is 
currently four times that of the United States and nine times 
that of Japan. In order to make further progress in meeting 
their ambitious goals there is a need for increasing technical 
capacity in energy auditing and energy efficiency retrofit 
design, monitoring and enforcing standards in industry power 
plants and buildings. These are all areas in which the United 
States and China can profitably cooperate.
    So in sum, China is working aggressively to improve its 
energy efficiency, reduce the carbon intensity of its energy 
mix. A recent study by McKenzie Global Institute indicates that 
if China pursued energy efficiency to the full extent possible 
and cut coal to 34 percent of its power supply, it could cut 
its projected greenhouse emissions by 2030 nearly in half.
    [The prepared statement of Ms. Finamore follows:] 

    [GRAPHIC] [TIFF OMITTED] T2186A.017
    
    [GRAPHIC] [TIFF OMITTED] T2186A.018
    
    [GRAPHIC] [TIFF OMITTED] T2186A.019
    
    [GRAPHIC] [TIFF OMITTED] T2186A.020
    
    [GRAPHIC] [TIFF OMITTED] T2186A.021
    
    [GRAPHIC] [TIFF OMITTED] T2186A.022
    
    [GRAPHIC] [TIFF OMITTED] T2186A.023
    
    [GRAPHIC] [TIFF OMITTED] T2186A.024
    
    [GRAPHIC] [TIFF OMITTED] T2186A.025
    
    [GRAPHIC] [TIFF OMITTED] T2186A.026
    
    [GRAPHIC] [TIFF OMITTED] T2186A.027
    
    The Chairman. Thank you, Ms. Finamore, very much.
    Our next witness is Mr. Lee Lane. Mr. Lane is a Resident 
Fellow at the American Enterprise Institute and is Co-Director 
of AEI's Project on Climate Engineering. Mr. Lane was 
previously a consultant to Charles River Associates 
International where he produced analyses of climate and energy 
issues. He also helped found the Climate Policy Center.
    We welcome you, Mr. Lane. Whenever you are ready, please 
begin.

  STATEMENT OF LEE LANE, RESIDENT FELLOW, AMERICAN ENTERPRISE 
                           INSTITUTE

    Mr. Lane. Thank you, Mr. Chairman, and Mr. Sensenbrenner 
and other members of the committee, I am delighted to have the 
opportunity to appear before you today and discuss these issues 
which I think are extremely important in the overall evolution 
of climate policy.
    My name is Lee Lane, and I am a Resident Fellow, as the 
chairman just said, at AEI. AEI is an organization that 
conducts policy analysis and research and education on a broad 
range of public policy issues. AEI does not take organizational 
positions on these issues, and the views that I am going to 
express here this morning are entirely my own, not necessarily 
those of the institute.
    Rising amounts of greenhouse gases in the atmosphere pose, 
I believe, several worrisome challenges. At the same time, many 
difficulties seem to rule out quick or easy solutions to the 
problems that are being posed to us. My statement suggests some 
ways in which the U.S. might nonetheless make progress. It 
makes three main points. I noticed that all three speakers who 
have spoken so far have three main points. So especially on 
that ground, we have grounds for agreement.
    The first point is that I think we need to acknowledge that 
whereas there seems to be an agreement, a global consensus 
even, on the need to reduce greenhouse gas emissions, that 
seeming agreement masks what I think is a distinct lack of 
consensus about who should pay to make these reductions in 
greenhouse gases. China, India, Russia and many other countries 
that have expressed agreement in principle that emissions 
should be reduced have not been especially forthcoming in 
incurring costs to actually achieve those emissions reductions.
    Now, I certainly hear and I have read the statements of my 
colleagues on the panel here, and I know that there have been a 
number of actions taken in China and elsewhere. But 
fundamentally those steps appear to me to be what we in this 
country used to call ``no regrets'' policies. Well, that is 
fine. We should welcome whatever emissions reductions occur as 
a result of those policies. But I don't think we should take 
those actions as suggesting that the world is any place close 
to being willing to bear the costs that would be required to 
really reduce greenhouse gas emissions to the level that would 
be required to halt climate change and actually stabilize 
concentrations of greenhouse gases in the atmosphere. We are 
very, very far from even discussing changes of that scale.
    My second point is I believe that it is true that the U.S. 
cannot create global consensus where none exists. Attempts to 
lead by example or to use trade sanctions to change China's 
behavior are likely to be both costly and ineffective. For 
developed countries to pay China's abatement cost is not an 
appealing option either. A recent MIT study, the one that Mr. 
Sensenbrenner referred to, estimated that carrying this 
principle to its logical conclusion would for the U.S. alone 
entail annual income transfers to the developing world of $200 
billion by 2020 and nearly $1 trillion by 2050. Each dollar 
spent in this way is, in effect, a dollar added to the U.S. 
trade deficit. This would heap a huge additional burden on a 
U.S. economy that, during this same period, will already be 
struggling to make many other daunting structural adjustments.
    Third, and my final point, is that the U.S. climate policy 
should candidly consider the likelihood that the needed global 
consensus on paying for abatement will be long in coming. If 
so, the world will probably fail to reach today's ambitious 
targets for stabilizing climate. Rather than striving to do the 
impossible, U.S. policy should focus on coping with the 
unavoidable. Adopting a modest, stable and gradually rising 
price on carbon emissions I believe is one step that we should 
take.
    An attached statement at the back of my statement discusses 
a number of other options that I think are important, 
especially focused on technological change, and I think several 
of these are in fact even more important than putting a price 
on carbon emissions. But I think a price on carbon emissions of 
the right kind would be an appropriate step, too.
    Finally, I guess I need to conclude with a note of caution. 
The U.S., like most other nations, has a real stake in curbing 
global greenhouse gas emissions. But if our good intentions 
lead us to incur costs that exceed the benefits to the United 
States, I fear those policies may not prove to be durable. And 
as many people have noted, climate policy is a marathon, not a 
sprint, and it is really important to muster a sustained 
effort.
    And I thank you very much, and I ask my statement be 
included in the record.
    [The prepared statement of Mr. Lane follows:]

    [GRAPHIC] [TIFF OMITTED] T2186A.028
    
    [GRAPHIC] [TIFF OMITTED] T2186A.029
    
    [GRAPHIC] [TIFF OMITTED] T2186A.030
    
    [GRAPHIC] [TIFF OMITTED] T2186A.031
    
    [GRAPHIC] [TIFF OMITTED] T2186A.032
    
    [GRAPHIC] [TIFF OMITTED] T2186A.033
    
    [GRAPHIC] [TIFF OMITTED] T2186A.034
    
    [GRAPHIC] [TIFF OMITTED] T2186A.035
    
    [GRAPHIC] [TIFF OMITTED] T2186A.036
    
    [GRAPHIC] [TIFF OMITTED] T2186A.037
    
    [GRAPHIC] [TIFF OMITTED] T2186A.038
    
    [GRAPHIC] [TIFF OMITTED] T2186A.039
    
    [GRAPHIC] [TIFF OMITTED] T2186A.040
    
    [GRAPHIC] [TIFF OMITTED] T2186A.041
    
    [GRAPHIC] [TIFF OMITTED] T2186A.042
    
    [GRAPHIC] [TIFF OMITTED] T2186A.043
    
    [GRAPHIC] [TIFF OMITTED] T2186A.044
    
    [GRAPHIC] [TIFF OMITTED] T2186A.045
    
    [GRAPHIC] [TIFF OMITTED] T2186A.046
    
    [GRAPHIC] [TIFF OMITTED] T2186A.047
    
    The Chairman. Without objection, it will be included in the 
record in its entirety.
    Our final witness is Mr. Ned Helme. He is the President and 
Cofounder of the Center for Clean Air Policy. Over the last two 
decades Mr. Helme has advised not only Congress, State 
governments, and the European Commission, but also developing 
countries from Brazil to China.
    So we welcome you, Mr. Helme. Whenever you are ready, 
please begin.

 STATEMENT OF NED HELME, PRESIDENT, CENTER FOR CLEAN AIR POLICY

    Mr. Helme. Thank you very much, Mr. Chairman, Mr. 
Sensenbrenner, and other members of the committee. It is 
certainly a pleasure to have a chance to speak to you this 
morning. I am Ned Helme, the President of the Center for Clean 
Air Policy.
    My task this morning is to sort of set the stage in terms 
of where we are in the negotiation process and complement what 
we have heard from my colleagues. Let me start by putting a 
slide on the board here, and this sort of summarizes what you 
have heard from my colleagues to the left and right of me.
    This compiles the reductions that will be achieved by 2010 
by China, Brazil, and Mexico under laws that are currently on 
the books in these countries. And as you can see, the red block 
is more than what we would do here in the U.S. under the 
Lieberman-Warner bill, as structured last year, by 2015, and it 
is comparable to the level of reduction we can expect from the 
Europeans with their minus 30 percent reduction target.
    So as my colleagues have shown you with the specifics, the 
sum total of this is quite substantial, and the world has 
really changed in terms of where we were in 1997 in Kyoto when 
very little was being done and where we are today where 
developing countries have really stepped up and carried their 
part of the burden here.
    Having said that, I want to build on what you said, Mr. 
Chairman, that this is great stuff but it is not enough. If we 
look at where we are going, we could zero out all the emissions 
of the developed nations by 2050 and we wouldn't get to the 
targets we are talking about. So we clearly need a substantial 
additional effort by China and other key developing countries, 
and I think that will be forthcoming in the process.
    My second point is really to talk a bit about the Bali 
Action Plan. I think this is a major breakthrough from where we 
were in 1997. For the first time we have agreement among 
developed and developing countries that both sides will commit 
to specific actions that will reduce, in the case of developing 
countries, growth and emissions, and that is premised on 
monitorable and reportable and verifiable actions on both 
sides, and it is also premised on the thought that we will have 
support in technology, in finance, and in building capacity 
from developed nations to developing nations. That is the heart 
of the Bali Action Plan, And it is a real breakthrough in terms 
of the thinking and the way in which this process has evolved 
over the years.
    In that action plan we are talking about taking nationally 
appropriate mitigation actions, and there are three types of 
these actions that are kicking around in the debate at this 
point. The first is unilateral action. And these numbers you 
see up here, a lot of what is here are actions that developing 
countries are doing on their own. These are not reductions that 
are being bought and paid for through the clean development 
mechanism. In the past, in the Kyoto Protocol, basically the 
only role was for projects in developing countries, could 
generate credits and those could be sold to the Europeans, for 
example, to meet the goals of their reductions by their 
companies.
    In this case we are talking about a real reduction by 
developing countries on their own that is a contribution to the 
atmosphere. So in addition to what developed nations do, we are 
going to see some real action by developing countries with some 
real costs--I would take issue with Lee's contention that all 
this is just no regrets--that will really move us forward. So 
that is the first and most important piece.
    The second is a set of actions that would be premised on a 
conditionality. We will go further if developed nations provide 
support in the financing and technology and capacity building.
    And then third is, if we have set a law, let's say China 
sets an RPS at 20 percent as they have done, If they do more 
than 20 percent, that could be turned into carbon credits to 
sell. So they have to meet the target on their own. If they go 
beyond it, they could market those on the carbon market.
    Let me take you to a specific example. Mr. Chairman, you 
alluded to this in your opening remarks. Mexico in December in 
Poznan put together the first really comprehensive approach 
that would show you what a national appropriate mitigation 
action on a sectoral approach would look like. Mexico proposed 
to set targets for reduction in cement, steel, oil refining and 
electricity, three of those very internationally competitive 
sectors. They have proposed that they would go further than the 
initial targets, significantly further, if there was support 
financially from developed nations to move that forward. And 
they said they would do this through a cap and trade program, a 
program that could combine with the U.S. cap and trade or a 
Canadian cap and trade program on a North American basis. So a 
very significant effort here. When we are talking about 
financing, we are not talking about big grants. In their case 
they are talking about loans that would help them overcome 
financial barriers. The banks in Mexico don't have the ability 
to assess energy efficiency programs.
    This is the kind of thing we are looking at. So very 
significant and a concrete proposal for Mexico that could move 
us forward. I think when we think about mitigation actions, we 
want to focus really on the 6 to 10 largest developing 
countries. They're responsible for over 80 to 90 percent of 
emissions. We don't really care about Zimbabwe and Morocco and 
so on. We really care about Brazil, China, Mexico, Korea, 
India, South Africa. Those are the key players. So it is a more 
workable and doable deal than it might have first appeared.
    Let me turn to the question of the United States' role in 
this. I think the U.S. is critical. We are the linchpin of a 
Copenhagen agreement. I think the positive reactions you have 
seen internationally to President Obama's comments on minus 14 
percent below current levels is a very positive sign. I think 
it can have a very positive impact in terms of moving this 
debate. I think there will be two tests for us.
    The first test is what is our target? Can we get that 
target together? I am optimistic here with the Congress that we 
could move something through the House. At least it would give 
us a real signal to help our negotiators talk about what kind 
of target can we take.
    And the second question is, will we help financially? That 
is I recognize a tougher question, but it is a key question. To 
make this ball move, we need to do it. And again, let's be 
clear. We are talking about help with technology. We are 
talking about capacity. We are talking about loans and breaking 
barriers. We are not talking about huge block grants like might 
be envisioned if you look at the India proposal, which is I 
think an outlier in terms of the real thinking on the table.
    Let me close by addressing--Mr. Hall has left, but he said 
there are twin challenges, and I think he is right on the 
money. He said, the twin challenges are: How do we deal with 
impacts on our companies in the United States? And how do we 
also encourage China and India to go further? And I think the 
answer is very clear. On the issue of carbon leakage, in the 
U.S. we have two choices. We could either give allowances free 
to key industrial sectors that are in danger, like cement, like 
steel, like oil refining, or we could do border tax 
adjustments, as I think one of you referred to this earlier 
that the--in fact Lee mentioned this in terms of--he said this 
is a real problem. Basically, any exports coming to the United 
States would have to buy carbon allowances. I think that is 
very provocative in the debate. Not very helpful. I think 
giving allowances out can take care of the carbon part of the 
problem. So that companies are held harmless in terms of this 
phase through 2020 until China, Brazil, Mexico have taken 
similar action in the cement industry and the steel industry, 
which I think we will see.
    The second half of Mr. Hall's challenge was, how do we get 
China to move? Border tax adjustments is not the way to go. 
China exports 1 percent of its steel to the United States. 
Putting a tax on Chinese steel is going to have no impact on 
their policies internationally. However, incentives like we 
just talked about, where we help them with the technology, 
where we take the CCS technology that we are working on and we 
do it with them in China at the same time we are doing it here. 
We don't do the old game of develop it here and 20 years later 
we put it in the developing countries. As my colleague here 
said, two coal plants a week, we have got to deal with CCS now.
    Let me close. My final thought for you is, I think we had a 
real breakthrough 2 weeks ago when the U.S. in the negotiations 
on a mercury treaty switched its position. Seven years we have 
said no international agreement on regulating mercury 
emissions. In 2 weeks the Obama administration changed 
direction and that completely dominated discussion. China, 
India, Argentina, Mexico, all of whom had been opposed to a 
mercury agreement, switched sides and said yes, we are onboard. 
I think it shows you what is possible from the kind of 
leadership we have from you guys and also from our President.
    Thank you very much.
    [The prepared statement of Mr. Helme follows:]

    [GRAPHIC] [TIFF OMITTED] T2186A.048
    
    [GRAPHIC] [TIFF OMITTED] T2186A.049
    
    [GRAPHIC] [TIFF OMITTED] T2186A.050
    
    [GRAPHIC] [TIFF OMITTED] T2186A.051
    
    [GRAPHIC] [TIFF OMITTED] T2186A.052
    
    [GRAPHIC] [TIFF OMITTED] T2186A.053
    
    [GRAPHIC] [TIFF OMITTED] T2186A.054
    
    [GRAPHIC] [TIFF OMITTED] T2186A.055
    
    [GRAPHIC] [TIFF OMITTED] T2186A.056
    
    [GRAPHIC] [TIFF OMITTED] T2186A.057
    
    [GRAPHIC] [TIFF OMITTED] T2186A.058
    
    [GRAPHIC] [TIFF OMITTED] T2186A.059
    
    [GRAPHIC] [TIFF OMITTED] T2186A.060
    
    [GRAPHIC] [TIFF OMITTED] T2186A.061
    
    The Chairman. Thank you, Mr. Helme, very much. We will now 
turn to questions from our committee members, and we will begin 
with the gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Mr. Lane, on page 10 
of your testimony, in the fifth paragraph, you said, America is 
well endowed with the resources required to make the needed 
adjustments. On page 12 you said, our responses need to account 
for the limitations on our resources and our abilities to 
affect the preferences of other societies. Can you help me fix 
the difference?
    Mr. Lane. Sure. I think that the United States--and I think 
this is generally agreed--because it is a very big country, 
because it is quite a wealthy country, has--and because it is 
developed and has a well-developed public health service, and 
so forth, has a lot of human and material capital, is probably 
better able to adapt to climate change than most poorer 
countries are likely to be. It also has a more temperate 
climate to begin with, so that say in comparison with India or 
a country that is located much closer to the equator, we are 
less likely to experience in the early decades of climate 
change really severe harm.
    At the same time, all of that being true, it is still true 
that we don't have infinite resources to help the entire world 
convert from fossil fuels to alternative energy and 
conservation, and so forth.
    Mr. Cleaver. On that point--excuse the interruption but I 
only have 5 minutes.
    Mr. Lane. That is fine.
    Mr. Cleaver. On that point I would like to engage all the 
panelists.
    Do you believe that it is possible for the United States in 
Copenhagen to create, for China and India in particular but all 
of the--many of the developing nations, the belief that there 
is a real connection between sustainable economic strength and 
hampering the environment?
    Mr. Helme. I certainly agree. I think that is very much in 
line with the kinds of things you see in the submissions from 
those countries. South Africa has been the leader, but this 
idea of dealing with carbon and at the same time promoting 
sustainable development is a key element of the G-77 of 
developing countries' perspective, and I think they are already 
on that page. What they are looking for is help with the 
technologies and with some of the new opportunities to really 
pursue that ideal. I think we are on the same page on that 
issue.
    Mr. Cleaver. Mr. Roberts.
    Mr. Roberts. I think for most developing countries the 
environment is clearly in their minds where their food comes 
from, where their water comes from, and they see the risks of 
that environment changing because of climate change. They see 
it more clearly than we do because in places like Indonesia, 
they walk out their back yard and catch the fish. Now as the 
ocean is becoming more acidified, they are seeing the coral 
reefs and fisheries change in front of their eyes. And they are 
seeing the sea level rise in their backyards, and they don't 
have the ability to move like we do.
    I find in those countries a profound awareness of the 
relationship between their livelihoods and keeping their 
environment intact, and that is the main motivation for moving 
forward. I see that as a powerful impetus for having that 
conversation in Copenhagen. I think it is going to happen.
    Mr. Cleaver. Thank you.
    I want to find out whether the three witnesses agree with 
Mr. Lane's testimony that a global agreement, a global pact on 
greenhouse gases, gas caps, with full trading of emissions 
allowances is probably not possible in Copenhagen. Do you 
believe there is an agreement to be made in Copenhagen?
    Mr. Helme. I think there is. I suggested in my testimony 
that we will have agreement on the targets for the developed 
nations. I think we will have agreement on this architecture of 
how we proceed with developing countries. So we will have 
agreement on developing countries putting a series of 
nationally appropriate mitigation actions on the table and 
conditioning that on the financing. And I think we will see the 
Annex 1 countries coming forward and saying here is the range 
of financing we might be able to put forward. And in 2010 I 
think we will really negotiate the final deal in terms of we 
will do this, and you will help us here, and here is what it 
amounts to.
    We are talking about a registry where developing countries 
will record what they are proposing, what they are looking for, 
and, at the end of the day, exactly what we have agreed to. So 
I think it doable. I think it is a two-step. I think in 
Copenhagen we get the structure done, and after Copenhagen, 
after we have passed our law and we know what financing we can 
help with, I think we get into the details. Clearly, with U.S. 
leadership, it is quite possible.
    Mr. Cleaver. It is possible to go to Copenhagen shooting 
for the stars, and we may hit the Moon?
    Mr. Roberts. I think Copenhagen is an important step along 
the way. I think right now we are seeing these important 
bilateral conversations occur between the U.S. and China and 
the U.S. and Brazil and the U.S. and Europe. That lays the 
groundwork for differentiated commitments and the kind of 
exchange and financing and technology that we have talked 
about.
    I believe in Copenhagen we will see breakthroughs in 
framing issues like forests and deforestation and making them 
credible in the context of a global deal. We will see the 
creation and the framing of financing mechanisms, from funds to 
markets. I also believe that we will make some progress in 
terms of framing differentiated commitments.
    But I agree with my colleague to my right that it is a step 
along the way. We will also see follow-up in 2010. We are on 
the right path. Copenhagen is an important moment, but it is 
going to be a combination of bilateral discussions and 
agreements, in addition to the UNFCCC process.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Wisconsin, Mr. Sensenbrenner.
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. Ms. 
Finamore, welcome back home from Beijing.
    My first question is what makes you believe that the 
Chinese are going to act any different in keeping commitments 
in this area than they have failed to do in keeping commitments 
under the WTO, particularly in the area of intellectual 
property rights?
    Ms. Finamore. I think there is a big difference between the 
WTO Agreement and the Climate Change Agreement. As I said 
earlier and detailed it in my testimony, there are strong 
motivations and driving forces compelling China to agree to 
some sort of international climate negotiation that are 
unrelated to just growing its economy or competitiveness 
concerns. In fact, they believe that improving their energy 
efficiency is going to increase their global competitiveness. 
And I would also say that there is a lot of common ground here 
that I think needs to be explored in China's desire to move 
away from its high-energy-consuming industries which are 
responsible for the largest percentage of their energy carbon 
emissions.
    Mr. Sensenbrenner. I can quote the head of China's National 
Development and Reform Commission who said our general stance 
is that China will not commit to any quantified emissions 
reduction target. That is what the chief Chinese negotiator 
told me when I met with him in Poznam.
    Energy efficiency in reducing greenhouse gas emissions are 
two separate and distinct issues, and China is now emitting 
more greenhouse gases than the United States. Maybe the Chinese 
are believing their own press releases, but given their track 
record, I can say that I read their press releases and I don't 
believe them.
    That being said, given the unanimous vote in the Senate 
before Kyoto in 1997 and the fact that the treaty requires a 
two-thirds vote to ratify, what we are talking about here, how 
do you get it ratified, particularly when China is talking 
about this wealth transfer as mandatory spending which 
effectively makes China the recipient of a new foreign aid 
entitlement program.
    Ms. Finamore. You quoted the comments made by the chief 
negotiator in China at the International Climate Agreements. 
And I would just say to you, for anybody who has spent any time 
in China, you have to understand that China, at least to my 
mind, has some of the best negotiators in the world. So what 
you are seeing is their negotiating position. Of course I would 
suggest that they are not necessarily going to make concessions 
at this stage in the negotiations until there is some 
opportunity for reaching a deal.
    Mr. Sensenbrenner. My time is running out. Let me say that 
given the last meeting in Poznam that lasted from 6 p.m. to 3 
a.m. on Saturday morning, the Third World, led by China, was 
asking for more money. And this is money that the first world 
doesn't have. Our economy is in the tank, so is Europe's. So 
aren't we talking about an academic exercise here, because I 
don't know who is going to vote for a treaty that ends up 
transferring a trillion dollars of U.S. money to China and 
India?
    Ms. Finamore. I think there has been a real sea change 
since Poznam that has been brought about by the new 
administration here.
    Mr. Sensenbrenner. Well, I have a minute left. I am looking 
at submissions that have been made to the UNFCCC by China and 
India last month, in February, which was after the change in 
administration. Maybe the administration has changed its 
negotiating policy, but certainly China and India haven't.
    I think one of the reasons Kyoto failed was because even 
President Clinton, who signed the Kyoto protocol, recognized 
that it was unratifiable and thus never submitted it to the 
Senate for its consideration. I guess my point is to do 
anything in this area, we are going to have to do something 
that is politically feasible as well as accomplishing 
something.
    I heard the comment of shooting for the stars and hitting 
the Moon. I think probably the way we are going now is that 
this rocket will crash 100 kilometers down range because of 
overestimations of what can be accomplished. Remember, you do 
need a two-thirds vote in the Senate. My time has expired.
    The Chairman. The gentleman's time has expired. Although if 
you would like more----
    Mr. Sensenbrenner. No, that is fine.
    The Chairman. The gentleman is a very good lawyer.
    The Chair recognizes the gentleman from Colorado, Mr. 
Salazar.
    Mr. Salazar. Thank you, Mr. Chairman.
    Mr. Helme, you mentioned that you thought the legislation 
moving forward in the House was the way to go. I know many of 
us in the Blue Dog Coalition believe the Senate should move 
before the House when it comes to climate change legislation 
that is moving forward. We certainly believe we would be more 
successful if we could get a bill that would actually pass 
having the votes in the Senate before it moves to the House.
    Mr. Helme. My sense is, given the election results, if you 
asked me this back in September, I would have said right, let's 
do the Senate first because that is our high water mark. I 
think the change has shifted the game. And once we are clear, 
and Mr. Markey has the key subcommittee, and Energy and 
Commerce will be the initial battleground, but once we are 
clear there, we have a good chance of moving a good bill, that 
is well-thought through, through the House in a timely manner.
    I think in the Senate it is a bit more divided. We will 
have to deal more with the gang of 15, the members who are sort 
of swing votes. So I think starting out in the House makes 
sense. It is basically a political calculation. Can we get 
something done that sets a good marker and a good piece out 
there? I thought the Dingell-Boucher bill last year raised a 
lot of key issues. I didn't agree with the target. I thought 
the target was too weak, but a lot of the other stuff was very 
helpful. So you are further along; whereas what happened in the 
Senate was a big battle over the pot of money, and it wasn't 
very constructive. And I think we are in a better position in 
the House to move first, so I think it makes sense.
    Mr. Salazar. I can almost assure you that what comes out of 
the House won't come out of the Senate. That is our biggest 
concern.
    Mr. Lane, if you had to choose one action before all others 
to address global warming, what would that be?
    Mr. Lane. It would be to develop and implement a really 
carefully structured energy research and development program. I 
think that actually Secretary Chu is talking about some of the 
changes that are exactly on target with what is needed, 
especially in the area of basic science and doing some of the 
longer-term more basic scientific research that is necessary to 
produce real cost breakthroughs for the future.
    It is terribly important when we talk about R&D to focus on 
the earlier parts of the research process that are more basic 
and that the private sector will not do under any 
circumstances. Government has to do what only it can do. That 
is the most important thing, in my judgment, for reaching a 
solution.
    Mr. Salazar. Thank you.
    Ms. Finamore, given that China is one of the leading solar 
manufacturers in the world, what do you think we can do to 
encourage them to use more solar instead of building more coal 
fire plants, and are they engineering the coal fire plants so 
that in the future they can be retrofitted to eliminating 
carbon emissions?
    Ms. Finamore. You are right that China is a leader in 
manufacturing and exporting of solar technologies, but it 
hasn't caught on yet domestically. A large part of that is the 
need to strengthen the policies and incentives that are listed 
actually in the renewable energy law that was passed in 2005 to 
implement them, and to also find ways to make sure that these 
renewable energy technologies are connected to the grid. So 
there are policy incentives that need to be strengthened in 
China because it already has the manufacturing capability.
    I would add, it is already the leader in the world in solar 
hot-water heating technology. I think it captures 80 percent of 
the world market. Wind power is growing 150 percent a year. 
Solar has lagged behind, and I think there is a lot more to be 
done in the policy and incentive areas.
    On coal fire plants, number one, all of the plants that are 
coming on line now are what is considered super critical or 
ultra super critical. So they are more efficient to begin with. 
They are actually blowing up the smallest, most highly 
polluting plants, coal-fired plants, so there is a gradual 
improvement in the energy efficiency and the emissions of those 
plants.
    But China is already in the process of building its first 
IGCC plant which is going to be coming online in the next 
couple of years, and they are going to be designing that so the 
carbon can be captured and stored. I think this is another area 
where there is tremendous potential for cooperation between the 
U.S. and China on these two technologies that are in the 
beginning processes in both countries.
    Mr. Salazar. Thank you.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentlelady from South Dakota, Ms. Herseth 
Sandlin.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman.
    If I could just follow-up, Ms. Finamore, on Mr. Salazar's 
question and what you just stated with regard to coal-fired 
facilities in China. I think including developing nations like 
China in any international climate change system is an 
important element and a practical climate change strategy that 
is going to be broadly acceptable to the American people, as 
some of the other questions from the Members on the committee 
have noted. And in your testimony and your response just now to 
Mr. Salazar, you note that China's thermal power expansion has 
been accomplished by replacing older plants with more modern 
plants and that China is pursuing clean coal technologies, 
including integrated gasification combined cycle.
    I represent the State of South Dakota, and South Dakota 
like many States throughout the Great Plains and the southwest 
utilize coal power for a very high percentage of our power, and 
there are some very exciting plans underway, whether it is 
integrating IGCC technology or other clean coal technology in 
the region. And as you also I am sure know, the President has 
spoken favorably of clean coal projects, and I think it is 
clear that from a practical standpoint, that coal-fired power 
generation will play a significant role in the United States 
for years to come. Given that fact and China's interest in more 
efficient coal-fired facilities and in clean coal technologies, 
do you agree that the United States should commit the resources 
needed to be the world's leader in this area?
    Ms. Finamore. Well, I am not an expert on what the United 
States should do, so I would defer to some of my colleagues on 
that.
    Ms. Herseth Sandlin. Let me ask you, do you know 
comparatively in terms of what we have committed here in the 
United States versus what China has committed in terms of 
financial resources to developing these technologies to date?
    Ms. Finamore. No, I don't; but I would be happy to follow 
up with you.
    Ms. Herseth Sandlin. Please do.
    Ms. Finamore. I would also say that I think it is important 
to note that the best way to reduce emissions from coal-fired 
power plants in China is to improve the energy efficiency. 
Studies have shown that China can cut its growth in energy 
demands by half just through becoming more efficient in its 
industrial technology and its buildings. Half of new building 
construction in the world is going on in China. So that has to 
be the first focus; and that is indeed China's primary climate 
change initiative.
    Ms. Herseth Sandlin. Perhaps you can get us the statistics 
on how many financial resources China has devoted to energy 
efficiency, and we can compare that to what we have done here 
in the U.S., including what was recently included in the 
economic recovery plan.
    Ms. Finamore. I would be happy to.
    Mr. Helme. Also, China has been a participant and committed 
some financing to the Future Gen Project which was shelved, but 
I guess it has been resuscitated by the stimulus bill. They are 
also committing financing to the Europeans. Both the U.K. and 
the European Union have committed to building a demonstration 
plant in China, and China will contribute to that. And in the 
MIMM negotiations, the NDRC have basically said we are ready to 
put the equivalent of the supercritical kind of coal plant that 
Barbara was talking about. We will pay that part; but what we 
are looking for is could the U.S. give a tax credit to GE, to 
the vendor, to help write down the cost? It is 30 percent more 
expensive, just like it is here, and they would like to have 
that help on the technology to jointly work together. So there 
is a lot of interest in this, but they haven't done as much 
because it is higher cost, as it is here.
    Ms. Herseth Sandlin. Thank you, that is very helpful. That 
is the only question I have.
    The Chairman. We are going to a second round so if members 
have any additional questions, I will be able to recognize them 
for that purpose.
    I am going to recognize myself right now for a question, 
and that will be for any of you to raise the issue of India for 
us briefly. If any of you would like to add that to the 
discussion, China is obviously, you know, the issue of the day, 
but India is moving rapidly as well. Would one of you like to 
address that issue?
    Mr. Helme. I think in the negotiations, as I said sort of 
in response to Mr. Sensenbrenner's question, I think India is 
the outlier. They have been the most hard-line on the rhetoric 
about we have to have equal per capita emissions. They have 
been very hard-line on the financing and hard-line on not 
supporting unilateral actions.
    You notice I talked about countries are doing things and 
not being paid for it. To date, India has done very little that 
was not paid for in the CDM. If you look at the spectrum of the 
debate, India is at the far right, along with the Saudis. And 
we can expect a pattern like we saw in the mercury negotiations 
where China moved, India was embarrassed, and India had to sort 
of follow behind China. India is the toughest nut to crack.
    We do some work in India. Our perception is Indian industry 
is quite progressive on these issues, particularly in key 
sectors, cement, steel and so on. They are pushing the envelope 
in terms of improving intensity and efficiency. The difficulty 
is getting the government to come around. I would put them in a 
special category in terms of where we stand.
    The Chairman. Let's talk a little bit about the 
implementation problems in these developing countries. There 
are impressive renewable energy targets in India, Brazil, 
Mexico, but give me your honest views as to the implementation 
probability in each of these countries. That would be very 
helpful to us. Ms. Finamore.
    Ms. Finamore. I think you have hit upon the key problem in 
China. And responding to what some of the members asked 
earlier, I believe there is tremendous political will at the 
national level to achieve its renewable energy targets and 
energy efficiency targets.
    The problem where they fall down is in implementation at 
the local level, provincial government leaders, heads of the 
major enterprises or factories. What I am very heartened to see 
is movement in this direction as well, although much needs to 
be done. And I think one of the most effective mechanisms that 
the government has just put into place is a system whereby the 
job promotions and actually ability to keep the jobs of the 
provincial governors is going to depend in part upon how well 
they meet these ambitious renewable energy, energy efficiency 
and emission reduction goals. I have found that single 
initiative has done more to concentrate the minds of the 
provincial leaders who are responsible.
    The Chairman. So are you saying in Beijing they tell the 
provincial governors, you are going to be in or out of a job 
based upon your implementation of renewable energy and 
efficiency targets?
    Ms. Finamore. In fact, yes. That is not the only factor 
that is going to be considered.
    The Chairman. That would be the most important factor, 
though.
    Ms. Finamore. Absolutely. But until recently, their job 
security was only based upon how well they grew their local 
GDP. Because they have a different political system, we could 
not do this in the United States, but they have an integrated 
political system where provincial governors do in fact report 
to the central government. So the government has the ability to 
do so. It has made a huge difference.
    The Chairman. We understand how Tammany Hall politics work. 
It didn't end that long ago in Boston. We understand how the 
local bosses, if they don't get the job done, might not hold 
onto their jobs. Do you think that is something that is likely 
to be enforced?
    Ms. Finamore. Yes. When the rubber meets the road, it will 
be at the end of 2010. At the end of this current 5-year plan. 
That is when the numbers have to come in. There will be some 
scapegoats whose heads will roll. However, the concern I have 
is that the provincial governors are responsible.
    The Chairman. Metaphorically, we hope.
    Ms. Finamore. Not always.
    Mr. Roberts. Mr. Chairman, I would like to refer to page 11 
in my written testimony which I hope is going to be included in 
the record.
    The Chairman. It will be, yes.
    Mr. Roberts. It lists the progress that various countries 
have made against renewable energy targets. It is an impressive 
track record. It gives you the indication that they are 
actually making progress.
    I wanted to also comment on, while we are talking about 
Governors and States, I don't know if any members of this 
committee attended the Governors Conference in L.A. that 
Governor Schwarzenegger held this past fall, but the ownership 
that Governors in States in the Amazon and Indonesia and China 
and elsewhere are taking of this issue, and the leadership that 
they want to demonstrate to the people who vote them into 
office is quite clear and impressive, and particularly their 
desire to join as part of global agreements and bring 
technology and solutions to bear to local populations.
    The Chairman. You are saying this might be a tale of two 
countries. In Brazil, we might be better off with the 
provincial governors running the program, whereas in China we 
might be better off with the central government running it 
rather than the provincial governors. So it all depends upon 
where the most committed public officials are within the 
Nation's structure. But at the end of the day, we don't care 
what their governmental structure is as long as there is a 
measurable improvement in their production of renewables and 
their energy efficiency.
    Mr. Lane, I am going to give you 1 minute to answer and 
then I am going to turn to Mr. Cleaver. Then I will come back 
and follow-up on my questions.
    Mr. Lane.
    Mr. Lane. My impression is that the provincial communist 
parties are actually a very important force in the central 
government, and we shouldn't I think look upon the Chinese 
Government as an entirely top-down enterprise in which the 
provincial governments are operating at the behest of the 
central government. That is why some of the 5-year plan targets 
in the past about restraining heavy industry's growth have not 
been implemented, because the provincial governments have 
simply overruled the central government.
    The Chairman. Thank you, Mr. Lane.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Helme, you made the comment, and Mr. Roberts as well, 
there were steps needed before Copenhagen, and that is down the 
road. But inevitably there is going to be a lot of talk here 
about how we cap emissions and there are all kinds of opinions 
on that. The Ranking Member mentioned, as he often does, cap 
and tax. I am intrigued by a concept that I have not heard a 
lot about, and it is cap and dividend. Are any of you familiar 
with this system? I would like your reaction to it if you are 
familiar with it.
    Mr. Helme. I think this goes to the heart of Mr. Obama's 
budget proposal of last week where he is basically saying we 
will auction all of the allowances and then we will recycle 
that revenue in the form of paying for the middle-income tax 
cut, perhaps assisting people in terms of paying their electric 
bills and that kind of thing. That is the heart of it. It is 
very intriguing because you look at it from an economic 
standpoint, the way to reduce the overall cost of climate 
regulation, the best way is to recycle money and use it as tax-
shifting, eliminate more distortionary taxes. It could cut the 
cost by 50 percent so we get more environmental bang for our 
buck by doing a portion of that. That is what we are talking 
about, the idea of putting it back through the Tax Code and 
taking it out.
    Obviously, we have some other needs. We have some key 
energy technologies we want to see developed and so on. The 
administration is starting by saying that is where they would 
like to go, a small piece is for technology and small piece is 
for the poor, which is important. It is an opening bid. I think 
the idea is a very intriguing one and one that makes it 
possible to do more in terms of climate target for less, which 
of course we want to do in today's economic context.
    Mr. Cleaver. Essentially, we will be giving permits to 
pollute, and there are those who would say when those permits 
to pollute are granted, that many businesses will just consider 
that the cost of doing business, and that we don't inhibit or 
prohibit their ability to emit greenhouse gases because they 
just pay for it and continue. Do you think that is realistic? 
Maybe the tough economic times today would also have an impact 
on businesses where they would be a little hesitant about 
creating another cost of doing business.
    Mr. Helme. Remember this auction idea, you are basically 
setting a cap which requires--in his case he is saying 14 
percent reduction below 2005 levels, the President's proposal. 
So we are going to cap the total pollution that is allowed, and 
we are only going to sell permits up to that level of cap. So 
we are going to get a significant emission reduction. We are 
not going to let them buy as many as they want and then pollute 
to their heart's delight. We are basically saying we are 
setting that cap. Wherever you set the cap determines the 
environmental results. I think it has both in it.
    Mr. Cleaver. Thank you, Mr. Chairman.
    The Chairman. The Chair recognizes the gentleman from 
Washington State, Mr. Inslee.
    Mr. Inslee. Hello, thank you.
    I am sorry I have just been able to join you and you may 
have talked about this, but I would like your thoughts on what 
we should ask China on either a bilateral or multilateral 
agreement. So, should we address a bilateral agreement with 
China; and second, whether it is bilateral or multilateral, 
what is a realistic request of China? Is it an intensity number 
of CO2 in their economy? Is it an investment number? 
Is it a cafe number? Is it a combination of those things? I 
would appreciate any and all of your thoughts on those 
subjects.
    Mr. Helme. My sense is that China, in their climate plan of 
April last year, laid out reductions they would achieve in 
various sectors. I think they are very focused on sector-based 
rather than national targets. So we will do this in cement, 
this in steel, this in electricity, and this in oil refining. I 
think that is what we should look for.
    What China talks about all of the time is doing this via 
technology. So in a 5-year plan, they have said to us you want 
us to make reductions in cement; we can do so many pounds of 
carbon per ton of cement, but we would rather say in 2020, 80 
percent of our plants will have waste-heat recirculation, 70 
percent will blend the cement with waste slag and that sort of 
thing, and 40 percent will do these other things.
    So putting this in terms of technology is what China really 
understands and relates to. Their negotiator said to me, 
setting that emission target, if there is a lot of growth, we 
will have a lot of plants and the intensity will improve. If 
the economy tanks, like it is doing now, we will build less new 
plants and we will do worse in terms of the intensity target. 
So we are not sure we can get to that emission number, but we 
can confidently say to you that we can do this much of this 
technology, or its equivalent, and this much of that 
technology.
    The discussion with China has to be how big; is it 
substantial and material in terms of total reduction? But in 
the specifics of help with technologies, you look at their 
submissions and their talk in the debate. That is where they 
are focused. They see this as the piece that is missing. The 
CDM doesn't help them build new, innovative technology. It just 
pays for today's technology. And that next round, as Barbara 
was saying, is what improves their efficiency and makes them 
more competitive.
    Ms. Finamore. I do agree with that, and I would like to add 
two more points. One is that there is a tremendous amount of 
mistrust that has grown up between the two countries over the 
years on this issue. I believe there is a lot that can be done 
outside--both within and outside the context of the 
international climate negotiations to help prepare for 
Copenhagen--between the U.S. and China, which together account 
for 40 percent of all CO2 emissions in the world. So 
we have developed a set of recommendations for how to 
strengthen the U.S.-China climate engagement, and that includes 
both suggestions for how the two countries should focus their 
bilateral discussions to come up with common ground on some of 
the key sticking points in the international climate 
negotiations such as the financial mechanisms and the 
technology transfers.
    But I also suggest, and this is I think very much in line 
with Secretary Clinton's statements on her trip to Beijing 
recently, which is there is tremendous opportunity here for 
bilateral cooperation on clean energy in particular, and this 
has two effects. One is that it can help to reduce the amount 
of mistrust that has built up. I think it can provide economic 
benefits for both countries.
    Most importantly, no matter what agreement is reached at 
Copenhagen, you are going to have this implementation problem 
in China and other developing countries, and whatever bilateral 
efforts that you jump-start right now are going to help jump-
start the implementation process. I believe there is a lot that 
can be done at a very low cost to the United States in helping 
to provide technical assistance to China, and that is the key 
area that should be explored now.
    Mr. Inslee. Mr. Roberts and Mr. Lane, I will take your 
answers in writing. I have limited time here.
    Should there be an international research and development 
coalition or entity that is funded by the countries of the 
world? Should there be one unified, which will not be the 
exclusive place for R&D, but should there be one institute that 
we all contribute to to generate new technologies in this 
regard? Mr. Roberts and Mr. Lane, if you have thoughts on that?
    Mr. Lane. Yes.
    Mr. Roberts. Not necessarily. I believe that there needs to 
be some mechanisms for developing new technologies. Does there 
need to be one institute that drives that? I am not so sure. I 
believe what we have seen in bilateral negotiations between 
countries are a wealth of possibilities for cooperation between 
the U.S. and China, U.S. and India, and U.S. and Brazil. Does 
all of that need to be centralized? I am not sure. We need to 
reach economies of scale and ensure the fastest possible 
transfer of technology so we are not all trying to reinvent the 
same wheel at the same time.
    Mr. Lane. I just wanted to say as I interrupted your 
question, sir, you were not indeed saying the opposite, that it 
didn't have to be the only vehicle, but there should be one.
    Mr. Inslee. Senator Voinovich asked Tony Blair this 
question the other day. To me there is a certain maybe romantic 
attraction to this idea that we are going to have some joint 
global R&D program, and maybe it is only 1 percent of our 
entire national R&D budget, but to me there is a certain charm 
of the entire world uniting in an R&D project, even if it is 
only a small portion of our global research budget. It is just 
one Congressman speaking.
    Mr. Roberts. There is no question from our perspective that 
the more the world can come together and bring technology and 
finance to bear on these issues in a focused way, the better. 
So there will be opportunities, in fact an imperative, for us 
to take the cooperative, consolidated approach. And it will 
mean creating some new global institutions along the lines of 
what you described.
    Mr. Inslee. When you think how we eradicated smallpox, 
these were global, unified efforts. And they were not 
exclusive, but they were unified.
    Thank you.
    The Chairman. If I could follow up on Mr. Inslee's question 
and go to you, Ms. Finamore, China just passed a new stimulus 
package.
    Ms. Finamore. Yes.
    The Chairman. Could you tell us a little bit about how much 
money they put into energy environments and how much they put 
into research? Because all of these global stimulus packages 
are constructed differently, but it would be interesting for us 
to understand what China did in this one particular field.
    Ms. Finamore. I would be happy to.
    Last November China announced a stimulus package equaling 4 
trillion renminbi which is equivalent to almost $600 billion 
U.S. It is a 2-year program and spreads out over ten sectors. 
There is a big discussion this week, it is the annual meeting 
of the National People's Congress and there is a big debate 
whether or not it should be expanded. So we could be hearing 
from the Premier on Thursday when he announces the National 
People's Congress, he may expand the stimulus package.
    Almost all of this 4 trillion renminbi is for 
infrastructure construction, particularly railways. As opposed 
to developing its highway system, which also gets a lot of 
funds but not that much, it is good for mass transit purposes 
for reducing emissions from transportation. There is some 
concern that it is going to require greater manufacturing of 
steel and concrete to build out the railway system; 350 billion 
renminbi, or $50 billion, is earmarked for energy efficiency 
and environmental protection projects specifically. But I would 
argue that there is an opportunity here for China to spend a 
lot of the remaining parts of the stimulus package in a way 
that is going to promote sustainable development and reduce 
emissions. In particular, a lot of the money, 1 trillion 
renminbi is going to go.
    The Chairman. How much is that, again?
    Ms. Finamore. To get dollars divide by 7, will go towards 
rehabilitating the areas devastated by the earthquake; in other 
words, building. If China puts environmental criteria on this 
building, it could go a long way in reducing emissions.
    The Chairman. Mr. Roberts.
    Mr. Roberts. Recently a report issued by HSBC Global 
Research compared stimulus packages across many countries and 
looked at what percentage of the overall stimulus package was 
devoted to a low-carbon economy. While it praised the United 
States for their efforts toward a green economy, it evaluated 
our package and determined that about 12 percent is going to a 
low-carbon economy. And by contrast, about 38 percent of the 
Chinese stimulus package, by the same definition, is going 
toward a low-carbon economy. So it is much more oriented toward 
the things we are talking about.
    The Chairman. So you are saying 12 percent of $800 billion 
is going to a low-carbon economy, but 37 percent of $600 
billion is going to a low-carbon economy?
    Mr. Roberts. According to the HSBC Global Research study, 
which is a global bank. It is a consumer bank out of London, 
and it has taken a keen interest in these issues because it is 
a consumer-based bank with branches throughout China and Europe 
and the world.
    The Chairman. There is a measure of energy efficiency in 
China that caught my attention. It is the top 1,000 program. 
Could any of you elaborate on that program, how it works and 
how effective it is?
    Mr. Helme. I think that was the same one that Ms. Finamore 
was referring to in her testimony, the energy efficiency 
program. My recollection of the data is they wanted 4 percent a 
year, and in the first year they got 1.2; but in the last 2 
years, 2007 and 2008, we were close. We were just under 4 in 
2007 and over 4 in 2008, so well on track. As Barbara 
indicated, it is 300 million tons a year which is very 
significant.
    Ms. Finamore. Just as Mr. Helme said that we can reach a 
global climate initiative by focusing on just five or six 
developing countries, China has found that it can go a long way 
towards achieving its ambitious energy efficiency goals by 
focusing on just 1,000 factories, and that's what this top 
1,000 factory program is. Together this 1,000 enterprises 
constitutes 33 percent, one-third of national energy 
consumption, and nearly half of all of its industrial energy 
consumption. They have targeted these plants and required every 
one of them to do an energy audit, hire energy managers. There 
are quotas, and they are apparently on track to achieve their 
quotas for each one of these 1,000 facilities.
    The Chairman. Let's move to Mexico. We heard the testimony 
here that they want to cut their emissions in half by 2050. 
Some people might doubt the effectiveness of the Mexican 
Government, given what is going on with the drug cartels down 
there, and that will be the first issue that the people raise. 
What is the capacity for the Government of Mexico to implement 
such a bold plan? Do any of you want to speak to that issue? 
Mr. Helme.
    Mr. Helme. Mexico is the thing I cited in terms of the 
details. The minus 50 is their aspirational goal. The President 
has put that in. They are going to release their national 
climate strategy in the next month or so. And as part of that, 
they will have specific goals for specific sectors. I cited the 
four sectors--cement, steel, oil refining and electricity. 
Importantly, we have looked at those sectors. Steel and cement 
are fairly efficient, more efficient than U.S. production, for 
example. The two other sectors, electricity and oil refining, 
are national companies, if you will. They are nationalized. 
They are incredibly inefficient. Oil refining, PMEX, is the 
worst scored refinery in the world, compared to any of the 
other world oil refining companies.
    But the good news is these are nationally run agencies, so 
we have a good chance, I think, with the government being able 
to take this on. And President Calderon is very knowledgeable. 
He was the Energy Secretary before he became President. He 
knows these agencies inside out. He has brought them in and got 
a commitment from both of them to play and step up and do some 
things.
    There are some huge opportunities. For example, there are 
3,000 megawatts of cogeneration right there on the table today 
at these oil refineries and chemical plants they could do 
tomorrow. They haven't been able to do it because Mexican law 
basically says CFE, the utility, decides what they pay--like we 
all used to do before you all passed the energy reform in 
1992--decides what they pay. And of course they pay nothing and 
so nobody builds a cogeneration.
    So these things can be turned around. They are not costly. 
That is my point for Mr. Sensenbrenner. This is not buckets of 
money. This is simple loans to get them over the top to 
capitalize this thing. So you are right, there are some real 
issues there. But I think there is a deep commitment at the 
President's level, and he has the legal authority. He doesn't 
have to pass a new law. He has authority to move forward with 
these efforts.
    The Chairman. My time has expired. I would like to give Mr. 
Cleaver and Mr. Inslee time for additional questions if they 
are interested.
    Mr. Inslee. No, thank you.
    The Chairman. Mr. Roberts, did you have a point on Mexico?
    Mr. Roberts. I have been to Mexico seven times this past 
year, and I would agree with the assessment that President 
Calderon is serious about climate change. Mario Molina, the 
Nobel Prize winning scientist, is adviser on these issues.
    The Chairman. From Lexington, Massachusetts, in my 
district. That is great.
    Mr. Roberts. Mario Molina.
    The Chairman. That is great.
    Mr. Roberts. And the business leaders in Mexico, most of 
the business leaders in Mexico are quite committed to this and 
moving their industries in the right direction. I think there 
is a real opportunity in Mexico.
    You raise that the President has his hands full in 
addressing the drug cartels in Mexico, but at the same time 
among the leaders of the world, I have seen him make a stronger 
commitment to this than most.
    The Chairman. Remember that scene in Annie Hall where Woody 
Allen was listening to somebody critique a movie and Marshall 
McLuhan turns around to comment. Well, I had a session like 
that in my district in 1995 with 1,500 people. And I had it in 
Lexington, to critique all of the analysis of ozone depletion 
and all of that. And then this other man went over to the 
microphone and said, ``Well, you know, I won the Nobel Prize on 
that subject.'' That is what can happen in Lexington when you 
are having a discussion on issues of this nature.
    Let me give each of you then 1 minute to summarize what it 
is that you want us to remember as we are going forward in 
terms of these developing countries and what are reasonable 
expectations for our country and the world, both in 2009 and 
the years ahead, because I think that is going to be the way in 
which this debate gets framed. It will be in that long-term 
economic context of where the burdens are and how they are 
going to be shared.
    So why don't we go in reverse order? We will begin with 
you, Mr. Helme.
    Mr. Helme. This may not be a popular answer, but I think, 
Chairman, the key issue here in the negotiations is the 
financing. It is a tough sell here in the Congress, but I think 
it is, in terms of our good faith--as I said, there are two 
tests of the U.S.; one is do we have a real target and is it 
strong? I think we can deliver on that side. And can we step up 
and show we are willing to help?
    The developing countries feel that the 1992 Rio Treaty and 
the 1997 Kyoto protocol both said Annex 1 will pay incremental 
costs. They will contribute to this, this and this, and the 
track record has been dismal and very little to show. Obviously 
we are in tough economic times here, but I think we need to 
think of targeted ways where we can show good faith and move 
this ball forward.
    I think China is ready to act. Mexico, Korea, Brazil, they 
are ready. India is in a different category. The others are 
serious. China will step up and outdo us if we show good faith. 
I don't think that it is about billions, it is about good faith 
in saying we will help you with technology and help you with 
capacity building, as my colleagues have said. I think that is 
the bottom line.
    The Chairman. Thank you, Mr. Helme.
    Mr. Lane.
    Mr. Lane. Mr. Markey, I guess I would say that the sign of 
commitment on the climate issue is really a willingness to 
impose a price on carbon emissions. I would be inclined to use 
that as the standard for assessing whether developing countries 
and developed countries are actually serious about reducing 
their greenhouse gas emissions. Are there comparable prices 
being put on greenhouse gas emissions? I don't think it 
necessarily has to be a high price to begin with, but I think 
we need to keep an eye on the relative prices and to make sure 
that ours don't get out of line with the rest of the world.
    I guess the only other point I would add to that is it 
seems to me that this is likely to be an iterative procedure. 
We need to continue to monitor this and adjust our behavior to 
make sure that it stays in line with the behavior of our major 
trading partners.
    The Chairman. Using your measurement of serious, would you 
say that the price that is being set in the European Community 
right now is serious?
    Mr. Lane. Yes, I would. I would point out that their price 
applies to only a relatively small percentage of their total 
greenhouse gas emissions, though. It is important to keep in 
mind what emissions are covered and how much of a country's 
total emissions are actually being covered by the control 
system.
    The Chairman. But they are serious about the proportions 
that they are covering?
    Mr. Lane. I believe, yes. Anything that gets us started 
toward having a price on emissions, I think is a step in the 
right direction and a good point for further negotiations.
    The Chairman. Thank you, Mr. Lane.
    Mr. Roberts.
    Mr. Roberts. There is no substitute here at home for 
putting a price on carbon. All of the things that we are 
talking about will not go to scale. The investments won't 
happen without putting a price on carbon. At the same time, we 
can't expect every other country to make the same kind of 
commitment that we make. It has clearly been established that 
there will be differential commitments that reflect different 
countries' political contexts.
    My final comments would be we need global reductions to 
solve the problems we have here at home. The smart money is not 
to spend all of our money here in the U.S., but to provide 
financing and technology to achieve low-cost solutions 
elsewhere in the world, because a ton in China and a ton in 
Mexico affects us just as much as a ton created here in the 
U.S.
    So I believe a smart provision of financing, not just to 
clean technologies but also to adaptation through instruments 
like the Global Environmental Fund, are essential to address 
the problem. And I believe that we need to create partnerships 
with other countries through bilateral negotiations and through 
Copenhagen to make this happen.
    The Chairman. Thank you, Mr. Roberts, very much.
    Ms. Finamore.
    Ms. Finamore. I would once again like to urge the committee 
to look beneath the negotiating posture of China to the 
tremendous progress that has already been made and the 
tremendous areas of common ground that exist between the two 
countries in order to break through the stalemate that has 
existed for so many years on climate issues.
    A lot of the work that can be done should be going on now 
with bilateral dialogues. Some of the efforts going on now are 
to bring together legislatures from the U.S. and China to talk 
about these issues. Whenever we go to China--my executive 
director is there right now--we get questions about what is the 
U.S. thinking. There is not a lot of understanding about what 
is happening with this new administration, but a tremendous 
amount of interest.
    I would also say that the bilateral work that needs to be 
done has already begun. In fact NRDC has been working for over 
13 years in bringing together experts from both the U.S. 
Government and California and other leading States in the U.S. 
on these kind of technology transfer technical assistance 
programs, so this can form the backbone of an expanded effort.
    Just last week, for example, we brought the new acting 
chairman of the Federal Electricity Regulatory Commission to 
China to speak at a major energy efficiency conference that we 
sponsored, and we got the new Secretary of Energy to 
participate by video. We look forward to working with you as we 
move forward on these issues.
    The Chairman. Thank you, Ms. Finamore, very much and thank 
you for traveling from Beijing to deliver your testimony today. 
There is no evidence of any jet lag in your performance here 
today, and we thank you for that.
    So there is good news of a sort. We have learned that 
China's goal by the end of this year is to be the leading 
exporter of renewable energy technology in the world. That is 
good news; and, of course, it is bad news because that should 
be something that we are touting in the United States. Brazil 
has established a goal of reducing deforestation by 70 percent, 
and we have heard the litany.
    But at the end of the day, as our witnesses have told us, 
to construct a global treaty, we are going to need measurable 
goals that are accepted by all of the developing countries in 
the world as well. That must be articulated in partnership with 
the developed nations and the United States in order to achieve 
this goal must be a leader, not a laggard, when it reaches 
Copenhagen.
    That is the goal the Congress has set for itself this year, 
to develop legislation that will allow the President to go to 
that negotiation as a credible negotiating partner with the 
other nations in the world.
    We thank each of you for your testimony.
    With that, this hearing is adjourned.
    [Whereupon, at 11:20 a.m., the committee was adjourned.]

    [GRAPHIC] [TIFF OMITTED] T2186A.062
    
    [GRAPHIC] [TIFF OMITTED] T2186A.063
    
    [GRAPHIC] [TIFF OMITTED] T2186A.064
    
    [GRAPHIC] [TIFF OMITTED] T2186A.065
    
    [GRAPHIC] [TIFF OMITTED] T2186A.066
    
    [GRAPHIC] [TIFF OMITTED] T2186A.067
    
    [GRAPHIC] [TIFF OMITTED] T2186A.068
    
    [GRAPHIC] [TIFF OMITTED] T2186A.069
    
    [GRAPHIC] [TIFF OMITTED] T2186A.070
    
    [GRAPHIC] [TIFF OMITTED] T2186A.071
    
    [GRAPHIC] [TIFF OMITTED] T2186A.072
    
    [GRAPHIC] [TIFF OMITTED] T2186A.073
    
    [GRAPHIC] [TIFF OMITTED] T2186A.074
    
    [GRAPHIC] [TIFF OMITTED] T2186A.075
    
    [GRAPHIC] [TIFF OMITTED] T2186A.076
    
    [GRAPHIC] [TIFF OMITTED] T2186A.077
    
    [GRAPHIC] [TIFF OMITTED] T2186A.078
    
    [GRAPHIC] [TIFF OMITTED] T2186A.079
    
    [GRAPHIC] [TIFF OMITTED] T2186A.080
    
    [GRAPHIC] [TIFF OMITTED] T2186A.081
    
    [GRAPHIC] [TIFF OMITTED] T2186A.082
    
    [GRAPHIC] [TIFF OMITTED] T2186A.083
    
    [GRAPHIC] [TIFF OMITTED] T2186A.084
    
    [GRAPHIC] [TIFF OMITTED] T2186A.085
    
    [GRAPHIC] [TIFF OMITTED] T2186A.086
    
    [GRAPHIC] [TIFF OMITTED] T2186A.087
    
    [GRAPHIC] [TIFF OMITTED] T2186A.088
    
    [GRAPHIC] [TIFF OMITTED] T2186A.089
    
    [GRAPHIC] [TIFF OMITTED] T2186A.090
    
    [GRAPHIC] [TIFF OMITTED] T2186A.091
    
    [GRAPHIC] [TIFF OMITTED] T2186A.092
    
    [GRAPHIC] [TIFF OMITTED] T2186A.093
    
    [GRAPHIC] [TIFF OMITTED] T2186A.094
    
    [GRAPHIC] [TIFF OMITTED] T2186A.095
    
    [GRAPHIC] [TIFF OMITTED] T2186A.096
    
    [GRAPHIC] [TIFF OMITTED] T2186A.097
    
    [GRAPHIC] [TIFF OMITTED] T2186A.098
    
    [GRAPHIC] [TIFF OMITTED] T2186A.099
    
    [GRAPHIC] [TIFF OMITTED] T2186A.100
    
    [GRAPHIC] [TIFF OMITTED] T2186A.101
    
    [GRAPHIC] [TIFF OMITTED] T2186A.102
    
    [GRAPHIC] [TIFF OMITTED] T2186A.103
    
    [GRAPHIC] [TIFF OMITTED] T2186A.104
    
    [GRAPHIC] [TIFF OMITTED] T2186A.105
    
    [GRAPHIC] [TIFF OMITTED] T2186A.106
    
    [GRAPHIC] [TIFF OMITTED] T2186A.107
    
    [GRAPHIC] [TIFF OMITTED] T2186A.108
    
    [GRAPHIC] [TIFF OMITTED] T2186A.109
    
    [GRAPHIC] [TIFF OMITTED] T2186A.110
    
    [GRAPHIC] [TIFF OMITTED] T2186A.111
    
    [GRAPHIC] [TIFF OMITTED] T2186A.112
    
    [GRAPHIC] [TIFF OMITTED] T2186A.113
    
    [GRAPHIC] [TIFF OMITTED] T2186A.114
    
    [GRAPHIC] [TIFF OMITTED] T2186A.115
    
    [GRAPHIC] [TIFF OMITTED] T2186A.116
    
    [GRAPHIC] [TIFF OMITTED] T2186A.117
    
    [GRAPHIC] [TIFF OMITTED] T2186A.118
    
    [GRAPHIC] [TIFF OMITTED] T2186A.119
    
    [GRAPHIC] [TIFF OMITTED] T2186A.120
    
    [GRAPHIC] [TIFF OMITTED] T2186A.121
    
    [GRAPHIC] [TIFF OMITTED] T2186A.122
    
    [GRAPHIC] [TIFF OMITTED] T2186A.123
    
    [GRAPHIC] [TIFF OMITTED] T2186A.124
    
    [GRAPHIC] [TIFF OMITTED] T2186A.125
    
    [GRAPHIC] [TIFF OMITTED] T2186A.126
    
    [GRAPHIC] [TIFF OMITTED] T2186A.127
    
    [GRAPHIC] [TIFF OMITTED] T2186A.128
    
    [GRAPHIC] [TIFF OMITTED] T2186A.129
    
    [GRAPHIC] [TIFF OMITTED] T2186A.130
    
    [GRAPHIC] [TIFF OMITTED] T2186A.131
    
    [GRAPHIC] [TIFF OMITTED] T2186A.132
    
    [GRAPHIC] [TIFF OMITTED] T2186A.133
    
