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


 
             ROADMAP TO COPENHAGEN: DRIVING TOWARD SUCCESS

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

                                HEARING

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 10, 2009

                               __________

                            Serial No. 111-9


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

                        globalwarming.house.gov



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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

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

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Bart Forsyth, 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. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     6
Hon. Shelley Capito, a Representative in Congress from the State 
  of West Virginia, opening statement............................     7
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     7
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     8
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................     8

                               Witnesses

Todd Stern, U.S. Special Envoy for Climate Change, U.S. 
  Department of State............................................     9
    Prepared statement...........................................    12
    Answers to submitted questions...............................    31


             ROADMAP TO COPENHAGEN: DRIVING TOWARD SUCCESS

                              ----------                              


                      THURSDAY, SEPTEMBER 10, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:39 a.m. in Room 
2175, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman of the Committee) presiding.
    Present: Representatives Markey, Blumenauer, Inslee, 
Cleave, Sensenbrenner, Blackburn, and Capito.
    Staff present: Ana Unruh Cohen and Camilla Bausch.
    The Chairman. Welcome to the Select Committee on Energy 
Independence and Global Warming. For those of you who have 
spent any time in the water this summer, you may have noticed 
that it was warmer than usual. On the east coast, typically 
chilly Maine beaches felt more like those usually found in 
Maryland, which were in turn feeling more like Florida. 
Worldwide ocean temperatures in July were the hottest recorded 
in the last 130 years.
    While this might benefit your beach weekend now, it is the 
latest reminder of the serious consequences of global warming. 
As the oceans warm and become more acidic due to increasing 
absorption of carbon dioxide, coral reefs and other critical 
components of the ocean ecosystem are put at risk, threatening 
food supplies for a significant portion of the world.
    Global warming is a global problem, in need of a global 
solution. The next opportunity to find that global solution is 
coming quickly. In December, the nations of the world will 
gather in Copenhagen, intent on finalizing an international 
climate agreement that will protect people and the planet and 
unleash a clean energy revolution.
    Todd Stern, the United States Special Envoy for Climate 
Change, is with us today to report on the progress made thus 
far and the challenges that remain to reaching an agreement in 
Copenhagen.
    Since the start of the Select Committee on Energy 
Independence and Global Warming, I have maintained that the 
most effective way of advancing the negotiations of the next 
international climate change agreement would be for the United 
States to show leadership by committing to mandatory domestic 
reductions of heat-trapping pollution.
    In June the House of Representatives took the first step by 
passing the Waxman-Markey American Clean Energy and Security 
Act. To the rest of the world, House passage of this bill 
signaled America's growing commitment to preventing climate 
change and building a global clean energy economy. It helped 
leaders at the G8 and the Major Economies Forum held in Italy 
this July reach agreement on important points, including the 
need for emissions to peak as soon as possible, commitments to 
prepare low carbon growth plans, and a pledge by developing 
countries to take actions that would meaningfully reduce their 
emissions from their current trajectories.
    I look forward to working with my Senate colleagues so that 
we can send the strongest possible signal from the United 
States Congress to the negotiations in Copenhagen.
    Sending clean energy legislation that reduces global 
warming pollution to President Obama is not just important for 
international diplomacy, it is critical to our national 
interest. The great race of the 21st century will be to provide 
affordable clean energy to the world. Whether countries are 
trying to revitalize flagging economies or pull their people 
out of poverty, they are turning to clean energy technology. In 
a race that the United States once had a clear lead, we are now 
falling behind. The Europeans, Japanese, and increasingly the 
Chinese are using their domestic policies to drive the 
development of clean energy industries and stake their claims 
to the burgeoning global clean energy economy. If we want to be 
globally competitive, we must do the same.
    The United States' effort to reverse the trend began with 
the 2007 energy bill's increase in fuel economy standards and 
commitment to renewable fuels. It accelerated with the $80 
billion investment in clean energy infrastructure and 
technology in this year's Recovery Act. It will culminate with 
a comprehensive clean energy law like the Waxman-Markey 
legislation that passed the House this summer.
    The world is watching the United States. We should be 
responding to that concern the world has. It is time to reclaim 
our technical leadership on clean energy, our economic 
leadership in the next great global jobs race and our moral 
leadership to protect the planet. I am confident that this is 
the foundation upon which a new global climate agreement, one 
that includes all countries doing their fair share, will be 
built.
    [The information follows:]

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    The Chairman. I would now like to turn and recognize the 
Ranking Member, the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    Mr. Sensenbrenner. Well, I certainly thank the Chairman 
from Massachusetts for recognizing me. What I would like to 
tell him is that in the Upper Midwest we had a very cool and 
dry summer. I live on a lake during the summer, and had you 
come and visited me I could have posted a picture of the screen 
of you jumping in my lake and turning blue. So I appreciate the 
world view that the gentleman from Massachusetts has got; but, 
remember, the Upper Midwest of the United States of America is 
part of the world as well.
    I would like to join Chairman Markey in welcoming Todd 
Stern, the U.S. Special Envoy for Climate Change, to this 
hearing. We have 87 calendar days and 16 official negotiating 
days before the Copenhagen conference on December 7th, when 
delegates hope to replace the flawed Kyoto Protocol. And where 
are we on the road to Copenhagen? Are we working towards 
success or are we working, as I fear, toward a repeat of the 
Kyoto experience?
    After 26 days of negotiations at three meetings this year 
in Bonn we are, in my opinion, a long ways from success. There 
are two parallel negotiations underway, one under the 
convention where the U.S. participates and the other under the 
Kyoto Protocol where the U.S. is an observer.
    The upcoming 2-week negotiating session in Bangkok will 
start with well over 400 pages of text to consider. This 
compares with a little over 100 pages of text at a similar time 
in the 1997 Kyoto negotiations. In addition to having to wade 
through lengthy and complex negotiating text, there are 
irreconcilable differences in the positions of developed and 
developing countries on a number of thorny issues, particularly 
on funding, technology, and midterm mitigation targets. 
Developing countries are demanding that developed countries 
contribute up to 1 percent of their gross domestic product in 
developing countries for climate change over and above existing 
foreign aid. This would be an additional tab of more than $140 
billion a year for the U.S. alone. This is an unacceptable 
price tag for the beleaguered American taxpayer and will 
increase an already out-of-control Federal budget deficit. Many 
developing countries have said they will not sign any agreement 
that does not include massive transfers of wealth. These same 
countries refuse to consider any binding commitments to reduce 
emissions.
    The developing countries are also leading efforts to weaken 
or even destroy intellectual property rights by seeking to gain 
free access to American and other developed countries' IPR for 
clean energy technologies. Their proposals include preventing 
patenting in developing countries, requiring compulsory 
licensing, and ensuring access to new technologies on a non-
exclusive royalty-free term, all of which ignore the fact that 
new technologies will only be developed if there are incentives 
to create them.
    Developing countries have also demanded that developed 
countries reduce their emissions by at least 40 percent below 
1990 levels by 2020. Cuts of such magnitude could only be 
achieved by wrecking developed countries' economies and, 
indeed, the global economy. In the meantime, most developing 
countries say they are unwilling to undertake any emissions 
reduction efforts in the absence of developed-country funding 
or free technology.
    Finally, it appears that a majority of developed countries, 
including the United States, have agreed that developing 
countries should not have to take on legally binding emissions 
reductions commitments for the foreseeable future. Business-as-
usual projections, so that even if developed countries reduce 
their emission to zero, global emissions will be higher in 2050 
than they are today because of increases in the developing 
world.
    As today's witness told the Center for American Progress in 
June, quote, According to recent modeling, even if every other 
country in the world besides China reduced its emissions by 80 
percent between now and 2050--a thoroughly unrealistic 
assumption by the way--China's emissions would alone be so 
large to put us on a track of global concentrations far above 
what scientists consider to be safe, unquote--from Mr. Stern.
    In light of this will the Senate ratify an agreement that 
lets China, India, Brazil and other major developing economies 
off the hook indefinitely? I have my doubts.
    So what does all of this portend? My more than 12 years' 
experience with international climate change negotiations tells 
me we are heading towards a repeat of Kyoto; namely, an 
environmentally ineffective agreement that cannot be ratified 
by the United States Senate.
    With so many controversial issues left unresolved, Mr. 
Stern and his negotiating team have 87 days of hard work ahead. 
I hope today's hearing helps provide a roadmap for a successful 
treaty that the American public and thus their elected Members 
of the Senate can support. Thank you.
    The Chairman. The gentleman's time has expired. We now turn 
and recognize the gentleman from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. Continuing your 
weather dialogue here, we just finished experiencing the 
longest period in our community's history--Portland, Oregon 
known for rain--without rain this summer, entirely consistent 
with what the experts would tell us in terms of changes in 
global climate patterns.
    I am very pleased that you have structured this hearing 
today. I hear my good friend from Wisconsin articulate the 
concerns about nations' stated negotiating positions. After 
other work over the course of the last year, I am struck by the 
growing consensus about the shared interests that we all share. 
The opportunities to blend the range of interest to be able to 
make sure that every country--not so much their stated 
negotiating positions, but what is in their long-term 
interests--what we can do to fashion an agreement I think is 
more possible than I would have expected.
    It is clear that the Americans can no longer continue to 
waste more energy than anybody in the world, regardless of our 
concerns about climate change and the negotiations. I look 
forward to hearing from Mr. Stern about how these pieces are 
coming together, what he views as the opportunities for these 
aligned interests. And last, but by no means least, any 
observations that he may have about what we in Congress, and 
this committee in particular, can
do between now and December to help move this along in Congress 
and any assistance we may give in Copenhagen. Thank you very 
much.
    The Chairman. Thank you. The gentleman's time has expired.
    The Chair recognizes the gentlelady from West Virginia, 
Mrs. Capito.
    Mrs. Capito. Thank you. I too welcome Mr. Stern. Just to 
make you familiar with me and the State that I represent, I 
represent West Virginia, which has a great stake in the 
decisions that you are making on the international stage. It is 
always difficult in our State, and has been historically, to 
balance the economic and environmental consideration. So I 
would ask you to--and I am certain that you will--take that 
into consideration, a State such as mine, and they are more 
heavily impacted than others in this country to the decisions 
that are going to be made on behalf of the United States in the 
international community and look just not at the environmental 
but the potential economic impact that these decisions will 
make. Thank you.
    The Chairman. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. Well, continuing our reports of this summer, 
let me give you mine during my 3-day summer vacation at Lake 
Quinalt, Washington. From the Olympic peninsula, part of the 
Olympic National Park on the south side of Lake Quinalt, there 
are these incredibly huge trees, the tallest Sitka spruce in 
the world. But on the western ridge of every ridge that is 
exposed to the winds coming in from the Pacific Ocean, they 
look like they have been clear-cut because there was an 
enormous windstorm that knocked down thousand-year-old trees 
and huge--10, 20, 30 acre patches on the western ridge. These 
trees have been around a thousand years, but now something is 
changing to knock them over.
    To me it was a pretty powerful statement about what happens 
when the climate changes to have to be climbing over these huge 
trees that have been knocked down. I do not know if that 
windstorm was specifically caused by climate change, but it was 
consistent with what the pattern suggests is going to become 
more frequent and we are seeing more frequently in the Pacific 
Northwest.
    Two notes of optimism: This summer, technology has been 
advancing, which ought to give us more optimism. Ultimately, we 
have to have technology to solve this. Last week First Solar, 
an American company, just signed a contract to build the 
biggest solar electrical generating plant in China using 
American technology. This is a model for the future. We will 
start building lithium-ion batteries in this country and 
electric cars in this country. Technology should be giving us 
optimism in Copenhagen.
    Second, there should be optimism in the U.S. Senate. We 
talked to 14 sort of moderate Democrats a few weeks ago. 
Something happened that has never happened in the history of 
the U.S. Congress. Members of the Senate listened to Members of 
the U.S. House and actually took notes. I was stunned. This has 
never happened. This is a wonderful opportunity for America to 
lead the world, both in Washington, DC, and Copenhagen. And, 
Mr. Stern, we wish you well. Thank you.
    The Chairman. The Chair now turns and recognizes the 
gentlelady from Tennessee, Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    Mr. Stern, welcome. We are delighted that you are here. I 
will have to say that while I did not have a vacation, I had a 
``workation'' in my district. But in Tennessee where I am from, 
as I was holding town halls, we found the weather was much 
cooler than average. One of my town halls that had five times 
as many people as expected, we were too large for the building 
and found ourselves out on the parking lot the first week of 
August, during the evening. And we were perfectly comfortable. 
It was 103, it was more like 83 degrees. So that came a little 
bit as a pleasant surprise for us.
    And when it was August 30th and I was slipping a sweater on 
my 15-month grandson to go out in the evening, I thought, my 
goodness, this is the coolest summer that we have had in 113 
years.
    We welcome you and we are looking forward to hearing what 
you have to say. I will have to tell you while some of my 
colleagues favor a global treaty, I do not favor a global 
climate change treaty. It is an effort that I am not able to 
support. As I have studied the issue and realizing many Third 
World nations are beginning to say look, we need to be working 
on a standard of living, their people and their leaders are 
trying to figure out how to deal with immediate life-and-death 
issues every single day. They are worried about food and health 
and sustainable economic development and want to place those 
issues first and foremost before looking at climate issues that 
would have an effect on them 50 or 100 years down the road. I 
think that we need to be mindful of that.
    Another item, technology. Mr. Inslee mentioned technology. 
Much of the innovation in technology that has taken place has 
taken place here in this country. Intellectual property 
protections for those innovators are going to be an imperative. 
But looking forward to the discussion today, I yield back, Mr. 
Chairman. Thank you so much.
    Mr. Chairman. I thank the gentlelady.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. As we move towards 
Copenhagen, I personally am experiencing great delight because 
I think that with the United States fully participating and 
with the United States for the first time putting forth an 
effort to deal with one of the most difficult issues facing our 
generation--climate change--the rest of the world I think will 
take note, pay attention and even begin to participate.
    I think that when you look at what is going on around the 
world, not ignoring even here in the United States, there is 
something that I think should send chills through most 
observant people who are not ideologically opposed to dealing 
with this crisis. So I am excited about the fact that this 
administration will be fully participating. I am excited about 
the fact that this committee lead by you, Mr. Chairman, has 
provided information to Congress, and I think we are on the 
road to the beginning of the healing of this planet. And so I 
appreciate your leadership and hope that you will go to 
Copenhagen and that I will be with you. I yield back the 
balance of my time.
    Mr. Chairman. We will go to Copenhagen together.
    Now, I think we have completed all time for opening 
statements by members. So we will turn now to our witness, Mr. 
Todd Stern, who served in the White House from 1993 to, 1999 
and from 1997 to 1999, coordinating the Clinton 
administration's Initiative on Global Climate Change. Mr. Stern 
served as the senior White House negotiator at the Kyoto in 
Buenos Aires negotiations. He has now been named by Secretary 
Hillary Clinton as the Department of State's Special Envoy for 
Climate Change.
    Mr. Stern is the Nation's chief climate negotiator. He 
represents the United States internationally in all bilateral 
and multilateral negotiations regarding climate change. It is 
an honor for us to have you with us today, Mr. Stern. Whenever 
you feel comfortable, please begin.

   STATEMENT OF TODD STERN, SPECIAL ENVOY FOR CLIMATE CHANGE

    Mr. Stern. Thank you very much, Mr. Chairman. I should say 
that I spent many of my summers up in places like Eagle River, 
Eau Claire, and Lake Nebagamon in Wisconsin, up in those upper 
reaches where Mr. Sensenbrenner was taking about. But I will 
not get into the issue of whether the water is hot or cold 
right now.
    I do thank you and the Ranking Member and members of this 
committee for inviting me here today, and let me thank you all 
for the hard work and leadership that you have shown over the 
past year.
    This morning I would like to provide you with a brief 
update on the state of negotiations. The core issues remain 
mitigation undertakings for developed and the more advanced 
developing countries; a regime for measuring, reporting and, 
most importantly, verifying all actions taken; and the 
provision of appropriate financial technology assistance by 
major economies as well as issues of adaptation and forestry.
    We are concentrating our efforts on three related fronts: 
the formal negotiating track of the U.N. Framework Convention, 
the Major Economies Forum and bilateral discussions.
    Let me say bluntly that the tenor of negotiations and the 
formal U.N. track has been difficult so far. Developing 
countries tend to see a problem, not of their own making, that 
they are being asked to fix in ways in which they fear could 
stifle their own ability to live their standards of living. 
Developed countries tend to see an unforgiving problem that 
cannot be solved without the full participation of key 
developing countries, particularly China and other emerging 
market economies. And yet we must find a way to bridge this 
historic developed- and developing-country divide.
    In the Major Economies Forum some good progress has been 
made. The leaders declaration in L'Aquila, Italy included a 
pledge by developing countries to undertake actions that would 
significantly cut their emissions in the midterm compared to 
business as usual; recognition of the broad scientific 
understanding that the increase in global temperatures ought 
not to exceed 2 degrees centigrade as compared to pre-
industrial levels; an agreement that emissions globally must 
peak as soon as possible; and agreement on broad principles of 
financing related to climate change.
    Major developing countries, and that includes China, 
Brazil, India, South Africa, are in fact taking action. They 
recognize the seriousness of the problem, their own 
vulnerability to it, and the need for global action. And each 
of them has taken or announced significant steps. We applaud 
those steps, but more is needed.
    We are calling upon China and the other major developing 
countries to undertake actions that will reduce their emissions 
below their so-called business-as-usual path in the midterm and 
to a degree consistent with what science is suggesting is 
necessary; to reflect those actions in an international 
agreement, just as we must reflect our own actions in such an 
agreement; to subject those actions to strong reporting and 
verification regime; and, in addition, all countries must 
develop low carbon growth plans, with assistance as 
appropriate, to steer the course of their own future 
development and put the world on the path to a low carbon 
global economy.
    Now we cannot expect any country to commit to actions that 
are antithetical to their own need to fight poverty and build a 
better life for their citizens. And we have to send a message 
in word and deed. The effort to meet a new climate change 
agreement is not simply putting a cap on carbon, it is also 
about sustainable development. But in the world we live in now, 
the only sustainable development is low carbon development.
    What do other countries, both developed and developing, 
have a right to expect from us? I think frankly that we stand 
and deliver; that we apply the global leadership that has been 
the hallmark of the United States to an issue of profound 
generational meaning. The steps that the President and Congress 
have already taken, including the $80 billion for clean energy 
investments in the stimulus package and the new tailpipe fuel 
economy standards that EPA and the Department of Transportation 
pledge to issue are very important but just the beginning. The 
centerpiece is the comprehensive energy and climate legislation 
that the House passed in May. Nothing that the United States 
can do is more important for the international negotiating 
process than enacting robust comprehensive energy and climate 
legislation as soon as possible.
    The United States can also be expected to play an important 
role in providing support for technology and adaptation to 
countries in need. We must make the development and 
dissemination of technology a top priority in order to bring 
sustainable low carbon energy services to people around the 
world, particularly the people in greatest need.
    In this respect you might say the financing provisions of 
the Waxman-Markey bill are pivotal, in my judgment, to getting 
the deal. This is absolutely not charity. It is squarely in the 
United States' national interest to help ensure that all 
countries pursue a clean development path.
    In short, we have a lot of work to do this fall. The 
Congress has a crucial role to play on the domestic front, and 
internationally we will be vigorously engaged with every 
relevant country and country block.
    Mr. Chairman, the world is going to make history on this 
issue over the course of the next months and years. We will 
either make it for the right reasons, because we found common 
ground and set ourselves on a path toward a new sustainable low 
carbon model, or for the wrong reasons, because we blinked at 
the moment of truth and left our children and grandchildren to 
face the consequences. We have to get this right. I thank you 
and look forward to answering your questions.
    The Chairman. Thank you, Mr. Stern, very much.
    [The statement of Mr. Stern follows:]

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    The Chairman. The Chair will now recognize himself for a 
round of questions.
    I will begin by asking you: You had a very large role in 
the Kyoto negotiations; could you outline for us what you 
believe the main lessons that should be drawn from the Kyoto 
experience?
    Mr. Stern. Certainly, Mr. Chairman. I think first and 
foremost I would say that Kyoto took place in what was 
fundamentally a domestic policy vacuum. It is critical that 
what we do internationally be synched up to what we are doing 
domestically; that there be political support; support here in 
the Congress for the kinds of actions that we are talking about 
taking internationally. So that was vividly not true during the 
Kyoto years. It must be true now. And that, again, is one of 
the reasons why the Waxman-Markey legislation is so 
fundamentally important.
    Second lesson is that we cannot move forward on an 
agreement which fails to include the major emitting countries 
in the world, whether they are developing or developed. The 
problem is a global problem that cannot begin to be solved 
without the genuine participation of countries like China and 
the other emerging markets. The reality is that the United 
States and the developed countries are the big historic 
emitters--the United States the largest of all--but going 
forward, the vast majority of growth and emissions is coming 
from the developing world and they have to play a significant 
part.
    The Chairman. So how will, in your opinion----
    Mr. Stern. I am sorry?
    The Chairman. How will successful negotiations in 
Copenhagen help American interests? If you could talk about 
that in the context of Waxman-Markey legislation and what the 
benefits for our penal would be?
    Mr. Stern. Sure. I think there are a few things to be said. 
First of all, the climate change threat is a fundamental threat 
to the United States as well as to other countries. And that is 
true as a matter of economics, national security and the 
environment, all three of those. And not at all least from a 
perspective of national security which has been highlighted in 
recent years, and in reports by former admirals and generals 
that were put out by the CNA Corporation. There was a big story 
in the New York Times a month or two ago about this, and there 
is increasing focus within the national security community on 
this issue.
    It is also true that, as a matter of the capacity to solve 
the problem, it is a global problem. If the United States is a 
large emitter, but 80 percent takes place outside of the United 
States, so for us to act without action around the world, there 
is no way to solve the problem. And further I think it will 
be--I completely agree with what you said when you said you 
referred to a great race in the 21st century with respect to 
clean energy and the development of clean energy. I think that 
has the potential to be the economic driver for all of us, 
including the whole world, not just the United States, but 
places that can be the recipient of the United States' high-
tech exports is clearly in the interest of this country.
    The Chairman. If you could, it would help if you would talk 
a little bit about the United States-China relationship, the 
issues of clean energy and climate, and the bilateral 
negotiations that have been going on in terms of using that as 
an indicator of progress that has been made towards an 
agreement.
    Mr. Stern. Right. Look, the United States and China are the 
two biggest players here. If there are two 800-pound gorillas 
on this issue, it is the U.S. and China, representing over 40 
percent of global emissions. So there is no question that we 
can't get an agreement that is acceptable to us without the 
genuine participation of China. We have been intensively 
engaged with the Chinese at various levels, bilaterally, and in 
the Major Economies Forum and other places. We have made it 
quite clear to the Chinese that the kinds of things that we 
need, which I reference in my testimony, they are going to have 
to take action which is commensurate with the scope of the 
problem, with their role as now the large emitter. They are 
going to have to reflect that action in an international 
context. They are going to have to be prepared to have a strong 
verification regime and the like. These are all issues that we 
discuss with them. We are attempting to narrow differences.
    Part of what is important I think with respect to China and 
other countries as well--we are focusing on China now--is that 
this issue has to be seen--and I think we have actually done a 
good job in conveying this in a whole array of different 
situations, starting with Secretary Clinton's trip in February. 
They have to see that this is a centrally important issue to 
the U.S.-China bilateral relationship. They care a lot about 
that.
    The summit that is going to occur between President Hu and 
President Obama will probably be the biggest diplomatic event 
of the year for China. They do not want it to run off the 
rails. On the other hand, they are in all things tough 
negotiators and going to try to get what they see as most in 
their interest. I do think China wants to get a deal done. The 
question will be whether we can get the particulars put 
together in a way that works for them and for us.
    The Chairman. Thank you. My time has expired. I recognize 
now the gentleman from Wisconsin, Mr. Sensenbrenner.
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. 
Historically, climate treaties such as the UNFCCC and Kyoto, 
have been submitted in the Senate as treaties. The Senate 
report prior to Kyoto stated that in the view of the Foreign 
Relations Committee, any amendment to the convention that 
adopted emissions target would have to be submitted to the 
Senate.
    Will the administration treat a Copenhagen climate deal, if 
one is reached, as an Article 2 treaty requiring advice and 
consent by two-thirds of the Senate, or will the administration 
say that this is a congressional executive agreement that will 
simply need a majority vote in both houses?
    Mr. Stern. Mr. Sensenbrenner, it is certainly our 
expectation that an agreement would be submitted to the Senate. 
We do not have any other plan at this point.
    Mr. Sensenbrenner. That is good to hear. Now the conundrum, 
of course, is that developing countries--and led by China and 
India--have adamantly objected to any type of legally binding 
emissions cap in the treaty. And when you talked in June to the 
Climate Actions Symposium, you started looking at the math of 
the increasing role to emissions in China and India, coupled 
with the targets that are being proposed for the developed 
world, and you called this the unforgiving math of accumulating 
emissions. Your words not mine.
    In light of this unforgiving math, would you agree to a 
treaty that did not include binding commitments from developing 
countries, particularly China and India?
    Mr. Stern. Mr. Chairman, we have called for binding 
commitments by all the major players, and that is what we are 
seeking. It is in our view understandable and appropriate, 
really, that there be differences as between what the developed 
countries are doing and what developing countries are doing 
with respect to the actual content of actions. And I think 
those are differences that ought to disappear over time, but we 
still recognize that there is some basis.
    Mr. Sensenbrenner. The Bali agreement which was negotiated 
by the Bush administration did talk about differentiated 
commitments. I guess my question is: If China and India 
stonewall on the issue of binding commitments, is that a deal 
breaker that you and the administration would be willing to 
walk away from?
    Mr. Stern. No. That is what I was just getting to, Mr. 
Sensenbrenner. What I was about to say is that I see a basis 
for some difference in content. I do not see a basis for saying 
we have to stand behind what we are talking about, and they do 
not have to stand behind what they are talking about. So we do 
think that that is quite important and, as they say, it is in 
the submission.
    Mr. Sensenbrenner. I can say that looking at it from a 
foreign--and relying on press reports--the response of the 
Environment Minister of India following Secretary Clinton's 
visit to New Delhi, at a press conference that she had there, 
certainly was not encouraging that India would sign up for 
binding commitments. So I wish you good luck in hopefully 
getting them to realize that they have to jump on board binding 
commitments if they expect the rest of the world to do that.
    The final piece of questions that I would like to ask you, 
Mr. Stern, is as I mentioned in my opening statement, 
developing countries are trying to weaken intellectual property 
rights. I am very concerned that the developing countries have 
proposed preventing patenting and developing in their 
countries, requiring compulsory licensing, ensuring access to 
new technologies on a non-exclusive royalty-free term.
    Does the administration support any of these positions, or 
will the administration work to make sure that the protection 
of intellectual property rights--which in my opinion is needed 
to assemble the capital to develop these new technologies--be 
included in a treaty that comes out of Copenhagen?
    Mr. Stern. We do not support those positions, Mr. 
Sensenbrenner. Look, I think intellectual property is central 
to our system. Indeed, if you look at this problem, which is 
the way I look at it, I think the way we look at it, it is 
fundamentally an issue that is only going to be solved through 
innovation, with the development of new technologies promoted 
through the right rules of the road, to be sure. You cannot 
have a problem whose solution is based on innovation if you 
interfere with intellectual property rights.
    Having said that, we also have to recognize that it is 
terribly important that we do find ways completely consistent 
with intellectual property protection, where we seek to diffuse 
and disseminate technologies to places, if needed. But we do 
not have--I do not think I have any difference of opinion with 
what you have stated.
    Mr. Sensenbrenner. That is good to hear. I yield back the 
balance of my time. Quit while we are ahead.
    The Chairman. I thank the gentleman. I think it is 
important to note that you did work on intellectual property 
issues when you were on the staff of Senator Leahy in the 
Senate.
    Mr. Stern. I did indeed.
    The Chairman. Let me turn now and recognize the gentleman 
from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. I think a number 
of us who had the opportunity to spend a week in China earlier 
this year came away with the same expression of optimism that 
you mentioned in terms of the interest of the Chinese. I think 
it was conveyed formally and informally that there was great 
interest in securing an agreement, that it was clearly 
important to them, and the notion that there are lots of common 
interests. And I would like to return to that in a moment.
    But before then, I would like to just follow up on your 
response to the initial question about what is different now 
than the Kyoto negotiation you were involved in earlier. You 
mentioned that we did not have the domestic policy vacuum, that 
we have greater structure framework. I am pleased that after 8 
years of the United States being missing in action, that we 
have, I think, changed that and we are working on the policy 
framework.
    But I am wondering if, other than the legislation that has 
passed the House, if you have other thoughts about changes to 
that framework, like the EPA's decision that we will be dealing 
with carbon pollution as something that is going to be subject 
to regulation. Are there other elements here that you see that 
change that framework?
    Mr. Stern. Well, sure. I think that the EPA decision is an 
important one. I think that, again, I see the general domestic 
backdrop, what is happening here also with the underpinning in 
terms of broader understanding and support for the issue in the 
public, in the national security community, a much greater 
involvement in the business community and the high-tech sectors 
who I think do see clean energy as the way to go.
    I mean, I think that people who lay their bets down on 
high-carbon infrastructure or high-carbon production measures 
now are a little bit like the guys who built the typewriter 
plants on the dawn of the PC revolution. It is a bad bet.
    And so I think there is a different kind of cultural 
infrastructure, if you will, with respect to where the public 
is, where the business community is, where the national 
security community is, and where Congress is. I think all of 
those things are quite different and lay the foundation for us 
to move forward if we can get this right and if we can get our 
international partners to move along with us.
    Mr. Blumenauer. It was interesting, the business community 
letter to the Senate yesterday, reinforcing your point.
    Are there provisions in the House legislation that you see 
specifically making a difference to bring together domestic and 
foreign interests to be able to understand mutual benefits, so 
that we are bridging that gap and making it less adversarial 
despite perfectly predictable negotiating posturing?
    Mr. Stern. Right.
    Mr. Blumenauer. Elements that we have done here that will 
help make your task easier.
    Mr. Stern. Yes. I would point to in particular--and they 
are related--I think there are provisions in the bill, one that 
involves a set-aside for international forestry at 5 percent of 
allowances, and another that provides a scaling-up set-aside 
for adaptation and mitigation, a percent for each, and scales 
all the way up to 4 percent for each in the mid-2020s. Those 
provisions are engines for financial support for poor countries 
around the world and in a way that I think is, again, very much 
in our interest, and both in our interest from a substantive 
standpoint and a diplomatic standpoint of being able to attract 
support from developing countries.
    So I mentioned to you in my opening remarks that I am very 
hopeful that those provisions, or at least some facsimile 
thereof, can be maintained in whatever version of the bill 
comes out of the Senate, because I do think those are quite 
important.
    Mr. Blumenauer. Lastly, is there anything additional from 
your vantage point that you think the House and this committee 
can do in the interim between now and Copenhagen that would be 
useful?
    Mr. Stern. Well, I think Congressman, I think that any time 
Members of Congress, this committee or the House or the Senate, 
have an opportunity to speak with foreign government visitors 
on these issues and to speak to them in a way that imparts some 
sense of reality to their thinking, that is always good. And 
there are different players that that can be relevant for.
    The trip you made to China I am sure was quite important in 
that regard. There are messages to be sent to places like 
India, but also to places like Europe. The thing that will 
allow us to get this done, if we can get it done, is combining 
the sense of what science requires with the sense of 
pragmatism. And there is often not enough pragmatism in the 
international arena.
    I mean, we can get something done if it is based on 
something that we all need. We cannot get something done if it 
is based on what we all ideally want. There is a difference 
between what you need and what you want. If countries can focus 
on what their real needs are, not on ideology, not on old 
rhetoric, if they can be sensitive to what is doable in the 
United States--I am proud of what we are doing here, I think 
the bill that came out of the House was a huge advance. And 
there are those who say, Well, why aren't you doing five times 
as much of that? It is important to hear messages from Members 
saying this is good, solid, and an important start; this is 
consistent with what we need to do and you are not going to get 
more than that. Let's get real and try to work this out and get 
it done.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. When we went to China we were very 
impressed with their investments in new clean energy 
technology. And we were impressed there were things they were 
doing we did not know before we went, including their renewable 
energy standards and the like. It is clear that they are 
moving. It is clear that they want to dominate some of these 
industries. And that is one of the reasons I am happy our 
stimulus package got us out of the gate.
    I guess the question I have as far as an agreement with 
China, they talked about themselves as a developing country, 
which was interesting because we would drive by the main drag 
going past Gucci stores and Lexus dealerships.
    Mr. Stern. Been there.
    Mr. Inslee. And Prada stores. It was difficult to 
understand that. To me it sort of looked like there was not two 
parts of the world: the developed world and the developing 
world. There were three parts: the developed world, the 
developing world, and China which is some sort of third tier in 
its classification.
    Should we think of that in these terms and encourage China 
to think about themselves in those terms? And if so, where do 
they fit in that tier?
    Mr. Stern. I have had very much the same reaction driving 
down the same road that you did, Congressman. I think China is 
kind of developed and a developing country at the same time. It 
is obviously a huge economic juggernaut when you see big 
cities, there are gleaming skyscrapers, and very modern 
looking. They still have somewhere between 3 and 400 million 
people, more people than live in this country, who live on a 
dollar or two a day. They are dirt-poor, particularly in the 
rural parts of the country.
    So, they are kind of both. They are kind of are a hybrid, 
as you say. And I think that we have to and are pushing China 
hard to take strong action. You cannot sort of expect of China 
what you would expect of poorer countries in Africa or Latin 
America or Asia. They do need to be treated, as do other 
emerging market countries, in a way that requires real action. 
It is the only way to solve the problem. Over time, and I do 
not think a very long period of time, I think they will need to 
be treated exactly the same as developed countries. But we are 
not quite there yet.
    I will say that if you look at what China is doing on this 
issue, it is actually quite impressive. It is not adequate yet, 
but they are doing a lot. I have sometimes said that I think 
the real competitive issue for us, the real competitiveness 
issue with us is that we might think we will spend the next 5 
years pushing China, and then we will spend all the rest of the 
years chasing them if we do not get our own act together. They 
are moving and they see big markets and they are going to move 
if we do not.
    Mr. Inslee. I think all of our anxiety has been that China 
is not moving on global climate change. Our economic anxiety 
should be that they are moving on climate change because they 
want to dominate these industries. And we want to be players in 
this.
    Mr. Stern. Right. Look at what they announced on the solar 
front, which is great. We need that to happen, but we need to 
be in the game fully ourselves.
    Mr. Inslee. I think our bill will help in that regard.
    We talked to Prime Minister Singh of India a couple of 
years ago, and he told us--and I do not think he was joking 
when he said this--he said India has agreed or will agree to a 
binding target of CO2 emissions. We will agree never 
to exceed per capita--per capita--the average of industrialized 
nations' emissions. They have sort of said, sure, we will with 
you. We will agree never to emit more than you do. We will 
agree to a binding target. Of course, if they get to that 
level, the planet will be cooked long ago. What do we say to 
that argument, and what is it in regard to India that we 
expect?
    Mr. Stern. I say to the argument that obviously that is not 
good enough. It is the case, if you think about the trajectory 
of the bill that came out of the House, the per capita 
emissions of the United States aren't going to decline very 
significantly over a period of 40 years or so, if you take this 
out to 2050. So the disparity----
    Mr. Inslee. If we pass our bill.
    Mr. Stern. That is right. If the Senate passes a bill and 
we get a conference and the President can sign it, and we 
actually enact legislation--which, again, I think there is 
nothing more important than that--but if that kind of regime 
gets put in place, you are going to have the gap between the 
per capita emission between countries like India and countries 
like us dramatically decrease because of the efficiencies and 
the renewable energy developments and so forth that will be 
part and parcel of that legislation.
    But in terms of what we are looking for from India now, it 
is very much the same structure as what I said for China. They 
need to articulate a strong, robust set of actions that will 
reduce their emissions significantly from where they would 
otherwise be from their business as usual. They have to reflect 
those in an international agreement and exactly what the 
structure of that is. It is a very live part of the discussions 
and negotiations.
    There has got to be a verification system. I mean it goes 
under the rubric of MRB, measurement, reporting and 
verification. But verification is really the most important 
piece, so that everybody can see what everybody else is doing 
and have some level of confidence that if China or India or 
France or anybody else says we are going to do X, there is a 
system to see whether they have actually done X. There has got 
to be a mechanism for financing and technology dissemination. 
And those are the key issues and we are working with them on 
all of those issues, and India is difficult. There is no 
question about it, India is tough.
    Mr. Inslee. 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.
    Mr. Stern, the world is in the throes of the great 
recession, and I think there are some European nations that are 
already experiencing some relief. And, of course, there is 
concern that we could pull people back down into a much greater 
recession if we do not recover.
    Last year the U.N. suggested that $86 billion a year would 
be needed to provide aid to developing nations as we begin to 
try to clean up this planet. My concern--and perhaps you have 
thought about it or maybe even had some discussion about it--at 
this point, the U.N. has collected nothing. And given the state 
of economics around the globe, is there a concern on your part 
that if we are successful in Copenhagen, but demonstratively 
cannot provide money--I mean, we have people in the United 
States who object to paying the U.N. dues. So when we are asked 
to provide money for this and we run into problems at home, 
does that create cause for China and India to become even more 
resistant to their participation; since we are not putting any 
money forth, therefore we must not be serious?
    Mr. Stern. It is a very good question, Congressman, and an 
important question. First of all, it is going to be important 
that there be financing assistance at some level provided, 
particularly to poor countries. It is also true, as Mr. 
Sensenbrenner said in his remarks, that the kinds of numbers 
that are tossed around by some in the negotiations are 
completely, wildly, unrealistic--1 percent of GDP, things like 
that that are untethered to reality.
    We have to work with the EU, Japan, Australia, other 
developed countries, to develop an overall financing package 
which is consistent with kind of what we can do. Again this is 
an agreement that would kick in starting in 2013. So hopefully 
we will be out of the great recession and into a better period 
of growth by that time. But the amounts of money that are 
considered and ultimately agreed to have to strike a right 
balance to what is reasonable to provide on the one hand and it 
is consistent with, or at least gets us in the right direction 
with respect to the need, on the other side.
    Again, I think that the provisions that are in the Waxman-
Markey bill are really quite helpful in that regard, because 
they do generate some funds. Not vast amounts, but a good start 
through the sale of emissions allowances. So I think that is a 
good way to do it that does not have to get into the yearly 
appropriations kind of process. But this is a need that is 
going to scale-up over time that we just have to kind of step 
in a balanced, reasonable way, along with our developed country 
partners, so we are making a good start but it is affordable.
    Mr. Cleaver. Do you think that it is important--as of today 
we do not even have any administrative costs, which does not 
bode well for, at least I think, the picture that we need to 
paint of what is going to happen after Copenhagen. I think 
administrative costs have been estimated at about $4 billion 
and, of course, we have nothing on that.
    I do agree that Markey-Waxman does provide some help. And 
maybe you can help us with this. We need a unicameral system of 
government here in the United States so we could close down the 
Senate, either today or sometime before Christmas. I think that 
the House has already acted and we are 3 months away from 
Copenhagen. So I think it would be important to either close 
the Senate down or somehow get them to do something they do not 
like to do, which is vote on legislation.
    Do you agree with me?
    Mr. Stern. No comment. I am appearing before the Senate in 
a week or two and I worked in the Senate. I am a big fan of 
both bodies. I managed to grow up in Chicago and like the White 
Sox and the Cubs, so I am not going to get into that.
    Mr. Cleaver. Mr. Chairman, I yield back the balance of my 
time.
    The Chairman. The Chair will recognize himself for 
additional questions. Inside of the Waxman-Markey bill is 
individual provisions on renewable electricity standards for 
our country, energy efficiency standards for our country. How 
do individual complementary policies like that included in the 
legislation play a role in global----
    Mr. Stern. Play a role?
    The Chairman. What role would provisions like that adopted 
by the United States play in international negotiations on the 
responsibility of countries around the world to adopt similar 
provisions?
    Mr. Stern. Well, I think provisions like that are very 
important both substantively and actually diplomatically. 
Substantively because they can push us in the direction of 
taking concrete actions to reduce emissions as well as 
improving our overall economic and clean energy profiles. I 
think they are important for that reason.
    In addition, Mr. Chairman, there are different kinds of 
ideas that are being discussed right now with respect to what 
the structure of this agreement ought to look like. One of the 
ideas I think is quite an interesting one has been proposed by 
Australia, something similar by South Korea, a little bit 
different, which would contemplate countries entering their 
commitments to their policies on to a schedule, sort of like in 
a trade context and committing to carry them out. So I think 
that in a structure like that, which again we do find 
interesting, you could imagine putting in all of our critical 
policies and what they add up to. And I think that in doing 
that, it gives us the opportunity and pushes countries not only 
to have a number, but to say not just X percent, but here is 
how we are going to do--here is what we are going to do about 
it.
    We have a policy on renewable energy standards, and 
appliances, and cap-and-trade system and we are putting our 
money where our mouth is. And so should you. So I think it is 
useful in that regard.
    The Chairman. Can you talk about the sharing of technical 
know-how and expertise in emissions verification processes? How 
would that work? How do you envision the sharing of the 
expertise to occur and ensuring that there is in fact a 
verification system in place that would work.
    Mr. Stern. Well, there are a couple of different elements 
to that. There is a measurement and reporting piece to that. 
The measurement in particular is a piece of that where I think 
that the technical expertise of countries like the United 
States will be important in helping various countries, actually 
even China, to be--to have greater capacity to measure 
emissions in a credible way. Verification is, as we see it, 
fundamentally an issue of trying to establish the countries 
that are actually doing what they have said they are going to 
do and this is a discussion which is live and going on in the 
negotiations right now. I mean I think that it will need to--a 
verification to work is going to have to balance rigor with not 
being overly intrusive because countries like us and other 
countries will have concerns about the degree to which people 
swoop in from outside. So there has got to be a good balance in 
how that is done and we are working on that.
    The Chairman. In your opinion is it possible to develop a 
verification----
    Mr. Stern. Yes----
    The Chairman [continuing]. Which can accurately measure 
emissions reductions without having an overly intrusive system 
put----
    Mr. Stern. Yes, I think--I think that it is, Mr. Chairman. 
I mean I think that again the measurement part is something 
that we have a lot of expertise in, other developed countries 
do, and we can help in what is often referred to as capacity 
building so that countries that have less expertise actually 
can go about effectively measuring emissions. That's one piece 
of it. The verification piece also has to do with the degree to 
which if countries as we are going to do X, Y, and Z, they can 
demonstrate that they are actually doing it, and I think that 
there's--some of that is going to depend in the first instance 
on what countries report. There would likely need to be some 
sort of expert review from the outside. There is a suite of 
elements that are going to have to be part of that, and I think 
it will be tricky but I think it is very important.
    The Chairman. It is important, very important. So, for 
example, if we were looking at the steel sector in China, in 
the United States, and in India and we wanted to make sure that 
that sector was properly verified, would an agreement be 
reached as part of this ultimate treaty that would put in place 
a verification system that would be mutually agreed upon by 
those countries? If you would just--using steel as a specific 
example, could you walk through how that might----
    Mr. Stern. Yeah. Well, I think it depends on the first 
instance what the actions are that a country has agreed to 
take. So let us assume under your hypothetical that China has 
agreed to do X, Y, Z things with respect to the steel industry. 
Then I think that first of all it would be important to work 
with the Chinese to make sure they are capable of measuring the 
emissions in a reasonably accurate way, and then I think it 
would be some combination of reporting in the first instance, 
and this is going to be true for any country, United States or 
anybody else, in the first instance reporting by the country 
saying we have agreed to do the following things, we are going 
to have this, that or the other kind of policies apply to steel 
mills, the building of steel mills or the running of steel 
mills in China, here's what we said we are going to do and here 
is what we are doing, and I think the capacity would be 
essential to have some kind of an outside expert review to be 
able to look to see what is being represented and determine 
whether it is accurate.
    The Chairman. The Chair recognizes the gentleman from 
Wisconsin, Mr. Sensenbrenner.
    Mr. Sensenbrenner. Mr. Stern, on June 10 you reported in 
the China Daily, quote, ``We don't expect China at this stage 
to take on a national cap.'' You have been advocating for the 
national cap in the Waxman-Markey bill. Why is a cap good for 
us and not good for China?
    Mr. Stern. Well, look I think it would be great if China 
took on a national cap. I don't think that's the only way to 
go. And I think that as I said earlier China--in talking to Mr. 
Inslee, China is in a kind of a hybrid position. China is--is 
obviously a developing juggernaut. It has got a very powerful 
economy. It is also still in many respects developing. So it is 
somewhere in between. And I think what we need to get from 
China is a set of actions that are strong. Now, look at--what 
they are currently doing right now includes a 20 percent cut in 
their energy intensity. I think that that is something that is 
actually economy wide. It is not a cap in the same way that we 
are talking about but it is significant. I think that--and they 
have got a 15 percent by 2020 renewable energy standard. They 
have got vehicle standards that are pretty much comparable to 
ours. They have got a whole suite of other measures for 
efficiency and the like. I mean on the one hand it is 
significant and doing a fair amount. On the other hand, they 
are growing so fast that their emissions are still going up a 
lot. They need to do a set of policies that add up to a 
national reduction in their emissions. So that is the thing 
that we are most fundamentally interested in. If they did a 
national cap that would be great. I don't think they are going 
to do that yet, and I don't think it is crucial for us that 
that happen as long as there is a set of policies that add up 
to a real reduction.
    Mr. Sensenbrenner. See, I am concerned that the Chinese are 
taking advantage of the differentiated language in the Bali 
agreement, basically to cook the math in their favor. The 
Chinese economy is recovering from the worldwide recession 
faster than ours. Maybe that is because their stimulus package 
was more effective than the ones that we have employed. But the 
projection that I have heard is that the Chinese GDP will go up 
by about 50 percent from 2005 to 2010. Now, a 20 percent cut in 
energy intensity means that they still emit 30 percent more in 
emissions, and that certainly is not going to have the economic 
impact that the caps in the Waxman-Markey bill are going to 
impose on the United States. And the Byrd-Hagel resolution 
basically said the center wouldn't ratify a treaty unless it 
met two points. One is that it was worldwide in application and 
secondly that it didn't hurt the United States economy. And if 
we are reducing our emissions below where we are now and China 
is still allowed to increase its emissions by 30 percent, I 
just can see more wealth and more jobs being outsourced from 
the United States to China, and that is not anything that I am 
willing to support. I don't think the American public will 
support it either; so how do we deal with this issue?
    Mr. Stern. Well, Congressman, I think that what we have--
that what we have to keep our eye on is again the robustness of 
the Chinese program. I think in the right circumstances and we 
don't know what we have got yet, but in the right circumstances 
what we would like to see is a set of actions where they are 
reducing emissions compared to their business-as-usual path, 
which is at least in some broad way comparable to or in the 
range of comparability with what we are talking about. And I 
think that is possible. Now, we don't have that yet. We don't 
know yet, but that is what we are pushing toward. I mean again 
the reductions that they have been making over this 5-year 
period, they are not enough but they are actually fairly 
significant as compared to where they would otherwise be, and 
that again is I think what we still need to be focusing on.
    The other thing with respect to our own concerns about our 
own companies is that the legislation that was passed out of 
the House includes a good deal of protection for energy-
intensive, trade-exposed industries basically getting all 
allowances relating to this legislation free so that those 
industries aren't going to pay any more into the 2020's. They 
aren't going to pay any more. It is not a case you have got 
this trade-exposed industry and they are going to pay so much 
because of this bill and the Chinese aren't. They are not going 
to pay.
    Mr. Sensenbrenner. With all due respect, Mr. Stern, boiling 
the math down to the bottom line meaning when you push the 
equals button on the calculator, what the Chinese say they are 
doing is they are cutting back on the growth rate of their 
emissions so that they will be still be 30 percent above 2005 
levels whereas Waxman-Markey says that we have to reduce our 
emissions to 17 percent below a lower baseline, and that math 
just doesn't add up. And I think that my constituents and the 
Senate ultimately will have to view whether the deal is a good 
one for the United States and is in our national interest, and 
China going up 30 percent and us going down 17 percent with 
different baselines, in my opinion, flunks the good deal test 
by a long, long way. So I just urge you that you are going to 
have to figure out a way to figure out how to bridge the gap 
between plus 30 and minus 17.
    Mr. Stern. Well, I appreciate your views, congressman. I do 
think that with respect to--to the world broadly, with respect 
to the major developing countries, a very important issue is 
one actually which is referenced in the leader's declaration 
from the Major Economies Forum, although not with the year 
specified yet, but that emissions are going to have to peak. 
They are not going to peak next year for China. They are just 
not. I mean you can't take an economy that is growing like that 
and put the brakes on flat. I mean if you look at what the 
trajectory is for China, it is completely different than the 
trajectory for the developed world; so you can't quite expect 
that. On the other hand, you can expect that over, you know, an 
appropriate period of time the emissions growth slows, they 
peak, and then they start coming down and what that time is is 
going to be an important part of the discussion.
    The Chairman. The Chair recognizes the gentleman from 
Washington State.
    Mr. Inslee. I almost think before we have a Senate debate 
in a treaty, everybody has to watch Slumdog Millionaire to just 
get a sense of what we are dealing with with some of our 
fellow--fellow folks across the water.
    I want to just ask what is--if you had two scenarios, which 
one would be better for the United States? One scenario where 
India, let us say those people who are now living with a piece 
of plastic stretched over their head on a piece of bamboo and 
maybe one shirt to their name and they wake up in the morning 
and try to figure out where they are going to get water. When 
you talk to those people that is what they say. What is the 
first thing you do when you wake up? They say, I try to find 
some water to drink. Then maybe I try to find some food to eat. 
And there are 300 to 500 million of those people that live that 
way. Now, we are asking them they need to act, but the question 
is what. So here are two scenarios: One scenario where those 
folks agree to a cap of the same cap that we have in the United 
States per person. They agree with us they will never emit more 
than we will today and they will agree to be bound by Waxman-
Markey in a sense, but of course their emissions go up by a 
factor of ten per person if they did that. They would still 
agree to a cap but it wouldn't do us any good. Or a situation 
where we demand and receive vigorous investments by them, 
vigorous changes in their regulatory structure, vigorous 
changes in their transportation infrastructure, vigorous 
efficiency standards in their building, some of which some of 
them have done. Of those two scenarios, my view would be an 
agreement where we win agreements by the developing world to 
take action, including China, as opposed to a cap which might 
be so high that they never actually ever do anything until the 
world is already destroyed. I will talk the action rather than 
the cap. What are your thoughts on that?
    Mr. Stern. I completely agree, congressman. And that is 
very much consistent with--with our focus all through this 
year. It is consistent with the focus in our submission. It is 
consistent with the focus of what we are going to be discussing 
in the Major Economies Forum next week here in Washington. So I 
couldn't agree with you more.
    Mr. Inslee. Thank you. There are two of us anyway. That is 
a start. Thanks a lot.
    The Chairman. Well, this has been an extremely informative, 
helpful briefing, Mr. Stern. We appreciate it very much. What I 
would like to do is give you a couple of minutes if you would 
like to summarize your case here to the Congress, what you 
think that we should do and what your expectations are for 
Copenhagen in terms of the results for our country and for the 
planet.
    Mr. Stern. Thank you very much, Mr. Chairman. I appreciate 
the opportunity to have come before you today.
    Look, I think that the most important thing without a doubt 
for the Congress to do is to enact--to pass legislation, send 
it to the President that he can sign that puts--that gives us 
the kind of credibility and leverage that would be enormously 
useful in the context of these negotiations. So in terms of 
what Congress can do, obviously there are a lot of things 
Congress can do, but that is job number one as far as I am 
concerned. We are going to be working hard through this fall to 
press our case with all of the critical parties, and that 
includes the Europeans, the nonEU developed countries like 
Japan and Australia, Canada, others, the major developing 
countries like China, India, Brazil, South Africa, and then the 
kind of rank and file, if you will, of developing countries. We 
need to make a case that--and I think that increasingly 
countries see this that this is an absolutely critical priority 
for the world, that there are security, economic, and 
environmental consequences of not acting that are just not 
acceptable. I mean the status quo is not sustainable, and we 
have a moment here where we can make real progress. So we have 
to get our own house in order as a priority and we have to work 
with our developed country friends and then developing to--to 
frame out a system that people can all agree on. I think it 
should be built on countries committing to a set of their own 
national actions. I mean that is what we have been talking 
about from the beginning and that is what we think is most 
effective. It has got to have that. It has got to have a 
verification system, and there has got to be a reasonable and 
balanced system for supporting the--through financing and 
technology, poor countries around the world.
    It is also important I think and we have been doing this 
but we are going to redouble our efforts to make sure that the 
broad range of developing countries, not the big ones, they are 
in a different place. They don't actually--we are not looking 
for them to step up and say we are going to make mid-term 
reductions by 2020 in the following ways. What we need them to 
do is develop low carbon development strategies, low carbon 
growth plans, and if they are poor countries, then with 
technical assistance and financing support to do that, so that 
everybody can get on a path to a low carbon development and to 
building a low carbon global economy. That is the only way we 
are going to be able to proceed. Technology development is 
going to be a huge part of that, but we have to--we are going 
to need to move forward with all of these groups, and we are 
going to be trying to do that at all levels. There are a number 
of important opportunities that the President is going to have 
this fall, the Secretary of State. Of course me and my team 
will be proceeding at full throttle, and we are going to do our 
best to get this done.
    The Chairman. It was a real privilege to have you come 
before us today. We wish you the best of luck. We will do our 
best from our side to work with the Senate in order to complete 
the legislation so that you can go fully armed into these 
negotiations the next 90 days are critical. And we very much 
thank you for your work on behalf of our country and the world. 
Thank you.
    Mr. Stern. Thank you very much, Mr. Chairman.
    The Chairman. This hearing is adjourned.
    [Whereupon, at 11:00 a.m., the committee was adjourned.]

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