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





                   THE U.S. CLIMATE ACTION PARTNERSHIP

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

                                HEARING

                               BEFORE THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                            JANUARY 15, 2009

                               ----------                              

                            Serial No. 111-1





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov












                  THE U.S. CLIMATE ACTION PARTNERSHIP

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

                                HEARING

                               BEFORE THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 15, 2009

                               __________

                            Serial No. 111-1





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov





                  U.S. GOVERNMENT PRINTING OFFICE
63-514 PDF                WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001





                    COMMITTEE ON ENERGY AND COMMERCE

                 HENRY A. WAXMAN, California, Chairman

JOHN D. DINGELL, Michigan            JOE BARTON, Texas
  Chairman Emeritus                    Ranking Member
EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
RICK BOUCHER, Virginia               FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
GENE GREEN, Texas                    STEVE BUYER, Indiana
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
  Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California               MARY BONO MACK, California
MIKE DOYLE, Pennsylvania             GREG WALDEN, Oregon
JANE HARMAN, California              LEE TERRY, Nebraska
TOM ALLEN, Maine                     MIKE ROGERS, Michigan
JAN SCHAKOWSKY, Illinois             SUE WILKINS MYRICK, North Carolina
HILDA L. SOLIS, California           JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas           TIM MURPHY, Pennsylvania
JAY INSLEE, Washington               MICHAEL C. BURGESS, Texas
TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
ANTHONY D. WEINER, New York          STEVE SCALISE, Louisiana
JIM MATHESON, Utah                   PARKER GRIFFITH, Alabama
G.K. BUTTERFIELD, North Carolina     ROBERT E. LATTA, Ohio
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA CHRISTENSEN, Virgin Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont

                                 ______

                           Professional Staff

                   Philip S. Barnett, Staff Director

                   Kristin L. Amerling, Chief Counsel

                       Earley Green, Chief Clerk

                 David Cavicke, Minority Staff Director

                                  (ii)











                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     1
    Prepared statement...........................................     3
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     6
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................     6
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     6
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................     8
Hon. John B. Shadegg, a Representative in Congress from the State 
  of Arizona, opening statement..................................     9
Hon. Doris O. Matsui, a Representative in Congress from the State 
  of California, opening statement...............................    11
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................    12
Hon. Donna Christensen, a Representative in Congress from the 
  Virgin Islands, opening statement..............................    13
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    14
Hon. Zachary T. Space, a Representative in Congress from the 
  State of Ohio, opening statement...............................    15
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................    16
Hon. Betty Sutton, a Representative in Congress from the State of 
  Ohio, opening statement........................................    17
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................    18
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................    18
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    19
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................    20
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, opening statement.................................    21
Hon. John P. Sarbanes, a Representative in Congress from the 
  State of Maryland, opening statement...........................    22
Hon. Roy Blunt, a Representative in Congress from the State of 
  Missouri, opening statement....................................    23
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    25
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    25
Hon. Henry Waxman, a Representative in Congress from the State of 
  California, opening statement..................................    27
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    28
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............    30
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    31

                               Witnesses

Jeffrey R. Immelt, Chairman and Chief Executive Officer, General 
  Electric.......................................................    33
    Prepared statement...........................................    35
    Answers to submitted questions \1\...........................
Jim Rogers, Chairman, President, and Chief Executive Officer, 
  Duke Energy....................................................    41
    Prepared statement...........................................    42
    Answers to submitted questions...............................   145
Frances Beinecke, President, Natural Resources Defense Council...    51
    Prepared statement...........................................    53
    Answers to submitted questions...............................   153
Fred Krupp, President, Environmental Defense Fund................    56
    Prepared statement...........................................    57
    Answers to submitted questions...............................   171
Eileen Claussen, President, Pew Center on Global Climate Change..    60
    Prepared statement...........................................    61
    Answers to submitted questions \1\...........................
Peter A. Darbee, Chairman, Chief Executive Officer, and 
  President, PG&E Corporation....................................    66
    Prepared statement...........................................    67
    Answers to submitted questions...............................   182
Preston Chiaro, Chief Executive Officer, Rio Tinto...............    71
    Prepared statement...........................................    72
    Answers to submitted questions...............................   191
James Mulva, Chairman and Chief Executive Officer, Conoco-
  Phillips.......................................................    78
    Prepared statement...........................................    79
    Answers to submitted questions...............................   205
Jonathan Lash, President, World Resources Institute \2\..........
    Prepared statement...........................................    84
    Answers to submitted questions...............................   220
George Nolen, President and Chief Executive Officer, Siemens 
  Corporation \2\................................................
    Prepared statement...........................................    90
    Answers to submitted questions...............................   238
John Rowe, President and Chief Executive Officer, Exelon 
  Corporation \2\................................................
    Prepared statement \3\.......................................
    Answers to submitted questions...............................   251
David Crane, President and Chief Executive Officer, NRG Energy, 
  Inc. \2\.......................................................
    Prepared statement...........................................    95
    Answers to submitted questions...............................   265
Mark Tercek, President and Chief Executive Officer, The Nature 
  Conservancy \2\................................................
    Prepared statement...........................................    99
    Answers to submitted questions...............................   277
Jeffry E. Sterba, Chairman of the Board and Chief Executive 
  Officer, PNM Resources \2\.....................................
    Prepared statement...........................................   105
    Answers to submitted questions...............................   289

                           Submitted Material

Letter of February 19, 2009, from United States Climate Action 
  Partnership, to Hon. Henry Waxman and Hon. John Dingell........   305

----------
\1\ Mr. Immelt and Ms. Claussen did not respond to submitted 
  questions for the record.
\2\ Messrs. Lash, Nolen, Rowe, Crane, Tercek, and Sterba did not 
  present oral statements at the hearing.
\3\ Mr. Rowe did not submit a prepared statement for the record.

 
                  THE U.S. CLIMATE ACTION PARTNERSHIP

                              ----------                              


                       THURSDAY, JANUARY 15, 2009

                          House of Representatives,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:15 a.m., in room 
2123, Rayburn House Office Building, Hon. Henry Waxman 
(chairman of the committee) presiding.
    Present: Representatives Waxman, Dingell, Markey, Pallone, 
Rush, Eshoo, Stupak, Green, DeGette, Capps, Doyle, Harman, 
Schakowsky, Gonzalez, Inslee, Baldwin, Matheson, Butterfield, 
Melancon, Barrow, Hill, Matsui, Christensen, Castor, Sarbanes, 
Murphy of Connecticut, Space, McNerney, Sutton, Braley, Welch, 
Barton, Hall, Upton, Whitfield, Shimkus, Shadegg, Blunt, Pitts, 
Bono, Walden, Terry, Rogers, Murphy of Pennsylvania, Burgess, 
Blackburn, and Gingrey.
    Staff Present: Phil Barnett, Kristin Amerling, Karen 
Lightfoot, Greg Dotson, Alexandra Teitz, Lorie Schmidt, Earley 
Green, Caren Auchman, Zhongrui ``JR'' Deng, Rob Cobbs, Matt 
Weiner, Alex Barron, Melissa Bez, Carla Hultberg, Caitlin 
Haberman, Matt Eisenberg, Amanda Mertens Campbell, Andrea 
Spring, Jerry Couri, Peter Spencer, and Garrett Golding.
    Mr. Waxman.  The meeting of the Committee will please come 
to order. We are here today for a hearing. And before we even 
call our witnesses in the room, we are going to recognize 
members for opening statements.
    Mr. Pallone, are you prepared for your opening statement?
    Mr. Pallone.  Sure.
    Mr. Waxman.  The gentleman is recognized for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone.  Thank you, Mr. Chairman.
    I want to first thank you all for--I was going to say thank 
all the panel, but they are not here yet, so I will forego 
that.
    The U.S. Climate Action Partnership, USCAP, has called for 
leadership in calling for national legislation to slow, stop, 
and reverse the growth in greenhouse gas emissions. It is 
encouraging to see such a broad coalition of leaders from the 
energy industry, financial services, and the environmental 
community working together to reduce carbon emissions. Everyone 
here understands the serious threat global climate change 
represents to the world.
    The Fourth Assessment Report of the Intergovernmental Panel 
on Climate Change predicted serious risks and damages to 
species, ecosystems, and human infrastructure if action is not 
taken to reduce emissions. It is time for Congress to pass 
legislation that will set the necessary emission reduction 
targets and will ensure we meet those targets in the short and 
long term. We cannot afford to wait another year to act.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pallone follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Waxman.  Thank you very much, Mr. Pallone.
    The gentleman from Kentucky.
    Mr. Whitfield.  Thank you, Mr. Chairman. It is my 
understanding that we have 1-minute opening statements?
    Mr. Waxman.  No, we are giving members 5 minutes.
    Mr. Whitfield.  Oh, 5 minutes. OK. Thank you, Mr. Chairman.
    Mr. Waxman.  You don't have to take 5 minutes.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield.  OK. I want to thank the chairman for having 
this hearing today with testimony from the United States 
Climate Action Partnership.
    I might note that last night I was looking at the Web site 
of the partnership, and I noticed that, a few months ago, they 
conducted a poll in 46 swing congressional districts. And in 
that poll, they asked the question of whether or not stringent 
climate change enforcement efforts should be taken in the 
United States even though action would not be taken in China 
and in India. And that raised an interesting question in my own 
mind, because with the economy being what it is today, not only 
in the U.S. but around the world, I think if there is ever a 
time that we have to be cognizant and aware of additional costs 
to produce electricity, to produce energy, and particularly so 
if other countries are not taking the necessary steps to 
address this issue as well.
    So I would also point out that I was reading an article in 
the New York Times just recently, and it was talking about the 
cap-and-trade system in Europe. And it points out that in 
Europe, which created the world's largest greenhouse gas market 
3 years ago, early evidence suggests the whole approach could 
fail. It specifically says that, this week, the European 
Environment Agency reported that emissions from factories and 
plants that trade pollution permits rose in 2006 over the 
previous year, and it also rose the first 2 years of the 
operation of the cap-and-trade system.
    So while the U.S. Climate Action Partnership is a strong 
advocate for some of these programs, I think at this particular 
time in the history of our country, with the economy being what 
it is, we have to move cautiously to reflect upon the 
additional costs that anything we might do will bear on 
production of energy. And if the U.S. has an undue amount of 
that cost, then it certainly will place us at an economic 
disadvantage with other developing economies around the world. 
So, with that, I yield back the balance of my time.
    Mr. Waxman.  Thank the gentleman for his opening statement.
    Ms. Capps?

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps.  Thank you, Mr. Chairman, for holding this 
hearing with the U.S. Climate Action Partnership.
    My remarks will be limited to a minute. But I do want to 
thank these companies and organizations for their blueprint for 
legislative action, and to let them know that it makes an 
important contribution to helping solve the global warming 
problem.
    Our witnesses agree that now is the time for action. They 
agree on the creation of a mandatory economic-wide program to 
address global warming. They also agree on a more aggressive 
emission reduction schedule with significantly narrowed ranges. 
What is more, the companies and groups before us today also 
make clear that by acting now, we can help, and not hurt, the 
economy.
    Through global warming legislation we can drive the 
development of new technologies. We can create new American 
jobs, and we can support workers in the transition to a green 
economy. It will be a challenge to enact meaningful 
legislation, but it can be done.
    And I join you, Mr. Chairman, in supporting that notion.
    We must face the challenge of global warming now. It is one 
of the great challenges of our generation. And with the help of 
groups and businesses like those in the Climate Action 
Partnership, this is a challenge we can and we will meet. I 
look forward to the testimony of our witnesses, and to passing 
the strongest global warming bill that we can.
    Thank you, and I yield back.
    Mr. Waxman.  Thank you, Ms. Capps.
    Mr. Shimkus?

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus.  Thank you, Mr. Chairman.
    A terrible start to hopefully a better year. It started 
yesterday. Now we are faced with a preparation time of 1 
minute, now granting 5. My complaint yesterday was that it is 
important for USCAP to hear our comments. Of course, they are 
not here. And I understand they are doing a press conference. 
So it is more important for USCAP to do a press conference, 
probably with the vast majority of my colleagues on the other 
side of the aisle, versus hearing the concerns of over 670,000 
people in my congressional district about how global climate 
change will cost jobs.
    I am going to hold the fossil fuel Democrats accountable. 
If there is any place you are going to be held accountable in 
this Congress, it is going to be in this committee. So if you 
are from a coal-producing State or a petroleum-producing State, 
you better get prepared to defend your votes, as global climate 
change will destroy the fossil fuel industry.
    So I am just giving you notice. If, on the floor, we can't 
get these amendments on the floor, you will be held accountable 
in this committee, if we proceed through regular order, on the 
movement that will destroy coal in this country. It will 
destroy crude oil production in this country. So be prepared 
for a battle.
    I can't address USCAP; they are not here. It is interesting 
in their first release of their report, guess what they have? 
It is not in the new one. We only got this--this was released 
an hour and 15 minutes ago. In their first release, what do 
they have as a picture in their portfolio? They have a trading 
floor. A trading floor. My question is, why is that trading 
floor no longer in this report? You know why? Because we are 
bailing out Wall Street because of traders who abused the 
system.
    Let's develop, this is a great idea, let's develop a 
trading floor for U.S. emissions, and let's let the big money 
folks at Goldman Sachs control it. Is that a great idea in this 
environment? That is what is being proposed.
    I have talked in this committee numerous times about a 
carbon tax. At least it is honest. Because climate change does 
a simple premise: It monetizes carbon. It puts a value to 
carbon. And someone is going to pay that cost. Now, the cap-
and-trade system is a shell game to hide the cost from the 
ultimate person who is going to pay. And who is that person who 
is going to pay? The person who is going to pay is the 
individual consumer, because industry is going to pass those 
costs on. Great idea in a struggling economy. The best thing we 
can do to help the economy move forward is increase the cost of 
energy when we can only be competitive in a worldwide 
environment if we have low-cost fuel.
    We saw, part of this recession is because we don't have a 
diversified fuel portfolio. We have been sending signals to the 
fossil fuel industry that, we do not want to use your low-cost 
fuel. And what has happened? The supply-and-demand curve 
increased the cost. Now we have low-cost fuel. Why? The economy 
is in a recession.
    Do we want to continue to move in that direction? This, my 
friends, guarantees, guarantees rural America, coal-producing 
States more job loss. How do I know this? It has happened. Go 
back to the Clean Air Act. Go back to my congressional 
district. Go back to the numerous coal mines. I have a picture 
being produced, sent to me in Kincaid, Illinois. Great picture. 
All these miners, all this equipment, all these facilities, no 
longer there. Closed. And I know those folks who are from coal-
producing States understand.
    And again, I appreciate this extra time, Mr. Chairman. I 
fear that giving USCAP the opportunity to roll this out in a 
press conference instead of hearing the concerns from the 
people in my congressional district is a terrible, terrible, 
bad start on a very important issue that will take bipartisan 
activity. And I will again just put my fossil-fuel Democrats on 
record. They know the work we did in the last Congress of 
raising the issue of coal on the floor of the House. With new 
rules, we may not get that chance. I can guarantee you, I can 
guarantee you, coal, you will get a chance to vote in support 
of coal as this legislation moves forward.
    I yield back.
    Mr. Waxman.  Thank you very much.
    Ms. Harman?

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman.  Thank you, Mr. Chairman.
    I want to say to you that I appreciate the opportunity to 
give a brief opening statement. I think it will afford 
especially our new members a chance to put their views out. And 
I know, based on your history, that you will conduct this 
committee in a way that does give the newest members an 
opportunity to be heard. So as a fairly old member, I want to 
thank you on their behalf.
    One of my children's favorite books was called, ``It is a 
Terrible, Terrible, Very Bad Day,'' by Judith Viorst, a 
wonderful Washington writer. Unlike Mr. Shimkus, I don't think 
it is a terrible, terrible, very bad day. I actually think it 
is a pretty terrific first hearing for this committee. And I 
look forward to being back when our witnesses will testify and 
to putting a few views forward.
    USCAP is a partnership between public policy, nonprofits, 
and the private sector. And I want to say that, in my view, 
public-private partnerships can work, and the model is an 
excellent one for us to use as the basis for legislation, 
critical legislation, that we are going to be embarked on in 
the energy area.
    This committee, for example, helped broker a public-private 
partnership on a range of energy-efficiency issues in our 2007 
Energy Independence and Security Act. Congressman Upton and I 
were extremely active on one of those partnerships regarding 
energy-efficient light bulbs. We worked with leading 
environmental groups, like the NRDC and the lighting industry, 
including Philips and Mr. Immelt's General Electric. It wasn't 
an easy process. The parties started negotiations very far 
apart. But with lots of work and the willingness of all sides 
and both sides of the aisle on this committee to listen 
respectfully to each other, we managed to craft groundbreaking 
legislation. We banned the 100-watt incandescent light bulb and 
required all lighting sold in the United States to be 30 to 40 
percent more efficient than it is today by 2014 and 300 percent 
more efficient by 2020. We laid the groundwork for bringing 
lighting manufacturing back to the U.S. and to overcoming 
concerns about mercury, which is in some of the existing light 
bulbs presently produced.
    I think that our public-private partnership can be a model 
for future legislation, including legislation on the subject of 
climate change. And I think that USCAP will help us craft 
legislation that is both far-reaching and driven by consensus. 
I hope this committee and our witnesses will use the public-
private partnership model as we move forward.
    And again I thank you for the opportunity to put my views 
out there.
    Mr. Waxman.  Thank you very much.
    Mr. Shadegg?

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Mr. Shadegg.  Thank you, Mr. Chairman.
    I would begin by expressing my support for the comments 
made by my colleagues Mr. Whitfield and Mr. Shimkus.
    I think we ought to talk about the procedure for this 
hearing, because I am deeply troubled by it. And I won't make a 
judgment call as to whether it is fair or appropriate. I will 
let the public and the people in this room make that judgment 
call.
    To my knowledge, this is the first time that in a routine 
hearing before this committee, members have been compelled to 
give their opening statement without the witnesses present. 
That is one of the opportunities where we as a member of the 
committee get an opportunity to express ourselves to the full 
panel about an issue. It was a concern expressed in yesterday's 
debate about the denial of opening statements to the members of 
the panel. But today I don't get the chance to make my concerns 
about this issue apparent to the members of the panel during an 
opening statement.
    Instead, as Mr. Shimkus noted, they are holding a press 
conference, I understand, over in the Cannon Building, where 
they can't hear me express either my concerns or the concerns 
of my constituents about the issue, point one.
    Point two, the minority was told that it could not have a 
minority witness on this panel. If it wanted a minority witness 
or a minority panel, it had to have it on a separate panel, and 
they had to be prepared to talk about this report, which was 
issued only, as my colleague Mr. Shimkus noted, an hour and 15 
minutes ago. Pretty difficult to ask a witness to come before a 
United States congressional committee and be prepared to answer 
questions about a report that they have for only an hour and 15 
minutes. And so the minority declined to have any witnesses. I 
think that is a stifling of the minority's rights.
    Next we were told that these witnesses will have a very 
limited time, indeed that the distinguished CEOs who will be 
here--the Chairman of ConocoPhillips; the Chairman of Duke 
Energy; the President and CEO of Exelon; the Chairman and CEO 
of General Electric; the President and CEO of NRG; the Chairman 
and President of PG&E the Chief Executive of the Energy Rio 
Tinto; the President and CEO of Siemens--all are on a very 
limited time period, and they can arrive here at 10 or 10:30 
but will have to leave by 12:30.
    So therefore, Congressman Shadegg, it is highly unlikely 
you will get to ask them any questions, but certainly Mr. 
Gingrey at the bottom of this dais will not get to ask them any 
questions. Again, a repression of the ability of the minority 
to express its views, forget majority-minority, just of 
congressmen to express their views to the members of the panel. 
I am deeply troubled by that.
    I share Mr. Shimkus's concerns about the effect of carbon 
cap and trade on this economy. I worry about its impact on 
jobs.
    I would like to, on the substance of this hearing, make the 
point that I believe we need to act prudently. There are many 
things that we can do right now to reduce greenhouse gases that 
will have two benefits, not just one. There are other things 
that we could do right now to reduce greenhouse gases that will 
have only one benefit and will have a significant cost. Let me 
explain that. If we as a Congress were to require dramatically 
more efficient buildings in this country, buildings that were 
built by landlords who didn't care about how efficient they 
were to make them more efficient, that would both reduce 
greenhouse gases and reduce our consumption of energy in 
general and reduce our consumption of foreign oil. Good policy, 
two benefits. If we were to do the same with homes, two 
benefits: reduce greenhouse gases and reduce our consumption of 
energy and our consumption of foreign oil. Same with more 
efficient automobiles, alternate vehicles, alternate fuels, 
wind, fuel, solar. There are a lot of things we can do that 
will have two benefits: It will reduce greenhouse gases and 
also reduce our use of energy in general and reduce our 
reliance on foreign countries, some of whom are not our 
friends, for energy, period.
    But we don't get to discuss that today because we are only 
discussing cap and trade. Cap and trade, I would suggest to 
you, is a single-benefit strategy. It will not reduce our 
consumption of energy. It will not reduce our consumption of 
foreign oil. But I don't get to tell the executives who are 
coming here any of that because I don't get that chance. I want 
them and their lobbyists to know that I intend to submit 
questions in writing in them to find out if those CEOs came 
here by corporate aircraft, if they have calculated the carbon 
footprint of their corporate aircraft, if they know how much it 
will cost their company to buy the carbon credits to keep all 
of their corporate aircraft in the air, and if they are willing 
to report that cost to their stockholders in their annual 
report so that, as Mr. Shimkus points out, the cost of buying 
these cap-and-trade permits, which is going to be borne by the 
American public and is going to cost us jobs, is known.
    I agree with Mr. Shimkus, a straightforward carbon tax 
would tell the American people what this costs. A cap-and-trade 
system is designed to hide that from the American consumers. 
And the American consumers deserve the truth.
    I thank you, and I yield back.
    Mr. Waxman.  Thank the gentleman.
    Just for the record, members should know the following. The 
purpose of a hearing is to hear what the witnesses have to say, 
not to tell the witnesses just what we have to say. But we will 
have an opportunity to ask questions of the witnesses or their 
designees if some of the CEOs cannot stay. So members are not 
going to be denied the opportunity to be questioned--members 
are not going to be denied the opportunity to question or make 
statements to the people from USCAP.
    Mr. Shimkus.  Would the chairman yield?
    Mr. Waxman.  Let me just finish this other point. We did 
not set any criteria for minority witnesses that they had to 
say this or they had to say that. We had no requests for 
minority witnesses. This is not the last hearing on the issue. 
And we certainly are going to have many witnesses with many 
points of view.
    Who asked me to yield?
    Mr. Shimkus.  Mr. Chairman, but it is true that many of 
these titans of industry are leaving at 12:30. So the 
individual CEOs who we may want to ask questions of will not be 
there.
    Mr. Waxman.  That is correct. And that was an understanding 
we had with Mr. Barton, because they are not going to stay, 
each of them, for the whole hearing. But there will be their 
designees to answer questions who are very familiar with their 
proposals.
    Mr. Shimkus.  And with all due respect, I don't want to 
talk to the designee; I want to talk to the CEOs. I yield back.
    Mr. Waxman.  Let's see. The gentlewoman from California, 
Ms. Matsui.

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Matsui.  Thank you, Mr. Chairman.
    And I thank you very much for calling today's hearing. I 
applaud your leadership and vision on this critical and 
pressing issue.
    I also would like to commend Chairman Markey on his 
tireless work focusing our attention on the problem of climate 
change. I am eager to work with both of you and with all my 
colleagues on this committee and on the Energy and Environment 
Subcommittee.
    In my hometown of Sacramento, we live at the confluence of 
two great beautiful rivers. The constant threat of flooding 
makes it even more urgent than ever that we address the issue 
of climate change. Unless we take action now, our way of life 
in Sacramento, in California, and across this Nation will be 
changed forever. I look forward to hearing from each of today's 
witnesses about how we can advance solutions that are 
effective, innovative and efficient.
    I, again, thank you for your leadership on this issue, Mr. 
Chairman.
    I yield back the balance of my time.
    Mr. Waxman.  Thank you very much.
    The gentleman from Oregon.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden.  Thank you very much, Mr. Chairman.
    And I want to cover a couple of points. I had the 
opportunity, as did several of my colleagues last summer, to 
spend an evening with some of these CEOs talking about their 
ideas and their proposal for cap and trade. And I remember 
asking the CEO of General Electric at this dinner, and the 
others, I said, now, in order for a cap-and-trade system to 
work, you have to price energy higher than it is today.
    And they all agreed with that.
    I said, well, you have some of the smartest financial 
people in the world working for your companies; how much more 
does energy have to be priced at to create a trading market? 
And they hemmed and hawed a bit, and I threw out the idea of 
like $20 to $25 a ton of carbon, which I think is what it 
trades for in Europe. And they didn't disagree with that.
    I said, so the price of energy will naturally be higher 
once you assume you have to have a higher price to create a 
market to trade in. And they agreed.
    I said, so if the price of energy is higher as a result of 
the policy that Congress adopts, and I am supposed to go home 
and sell to my constituents, it is good for them and for the 
country and the globe, then would each of you, and I would ask 
them this today if I get a chance, commit in your companies not 
to chase cheaper energy elsewhere in the world for your 
manufacturing? I think that is a pretty simple request.
    None of them would commit to that, and said so. So it 
strikes me as odd that, at a time when our country is facing 
unprecedented economic problems, that we have these CEOs asking 
for higher energy costs but unwilling to commit not to chase 
cheaper energy elsewhere in the world for manufacturing. That 
bothered me a lot.
    Now, I am not sure what they are about, to tell you the 
truth. I do know, as I look at the people who are involved, 
they are very respected people and companies. But I also 
recognize some names that, frankly, the taxpayers are having to 
bail out right now, like AIG. And many of these companies, I 
think, seek--would benefit from whatever happens in a cap-and-
trade proposal, especially if you are a trader.
    And in meetings I have had overseas with some of the 
European leaders and all, it seemed to me, over time, the 
people most aggressively advocating a cap-and-trade system were 
those who were going to be trading in it. And it bothers me, 
because when we look at what we are going through right now 
because of the way debt was traded and derivatives and all of 
those new instruments we are learning about, and the utter 
collapse of our economy as a result, it perplexes me that we 
are going to create in theory a new system of cap and trade by 
driving energy costs higher with no guarantee jobs won't go 
overseas.
    Now, having said that, I am proud to come from the State of 
Oregon. I am probably the only member of my congressional 
delegation that drives a hybrid in Washington and one in my 
home district. And I believe in conservation and recycling. It 
is part of our heritage as Oregonians. And I think we have done 
a lot in the last 9 years or so on improving the environment. 
Renewable fuels, for example, since 2001, it is a 500 percent 
increase by 2022. Vehicle fuel economy, a 40 percent increase 
will occur by 2020. Lighting efficiency, many on this committee 
have supported the bipartisan effort to improve lighting, 25 to 
30 percent lighting efficiency improvement by 2012 to 2014, and 
70 percent by 2020. Appliance efficiency standards up 45 
percent since 2001. Federal Government operations, bigger than 
most countries, by the way, just what operates in the Federal 
Government, we have already put in place a 30 percent 
efficiency and 20 percent renewable fuel use by 2015. Renewable 
power, 26 States now have that requirement, and it is a 500 
percent increase to date. Building codes, we have already said, 
Federal Government promoting new 30 percent model code.
    There are many things that we are doing that I think we can 
be proud of as this country in reducing our carbon emissions 
and improving our efficiency, reducing our use of energy.
    But the thing that remains here is, there is no viable cap 
and trade--or I am sorry, no viable carbon capture and storage 
technology readily available in the commercial market today. I 
will get into that more later on I hope.
    But before we create new standards and requirements, we 
better make sure we understand what is going to happen to our 
economy and what technology is available.
    Thank you, Mr. Chairman.
    Mr. Waxman.  Thank you, Mr. Walden.
    Ms. Christensen.

 OPENING STATEMENT OF HON. DONNA CHRISTENSEN, A REPRESENTATIVE 
              IN CONGRESS FROM THE VIRGIN ISLANDS

    Ms. Christensen. Good morning.
    Thank you, Chairman Waxman, and let me take this 
opportunity at our first official hearing to say what an honor 
it is to have been elected to serve on Energy and Commerce, and 
I look forward to a productive tenure on this committee working 
with you and my colleagues to address issues that come under 
our jurisdiction that are some of the most challenging in our 
Nation. And climate change is one of these, and perhaps 
considered the greatest, challenge facing the world today.
    In my district, the U.S. Virgin Islands and the entire 
Caribbean region, we are very concerned, of course, about its 
impact on sea levels, changing weather patterns and, most 
importantly right now, the bleaching and loss of our coral 
reefs, the coral reefs that are so important to our food, the 
health of our sea resources, the livelihood of some of my 
constituents, and our tourism-based economy. As a physician, a 
member of the Health Subcommittee, and someone who has worked 
for a long time on national health care issues, the predicted 
impacts of climate change on health are also frightening, 
especially because the troubling trends have already started, 
and we have not as a Nation taken any meaningful steps to 
reduce greenhouse gases and global warming.
    So I look forward to the testimony of the partnership and 
the members who are going to be here with us today. Not 
surprisingly, cap and trade is a cornerstone of their 
recommended strategy. I would be very interested, though, in 
our panelists' comments and opinions on another proposal that I 
have recently learned about and which I find very I intriguing, 
cap and dividends. And so I applaud the diversity of the 
partnership and the hard work that I know it must have taken to 
reach consensus on their call for action, and I look forward to 
their testimony and working with them and you on these 
important issues.
    Mr. Waxman.  Thank you very much, Ms. Christensen.
    Mr. Terry?
    Mr. Terry.  I will waive.
    Mr. Waxman.  Who is next? Does it go--yes. The gentlelady 
from----
    Ms. Blackburn.  From Tennessee, Mr. Chairman.
    Mr. Waxman.  Yes.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Ms. Blackburn.  Yes. Thank you so much. I want to thank you 
for the hearing today.
    And I will be pleased that the witnesses are here to visit 
with us today.
    I join my colleagues in wishing that they would be able to 
stay and answer some of the questions that we have that are 
specific to the issue and specific to how their industries are 
planning to address this issue.
    Just a couple of thoughts. Number one, I am one of the ones 
on this committee that still has very serious reservations 
about the plans that we are hearing from the new President, 
what he is contemplating to stop the growth of greenhouse 
gases. I think that we have to look at some of the data that is 
coming in that addresses the issue of climate change and also, 
certainly, of cooling.
    I found it very interesting that England, for example, 
recently has experienced temperatures 2 degrees Celsius colder 
than Antarctica and that they have had an average temperature 
in 2008 that was 1 degree Celsius less than 2007. So when we 
hear the talk of global warming and we experience what we have 
experienced in my home State in Tennessee with colder 
temperatures and we hear data such as this, it does cause us to 
question the global warming science.
    Secondly, the mandatory reduction in emissions on 
greenhouse gases through the cap-and-trade system. I think that 
the more we talk to those in business and industry, the more we 
see the impact that this is going to have and the negative 
impact that this is going to bring to our economy, the transfer 
of wealth from industries and consumers to companies that are 
promoting inefficient and inadequate technologies, essentially 
picking winners and losers in the free market.
    The European emissions trading system, when you look at 
that trading scheme as they call it, and Mr. Chairman, I find 
that very appropriate, using the word, the trading scheme, it 
provides in my opinion ample evidence of how companies game the 
system for their benefit. But even if the weaknesses of a cap-
and-trade system are addressed, it will still reduce the 
availability of energy and drive up the cost of economic 
development, which is something we are actually trying to 
reduce right now. So this is not only counterintuitive, it 
appears that it will be counterproductive in many ways.
    I also have concerns, and I know we are not addressing this 
specifically in this hearing, but it is a related issue, about 
the EPA regulating and moving to regulate greenhouse gases and 
the monster of a bureaucracy that that would require and the 
need to get permits for everything from cows to schools to 
churches for greenhouse emissions and the economic slowdown 
that this would cause if we were all sitting around waiting for 
the EPA to issue a $175 tax per cow or $20 tax per hog. For our 
agricultural interests in our States, this just seems like a 
very cumbersome and counterproductive bureaucracy.
    So we have plenty on our plate today, Mr. Chairman. I thank 
you for the hearing. I hope that it is a robust discussion of 
issues, and I yield the balance of my time.
    Mr. Waxman.  Thank you very much, Ms. Blackburn.
    Next would be the gentleman from Ohio.

OPENING STATEMENT OF HON. ZACHARY T. SPACE, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Space.  Thank you, Mr. Chairman.
    If I could just express what an honor it is to serve on 
this committee that deals with so many seminal issues at this 
crossroads in history. I would like to begin by offering my 
thanks to Chairman Waxman for holding this hearing today. I am 
excited to have an opportunity to work with the members of this 
committee and organizations like USCAP to address the issues of 
climate change. Climate change is a very real and very pressing 
issue facing this country. And we as Members of Congress have a 
responsibility to address it.
    What remains is the question of how to answer the call to 
action in a responsible fashion that both lowers our Nation's 
damaging emissions and protects the ability of our economy to 
grow. I believe that it is a goal that all of the members of 
this committee share and one we can work together to achieve.
    I am greatly encouraged by the work of USCAP in assembling 
some of the foremost energy producers and strongest advocates 
for environmental protection in the Nation to proactively 
address this crucial challenge. I look forward to the testimony 
today and applaud the participating members of USCAP for the 
progressive, cooperative, and aggressive approach to this 
critical issue.
    I yield back my time.
    Mr. Waxman.  Thank you very much, Mr. Space.
    Mr. Gingrey?

  OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Gingrey.  Mr. Chairman, thank you.
    And I join my new member colleagues in expressing my 
gratitude and excitement about serving on the committee and 
this being the first opportunity to utter any words on the 
committee. I hope they won't come across as sounding too 
negative, because certainly that is not my intent. But I do 
have some concerns, both in regarding process and policy.
    And I would like to voice my strong concerns, first off, 
about the process by which today's hearing has been conducted 
by the majority. The mission statement of the United States 
Climate Action Partnership pledges that the organization will 
work with Congress on these critical environmental issues. I am 
deeply troubled that, despite this pledge, the majority has 
elected to give the members of this committee almost no time to 
digest the recommendations made by USCAP on climate change.
    Although I firmly believe that the committee should not be 
dismissive, and certainly I am not, of their report, Mr. 
Chairman, I believe that we would be better served by the 
information given to members and staff less than 90 minutes ago 
if we were to hold this hearing on a future date. With more 
time, members could properly analyze and scrutinize the 
important work of USCAP so we could have a more engaging and 
productive hearing.
    Unfortunately, due to what seems to me like the political 
expediency of this organization for the majority, we will not 
have that opportunity for the American people. So much of my 
concerns then for the process.
    In regarding policy, you know, this cap and trade, which is 
going to be the focus of the hearing, and we heard Mr. 
Whitfield earlier explaining the lack of really meaningful 
progress in the European Nations over a 2- or 3-year period 
regarding cap and trade, where greenhouse gases have not been 
reduced, and I would hate to see cap and trade go the way of 
wetlands mitigation, community service in lieu of jail time, 
and some of these other things that sound so great on paper 
that really don't work out in the long run.
    You know, in the report that we just got, I see in the 
prologue, it says, in January 2007 we issued our call for 
action, in which we joined together to call for prompt 
enactment of national legislation in the United States to slow, 
stop, and reverse the growth of greenhouse gases emissions over 
the shortest time reasonably possible.
    Now, that was in January 2007. I was a member of the 
Science Committee at that time. Our first hearing of the year 
was the Honorable Nancy Pelosi. Our second hearing of the year, 
and it was a joint hearing with this committee, was former Vice 
President Al Gore. Our economy was far different in January of 
2007 than it is today.
    But U.S. Cap goes on in this report to say today, U.S. 
leadership is essential for establishing an equitable and 
effective international policy framework for robust action by 
all major emitting countries. For this reason, action by the 
United States should not, should not, be contingent on 
simultaneous action by other countries, i.e., China and India. 
I say to my colleagues, and I will wrap it up with that, Mr. 
Chairman, that there are no Pacific Island Nations in immediate 
danger of being underwater because of global warming and the 
rise in the sea level, but there are many economies, many 
companies, General Motors, Chrysler, et cetera, who are under 
water today. And I think we have a real crisis in our economy. 
And this may not be the time for the United States to take that 
kind of a chance. Let's take this slow, and let's listen to 
what these folks have to say today, but let's don't jump to 
action too quickly, maybe like we did in the $800 billion 
bailout.
    And I yield back the balance of my time.
    Mr. Waxman.  I thank the gentleman.
    The gentlelady from Ohio, Ms. Sutton.

  OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Ms. Sutton.  Thank you, Mr. Chairman.
    Before I begin, I would like to thank you for holding this 
hearing and for getting us off to a quick start on an 
incredibly critical issue before this country and, frankly, the 
world at large.
    I am truly honored to be a part of this body, where we are 
going to seek solutions for these complex issues that face us 
as a Nation and, certainly as a representative from Ohio, that 
face my constituents.
    This is critically important to have these folks here today 
so that we can learn more about the members from the U.S. 
Climate Action Partnership and about how they think we can best 
advance our Nation's energy policy. USCAP's alliance, which 
includes major industrial and energy companies and 
environmental groups, demonstrates that business interests and 
environmental interests can work together to pursue policies 
that will meet the multidimensional challenge before us.
    I am encouraged by USCAP's efforts to work together as we 
discuss policies that will both protect our environment and 
spur the development of advanced technologies and jobs. Make no 
mistake, it is critical that we find ways to effectively 
address global warming. And I am looking forward to finding the 
right solutions that will concurrently preserve and create jobs 
for today and tomorrow.
    Thank you.
    Mr. Waxman.  Thank you very much, Ms. Sutton.
    The Chair wishes to recognize the chairman emeritus of the 
committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell.  Mr. Chairman, thank you.
    I commend you for this hearing.
    It is a remarkable event when we find that we have the 
large number of both NGO heads and the heads of American 
businesses coming together. I would like to point out also that 
the directors of Edison Electric Institute endorsed a set of 
points of agreement on climate change last week. All of this 
points to one fact: Climate change is recognized as being the 
most critical climate issue facing us by everybody involved.
    When the USCAP's call to action was released, it made news, 
as well it should. For the first time, a diverse group of 
entities, who oftentimes are at odds on environmental matters, 
agreed on the critical need for action on climate change. The 
call to action calls for Federal climate change legislation to 
follow six key principles. However, for the most part, it does 
not get into the level of detail necessary for a complicated 
legislative resolution to the problem.
    Today USCAP released a more detailed set of 
recommendations. While we have not yet had the opportunity to 
delve into these recommendations, I do look forward to hearing 
more about them when our witnesses appear today.
    As earlier stated, Mr. Chairman, climate change is the most 
critical environmental issue facing us. Last Congress we held a 
number of hearings, issued a number of white papers on the 
subject of climate change, and in fact, Mr. Boucher and I put 
forward draft legislation that was written specifically to 
address the six goals in the call to action. All of this was 
intended to set us up for prompt action this year.
    This hearing builds upon that record. I look forward to 
working with you and all my colleagues to address climate 
change in the manner which achieves reduction amounts that 
scientists agree is necessary while protecting domestic jobs.
    Thank you, Mr. Chairman.
    Mr. Waxman.  Thank you, Mr. Dingell.
    Mr. Rush?

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush.  Thank you, Mr. Chairman.
    And I, too, want to commend you for holding this hearing, 
thus quick starting our activities of this committee on this 
very, very important issue.
    Mr. Chairman, I think that we are going to be well served 
by the esteemed panel that you have assembled for today. And I 
also do want to thank each and every one of them for making 
such an appearance before this committee.
    Among those who will be testifying today is my good friend 
Mr. John Rowe, who is the President and the CEO of Exelon. I 
have worked with Mr. Rowe on many energy-related issues, and I 
find him to be a very hardworking and innovative and forward-
thinking individual. I look forward to hearing his remarks 
regarding the innovative and very, very excellent practices 
that Exelon has adopted in becoming an industry leader in the 
production and distribution of clean and renewable energy 
sources.
    I would also like to say that I look forward to hearing 
from all of our distinguished panelists as they seek to rally 
the Congress as well as the other industries to move us all 
forward in developing cleaner energy policies and technologies 
that we sorely need for the continuing success of our economy 
and of our future as a Nation and, indeed, of the world's 
population. I look forward to hearing them outline the steps 
that their own companies have enacted in order to move this 
Nation forward in that direction.
    And Mr. Chairman, in conclusion, I just want to again thank 
you for gathering us together so that we can have a great 
beginning as we initiate this 111th Congress.
    I yield back the balance of my time.
    Mr. Waxman.  Thank you, Mr. Rush.
    Mr. Burgess?

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess.  Thank you, Mr. Chairman, and thank you for 
holding this hearing, briefing, that we are having this 
morning, an unusual mix of stakeholders who will come before 
our committee today, and I am interested to see the 
recommendations that this group will offer us.
    From what I understand, it is a consensus blueprint to help 
guide future action on climate change legislation for this 
committee. And the vagueness of the report is an example of the 
nuances that exist in crafting policy to control consumer 
energy use without further damaging our economy, which is 
already under some strain.
    One of the leaders in the energy industry today who is 
unfortunately not going to be with us, Rex Tillerson from 
ExxonMobil, was in Washington last week. Mr. Tillerson 
suggested that a carbon tax would be the fair and equitable way 
to transparently control carbon emissions. I think our former 
Chairman in the last session, the last Congress, Mr. Dingell 
also had a similar recommendation.
    When you have an industry leader asking for an additional 
tax burden to simply provide a better environment for his long-
term investments and business planning, you begin to appreciate 
some of the pressure that the CEOs are under to continue to 
increase revenue in such a strained economic environment. They 
need transparency. They need clarification to compensate for 
the unexpected volatility in their marketplace.
    Unfortunately, clarity is not part of this 30-page report 
released from embargo by USCAP this morning. Somewhat vague on 
implementation, it is very complex in plan and would require 
new and integrated systems development. And that costs money 
and increases the number of variables in the regime. As we have 
seen in the financial industry, sophistication, complexity, and 
increased variables add distortions and volatility to the 
market; not to mention, variables in complexity add the 
opportunity for manipulation, and would require a strong 
Federal regulator. That is an additional burden on the U.S. 
taxpayers and further strain on our Federal budget.
    If I had the opportunity, I would ask these individuals 
here today the following questions: Would a carbon tax provide 
a clearer signal that industry is asking for, and is it a 
comparable alternative to what has been outlined in this 
report? Secondly, do you think the implementation of this 
report will help turn profits and increase domestic economic 
activity? And are you willing to step down from your position 
if it does not? Has the economic downturn already slowed, 
stopped, and reduced carbon emissions, which makes the 
recommendations in this report unnecessary?
    Thank you, Mr. Chairman, and I will yield back the balance 
of my time.
    Mr. Waxman.  Thank you, Mr. Burgess.
    Mr. Green?

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green.  Thank you, Mr. Chairman.
    Let me begin by saying I look forward to working with you 
as our new chair of the Energy and Commerce Committee. Over the 
years I have known you to be a tireless defender of public 
health and environment, qualities that will serve our committee 
well as we begin to tackle the many critical issues facing our 
Nation.
    It is timely that our first full committee hearing in this 
Congress focuses on the U.S. Climate Action Partnership, 
especially since the blueprint for the legislative action was 
just released this morning.
    President-elect Barack Obama has signaled that his 
administration will ``help lead the world toward a new era of 
global cooperation on climate change.''
    To be truly successful, any efforts to reduce greenhouse 
gas emissions must be global in nature and must result from an 
extensive buy-in in a range of diverse U.S. stakeholders, from 
our industrial base to the consumers who pay the bills. That is 
what makes the efforts of USCAP so important.
    USCAP members--from utilities and environmental groups--
came together to form a call to action to reverse greenhouse 
gas emissions, and today I hope to learn specifics about the 
USCAP new ``Blueprint for Legislative Action.'' And I commend 
them for attempting the difficult task of compromise on such a 
complex issue. And I look forward to the testimony.
    Following up on my colleague from Texas, I also read the 
statement last week by the CEO of Exxon, and I guess our 
committee and the Congress has a tough decision, because I have 
some concerns about cap and trade, because if you do just have 
a carbon tax, people know how much it is, the industry can 
produce using that, and as consumers, we know. Whereas with a 
cap and trade, it is always changing. And I have to admit, with 
our most recent economic crisis with mortgage trading and 
slicing and dicing things, how much money was taken out of the 
market, I am a little concerned about a cap and trade. And I 
hope the panel will talk about that, as compared to just a 
straight up carbon tax that again it is tough to get the votes 
for in Congress, but it is also--probably also the cleanest and 
most transparent thing that Congress can do and just put a tax 
on what we should be putting in our atmosphere.
    So, Mr. Chairman, thank you again for holding our first 
hearing on this issue.
    Mr. Waxman.  Thank you, Mr. Green.
    Ms. Schakowsky?

 OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky.  Thank you so much, Mr. Chairman.
    The science is clear: global climate change is real and 
poses an immediate threat to our planet and our way of life. 
The 2007 report of the Intergovernmental Panel on Climate 
Change unequivocally found that our climate is warming and that 
the primary cause of this warming is due to human activities. 
And in some ways, it is a relief to have arrived at this point, 
where there is such a great consensus in the scientific 
community, and now as we move forward in the policymaking 
community to address this problem.
    I think for years we have squandered the time by arguing 
over whether this is real or not real and how we should move. 
Human-caused pollution has already caused drastic changes to 
the world's ecosystem. If emissions continue unabated, our 
Nation and the world will continue to experience unprecedented 
weather patterns, resulting in heat waves, droughts, wildfires, 
floods, public health threats, and the extinction of thousands 
of plant and animal species. This crisis warrants immediate 
policy response.
    I heard some of my colleagues talk about moving slowly, 
moving carefully. I don't think those are the same things. I 
think we definitely need to move carefully, but I also think we 
need to move swiftly and boldly. The longer we wait, the harder 
and more costly it will be to limit climate change, and 
therefore I think, Mr. Chairman, it sends an excellent message 
that our first committee hearing of the year is on this 
important topic.
    And I am very grateful that the panel is here today. I hope 
we do have a robust discussion of their recommendations.
    I for one am a bit concerned about the pace that is 
recommended here. When they have a little chart about emission 
reduction targets, it looks like what they are saying is, the 
way it reads is that there would be an 80 percent reduction of 
2005 levels of emissions by 2050. I think that is inadequate. I 
think we have to be talking more like an 80 percent reduction 
of 1990 levels and that we are going to have to move more 
swiftly to address these problems.
    Others of my colleagues have said things like, government 
shouldn't pick winners and losers in the energy arena. Well, 
that is exactly what we have done for generations, is pick 
winners and losers; the winners being the big oil companies, 
the nuclear industry. Government has always made decisions 
about the most judicious way to achieve our policy goals in 
terms of helping industry. And now, I think, it will be our 
obligation to make sure that we create systems that will 
encourage the most efficient ways to reduce pollution and save 
our planet be available in the marketplace.
    In the weeks and months ahead, we must continue to work 
together with the players that are going to be here on this 
panel and with all the different interests within our own 
Congress to put forward the most aggressive proposal possible 
to solve this imminent crisis.
    So, again, Mr. Chairman, I thank you so much for holding 
this hearing and look forward to working with you.
    I yield back the balance of my time.
    Mr. Waxman.  Thank you, Ms. Schakowsky.
    Mr. Sarbanes?

OPENING STATEMENT OF HON. JOHN P. SARBANES, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Sarbanes.  Thank you, Mr. Chairman. I appreciate your 
holding this hearing. I am looking forward to serving on the 
committee and serving under your leadership with respect to 
this and many other issues.
    This is the most pressing issue of our time, really of any 
time. And it is fitting that we are having the hearing so early 
in the session. I look forward to hearing from these witnesses 
from USCAP. I wanted to just cite some statistics about what 
could happen to the Chesapeake Bay. I hail from Maryland, and 
the Chesapeake Bay is clearly a treasure for our State and the 
region, but also a national treasure. And to recount some of 
the projections of what would happen if we don't take the steps 
we need to with respect to global warming as it would affect 
the Chesapeake Bay, I think really bringing this home: 
according to a report by the National Wildlife Federation, if 
we continue on our current course and fail to reduce carbon 
emissions, and this assumes an increase in 3 degrees Fahrenheit 
by the end of this century, global warming would cause the loss 
of, with respect to the Chesapeake Bay, more than 167,000 acres 
of undeveloped dry land; 58 percent of the beaches along the 
ocean coasts; 69 percent of estuarine beaches along the bay, 
more than half of the region's tidal swamps and wetland 
habitats would be replaced by more than 266,000 acres of open 
water, which is equal to about 415 square miles. This would be 
cataclysmic. And this is just one example of the effects of not 
addressing global warming.
    What I am curious to learn more about from this report, 
from the panel's discussion today and from other hearings we 
will have on the topic is whether the targets for reducing 
emissions which are being set forth according to certain time 
frames actually correlate to the degree to which we have to 
slow, stop, and then reverse the global warming trend overall, 
because we can become seduced by the targets for reducing 
carbon emissions without necessarily linking them to the pace 
at which we actually have to stop global warming and reverse 
global warming. And it may be that the targets set are not 
aggressive enough, as the congresswoman just indicated.
    Bringing the market into this enterprise, which is what the 
recommendation here is of USCAP, is obviously critical. That 
alone can't do it. I think we are going to have to have a 
hybrid approach in order to achieve the levels of reduction 
that we seek and that are going to make a real difference. So 
there needs to be a multi-pronged approach. But more than 
anything, what should come from this hearing and others that we 
have on the topic is the urgency with which we need to move 
with respect to reducing global warming and reducing our carbon 
emissions. We really don't have any time to wait. And humans 
are, of course, very capable of delaying on all fronts. And so 
we have to move quickly. We have to move quickly as 
policymakers.
    I know this committee is going to be critical to doing 
that. And I thank you for holding the hearing today.
    Mr. Waxman.  Thank you, Mr. Sarbanes.
    Mr. Blunt?

   OPENING STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MISSOURI

    Mr. Blunt.  Thank you, Mr. Chairman.
    As it relates to this hearing today, clearly this is going 
to be a topic that this committee will deal with during this 
Congress and spend a lot of time on.
    I do wish we could have had more time to look at the 
partnership proposal before we had a hearing on the proposal. 
Certainly as we look at energy this year, my view has been and 
will continue to be that we need to find more of it, to find 
more American energy, to use less of it and to invest in the 
future. One of my concerns as we approach this topic of climate 
change is that we want to be sure that we're investing in the 
future in a way that doesn't cost jobs and opportunity and 
creates new jobs and new opportunities at the same time.
    Even if we knew, Mr. Chairman, where we were going to be in 
terms of the best way to power the economy 25 years from now, 
I'm not sure--as a matter of fact, I'm absolutely confident it 
would not be wise to try to get there in 5 years. To see the 
transition in the economy that could occur in a way that cost 
American jobs and cost American opportunity would be a huge 
mistake. We're all concerned about passing along a strong 
economy and a strong environment. I know that we have many 
different views on this committee as to whether or not we're in 
global warming caused by human activity or we're in the climate 
change activities that have happened throughout the history of 
the planet.
    Clearly there's always been climate change. There's a rush 
to determine that somehow the current climate changes are 
caused by things that we can impact in a significant way by 
immediate action. There's less debate about whether they're all 
immediate actions would create lost jobs and lost economic 
opportunity. This needs to be dealt with in the most thoughtful 
possible way. I don't disagree at all with previous comments 
that what we can do quickly we need to do quickly. But I do 
disagree that everything should be done in the quickest 
possible time frame. Everything should be done in a time frame 
that makes sense for American families, for the American 
environment but also for the American top competitive position 
in the world. And those are some of the topics that I'm sure 
we'll cover.
    In this hearing today, obviously we have lots of name 
plates in front of us. So if everybody who's going to be 
testifying gives a 5-minute opening statement, everybody that 
would like to ask questions of this panel today won't be able 
to ask all the questions we'd like to ask. But clearly this is 
the launching point for what will be an important debate in 
this committee, an important debate in this country, and will 
have massive impact on the future of American opportunity if we 
make the wrong decisions.
    And so Mr. Chairman, again, let me thank you for the way 
you got the committee started yesterday. I look forward to 
working with you personally. I know that this topic of 
environment and energy is one that our ranking member Mr. 
Barton has spent an incredible amount of time on, as I have and 
others have, and we are eager for the right opportunity--for 
opportunities to discuss what the future should look like for 
the American environment and American energy. And I yield back.
    Mr. Waxman.  Thank you very much, Mr. Blunt. I've asked Mr. 
Barton and Mr. Markey and Mr. Upton to hold off on their 
opening statements, along with my opening statement, before we 
hear immediately from the witnesses. But I want to ask if any 
member wishes to make, other than the four I mentioned, wishes 
to make an opening statement at this time?
    Mr. Barton.  Mr. Chairman, did you ask for unanimous 
consent?
    Mr. Waxman.  No. I was asking if any Member wishes to make 
an opening statement. If not, I would ask unanimous consent 
that we--when we reconvene at 10:30 that opening statements--
the only opening statements we will have will come from the 
chairman, the ranking member of the full committee, the 
chairman and the ranking member of the Energy and Environment 
Subcommittee.
    Mr. Barton.  Reserving the right to object.
    Mr. Waxman.  The gentleman is recognized for his 
reservation.
    Mr. Barton.  First, let me say that you have just had one 
of your Members come in so we may want to give him a right to 
make an opening statement.
    Mr. Waxman.  We certainly will.
    Mr. Barton.  I will not object to the unanimous consent 
request. But I want to make the point that in discussions about 
this proceeding, I encouraged you to begin early so that 
members that wished to make opening statements could. And you 
were agreeable to that. I think we have shown this morning that 
opening statements are a positive part of a hearing record. And 
I hope that in the future, although we've changed the rules so 
that opening statements and hearings are now at the discretion 
of the Chair, that you will continue to work with me and others 
so that we give members that wish to an opportunity to make an 
opening statement, because I do think it's important that we 
have members that are allowed to do that.
    And this committee, although it may be one of the few 
committees that still allows it, has always allowed every 
member on both sides of the aisle the opportunity to give some 
sort of an opening statement, maybe a 1-minute or a 3-minute 
before we begin the hearing process. So I want to thank you, 
even though it's now discretionary because of our rule change, 
that you did use your discretion to start the hearing early so 
that we could have opening statements. And I hope we continue 
that discretion.
    Mr. Waxman.  If the gentleman would yield, you have 
certainly made this point very clear to me. And I'm open to it 
and we'll try to work together.
    Mr. Barton.  OK.
    Mr. Waxman.  I have a unanimous consent request pending. I 
would like to revise it by saying that if the two members who 
have just joined us wish to make opening statements they are 
able to do so at this time.
    Mr. Butterfield.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield.  Mr. Chairman, I certainly apologize for 
being late. I figured out a lot of things from being in 
Washington, but one I haven't figured out is how to be in two 
places at one time. So thank you very much for recognizing me. 
Mr. Chairman, Ranking Member Barton, we certainly have a 
historic opportunity in this Congress and in this committee to 
revolutionize our energy and environmental policy. 
Accomplishing the monumental task of passing and implementing 
energy reform demands and bipartisanship in this body in 
cooperation between the actors involved and the crafting of the 
policy, which certainly includes our witnesses today from 
USCAP.
    Transformation of our attitude to one of cooperation and 
recognition of a common problem is sorely needed not only to 
combat the climate change crisis but to mobilize every sector 
of our society to participate in the process to make us more 
economically and environmentally secure. It is certainly our 
responsibility to confront these issues aggressively but 
prudently, recognizing that in our policy, there will be 
winners, there will be losers. The poorest among us, those who 
are least responsible for greenhouse gas emissions, will be the 
losers in nearly any iteration of policy that puts a price on 
carbon. When crafting our policy, Mr. Chairman, to curb 
emissions, we must mitigate the rising cost of energy on 
Americans poor who contributed the least to the problem and can 
least afford to bear the weight of a costly solution. So I 
thank the witnesses today for their efforts to find consensus 
among diverse actors and eagerly anticipate the opportunity we 
have in the coming months to effect change. Thank you. I yield 
back.
    Mr. Waxman.  Thank you very much, Mr. Butterfield. Mr. 
Murphy, do you wish to make an opening statement?
    Mr. Murphy of Pennsylvania.  Yes. Thank you, Mr. Chairman. 
How much time?
    Mr. Waxman.  Five minutes.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy of Pennsylvania.  Thank you. I thank you not 
only for the opportunity to make an opening statement but also 
to recognize the importance of members speaking to these 
issues.
    Early this morning I had a chance to go over to the Senate 
Hart Building and listen to some of the presentations of the 
United States Climate Action Partnership and had a preview of 
some of the important things that they'll be saying today. As 
we look at this, as Members of Congress, I hope that this 
committee can add some other elements to this. Certainly we all 
want clean air and clean water and clean land for coming 
generations. Even if there are still disputes about climate 
change, we need to join our hands together when it comes to 
making sure we keep this planet clean for following 
generations. But it is important as we look at these issues, 
we're also addressing them from the standpoint of how we do 
this on a global perspective and not just a local perspective. 
United States has lost hundreds of thousands, perhaps millions 
of jobs in manufacturing over the years, some of it is 
technologies have changed, but some of it also has come from 
jobs moving overseas where there are not the same pollution 
controls or expectations, where products can be made cheaper 
because they pay lower wages and don't have legacy costs or 
health or other elements there.
    But in the area of producing energy in clean and efficient 
ways, it is ones we have to look at in a global perspective. I 
look at my area of Pittsburgh as an example. Pittsburgh in the 
1800s was referred to by Charles Dickens as hell with the lid 
off. It continued to be a highly polluting area where people 
understood if they went to work, even white collar workers, 
they brought a couple shirts to work, and they would change 
them a couple times during the day because of the soot that was 
left on their clothes.
    Health problems and that sort of dirtiness were seen as 
part of life, yet Pittsburgh underwent amazing transitions 
where now it is really a model of a city as how things have 
cleaned up. We have bass fishing tournaments now in rivers that 
were once ones where nothing seemed to live. We also have to 
understand however that part of the cause of that came because 
steel left Pittsburgh. We have a great team called the 
Steelers. But quite frankly, I don't think steel is made 
anywhere within the city limits of Pittsburgh anymore. We've 
replaced it with other things. There are great companies that 
are headquartered such as U.S. Steel and other steel 
manufacturers. But they make that steel throughout the world 
now. We also are known in that U.S. steel made a tremendous 
investment in its cleratin coke works by investing over $1 
billion to make sure that coke--you can make steel without 
coal, but to make sure that that pollution is reduced there 
too. We applaud them for that.
    But what happens with other countries with regard to how 
they make steel, how they make manufactured products and how 
they make their energy to make those products is of concern. 
Developing countries like China and India emit an estimated 2.5 
to 5.0 metric carbons of CO2 emissions per metric 
ton of crude steel. The United States averages 1.2 metric tons 
of CO2 emissions per metric ton of crude steel. 
Cutting emissions in the U.S. has been done. But carbon 
emissions in other countries is two to four times that amount. 
That being the case, if we simply say that a cap and trade 
program in this country will be looked at and companies are 
allowed to or will continue to move their factories overseas to 
make their raw goods and their parts where cap and trade does 
not apply, we have done nothing to clean up this planet. 
Nothing.
    In fact we've just played this massive shell game by 
saying, we'll make these heavy industry parts in other 
countries, ship them back over here, put them together and say 
we've cleaned up our area. We have done no such thing. We have 
to make sure that whatever we do for carbon emissions and other 
pollution areas that we do this on a global perspective if 
we're going to do this at all. I'm tired of seeing our jobs go 
over to China. I'm tired of continuing to fund both sides of 
the War on Terror when we are sending things over to the 
Mideast when we can do so much here with our rich talent.
    So I hope that we all as colleagues join together then in 
seeing what we can do with the United States being a leader in 
bringing other nations to the table on this. We have to have 
solutions. We cannot afford to not the have solutions. We 
cannot afford to ignore this and we cannot afford to simply 
shuffle the jobs off to other countries and turn away and 
pretend we did something meaningful. With that, I yield back. 
Thank you very much, Mr. Chairman.
    Mr. Waxman.  Thank you, Mr. Murphy. Mr. Welch.
    Mr. Welch.  Thank you, Mr. Chairman and ranking member. My 
opening statement is, I'm glad to be here, and I look forward 
to working with the committee. Thank you.
    Mr. Waxman.  Thank you, Mr. Welch. Seeing no other members 
that wish to be recognized at this time for an opening 
statement, other than the four I mentioned earlier, the 
unanimous consent request before us is to recess until 10:30, 
at which point we will hear from the chairman and ranking 
member of the full committee, chairman and ranking member of 
the subcommittee, and the witnesses that are before us. Without 
objection that will be the order. We'll recess for another 5 or 
6 minutes.
    [Recess.]

  OPENING STATEMENT OF HON. HENRY WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman.  The meeting of the committee will please come 
to order. I am pleased to welcome you all here today to the 
first hearing of the Energy and Commerce Committee in the 111th 
Congress. We're holding this hearing on one of the most 
important issues Congress will face. It concerns our children's 
future, our economic future, and our security as a Nation. It 
is also about responding to the economic crisis we face.
    Today we're going to hear from some of our Nation's most 
prominent leaders in business and environmental community. 
These diverse leaders have come together in the U.S. Climate 
Action Partnership to call for legislation to reduce the threat 
of global warming. They recognize that the key to a revitalized 
economy and our long-term prosperity as a Nation lies in 
addressing climate change and transitioning to a clean energy 
economy.
    We are struggling with a grave economic crisis. Many 
Americans have already lost their jobs, their homes, their 
retirement savings. Many more are worried about their economic 
future. As Congress acts to address the immediate crisis, we 
must also lay the foundation for sustained long-term economic 
growth and security.
    Our environment and our economy depend on congressional 
action to confront the threat of climate change and secure our 
energy independence. U.S. industries want to invest in a clean 
energy future, but uncertainty about whether, when, and how 
greenhouse gas emissions will be reduced is deterring these 
vital investments. Companies are caught in a dilemma. They are 
reluctant to invest in old polluting technologies because they 
know that tougher regulations are inevitable but they can't 
invest in new cleaner technologies until they know what 
Congress is going to require.
    Our job is to extend to these industries a way to end the 
regulatory limbo and set our Nation on a responsible path for 
reducing climate change and achieving energy independence. Our 
committee will be acting quickly and decisively to reduce 
global warming and end our dependence on foreign oil. My goal 
as Chairman is to pass a comprehensive climate and energy 
legislation in the committee before the Memorial Day recess.
    That's an ambitious schedule, but it's an achievable one. 
We cannot afford another year of delay. As of today's hearing, 
we will show through the testimony a consensus is developing 
that our Nation needs climate legislation. Our job is to 
transform this consensus into effective legislation. The 
legislation must be based on the science and meet the very 
serious threats we face. We are fortunate that Ed Markey, one 
of the most experienced legislators in Congress, will be 
chairing the Energy and Environment Subcommittee. We're also 
fortunate that we have so many skilled and knowledgeable 
members on both sides of the aisle on this committee.
    Finding a consensus is not always easy, but I know that 
with the leadership that we will be able to have in our 
subcommittee from other members, we can succeed. Climate 
change, energy independence, and health care are going to be 
the committee's highest priorities. Passage of the children's 
health bill yesterday was a down payment on health reform. 
Today's hearing starts our work on climate change and energy 
independence. We'll be working on both issues at the same time. 
I welcome our distinguished witnesses and look forward to their 
testimony. But first we're going to hear from the Ranking 
member of the full committee, the Chairman and the ranking 
member of the subcommittee. Mr. Barton.
    Mr. Barton.  Thank you, Mr. Chairman. Before I give my 
statement I want to make sure that we have on the record, 
members will be allowed, time permitting, to ask questions of 
the witnesses and if time does not permit, we will be able to 
give written questions and the answers will be submitted for 
the record.
    Mr. Waxman.  Without objection, that will be a unanimous 
consent request that will be adopted. Any objections? Hearing 
none, that will be the order.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton.  Mr. Chairman, I'm very willing to work with 
you and others on the Committee to try to accomplish the goal 
that you just announced. I think it's good for the new chairman 
to have goals and that's certainly a worthy goal. Having said 
that, I want to make a couple of comments that are cautionary. 
First, several of our members, in their opening statements 
earlier before the panel got here, indicated that the science 
is settled on climate change. The science is not settled. This 
is not a hearing to debate the science, so I won't do that. I 
would point out though until Christopher Columbus discovered 
America in 1492 the science was settled that the earth was 
flat. I will also point out that until the mid-1800s, the 
science was settled that if somebody was sick, you bled them, 
and as late as the mid-1940s the science was that airplanes 
couldn't exceed the speed of sound.
    Science has a way of being settled status quo that turns 
out not to be. What I will say is that science is settled that 
CO2 concentrations are increasing in the atmosphere. 
That's a true statement. I will also stipulate that in some 
parts of the globe, temperatures are going up. I'm still not 
sure what average world temperature means. To me, what's more 
important is what's the temperature in Arlington, Texas, at a 
time certain in a place certain. But having said that, until 
you show me one of these U.N. models that can predict the past 
with at least 50 percent accuracy, much less the future, I'm 
not going to stipulate that the science is settled.
    Having said that, we're here today because we've got a 
distinguished list of panelists who have joined together to 
come up with a matrix on how to help our environmental and our 
economic issues. And they are distinguished. I know at least 
\2/3\ of them personally. And I will stipulate that they're all 
men and women of honor and integrity. One of the things that 
they say in their statement of principles is that they want a 
plan that's economically viable. Let me just read the stock 
prices of the witnesses today that are before us. We have the 
CEO of Conoco-Phillips. His stock price a year ago was $75.15 a 
share. It closed yesterday at $48.82. That's a 35 percent 
reduction. Duke Energy, Mr. Rogers is with us. His stock price 
a year ago was $20.05. It closed yesterday at $14.89. That's a 
decline of 26 percent. Mr. John Rowe, who represents Exelon, 
his stock price a year ago was $77.49. It closed yesterday at 
$52.84. That's a decrease of 32 percent. Mr. Crane, who 
represents NRG, $40.99, $23.17 yesterday, minus 43 percent. 
General Electric, one of the bedrocks of American industry, 
$35.27 a year ago, $13.87. That's a decline of 61 percent. 
Unfortunately I own some of that stock.
    So I want my G.E. folks to get with the program here. Rio 
Tinto, $402.09, closed yesterday at $81.52. A decline of 80 
percent. Siemens closed yesterday 61 percent off. PNM, Mr. 
Sterba, who has got a new hairdo I see.
    Mr. Sterba.  Yes, sir.
    Mr. Barton.  $20.09 a year ago, $10.31 yesterday, a decline 
of 49 percent. And the winner, in terms of least decline is 
Pacific Gas and Electric, Mr. Darbee. Their stock a year ago 
was $44.22. Yesterday it was $36.52 which is a decline of only 
17 percent. It must be something about the California economy, 
Mr. Chairman, it is helping or maybe Mr. Darbee is just an 
unbelievably excellent leader. My point is, there's not one CEO 
here today whose stock price is even close to what it was a 
year ago. We're in a very serious economic recession. And you 
cannot tell me that if we adopt one of their principles of a 
mandatory, mandatory cap and trade program on CO2 
emissions for our economy that it's going to help their stock 
prices.
    Now stock price is an inelegant value of the whole economy. 
I understand that. But we should be about protecting jobs, 
creating jobs. If we can do things, Mr. Chairman, that improve 
energy efficiency, if we get more energy or we get more output 
for less energy, and there's an environmental benefit 
consequently because of that, that's a good thing. But if we 
say we have to do things to lessen CO2 regardless of 
the economic consequences, in my opinion, that's a bad thing.
    So I think we should start with solutions that work. Mr. 
Boucher has a bill that is an R&D program for CO2 
carbon capture, conversion and sequestration. There's consensus 
on both sides of the aisle that that bill is a good first step. 
We should move that bill, Mr. Chairman. Then let's look at the 
experience in Europe of their cap and trade program, which is 
not working. Which is not working. And go from there. And last 
thing, we don't have the CEO of ExxonMobil here. I don't know 
if they're a part of USCAP. But their CEO has come out and 
said, if we have to do something about carbon, let's have a 
carbon tax.
    Now I'm not an advocate of a carbon tax. But I do believe 
that if you really, really, really want to reduce 
CO2, a carbon tax is the most efficient way to do 
it. And we should get with our friends at Ways and Means and 
give that some serious consideration. With that, Mr. Chairman, 
I'll yield back. I do appreciate the witnesses being here. I've 
read the synopsis of their program. And I do agree with their 
conclusion that we want to do things that are sustainable, that 
protect the economy and show that America can be a world 
leader. I do agree with that.
    Mr. Waxman.  Thank you Mr. Barton. Mr. Markey.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey.  Thank you, Mr. Chairman, very much. The 
coalition of American businesses and environmental groups 
before us today represents the evolution that has occurred on 
the issue of global warming. We have emerged from the last 
decade primordial ooze of discord and delay on global warming 
action. We have now arrived on terra firma where hard emissions 
reductions targets must supplant voluntary measures that aren't 
up to the job. And instead of struggling to stay afloat in a 
mire of skepticism, we're now poised to march forward with a 
new climate-friendly Obama administration and congressional 
leadership. But evolution will only take us so far on this 
issue. What we now need is legislative intelligent design.
    Now the hard task of enacting global warming legislation is 
before us. The witnesses here today, their shareholders and 
members and a growing majority of Americans know that the key 
to our economic growth, national security, and planetary 
survival is to pass energy and climate legislation that will 
finally unleash the clean energy revolution that has been 
building for years. The CEOs that are testifying before us 
today are not here to harm shareholder value. They are here to 
help lay out a plan, which will enhance shareholder value in 
the years ahead. To target where the economic growth 
opportunities are for our country and to create the jobs that 
will employ Americans for this generation and generations to 
come. That is why they are here. They understand the problems 
better than any that our country is faced with today 
economically.
    Our country has been hit by an economic tsunami. At the 
same time, we are feeling the early effects of a climate storm 
that is growing stronger and approaching faster than predicted 
just a few years ago. Comprehensive clean energy and climate 
legislation is the solution to both of these problems. And it 
is a solution for the whole country. High tech hubs like 
Massachusetts and sunny California will benefit. But so will 
steelworkers in Pennsylvania and former Maytag manufacturing 
workers in Iowa who are building blades for wind turbines. And 
ranchers in Texas and South Dakota are seeing their relentless 
winds turned into revenue with every turn of the wind turbine 
sprouting on their lands. Last year I introduced iCAP, the 
Investing in Climate Action and Protection Act, as my 
contribution to the climate policy discussion. Many of the core 
ideas of iCAP are reflected in the discussion draft put forward 
by Chairman Dingell and Chairman Boucher this past October. And 
many are consistent with the blueprint issued by the U.S. 
Climate Action Partnership today. Those developments bode well 
for the work before us. And I look forward to working with you, 
Chairman Waxman, chosen newly as the chairman because you have 
shown such tremendous leadership on this issue. I look forward 
to working with the other members of the committee, the 
administration and the American people to enact climate 
legislation that will save our economy and protect the planet.
    As the new chairman of the Energy and Environment 
Subcommittee, I am committed to moving a bill as quickly as 
possible in partnership with Chairman Waxman and all of the 
members, bipartisan, Democrat and Republican so that we can as 
quickly as possible deal with this issue because the urgency of 
the problem demands swift action. So I thank you, Mr. Chairman. 
I think it's very appropriate that you made this the first 
hearing and the quality of this first panel represents the 
magnitude of this issue. And I yield back the balance of my 
time.
    Mr. Waxman.  Thank you very much, Mr. Markey. Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton.  Well, thank you, Mr. Chairman. I just hope that 
this hearing is not necessarily a sign of things to come. I can 
remember when Republicans took the majority in the 1990s and I 
can remember sage advice given by my friend, Mr. Markey, who 
said that we ought to have the subcommittee chairman of 
Oversight and Intel, his advice was that we not have more than 
one panel and not more than six or seven witnesses and always 
allow the minority to have an equal say in terms of the folks 
on that panel. And admittedly, we have one panel today, but we 
have far more than six or seven. And I'm not sure that the 
minority was afforded the opportunity to, in fact, insist on a 
couple different witnesses. I also wish that we had received 
this blueprint earlier than this morning.
    Clearly it was printed before today. It would have been 
nice to at least have taken it home last night to be able to 
digest some of the summaries and the information rather than 
get it thrust at us literally at 9:00 this morning over in the 
Cannon Building.
    But I would confess that climate change is real. I 
recognize that we have a problem, and in fact, we do need to 
take action. I have never been a fan of cap and trade. We're 
fortunate to look at the EU's failure and their inability to 
reduce global gas emissions. Climate change policy must adhere 
to a number of different commonsense principles. It must 
provide a tangible environmental benefit to the American 
people. It has to advance technology and provide the 
opportunity for export. It has to protect American jobs. It has 
to strengthen U.S. energy security. And it does require global 
participation. I'll support legislation--I won't support 
legislation that doesn't meet those standards.
    In my State of Michigan, things are really, really tough. 
Our governor told us last week that our unemployment offices 
across the state are fielding 100,000 calls an hour. By design, 
a cap and trade approach works by increasing energy costs and 
slowing down economic growth. We can't afford that in Michigan. 
As a former member of this committee from the other side of the 
aisle, Sherrod Brown, now a Senator from the State of Ohio 
during the Senate cap and trade debate last year, sent a letter 
to Majority Leader Reid who said, and I am quoting directly 
from his letter, that cap and trade programs developed in the 
Lieberman-Warner bill have the potential to raise over $7 
trillion.
    Much of those funds will be indirectly paid for by 
consumers through increased energy prices. I think he had it 
right. The only consensus achieved during that Senate debate 
was that the cap and trade approach was not appropriate. Rather 
than making energy more expensive, hurting our fragile economy 
and sending American jobs overseas, we need to be pursuing an 
approach that promotes and encourages clean energy, builds 
economic strength through exporting American technology and 
thus creates jobs rather than exporting them. And I propose 
instead of setting an arbitrary cap that isn't linked to 
tangible global greenhouse gas reductions or recognizable drop 
in global temperatures that we should begin working on a clean 
energy policy that spurs investments in that technology and 
American jobs. More nuclear.
    We need to invest in clean coal technologies like carbon 
capture. We need to invest more in wind and solar and other 
renewables like hydro and we need more conservation. We must 
take a sector-by-sector approach that cultivates innovations in 
technology and efficiency rather than arbitrary government 
mandates. And we must meet our ever increasing energy demands 
as our economy begins to move forward and recover from this 
recession that we've been in, particularly in Michigan, for a 
long, long time. And you can't exclude China or India.
    Mr. Chairman, I look forward to the presentation and the 
questions that we'll be able to afford ourselves, both in 
person as well as in writing. I yield back the balance of my 
time.
    Mr. Waxman.  Thank you Mr. Upton. Today we're honored to 
have with us 14 chief executive officers and presidents of a 
broad range of businesses and leading environmental 
organizations, all of whom are here as members of the U.S. 
Climate Action Partnership or USCAP. USCAP is a coalition of 
over 30 businesses and leading environmental groups with the 
common purpose of urging Congress to enact climate change 
legislation promptly. And I would note that two other members, 
Alcoa and Deere and Company had been invited to testify and 
ultimately were unable to do so. This is a truly a 
distinguished panel. And I can spend a great deal of time 
discussing their accomplishments and their portfolios and their 
stock prices. But I think that since the purpose of this 
hearing is to hear from them and time is short, I'll forgo a 
full introduction.
    Joining us today are Jonathan Lash, President, World 
Resources Institute. James Mulva, Chairman and Chief Executive 
Officer of Conoco-Phillips. George Nolen, President and Chief 
Executive Officer of Siemens Corporation. Fred Krupp, President 
of Environmental Defense Fund. John Rowe, President and Chief 
Executive Officer of Exelon Corporation. David Crane, President 
and Chief Executive Officer of NRG Energy. Preston Chiaro, 
Chief Executive Officer of Rio Tinto. Jeffrey Immelt, Chairman 
and Chief Executive Officer of General Electric. Frances 
Beinecke, President of Natural Resources Defense Council. Jim 
Rogers, Chairman and President, Chief Executive Officer of Duke 
Energy. Peter Darbee, Chairman, CEO and President of PG&E 
Corporation. Eileen Claussen, President of the Pew Center on 
Global Climate Change. Mark Tercek, President and Chief 
Executive Officer, The Nature Conservancy. And Jeffry Sterba, 
Chairman, CEO and President of PNM Resources.
    Mr. Waxman.  As I understand it, we're going to hear from 
six witnesses--no, in agreement with the witnesses, six 
witnesses will waive their opening statement. And we thank them 
for their understanding. For the remainder, we'll hear 2-minute 
oral statements from each, and we have written statements from 
all of the witnesses, which we will enter into the record.
    I would like to also forewarn members, which I have 
mentioned this before, that some members of the panel will have 
to meet prior engagements this afternoon with the incoming 
administration. And as Mr. Barton and I have discussed, when 
this group of witnesses needs to leave, they will leave behind 
a group of designated replacements and will stay until we have 
finished with all our questions from all of the members who 
wish to ask questions.
    We're going to start a new policy in this committee that 
all witnesses that testify before us do so under oath. So I'd 
like to ask you if you would now that you are comfortably 
seated to please stand and raise your right hands.
    [Witnesses sworn.]
    Mr. Waxman.  The record will indicate each of the witnesses 
answered in the affirmative. We'll turn to our first witness 
for a statement, Mr. Immelt from General Electric.

 STATEMENT OF JEFFREY R. IMMELT, CHAIRMAN AND CHIEF EXECUTIVE 
                   OFFICER, GENERAL ELECTRIC

    Mr. Immelt.  Good morning, Mr. Chairman. Thank you and 
Ranking Member Barton, members of the committee, good morning, 
and it's an honor to be here this morning. Thank you for this 
opportunity. I'm Jeff Immelt, chairman of G.E. I understand we 
might have gotten off on the wrong foot this morning. I want to 
apologize for any process difficulties or misunderstandings we 
had. But we are honored to be here and we look to being 
responsive. We've been briefed on what the opening comments 
were. And please know directly from all of us that there is no 
intention to be disrespectful in any manner. We are here to be 
helpful in this process. So let me say that from the outset. 
We've launched a clean energy initiative in G.E. about 5 years 
ago. Here's what we've learned so far. We've reduced our own 
carbon footprint from where we were in 2004 by 8 percent 
between now and then. That represents about $100 million 
savings per year.
    So in an industrial setting, we've taken it on internally 
to great results. We've invested approximately $3 billion in 
clean energy R&D each year over that time period. That has 
generated $17 billion in 2008 revenue, 20 percent annual 
growth. Ranking member Barton, if this was our only business, 
our stock price would be doing much better right now. This is 
actually a great place to invest. And we've created 
competitiveness. 20 percent of our jobs inside G.E. are tied to 
green products. And that pulls with it another 60,000 supplier 
jobs.
    We are a net exporter of these products. So we view this as 
being a core of our global competitiveness. That's just a 
background of how I have come here.
    I represent, and we've all come together as the members of 
U.S. Climate Action Partnership, each one will go through some 
of the aspects of the blueprint that we've introduced today. 
But I would just make maybe four points at a very high level. 
One is that we really have gathered together a very diverse 
group of leaders. We represent industrial customers, utilities, 
car companies, oil companies. We really have tried to put 
together a representative segment of the industrial complex in 
the United States as well as having some of the leading NGOs in 
this field and experts over a long period of time.
    The second point I'd make is that what we try to do is a 
balanced and integrated approach with the understanding that 
economics are important, that solving the environmental issues 
are important, and we've tried to link in the proposal--the 
right trade-offs you know that can be--should be considered as 
we go forward with this kind of legislation. I'd say the third 
thing that we try to do is represent in cap and trade a market-
based approach for pricing carbon that we think over the long 
term will stimulate technology and make that a tremendous 
source of great strength as we go forward. The last comment 
that I would make is that we've always viewed U.S. Climate 
Action Partnership as a catalyst for change. We don't think we 
have all the answers. We think this is a starting point that 
can be built on and please accept that in the spirit with which 
it's given. We are people trying to solve what we view as a 
problem, trying to turn that into an opportunity and trying to 
do that in the context of being good citizens and being 
constructive in this dialogue. So thank you very much. And I'll 
turn this over to Jim Rogers.
    Mr. Waxman.  Thank you, Mr. Immelt.
    [The prepared statement of Mr. Immelt follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Mr. Rogers.

    STATEMENT OF JIM ROGERS, CHAIRMAN AND PRESIDENT, CHIEF 
                 EXECUTIVE OFFICER, DUKE ENERGY

    Mr. Rogers.  I'm Jim Rogers. I'm the CEO of Duke Energy. We 
serve a population of more than 11 million people in the in 
five States in the Midwest and in the Carolinas. On their 
behalf, I want to thank you for holding this hearing on USCAP's 
blueprint for legislative action. The song lyrics ``You can't 
always get what you want, but if you try some time, you might 
find you get what you need'' is not only a great line from a 
classic Rolling Stones song, but I suspect it is a feeling each 
of us have had as we created this blueprint for legislative 
action. We develop legislative proposals to be considered as a 
package, ones that seek to carefully balance the oftentimes 
conflicting demands of protecting our environment, our economy 
and our consumers. Decarbonizing our economy by 80 percent 
between now and 2050 would be a historic undertaking. It will 
not be cheap. And it will not be easy.
    The sooner we pass climate change legislation, the better 
off our economy and the world's environment will be. If we go 
about it in the right way, we cannot only avoid unnecessary 
economic harm and dislocation, but we can also ignite a lower 
carbon green revolution and more rapidly put this recession in 
our rear view mirror. It's my judgment that if we can couple a 
short-term stimulus package with this longer-term climate plan, 
we have the ability to stimulate greater confidence from 
consumers, entrepreneurs and corporations and we all know 
recessions are put in the rear view mirror when you have the 
capability to build confidence in the future and make 
investments.
    And let me quickly say, for our company, we plan to invest 
$25 billion in infrastructure over the next 5 years. It is 
critical we know the rules of the road of climate change as 
soon as possible to make sure that we are making the right 
investments. Regulatory uncertainty is postponing investments 
and renewables in other green technologies. It's postponing the 
creation of jobs from apprentices to engineers to Ph.Ds. Our 
one fear--and I will leave this with you--is that many in 
Congress will look for reasons to postpone action on climate 
legislation this year. As a former consumer advocate who fought 
rate increases of utility companies in the 1970s, I believe by 
starting now we have a better chance to smooth out and minimize 
the inevitable cost increases that will be imposed on U.S. 
consumers. We have important provisions in this blueprint that 
mitigate the cost impact on electric consumers by achieving 
president-elect Obama's stated objective to reduce carbon 
emissions by 2020. Thank you, Chairman Waxman and the 
committee. I appreciate the opportunity to be here today.
    Mr. Waxman.  Thank you Mr. Rogers.
    [The prepared statement of Mr. Rogers follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Ms. Beinecke.

  STATEMENT OF FRANCES BEINECKE, PRESIDENT, NATURAL RESOURCES 
                        DEFENSE COUNCIL

    Mr. Beinecke.  Thank you very much, Mr. Chairman, and all 
members of the committee for being here today and hearing the 
recommendations of USCAP. I am Frances Beinecke, President of 
the Natural Resource's Defense Council, and I want to 
congratulate you for devoting the first hearing, Chairman 
Waxman, of your chairmanship to addressing global warming. You 
are demonstrating that you share our understanding of the 
urgency of enacting comprehensive legislation to cut global 
warming pollution. The scientific basis for prompt action has 
become even more compelling in the 2 years since USCAP issued 
its call for action. The Nobel Prize-winning Intergovernmental 
Panel on Climate Change issued its most definitive report and 
even more recent findings show that global warming is occurring 
at a pace that equals or exceeds the upper bounds of earlier 
predictions. We see this in higher global temperatures, in the 
shrinking Arctic ice sheet in the increasing acidification of 
the oceans and increasing sea level rise. Global warming is no 
longer a distant threat, but a present danger to public health 
to national security, to biodiversity to the planet.
    Some will suggest that the current economic crisis is a 
reason to delay comprehensive climate legislation. I believe 
that the opposite is true. The work this committee has already 
started on economic stimulus legislation can jump-start 
investments in clean energy infrastructure and help get our 
economy back on track. These public investments will leverage 
much more private spending and will be far more effective if 
Congress follows the economic stimulus bill by promptly 
enacting legislation that establishes a clear roadmap for 
achieving the 80 percent reduction in global warming pollution 
that's needed by mid century.
    The targets during the first decade of the program are 
among the most important and most challenging of a bill's 
design features. Since the U.S. is late in cutting emissions, 
we need to make up for lost time, but some stakeholders are 
concerned about the cost and feasibility of meeting deep 
emission reduction targets, particularly in the early years. 
This tension has led to a range of views on the appropriate 
near-term targets. In the blueprint, USCAP recommends emission 
limits for cap sources and for total U.S. emissions that would 
be equivalent to an 80 percent reduction by 2050, nearly 50 
percent reduction by 2030 and a range of 14 to 20 percent 
reduction by 2020. It's important to stress that these targets 
are tightly linked to the other recommendations included in the 
blueprint as will be described by my colleagues.
    I'd also like to be clear that NRDC believes the science 
justifies a reduction of at least 20 percent by 2020. We joined 
request the USCAP consensus because we believe it is critical 
to enact climate legislation this year, and we believe that the 
blueprint shows a way to marshal the support from diverse 
constituencies needed to achieve that goal.
    Mr. Chairman and all members of the committee, we have a 
short window of opportunity to enact effective global warming 
legislation and secure our physical economic and environmental 
future. We look forward to working with all of you to achieve 
that in the coming year. Thank you.
    [The prepared statement of Ms. Beinecke follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Thank you very much, Ms. Beinecke.
    Mr. Krupp.

 STATEMENT OF FRED KRUPP, PRESIDENT, ENVIRONMENTAL DEFENSE FUND

    Mr. Krupp.  Thank you, Mr. Chairman. I am honored to be 
here. This blueprint for climate security is a blueprint 
because it has a cap that protects the atmosphere. The cap is 
the legal guarantee that pollution actually goes down. But the 
cap does a lot more than that. The cap creates customers. And 
if America has ever needed customers at home and abroad both 
for new and existing technologies, now is that time. And thank 
you, Mr. Chairman, for your commitment to move legislation out 
of this committee by the Memorial Day recess. For the sake of 
our atmosphere and our economy, we really need Congress to 
enact this legislation this year. My role is to talk about cost 
control measures, the most powerful of which is the cap and 
trade program itself. Cap and trade creates competition that 
will drive costs down while amplifying the effect of any 
stimulus package that you've passed. These measures--other 
measures will also be needed.
    And these measures should protect the economy, drive 
investment and energy efficiency and maintain the environmental 
integrity of the overall emissions budget. Emissions offset, 
that is activities that reduce greenhouse gas emissions that 
are not included in sectors that are not part of the cap, are a 
critical cost control measure recommended in the USCAP 
blueprint. Since USCAP is recommending stringent emissions 
targets, we also recommend the generous use of offsets to help 
moderate the compliance costs. USCAP recommends that Congress 
establish a board to set an overall annual upper limit for 
offsets starting at 2 billion metric tons with the authority to 
increase offsets up to 3 billion metric tons. Since the quality 
of offsets is an important--as important as the quantity, we 
also recommend that Congress direct EPA to establish a rigorous 
and transparent process for ensuring that all our offsets 
represent real and additional reductions.
    In addition, the board should oversee system-wide strategic 
offset and allowance pool, a carbon board which includes a 
reserve pool with additional offsets and as a measure of last 
resort the ability to borrow from future compliance periods 
that could be released into the market to prevent undue 
economic harm if necessary.
    Quality as far as carbon tons created by reducing tropical 
deforestation, would be eligible both for the international 
offset portion and for this strategic offset reserve. Thank 
you.
    [The prepared statement of Mr. Krupp follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Thank you, Mr. Krupp.
    Ms. Claussen.

 STATEMENT OF EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL 
                         CLIMATE CHANGE

    Ms. Claussen.  Chairman Waxman, Ranking Member Barton, and 
members of the committee, my name is Eileen Claussen and I'm 
the president of the Pew Center on Global Climate Change. I am 
going to say a few words about USCAP's recommendations 
regarding the allocation of allowance value. Greenhouse gas 
emission allowances in an economy-wide cap and trade system 
will represent trillions of dollars in value over the life of 
the program. USCAP believes the distribution of allowance value 
should facilitate the transition to a low-carbon economy for 
consumers and businesses, provide capital to support new low 
and zero greenhouse gas-emitting technologies and address the 
need for humans and the environment to adapt to climate change.
    USCAP recommends that a significant portion of allowances 
should be initially distributed free to capped entities and 
economic sectors particularly disadvantaged by the secondary 
price effects of a cap and that free distribution of allowances 
be phased out over time. The USCAP blueprint identifies 
principles to guide the fair and equitable allocation of 
allowances to end use consumers of electricity, natural gas and 
transportation fuels, low-income consumers and workers in 
transition, energy intensive industries that face international 
competition, trade exposed commodity products, competitive 
power generators and other nonutility large stationary sources, 
programs to achieve technology transformation and adaptation 
needs of vulnerable people and ecosystems at home and abroad.
    One of our main objectives is to dampen the price impact of 
climate policy on the customers of electricity and natural gas, 
particularly in the early years of the emissions constraint. 
And therefore, we believe that a significant portion of 
emission allowance value should also be allocated to electric 
and natural gas local distribution companies which are cost 
regulated and where the prices--the price alleviation would be 
passed on to consumers. Thank you.
    [The prepared statement of Ms. Claussen follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Thank you, Ms. Claussen. Our next witness to 
testify is Mr. Darbee from PG&E.

    STATEMENT OF PETER A. DARBEE, CHAIRMAN, CHIEF EXECUTIVE 
            OFFICER, AND PRESIDENT, PG&E CORPORATION

    Mr. Darbee.  Mr. Chairman, Ranking member Barton, other 
members of the committee, thank you for the opportunity to be 
here this morning. I'm going to address the issue of energy 
efficiency, one of my favorites. From virtually every angle, be 
it cost or technology or the size and value of the benefits, 
one of the best strategies to attack the climate problem is 
improving our energy efficiency. It, as Time Magazine said in a 
recent cover story, it's perfectly clean, remarkably cheap, 
surprisingly abundant and immediately available. Its cost is 
about 2 or 3 cents a kilowatt hour, which is I think as cheap 
or cheaper than any alternative energy source. USCAP hardly 
seconds the appraisal of Time magazine. Fortunately for 30 
years, PG&E has designed and run some of the world's most 
effective energy efficiency initiatives. This success is just 
one of the many indicators pointing to the enormous benefits 
available naturally in this field. In USCAP's view, these 
include not only lower energy emissions, but also economic 
investment, jobs and not the least savings for our customers. 
The key lies in the right mix of policies, programs and 
incentives. With that as the goal, USCAP's specific 
recommendations are the following: Setting or updating codes 
and standards for buildings and end use technologies at the 
Federal and State levels, including improving efficiency in 
Federal buildings. Expanding tax credits, incentives and 
rebates for buildings that outperform energy efficiency codes. 
Fully funding energy efficiency outreach in education. 
Providing incentives to manufacturers and retailers who embrace 
highly efficient equipment and appliances, using tax and 
regulatory policies to drive consumers and manufacturers 
towards more energy efficiency product and processes. 
Developing a generally accepted approach for measuring and 
tracking energy reductions and corresponding emissions 
benefits. Encouraging State regulators to align policies so 
that utilities are incentivized to put a high priority on 
energy efficiency and demand management. A prime example of 
this is revenue decoupling which eliminates the incentives for 
utilities to sell more energy as they are currently motivated 
to do today. Tracking and reporting State progress on energy 
efficiency potentially rewarding the leaders with additional 
energy efficiency funding, and finally, labelling buildings to 
provide information on the value of energy savings and 
requiring that information be factored into loan applications 
and underwriting.
    Together we believe these steps would jump start major 
progress towards boosting the overall energy efficiency of the 
U.S. economy. Thank you for this opportunity to speak before 
you.
    [The prepared statement of Mr. Darbee follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Thank you, Mr. Darbee.
    Now we'll hear from Mr. Chiaro from Rio Tinto. There's a 
button on the base.

STATEMENT OF PRESTON CHIARO, CHIEF EXECUTIVE OFFICER, RIO TINTO

    Mr. Chiaro.  Chairman Waxman, Ranking member Barton, and 
distinguished members, members of the committee, thank you for 
agreeing to listen to our views this morning. I am Preston 
Chiaro, chief executive energy and minerals for Rio Tinto. We 
are a major minerals and metals producer with operations and 
markets worldwide. Here in the U.S., we're the second largest 
coal producer and we are also the world's second largest 
producer of uranium for nuclear power generation. Our coal and 
uranium together provide the fuel for about 9 percent of the 
Nation's electricity generation. Our U.S. businesses employ 
over 15,000 people in 31 States with major operations in 
California, Kentucky, Utah, and Wyoming.
    I want to talk this morning about technology, many low 
greenhouse gas emitting technologies already exist. And these 
technologies will be important for near-term reductions. But we 
must also develop the long-term critical path solutions that 
will allow us to meet aggressive reduction targets over time. 
Critical path technologies such as carbon dioxide capture and 
storage or CCS need stable predictable funding sources not 
subject to annual appropriations in order to compress and 
accelerate the technology deployment and commercialization time 
frames. CCS really is a key, enabling technology to unlock an 
environmentally friendly future for fossil fuels.
    The proposals outlined in the blueprint are intended to 
promote CCS technologies to levels above and beyond what a 
CO2 market price signal alone will yield. Our 
specific recommendations include first by 2010, a comprehensive 
national strategy for implementing all necessary rules and 
removing legal barriers for CCS deployment. Second, funding for 
five gigawatts of projects to demonstrate full integration and 
viability of CCS with power production and other industrial 
processes.
    Demonstration projects must be underway even before a cap 
and trade program is in place. Third, direct funding of CCS 
projects for sequestered CO2 from coal and other 
fossil fuels made on a first come first serve basis. Funding 
levels must be adequate to cover the incremental costs of 
capturing and storing CO2 instead of emitting it 
into the atmosphere, and sufficient to encourage deployment on 
the order of about 72 gigawatts. We believe this will keep coal 
in the overall generation mix and avoid a costly dash to gas 
within the power sector.
    Once an adequate regulatory framework and financial 
incentives are in place and CCS technology has been 
successfully deployed in commercial settings, we recommend that 
all new coal plants meet a reasonable performance standard. We 
believe that these policy recommendations will go far in 
ensuring that coal remains a cornerstone of electricity 
generation in the future while responding to the imperative to 
reduce man-made greenhouse gases. Thank you.
    [The prepared statement of Mr. Chiaro follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Waxman.  Thank you very much, Mr. Chiaro.
    And finally we'll hear from Mr. Mulva from Conoco-Phillips.

STATEMENT OF JAMES MULVA, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, 
                        CONOCO-PHILLIPS

    Mr. Mulva.  Good Morning, Mr. Chairman and committee 
members. As chairman of Conoco-Phillips, the third largest, 
U.S.-based integrated energy company, we support the integrated 
set of recommendations included in USCAP's blueprint for 
legislative action. Greenhouse gas emissions from 
transportation fuel represent nearly \1/3\ of U.S. total. 
Clearly, this sector must be covered by any comprehensive 
national policy. However, reducing these end use emissions is 
going to be complicated. It would require a systematic approach 
that involves fuel providers, vehicle and equipment 
manufacturers, consumers, public officials and policymakers. 
Now the blueprint offers several key recommendations specific 
to transportation.
    First, emissions from transportation should be included in 
an economy-wide cap. Second, fuel providers should be 
responsible for securing allowances for the resulting consumer 
emissions. And third, coordinated performance measures should 
be established for all factors involved and that is vehicles, 
fuels and consumers. Including transportation within the cap 
will provide the environmental certainty that's needed. It will 
encourage efficiency, technological progress and more energy 
conscious consumer practices. Recommended performance measures 
include one, a greenhouse gas-based fuel performance standard 
that's challenging but it's also economically and technically 
feasible. Two, improve vehicle emission standards. And three, 
strong policies that would reduce emissions from travel, 
stimulate investments in efficiency and encourage less carbon 
intensive infrastructure development. These measures should be 
periodically reviewed and updated for their effectiveness. Our 
company and other USCAP members are committed to working with 
Congress and the new administration. We urge you to enact 
legislation that effectively protects the climate while also 
assuring the safe, secure and affordable energy supplies that 
sustain our economy and standard of living. Thank you.
    [The prepared statement of Mr. Mulva follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Waxman.  Thank you very much for your testimony.
    I note that these are the members of your group selected to 
give oral statements, but we have written statements from the 
rest of you, and those will certainly be in the record.
    [The statements of Jonathan Lash, George Nolen, David 
Crane, Mark Tercek, and Jeffry Sterba follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Waxman.  I want to start off the questioning by 
yielding to Mr. Markey.
    Mr. Markey.  Thank you, Mr. Chairman, very much. This is a 
question to the CEOs. You've heard the concern that adopting 
the kind of proposals that you're putting before us today could 
harm your companies. I'm going to ask each one of the CEOs, do 
you agree with that suggestion or do you disagree? Mr. Mulva, I 
just need a yes or no because I have several questions.
    Mr. Mulva.
    Mr. Mulva.  No, I don't believe what we are proposing will 
harm our company and its long-term prospects for opportunities 
in investment.
    Mr. Markey.  Thank you. Mr. Nolen.
    Mr. Nolen.  I also don't believe it will hurt our company 
and will make it better in the long term.
    Mr. Markey.  Mr. Rowe.
    Mr. Rowe.  No, sir.
    Mr. Markey.  Mr. Crane.
    Mr. Crane.  No.
    Mr. Markey.  Mr. Chiaro.
    Mr. Chiaro.  No, sir.
    Mr. Markey.  Mr. Rogers.
    Mr. Rogers.  No, with respect to our company as well----
    Mr. Markey.  I am coming back to you with another question. 
Thank you. Mr. Darbee.
    Mr. Darbee.  No, sir.
    Mr. Markey.  Mr. Sterba--Mr. Tercek. I'm sorry.
    Mr. Tercek.  I'm with the Nature Conservancy.
    Mr. Markey.  Mr. Sterba.
    Mr. Sterba.  No, I don't. It's inappropriate.
    Mr. Markey.  Let me go to you now, Mr. Rogers. You say that 
the current economic downturn actually provides Congress with 
its best opportunity to pass meaningful and sustainable climate 
legislation. Can you briefly expand on that?
    Mr. Rogers.  Sure. Because as I study many of the proposals 
for the economic stimulus and I look at sort of the green 
stimulus that's embedded in that, if that is passed and we have 
climate legislation pass this year where the economic impact 
won't be immediate because of the way the plan works, I think 
the combination of the two together provides the kind of 
roadmap that will allow companies like ours to start making the 
decision.
    And let me also be very blunt about this. I don't think 
it's going to be cheap or easy to achieve the objectives in the 
blueprint. And the sooner we get started, the better. And quite 
frankly, I believe having a debate about this in the middle of 
the recession is the right time to do debate it because 
economic considerations will be carefully taken into account.
    Mr. Markey.  Thank you Mr. Rogers. Mr. Chiaro, you 
represent the second largest coal producer in the United 
States. And yet in your testimony, you say that legislation 
could encourage innovation, enhance America's energy security, 
foster economic growth and improve our balance of trade. Could 
you briefly expand on that?
    Mr. Chiaro.  Coal has some fundamental characteristics that 
I believe make it a viable and in fact essential fuel for the 
future. Like every other fuel source, it has environmental 
aspects that must be controlled. We have done a good job 
controlling particulate emissions from coal, sulfur dioxide 
emissions from coal, other aspects of coal mining and so on. 
And this is just simply the step in that procession of 
technology development to produce technology carbon capture and 
storage that can address the C02 emissions from coal-fired 
generation.
    Mr. Markey.  Thank you Mr. Chiaro.
    Mr. Crane, you say in your testimony that addressing the 
climate legislation is the paramount challenge facing our 
generation and that it is a moral imperative that we act 
without any further delay. Please expand.
    Mr. Crane.  Well, I think just from our perspective, our 
role as business leaders is to target our companies as to the 
social and economic dynamics in which we live. And this is the 
most compelling one. As a major carbon emitter and someone who 
stands ready with capital to invest in green technologies, what 
we really need is to work hand in hand with yourselves to 
provide clarity so we know where to invest.
    Mr. Markey.  Thank you.
    Mr. Immelt, you testified that your wind turbine business 
has grown from $300 million to $6 billion in just 6 years. And 
you also state that GE's clean-tech ecomagination business is 
growing at 20 percent a year and will soon reach $25 billion 
and create tens of thousands of jobs. So you see this as a 
great economic opportunity for GE, huh?
    Mr. Immelt.  Sir, I believe not just in the United States, 
but globally, the interest in clean technology is high. We see 
demand for these products on a global basis, and most 
importantly we are a net exporter of all these products out of 
the United States. So I think that investing in clean 
technology and innovation, clean technology is a great business 
proposition for many companies in this country.
    Mr. Markey.  Thank you. 
    Ms. Beinecke, you say that the cost of inaction is very 
high for our economy and our country. Could you please expand?
    Ms. Beinecke.  Well, the evidence, the scientific evidence 
of what the consequences of global warming are, are just 
mounting very, very rapidly as I indicated. And so there will 
be not only severe ecological consequences, but severe 
humanitarian consequences as a result of that. And so every day 
that we delay in enacting climate legislation and getting on 
the path reducing our carbon emissions, puts not only all of 
our ecological systems at risk but puts literally hundreds of 
millions of people around the world at risk for not being able 
to have secure futures.
    Mr. Markey.  Chairman Waxman and I are committed to acting 
to deal with this urgent problem and to do so in a fashion that 
represents the urgency of the problem.
    Thank you all for being here today.
    Mr. Waxman.  Thank you, Mr. Markey. Mr. Blunt.
    Mr. Blunt.  Thank you, Mr. Chairman. If--as we put this or 
other things into legislation, we will of course have to come 
up always with cost estimates, with economic impact estimates.
    Ms. Claussen, are there those estimates in the report?
    Ms. Claussen.  No, we do not have them in the blueprint. We 
have done some economic modeling and we have looked carefully 
at the economic modeling that's been done over the last year 
over pieces of legislation like the Lieberman-Warner bill.
    It is our conclusion that you cannot derive point estimates 
that are meaningful here, but you can get a lot of insights. 
And we took those insights into account when we developed the 
blueprint. For example----
    Mr. Blunt.  Let me ask a couple of questions about that. 
They are not here yet, we will need to look for them. 
Lieberman-Warner was the plan that was discussed last year and 
the estimates from the Energy Information Administration, from 
EPA, from the National Association of Manufacturers, they all 
had estimates that showed significant gross domestic product 
reductions by 2030. I know in my State alone, in Missouri, the 
estimate of one of those reports was that we would lose--have a 
net loss of 57,000 to 76,000 jobs, obviously not a loss that we 
would want to have at any time and particularly not at this 
time.
    I'm wondering, Mr. Darbee, as you looked at this topic, how 
much of that is offset by new jobs, and what's in this report 
that doesn't create 140 percent increase in gas prices by 2050, 
for instance, that Warner-Lieberman was purported to increase. 
Mr. Darbee?
    Mr. Darbee.  Well, Congressman, let me say that there were 
a lot of concerns when we started on the energy efficiency 
route 30 years ago in California, along the same lines. And 
people felt that really working hard on energy efficiency as 
well as choosing the route on renewables that we did would hurt 
the economy. And yet the California economy has grown better 
than average in the United States over that 30-year period. So 
as we look at it, there are tremendous opportunities with 
respect to investments in energy efficiency, in investments in 
renewable technology. You've heard from the CEO of GE about the 
opportunities there. So I think there will be many puts and 
takes. Some estimates have indicated that the cost would be 
below 1 percent of GNP. Those costs are not insubstantial. But 
when one thinks about the consequences of inaction, just for 
example in water in the West or hurricane damage in the East, 
they more than swamp the costs associated with dealing with 
climate change. And what we've learned from business is the 
sooner you start working on a major problem, the more degrees 
of freedom you have in solving that, and the solutions are 
cheaper. So the cost will not be inconsequential, but they will 
be less than the cost of inaction.
    Mr. Blunt.  Where are we? I'm interested in the argument 
that Mr. Rogers I thought made effectively, that the sooner you 
start, the more you average out the ultimate cost that these 
things may have to have. Is that in the report somewhere? The 
averaging out, the goals, have we--has goals been designed in a 
way that we are really thinking about the incremental cost and 
the impact that has?
    I'll let you, Mr. Darbee, answer that too, if you want.
    Mr. Darbee.  I don't believe that we have that in the 
report, although if my colleagues can identify something that 
I've missed, I don't think it is there. Supporting that, we 
have done, as Ms. Claussen indicated, a fair amount of economic 
analysis, as have others like McKenzie, that suggest that the 
costs are manageable and less than the costs of inaction.
    Mr. Blunt.  Yes. I think Ms. Claussen used the--we talked 
some in the hearing already in your testimony about the 2020 
figure. I guess I will just go down the line, the same line 
that my friend Mr. Markey went down. And my question would be: 
Are you confident that this doesn't have negative economic 
impact on your companies in terms of job loss or other costs in 
the first decade?
    And, Mr. Mulva, I think you got to lead off last. It is 
really just a yes or no question, is the first decade as 
opposed to between now and 2050.
    Mr. Mulva.  Addressing climate change will increase our 
cost structure providing energy.
    Mr. Nolen.  No, it will not, as a provider of the 
technology.
    Mr. Blunt.  Mr. Rowe?
    Mr. Rowe.  It will not have negative effects on my company, 
but if we aren't very careful to use the market mechanisms of 
cap and trade to limit the costs of what we do, it would have 
negative effects on our customers. That's why we think that cap 
and trade is so important.
    Mr. Blunt.  Mr. Crane.
    Mr. Crane.  In the near term, taken in its totality, would 
not impact us in the near term. In the long term it would hurt 
us if we don't adapt our technology, change the way we make 
electricity, which is part of the plan.
    Mr. Chiaro.  On balance we believe the opportunities will 
outweigh the risks and costs.
    Mr. Blunt.  In the first 10 years?
    Mr. Chiaro.  In the first 10 years.
    Mr. Blunt.  Mr. Immelt.
    Mr. Immelt.  Congressman, I would agree with my colleagues.
    Mr. Blunt.  Mr. Rogers.
    Mr. Rogers.  In the first 10 years, if the allocation 
method is done appropriately, it will minimize the cost impact, 
but there will be cost impact on our consumers. We are the 
third-largest consumer of coal in the country, over 70 percent 
of our electricity coming from coal. And for the 25 States with 
more than 50 percent of their electricity from coal, it will 
also--if the allocation of allowances is not designed right, 
could result in significant increases in prices in each of 
those States.
    Mr. Blunt.  And just very quickly, I'm over my time, Mr. 
Darbee and Mr. Tercek.
    Mr. Darbee.  The answer is no.
    Mr. Tercek.  Like Mr. Rogers, there will be cost increases 
that our customers will bear. But if it's not appropriately as 
we've laid out, we can minimize what those cost increases are.
    Mr. Blunt.  Thank you. And thank you, Mr. Chairman.
    Mr. Waxman.  Thank you, Mr. Blunt.
    The Chair would like to now recognize the Chairman Emeritus 
of the committee, Mr. Dingell, for his questions.
    Mr. Dingell.  I thank you for your courtesy. This question 
to Dow and Dupont, I believe Mr. Green and Mr. Sterba are 
present here.
    I have a great concern about designing the climate change 
program so as not to put our own American industries at a 
competitive disadvantage and driving jobs overseas. I am 
particularly concerned about USCAP's views on one issue and 
that is chemical companies such as Dow and Dupont. And that is 
about the possibility of massive fuel switching occurring from 
coal to natural gas. I have fears that this could create 
significant increases in the cost of natural gas, which is used 
both as a process and as a feedstock.
    Could Mr. Green or Mr. Sterba comment on that and tell me 
whether this issue was discussed at USCAP? Gentlemen, don't be 
shy, the clock is running.
    Ms. Claussen.  They are not here.
    Mr. Dingell.  Oh, they are not here.
    Ms. Claussen.  They are not present.
    Mr. Dingell.  Could anyone, then, answer that?
    Ms. Claussen.  Maybe I can reassure you that we spent a 
great deal of time with our concerns about trying to avoid the 
dash for gas which would put Dupont and Dow at a disadvantage. 
That is why we have the cost containment mechanisms that we've 
put in here. And that is why we think it is important when you 
consider allocation that you do so to companies that could be 
adversely affected.
    Mr. Dingell.  Would anyone else like to make a comment?
    Mr. Tercek.  I would add, Mr. Dingell, the dash to gas is 
something, as has been said, is something we are very, very 
focused on. And we must try to avoid near-term price spikes in 
cost of carbon and that's why the--all of the mitigating 
mechanisms, from allocations to the Carbon Board administering 
a reserve fund, to the use of offsets, are a critical component 
of this. Otherwise we would run the risk of moving on to 
natural gas to the detriment not just of our chemical 
companies, but all consumers who use natural gas to heat their 
homes.
    Mr. Dingell.  All right. Ladies and gentlemen, last year 
you will recall that Mr. Boucher and I released a discussion 
draft, which was our suggestions as to what the committee 
should consider as we proceed about this business.
    I would like to have each of you give me some comments, or 
those of you who seem--who would prefer to do so, to tell us 
about the blueprint release today and how it meshes with that 
draft or how it would work, because I believe that this is 
going to be a very important tool for this committee to use to 
begin to arrive at a consensus. Who would like to respond?
    Ms. Beinecke.  Thank you very much for the question. In our 
analysis, there are many elements of the discussion draft that 
you and Chairman Boucher prepared that is very consistent with 
what is in the blueprint. And I think we could answer 
specifically and do an analysis for you going forward. But a 
lot of the issues, the targets, the cost containment 
mechanisms, the various incentives to drive technology, I think 
are quite compatible in both, I think provide a blueprint for 
the committee to begin their deliberations this year on how to 
enact climate legislation quickly.
    Mr. Dingell.  Would each of you who is disposed give us 
some comments on the question just asked? In other words, do 
this please for the record. And I ask, Mr. Chairman, that the 
record remain open so that we may have those responses included 
into the record on this matter.
    Mr. Waxman.  Without objection, that will be the order.
    Mr. Dingell.  Mr. Chairman, I thank you. Ladies and 
gentlemen, thank you.
    Mr. Waxman.  Thank you, Mr. Dingell. Mr. Upton.
    Mr. Upton.  Thank you, Mr. Chairman.
    I think many of you know that our electricity demands in 
this country are expected to grow by about 50 percent by the 
year 2030. Your plan as you submitted this morning will 
reduce--will have a reduction in emissions by 40 percent by 
that same year and 80 percent by the year 2050. I wonder if any 
of you know when the last time our country--at what year did 
our country actually achieve the emissions that are mandated in 
this legislation or proposed by 2050? In other words, an 80 
percent reduction. Any of you know? Mr. Krupp.
    Mr. Krupp.  Well, I would have to----
    Mr. Upton.  I'm told it is about 100 years ago; that our 
emissions by 2050 in essence would equal what was in the early 
1900s.
    Mr. Krupp.  Excellent question, Mr. Upton. The historical 
experiences that we have in regulating emissions really most 
clearly is illustrated by the 1990 Clean Air Act, which called 
for a 50 percent reduction not in 22 years as we are calling 
for here, but a 50 percent reduction in only 10 years. That was 
achieved ahead of schedule for sulfur dioxide. And in fact 
under the current administration, the Bush administration, the 
President has ordered an additional 70 percent cut in less than 
another decade. So combined, the two cuts in sulfur emissions 
that have been ordered are greater than 80 percent, in a much 
shorter time frame, and have been achieved at a fraction of the 
cost predicted by the opponents.
    Mr. Upton.  Well, this, of course, will be carbon emission 
reductions.
    Mr. Krupp.  That's absolutely true. I think that the sulfur 
is very instructive experience. With carbon, the opportunities 
for reducing, especially when you consider offsets, are much 
broader than with sulfur. With sulfur you really needed end-of-
the-pipe technology. With carbon, energy efficiency reducing 
the input from--by using offsets from farmers who can 
contribute to reductions opens up a wider array of 
possibilities. So I think there's more reason to be optimistic 
here.
    Mr. Upton.  OK. Mr. Rogers, you indicated that unless we 
perfected the CCS process by--certainly by the year 2015, that 
it would be very difficult to achieve the proposed reductions 
by 2020 as well as 2030 and 2050. You know that Mr. Boucher and 
I introduced legislation in the last Congress that proposed a 
path to get that. We appreciated the industry support for sure. 
But that legislation languished, it did not move out of this 
committee. The Chairman has indicated he would like to pass 
this, the overall legislation, in the next 4 months. You have 
indicated that it would be at least 5 years before we'd see 
whether this is perfected or not. Can you achieve these 
reductions without CCS?
    Mr. Rogers.  It would be my judgment that--one, I was very 
supportive of that legislation.
    Mr. Upton.  I know that.
    Mr. Rogers.  I think it is critical. It would be my 
judgment that without that legislation, our comparable effort, 
that we would be in a place where we can achieve the targets. 
But I would say one other thing that I think is very important 
for this committee to appreciate. These targets can be met only 
if we have aggressive energy efficiency. These targets can only 
be met if we have renewables and renewables that we can 
actually get to market, which means eminent domain. Because 
renewables, without eminent domain, will not get to market 
given the ability to build and to build transmission.
    Thirdly, in every study, and I would refer you to the EPRI 
study, a key component to being able to achieve these levels 
and to supply electricity to our economy has required 
significant buildout of nuclear units going forward. And if you 
take any of these off the table, take coal off the table or if 
you take nuclear off the table, our ability to hit these 
targets, just not a mission that can be achieved.
    Mr. Upton.  Mr. Darbee, would you agree with that?
    Mr. Darbee.  I agree that we need all of the different 
technologies that have been identified. The one thing I would 
say is that with a cost put on carbon, there are all sorts of 
new technologies that we haven't identified yet that may be 
available in 2020, and that they may substitute to the extent 
that we have----
    Mr. Upton.  I want to get my last question in. I appreciate 
it.
    Mr. Krupp and Ms. Beinecke, did you support--did you all 
take a stand on the CCS legislation in the last Congress?
    Mr. Krupp.  We did not.
    Ms. Beinecke.  Yes, we did and we supported that 
legislation.
    Mr. Upton.  You did support it.
    Ms. Beinecke.  And the CCS provisions, because we think 
getting CCS going rapidly is absolutely critical to solving the 
problem.
    Mr. Upton.  My time has expired. Thank you, Mr. Chairman.
    Mr. Waxman.  Thank you, Mr. Upton.
    Now recognizing members on the rules in the order in which 
they appeared at the committee today, Ms. Capps you would be 
next.
    Mrs. Capps.  Thank you, Mr. Chairman. Part of the reason 
we're here today is that year after year our understanding of 
climate change science has grown: computer models that 
predicted increase in temperature, changes in ocean heat 
content, and decreases in Arctic sea ice, then strongly 
supported by subsequent observation. As this committee takes up 
legislation to address climate change, we need to stay apprised 
of the latest climate science. We also need to think through 
the economic effects of our actions. If history is a guide, 
there will be some who will argue that it is simply too 
expensive to take action. Each time Congress has considered 
adopting environmental protections in the past, we've heard the 
same story.
    Now, Mr. Krupp, I would like to build on the interaction 
you just had with my colleague, Mr. Upton. And you and I have 
had a working relationship in my congressional district on the 
central coast. In a little fishing village called Morrow Bay, 
you helped us demonstrate that we could save that village by 
protect--and that protecting the environment could actually 
ensure business growth for those fisherman.
    I know that the Environmental Defense Fund employs Ph.D. 
Economists, and I would like to ask you about the predictive 
powers of this discipline. Could you talk about the history of 
cost predictions for previous environmental legislation? In 
particular, I would like to hear some background on the 
accuracy of predictions about the 1990 acid rain program, part 
of the Clean Air Act's cap and trade system.
    Mr. Krupp.  Thank you. It is an excellent question and it 
turns out that it is very hard for the economic models to 
predict the impact of a dynamic incentive to come up with new 
technologies. And these economic models historically have 
always underestimated the innovation factor.
    Specifically, you ask about the Clean Air Act of 1990. 
Costs for removing a ton of sulfur dioxide were estimated 
anywhere between $800 a ton and over $2,000 a ton. In the first 
phase of the program, costs turned out to be--which is what the 
estimates were for--less than $100 a ton. So the estimates were 
wrong by up to a factor of 10-fold. And the reason is that the 
cap and trade creates buyers for the lowest-cost tech 
technology. It creates a hunt, it creates incentives to 
innovate. And that basically grinds down the cost.
    And that would be my comment. Historically, economists have 
always overestimated the cost, without exception.
    Mrs. Capps.  Well, given our apparent difficulties in 
predicting how the economy would change, it is still a very 
vitally important topic. Do you have any advice on how 
policymakers could best make use of economic predictions about 
climate and energy policy?
    Mr. Krupp.  Well, I think the models still are useful 
because they do tell us that the design of the program by your 
committee will be extremely important in terms of cost. They 
tell us that--I don't think they can give us a number of what 
the costs will be, but they say there are some things that you 
can do that will make a big difference, and they show us 
relatively they will more or less expensive.
    For example, allowing the use of offsets will drive the 
cost down substantially. And all the models from MIT and 
Harvard do show that. And I do think those qualitative 
conclusions are correct. They show that the more trading you 
allow, the more flexibility between gases and between sectors 
that you allow, the more you will drive the cost down of the 
program.
    Mrs. Capps.  Let me just ask--this, I believe, is an 
important topic--if any of the rest of you, particularly those 
of you who represent an industry, would have some advice along 
this line, for example----
    Mr. Rowe.  Congresswoman Capps, I basically agree with what 
Mr. Krupp said. I think we should extrapolate from sulfur--
which is something you didn't want to burn in the first place--
to carbon, which is something you are burning by intent rather 
carefully. So I don't think we can be confident of that level 
of difference between our hopes and our fears. But I strongly 
agree with Mr. Krupp on the importance of the trading system.
    This is why other measures are not adequate. We know the 
new President will propose a stimulus package. We are all 
looking forward to it in hopes. We know this Congress will 
consider renewable portfolio standards anew. But you know, my 
company has tried very hard to analyze the different costs of 
low-carbon energy and put it in a common frame of dollars per 
ton of CO2. And we know that some energy efficiency 
is as good as free. We just don't know how much, because nobody 
can do a good curve. Reducing carbon through natural gas 
consumption is somewhere on the order of $10 a ton per 
CO2. We think nuclear is something like 40, and 
today's wind something like 80. Whereas solar is still above 
100, and probably around 3. But solar is evolving 
technologically. If you do this all with a relatively crude 
tool like RPS, you will tend to get the more expensive 
solutions. Whereas if you have the cap and trade system, as Mr. 
Krupp has said, in the long run you will get the lower-cost 
solutions.
    Mrs. Capps.  Thank you very much, Mr. Chairman.
    Mr. Waxman.  Thank you, Ms. Capps. Mr. Whitfield.
    Mr. Whitfield.  Thank you, Mr. Chairman. I also would like 
to thank all of you for taking time from your busy schedules to 
be with us today as we explore options and issues related to 
this serious subject matter.
    I notice that Mr. Markey in his questions to you, Mr. 
Chiaro, announced that you operate the second-largest coal 
producer in the U.S. It was my understanding that you all 
recently announced your plans to divest that coal operation in 
the U.S. That would lead me to believe that since you are part 
of an organization that wants to put a cap on carbon and you've 
made a decision to sell the coal-producing part of your 
company, that you're not optimistic about the possibility of 
operating a coal company in the U.S. Is that true or not?
    Mr. Chiaro.  I thank you for the question. The impetus 
behind putting a number of our assets around the world for sale 
was really the acquisition of a company called Alcan, major 
aluminum producer. And the principal reason that we bought 
Alcan is because they have a large proportion of the power that 
is required to produce aluminum, is produced by hydro, a low-
carbon emitting form of energy. So only in that sense was the 
decision to sell a range of assets, including some of our coal 
assets here in the U.S., related to climate change. When we 
looked at the assets that we would sell, and the criteria that 
we used to distinguish those that we would put up for sale 
versus those that we would keep, climate change was indeed on 
the list, but it was very far down the list. It wasn't even in 
the top five criteria.
    The principal reason for deciding to sell some of our coal 
assets in the U.S., by the way not all of them, really was 
related to profitability. And I must say the Bureau of Land 
Management does a good job of extracting value for the 
taxpayers out of the coal deposits in the Powder River Basin, 
so I congratulate them.
    Mr. Whitfield.  Do you all operate any coal facilities 
outside the U.S.?
    Mr. Chiaro.  Indeed we do. We are the largest coal 
producers in Australia and we have very active exploration 
programs underway to find more coal around the rest of the 
world.
    Mr. Whitfield.  What about China?
    Mr. Chiaro.  We do not have any activities underway in 
China right now. We don't mine coal in China. In fact we sell 
very little coal--of our coal into China. China, as you're 
aware, is the largest producer of coal in the world right now.
    Mr. Whitfield.  You know what, Mr. Immelt, when I go to the 
Rotary Club down in my district, the people oftentimes complain 
that on environmental issues that the U.S.--they're advocates 
that we should lead the way. And your organization is saying 
that we should lead the way on the cap and trade, for example. 
And yet in China they are bringing on two new coal-powered--one 
new coal-powered plant every 2 weeks. In fact, I read that last 
year just electricity produced by coal in China exceeded all 
electricity produced by every measure in Great Britain last 
year. Just the new. And I know that your company is certainly 
selling a lot of equipment to build some of those new coal-
powered plants in China.
    What about this criticism that we take a lead on this, that 
China is not following us at all, and the detrimental impact it 
will have on our economy, the detrimental impact it will have 
on--because our electricity costs will be higher--what about 
that argument?
    Mr. Immelt.  Congressman, we spent a lot of time just 
trying to frame the globalization debate. You'll see an an 
entire section as part of the blueprint where we talk about the 
ability to drive competitiveness so that our industries 
aren't--aren't disadvantaged versus China and India. And 
clearly if you think about Dow, Dupont, GE, Alcoa, the people 
that are up here, we need to run--you know, kind of globally 
competitive footprint. And so we think about that.
    The other counter I would make, sir, is that, you know, we 
are a net exporter of clean products, you know. And so I really 
believe that there is an export opportunity here if we lead and 
innovate in the area of high-efficiency engines, in the area of 
super-light materials and some of the entrepreneurial structure 
that exists.
    Mr. Whitfield.  Did you all actually sell $600 billion 
worth of windpower equipment last year?
    Mr. Immelt.  Not $600 billion, no. I wish.
    Mr. Whitfield.  Well, Mr. Markey said that they went from 
$300 million----
    Mr. Immelt.  About $6 billion last year.
    Mr. Whitfield.  How much?
    Mr. Immelt.  About $6 billion.
    Mr. Whitfield.  Oh, OK. One final comment I would just 
make, I was reading this article in the New York Times 
basically a few moments ago, that said that in Europe, which 
created the world's largest greenhouse gas market 3\1/2\ years 
ago, early evidence suggested the whole approach could fail 
because emissions are going up. GAO came out in December 2008 
on a study of European Union's emission and trading system. And 
they basically had said that available information could not 
substantiate emissions in reductions, could not substantiate 
any development in new technology, growth in the economy or any 
of the things that you all are saying will--can flow from a cap 
and trade system.
    I say that simply as we move forward--obviously we're going 
to get into this--all of us I think have the right goals in 
mind. We want to be fair-minded and don't want to put the U.S. 
at a disadvantage economically. So I look forward to working 
with all of you and the other committee members as we move 
forward.
    Mr. Markey [presiding]. The gentleman's time has expired. 
The Chair recognizes the gentlelady from California, Ms. 
Harman.
    Ms. Harman.  Thank you, Mr. Chairman. Not only is it huge, 
but it reflects the gamut of interest in this issue from fossil 
fuel producers to environmental advocates. And I suggest, as I 
did in opening remarks about an hour ago before the panel was 
physically in front of us, that this is the model to solve 
these problems. My guess is that some of you voted for the 
incoming administration, some of you didn't. But that doesn't 
matter, what all of you are doing is trying to help both I 
think the administration and this diverse committee solve a 
tough problem. And I don't think it should matter on this 
committee whether we supported the next administration or we 
didn't. I personally did. But I also think that having all of 
you buy into a solution is the way that solution will work. And 
I'm looking at nodding heads so I'm very happy to see that.
    I talked earlier about what I called the public-private 
model and how we used it to solve one little tiny energy 
efficiency issue, and that is light bulbs. Mr. Immelt, you were 
part of our conspiracy and so was the NRDC, and it was hard to 
figure out a program that would really get us to much more 
efficient light bulbs by 2020. But guess what? We did. And we 
got almost unanimous support in this committee and in the 
Congress for what we came up with. So I just put it out that 
this, what I call the public-private model, is the best to 
solve these problems.
    Now, all of the solutions will depend on something we 
really haven't talked about this morning and that's what I want 
to ask a question about and invite any of you to comment on, 
and that is a smart grid. If we don't have a smart grid, 
certainly the efficiency pieces of this solution won't work.
    I just learned that in our new stimulus package there will 
be about $10 billion for investments in smart-grid development. 
But I would like to invite you to talk about, any of you--
maybe, Mr. Immelt, we should start with you--the smart grid and 
why it is a critical piece of the solution.
    Mr. Immelt.  Congresswoman, I believe that--I would talk 
about both a grid that is smarter and bigger. Maybe start with 
bigger first. It was mentioned earlier that if we're going to 
increase the penetration of renewables in the country we're 
going to need a bigger pipe to push the renewables through from 
a storage and efficiency standpoint. So there needs to be some 
accommodation there.
    And as far as a smart grid--and my colleagues that run 
utilities here are probably even more expert than we are--there 
is such a huge advantage in efficiency and empowerment to 
consumers. And we view this as both a conservation advantage 
and also a tremendous advantage to reduce global warming. So I 
think the technology actually exists today. It is just how it 
gets deployed through the utility structure, you know, what 
consumer incentives. But the technology exists really to 
empower consumers to make substantial--and industrial customers 
to make substantial decreases in their use of energy.
    Ms. Harman.  Thank you. Before recognizing anyone else, let 
me just ask if anyone disagrees that the smart grid is a 
critical part of the solution? OK, who else would like to 
comment?
    Mr. Darbee.  If I can comment. My colleague to my right 
from Duke Energy was struggling to get the microphone, but in 
answer to your question----
    Ms. Harman.  I'm sure we can accommodate him too.
    Mr. Darbee.  We are in the midst of PG&E deploying 10 
million smart meters, and this is the enabling strategy for 
tremendous energy efficiency, demand management, and frankly 
one of the things that will solve this country's energy 
security issues the best. It enables the electric car that is 
coming down the road that we will see between 2010 and 2020. So 
it is critically important, we are moving on it.
    It also provides the opportunity for smart appliances 
within the home. What we envision is people pulling up their 
computer on their home page, understanding how much power they 
are currently using, and noting if there are any deviations--if 
power is being used at an unusually high level in the cellar, 
in the bedrooms, in the attic, wherever--so they can call home 
and say, something's wrong here and we've got a problem, we 
ought to turn off the tower.
    Ms. Harman.  We only have time for one more comment but I 
would invite--Mr. Chairman, may I request that others can 
submit their answers for the record?
    Mr. Markey.  No objection, they would be welcome.
    Ms. Harman.  Before we call on our friend from Duke Energy, 
I would just observe too that a smart grid needs to be 
resilient to withstand a cyber attack or other hacking. Let's 
just hear one more comment.
    Mr. Rogers.  We support smart grid. In fact in our 5-year 
capital plan, we are going to spend $1.5 billion making our 
grid smart. But smart grid means different things to different 
people. What it means to us is it means taking our analog and 
making it digital. At the end of the day, that will reduce line 
losses and will save energy.
    The second thing it means to us, it means putting smart 
meters in. Smart meters will really allow us--and we're 
deploying them today to have a more sophisticated energy 
efficiency approach, as Peter Darbee was talking about.
    Many people think of the smart grid as simply transmission 
lines, but the reality of that is, that is really not 
technically the smart grid, it is more in the distribution part 
of the system.
    Ms. Harman.  Thank you, Mr. Chairman.
    Mr. Markey.  The gentlelady's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden.  Thank you, Mr. Chairman. I want to touch on a 
couple points. I represent a very rural district. We have 10 or 
11 national forests within that district and I have been real 
active on forest management policy.
    Catastrophic wildfires account for vast amounts of 
greenhouse gas emissions every year. With a hotter and drier 
climate projected for the west and for the northern end of our 
country, this situation will only be exacerbated. Depending on 
the fire severity and forest type, up to 100 tons of carbon per 
acre can be released. And in 2007 alone, 10 million acres of 
forests burned. Now, by conservative estimates, that means that 
60 million tons of carbon dioxide was spewed into the 
atmosphere, not to mention all the other greenhouse gasses and 
pollutants. That is roughly the equivalent of 12 million 
vehicle emissions for 1 year.
    According to the EPA, 562.3 million metric tons of carbon 
were unleashed upon the atmosphere by forest fires between 2000 
and 2005. Now there is a study out on national forests in 
eastern Washington that showed that those forests, left alone, 
will become net emitters of carbon rather than carbon sinks by 
the late century, due to emissions of catastrophic fire. The 
forest would likely burn at a rate of 1.7 percent per year, 
meaning the entire forest would burn in less than 100 years. 
Actively managed forests could lead to at least a 50 to 60 
percent reduction at the current level of acreage burned, due 
to wildfire.
    So my question to you is--and we have an obligation as 
stewards of these great Federal forests to better manage them. 
And I would like to know if anybody objects to changing Federal 
law to be able to more actively manage these forests along the 
lines of what this Congress passed several years ago with the 
Healthy Forests Restoration Act.
    Does anybody object to moving forward over the condition 
class 2 and 3 lands, to give the Forest Service the authority 
to do what they do around our communities?
    Mr. Tercek.  I'll address that.
    Mr. Walden.  Please
    Mr. Tercek.  I'll address it from the Nature Conservancy.
    Mr. Walden.  Yes, sir.
    Mr. Tercek.  Fire protection is not part of the scope of 
our blueprint, but the Nature Conservancy, certainly as a 
conservation organization, strongly supports those type of 
initiatives.
    Mr. Walden.  I appreciate that.
    Mr. Tercek.  On the broad topic of forests, I would like to 
note that we do call for forest offset in this document, both 
domestically and international. Not only is it an important 
source of cost containment, but it is an important opportunity 
to protect our forests for a whole range of benefits. And we 
also note that the U.S. has an opportunity to be a real leader 
here.
    Mr. Walden.  I'm going to have to cut you off, because I 
only have a couple of minutes. I'm sorry, but I appreciate that 
and I appreciate the work. And I've toured some of your sites 
out in my district where you have done a terrific job doing 
what needs to be done.
    Mr. Rowe.
    Mr. Rowe.  Congressman, I would point out not only do we 
not object, but the offset provisions in the USCAP 
recommendations would create an incentive for folks like us to 
invest in better forest management.
    Mr. Walden.  On Federal lands?
    Mr. Rowe.  Either way. That's the way the offset provisions 
would work.
    Mr. Walden.  All right. Then I want to move on to wind, 
because my district probably has as much wind as many others--
not many other others in the country. And in fact the 
Bonneville grid will have up to 30 percent of its power from 
wind energy within the next 2 years, which I think is the 
highest percentage of any grid in the country.
    The point I raise is that in order to smooth that load, 
they are now being faced with having to put gas peaking plants 
in place. So you all recognize the fact that there are 
limitations to some of these alternatives, correct?
    Does anybody want to comment on that? Mr. Nolen.
    Mr. Nolen.  I mean, certainly there are a couple of issues 
with wind. First of all, you have to move the wind to where the 
people are. You mentioned that your district did not have the 
numbers of people so----
    Mr. Walden.  Transmission.
    Mr. Nolen [continuing]. The grid comes in, a very important 
point with the grid. We need to do more in storage technologies 
of how do you store. But the facts are at the present time, 
wind is not a peak load source and so you need some sources 
behind it.
    Mr. Walden.  To firm it up.
    Mr. Nolen.  To firm it up.
    Mr. Walden.  Absolutely. And in the Northwest, of course, 
we use hydro. And one of the issues that we have in the 
Northwest is what sort of credit allocation would there be in a 
cap and trade system for a system that has traditionally relied 
on hydro? And who picks the date that decides the water flowing 
through a dam is renewable and producing energy is renewable 
and the water flowing through a more modern dam isn't renewable 
or vice versa? How do you account for hydropower as a renewable 
energy source if it has been in place since Franklin Roosevelt 
was President? Do you include that as a renewable or not? And, 
if not, why?
    Mr. Krupp.  Well, the beauty of the cap and trade system, 
Congressman, is that hydropower would not require any permits, 
so there would be no cost imposed on it. So although we're not 
proposing an RPS, so that definition is not directly relevant 
here, all----
    Mr. Walden.  But it would be under an RPS.
    Mr. Krupp.  It would be, but that's not what we are here to 
propose.
    Mr. Walden.  It all melds together.
    Mr. Krupp.  In the cap and trade system all hydro is 
advantaged.
    Mr. Walden.  So it's credited?
    Mr. Krupp.  It doesn't need a----
    Mr. Walden.  New hydro is credited?
    Mr. Krupp.  Old and new hydro, all generating electricity 
has no carbon output. Yes.
    Mr. Walden.  Thank you, Mr. Chairman.
    Mr. Markey.  The gentleman's time expired. The Chair 
recognizes the gentlelady from the Virgin Islands, Ms. 
Christensen.
    Ms. Christensen. Thank you, Mr. Chairman. And thank all of 
the panelists for being here and for the blueprint. I said in 
my opening statement that given the diversity of the group, I 
really appreciate the fact that you are able to come up with a 
consensus document.
    I have a couple of, I think, brief questions. But one of 
the six key principals in the call for action is to be fair to 
all economic sectors, geographic regions and economic groups 
that may be disproportionately impacted. And some of the more 
disproportionately impacted communities in our country would be 
poor and minority or--and sometimes they are the same. So were 
there any special considerations--I haven't had a chance to go 
through the entire report for low-income minority--
disadvantaged populations?
    Mr. Darbee.  If I might address that, what is provided for 
is that in the case of local distribution companies, that the 
benefits of allocations be passed through to customers. And 
what we are proposing is that they be passed to the local 
distribution companies, and those companies are required to 
pass those on to the consumers. And in the case of regulated 
electric utilities what we are proposing is the local utility 
commissions would undertake that program.
    Specific to your question, in California the approach that 
we've taken is that we have a REACH program, and so those 
people who don't have the economic resources to pay for their 
bills in full, we provide economic support for them. We also 
have a program on energy efficiency where, for low-income 
individuals, they can contact our company. We will send people 
out, do an energy audit, and then the utility will pay for the 
improvements to their home to make it more energy efficient. So 
that was the way that we were thinking about addressing the 
particular question you raise.
    Ms. Christensen. OK, I will take one more answer, then move 
to my next question.
    Mr. Tercek.  We also have provisions for funding for what 
we call adaptations to climate change, inevitable climate 
change, including overseas, including island countries that we 
can----
    Ms. Christensen. Because that was my next question, because 
I obviously live in the Caribbean, and we are small economies, 
fragile economies, and I was wondering. So if you would just 
expand on maybe what you were going to say about the Caribbean.
    Mr. Tercek.  The Conservancy, our scientists advise us that 
there's great opportunity to invest in natural ecosystems that 
provide very important adaptation benefits to vulnerable 
people. And in our blueprint we recommend that funding be made 
available from the sale of allowances to pay for these 
programs, both overseas and in the U.S.
    Ms. Christensen. Thanks. At a retreat I attended last week, 
I came across a new concept that I also mentioned in my opening 
statement, which is cap and dividends as an alternative to cap 
and trade. And I wonder if anyone would like to comment on the 
differences--or the advantages of one over the other, cap and 
dividends?
    Ms. Beinecke.  Well, that's a topic that's gotten increased 
interest over the last year. And one of the things that we 
envision is first allocations and then move it into an auction 
system, and that the proceeds of the auction would go towards 
technology development, but the bulk of the resources over time 
would go back to the consumer, and that is the dividend 
concept.
    So I think that the question for the committee to consider 
in drafting legislation is sort of what the time frame is for 
returning that very significant resource to the consumer.
    Ms. Christensen. So it doesn't have to be an either/or, it 
can be a----
    Ms. Beinecke.  We envision a system that actually moves 
from one to the other over time. I think that those proponents 
proposing the cap and dividend system do envision going totally 
in one direction, but USCAP's blueprint actually envisions 
first an allocation and then moving to auction over time.
    Mr. Rogers.  Let me say a cap and dividend has the 
potential of creating huge subsidies where most of the money 
would come from States that are heavily dependent on coal, like 
Indiana, Ohio, Pennsylvania, Michigan. And that, for instance, 
you would take $100 out of a State like Ohio and only send $40 
back, d the money would go someplace else. So there is some 
equity issues associated with a proposed cap and dividend 
approach.
    Ms. Christensen. Thank you. I don't have any further 
questions, Mr. Chairman.
    Mr. Markey.  The gentlelady's time has expired.
    The Chair recognizes the gentleman from Illinois, Mr. 
Shimkus.
    Mr. Shimkus.  Thank you, Mr. Chairman. I appreciate the 
panel being here. I wish I would have been here for a lot of 
the opening statements. I did find the benefit of the opening 
statement, though, Mr. Chairman, as I had to go do other 
business, had Steering Committee meetings. And since many of 
the members are leaving at 12:30, it was my luck that I got 
back in time to get around to questions. If we don't have 
opening statements, then we don't have a chance to talk to you.
    One of the arguments I made yesterday is one of importance 
for you all. You are doing what you think is important for your 
association or your shareholders. And we have the burden of 
doing what is critically important to our constituents, and 
they are not minor. Each of us represent 660,000 voters. I was 
interested--one of the things I said in my opening statement 
was the interest in your first release, which had the trading 
floor as part of the debate on how a cap and trade through the 
trading floor could be helpful. I was very curious that in this 
new one, no trading floor, no picture. And I would ask for a 
reason. I would argue because in this cap and trade debate, 
which we like to liken to the Clean Air Act and the 
NOx and SOx, there are distinct 
differences. One is technology was available then, it's still 
not available now.
    What is being proposed in the cap and trade under this 
venue is bringing in the huge money managers, the Goldman Sachs 
of the world into this debate, to incentivize. The other thing 
about cap and trade that we need to continue to talk about is 
the loss of value that has happened in the stock exchange in 
the past couple months.
    Now, I want to be clear, you all know--we have met, had 
dinner, a lot of friends--I am opposed. But if we want to be 
clear to my voters, we enact a carbon tax. They know exactly 
what the cost is going to be to them, the consumers that are 
going to have to pay for this move. Any other process, I will 
argue unless you can convince me, is a shell game meant to hide 
the cost from the consumer. And I will--we'll have a chance.
    It is interesting on the association, too, and I know Rio 
Tinto has some mining operations, but no one else. Where is the 
coal mine operators?
    And the other thing about the association is where is the 
members of organized labor? Where is the United Mine Workers? 
I'm a Republican, and they a lot of times don't like me, just 
by definition, but I have a great relationship with the 
operating engineers. I have a great relationship with the 
boilermakers. I have a great relationship, again, with the 
operating engineers. I have an interesting relationship with 
the United Mine Workers. I have a good relationship with those 
who build the next generation of power plants today and 
tomorrow. Where are they to weigh in on what this is going to 
effect to the membership. Because I can tell you, as I did in 
my opening statement, I'm going to go to them, and I am going 
to want them to be on board. So when there is job loss, which I 
predict will happen. We can talk about green jobs, but the 
proportional ratio of building a coal-fired power plant and 
putting up windmills, which are being built in my district too, 
there is no comparable ratio about the jobs and operating a 
major nuclear power plant or a coal-fired plant as a window. We 
can talk green jobs all we want, real jobs or in real 
manufacturing. I'm going to hold--as I talk to my friends on 
the other side, I'm going to hold that issue.
    Mr. Rowe is a good friend. Illinois is a big power State: 
coal, marginal oil, now wind, nuclear power. Nuclear power has 
to be part of this debate. How can we move to nuclear power 
expansion, Mr. Rowe, if we did not move aggressively on the 
high-level nuclear waste in Yucca Mountain?
    Mr. Rowe.  Congressman Shimkus, you are indeed a good 
friend, and as you know I respect you immensely, both when we 
agree and on those rare occasions when we disagree. One of the 
things we share is a commitment to the importance of 
transparency so the public knows what it's getting.
    I have, as several members of this panel have in the past, 
supported the carbon tax to deal with this problem for the 
transparency reason, but it never seemed to catch on. Resources 
for the Future did a study and found most Americans want to 
deal with the carbon issues. Most Americans don't like a carbon 
tax because they know it costs them money. They are pretty 
suspicious of a cap and trade system because they rightly think 
it will cost them money. But they think renewable portfolio 
standards will be free.
    As I indicated, while you were called away to something 
else, we have at Exelon tried to study the cost of all sorts of 
low-carbon solutions; energy efficiency, which is free for a 
while, but not forever; gas, which is low cost but an awful lot 
to bet on one thing; nuclear, that we think costs around $40 a 
ton; and various forms of renewables which tend to be much 
higher. I believe we need nuclear in this puzzle----
    Ms. DeGette [presiding]. Mr. Rowe, if you could finish up 
please, the gentleman's time has expired.
    Mr. Rowe.  Sorry, I took too much of your time.
    Mr. Shimkus.  Yucca Mountain?
    Ms. DeGette.  I'm sorry, the gentleman's time has expired.
    Mr. Shimkus.  So he can't answer the question on Yucca 
Mountain? Just yes or no?
    Ms. DeGette.  The gentleman would certainly----
    Mr. Shimkus.  That was the question.
    Ms. DeGette.  The gentleman would certainly be happy----
    Mr. Shimkus.  Mr. Rowe, if I provided for your response a 
question in writing?
    Ms. DeGette.  The gentleman from Ohio, Mr. Space.
    Mr. Space.  I come from one of those so-called coal 
districts that Mr. Shimkus identified earlier in his opening. 
Apart from that, it is a district that has been suffering from 
higher-than-average unemployment rates in a State that suffers 
higher-than-average nationwide. Our poverty rate exceeds 20, 
sometimes 30 percent in some of my counties. The jobs that we 
do have aren't paying enough to get many people out of poverty. 
Tens of thousands of people are working in poverty.
    Mr. Shimkus has posed a rhetorical question about labor. 
Where is labor? What about organized labor? I think that raises 
a larger question that I'd be curious, Mr. Rogers, if you could 
respond. What effect would this rather sweeping measure have on 
the creation of jobs?
    Mr. Rogers.  First, I appreciate this because, as you know, 
we serve Ohio also and we have many--we have over 11 million 
people that we serve, including many in Ohio. When I look at 
this legislation, this blueprint, several places where I see 
jobs that work in your part of the world. One is if we can 
successfully achieve carbon capture and sequestration, we can 
deploy it. That keeps coal in the mix in a low-carbon world and 
that means jobs. It also means jobs in terms of actually the 
building of coal gasification facilities in lieu of traditional 
coal plants. It means building jobs with respect to building 
the carbon capture sequestration going forward. I think it's 
going to mean new nuclear plants, and there will be significant 
jobs that come from that. I believe in terms of energy 
efficiency there will be jobs.
    So as I look at this, I believe not just in the short term, 
but in the longer term, jobs will be created as we 
fundamentally transform our energy infrastructure.
    Mr. Space.  And has thought been given--and I apologize for 
not having been able to read the entire report as of yet--but 
has thought been given to the educational and training process 
and national policies that could be implemented that would help 
develop a workforce in a comprehensive and practical fashion to 
fill these potential jobs of the future?
    Mr. Rogers.  We have not addressed that specific aspect of 
it. But I do believe, as we look at new technologies, whether 
they are clean tech, renewables, advanced technologies in 
nuclear, advanced coal technologies, advanced gas, I think in 
all these areas it is going to take a significant number of new 
engineers and technicians in order for this to happen.
    So I fundamentally believe this is going to happen. I, 
personally, believe it is going to happen anyway, because I 
look at our fleet, and by 2050 every power plant we have today 
will be retired. So if I know what the rules are with respect 
to carbon, it allows us to make investments consistent with 
achieving a low carbon footprint but, at the same time, of 
retiring and replacing. And that process alone will create 
significant jobs over the future period.
    Mr. Lash.  Jim, could I briefly correct you?
    Actually, the blueprint specifically addresses, 
Congressman, the issue you raised and the need for training. It 
is one of the goals we set out for the allocation system, to 
provide for the training of the workforce needed to facilitate 
these wide-scale transitions.
    Mr. Space.  And are specific national policies suggested on 
how best to implement those goals?
    Mr. Lash.  Not in detail, sir.
    Mr. Space.  Thank you.
    Mr. Sterba.  Mr. Space?
    Mr. Space.  Yes, sir.
    Mr. Sterba.  Two of you have asked the question regarding 
labor unions. And I would just like to mention that--and it was 
not on the House side, but a year, year and a half ago, I stood 
with Senator Bingaman, Chairman Bingaman, with the IBEW and, I 
believe, the AFL-CIO--I need to verify that that was the second 
union--that endorsed a bill that was put forward on the Senate 
side, which was a cap-and-trade bill by Senator Bingaman, 
Senator Murkowski, and a number of others.
    Mr. Space.  Has organized labor been involved in any 
respect with regard to this USCAP finding?
    Mr. Sterba.  No.
    Mr. Space.  All right. Thank you.
    I yield back.
    Ms. DeGette.  The Chair recognizes the gentleman from 
Georgia, Mr. Gingrey.
    Mr. Gingrey.  Thank you, Madam Chairman.
    And thank all of you for being here and bringing us the 
blueprint.
    I want to read from the summary overview in your final--
your commitment, the last paragraph. ``We, the members of the 
U.S. Climate Action Partnership, pledge to work with the 
President, the Congress, and all other stakeholders to enact an 
environmentally effective, economically sustainable, and fair 
climate change program consistent with our principles at the 
earliest practical date.''
    And I heard either one of the witnesses or maybe a member 
of the committee say earlier that the goal was to have 
legislation to the President before the Memorial Day break. So 
that is coming up pretty darn soon.
    You know, we are obviously in a pretty tough economic 
environment. In this last year, what, 2.5 million jobs lost. 
Right now we are on the floor about to vote on a bill, the 
second tranche, the $350 billion of the rescue package, to try 
to do something about this economy, to get it back on track.
    And yet what I am hearing from you, from USCAP, is that you 
are recommending something whose cornerstone is cap and trade, 
a mandatory cap-and-trade regime, and that it needs to be done 
with all due haste.
    My question to you--and any of you can respond--is this: 
Are you willing to sacrifice more American jobs to achieve the 
goals of your report? Are you, at this crucial time in our 
Nation's history, willing to push forward with all due haste, 
maybe by Memorial Day weekend, with legislation calling for 
mandatory cap and trade as its cornerstone, and at the risk of 
losing additional jobs?
    Anyone?
    Mr. Crane.  Congressman, it is a great question. And I 
think it speaks to an important point, which is the timing 
question.
    If climate change legislation is passed that has to be 
implemented with a cap and trade in several years' time, I 
believe, and certainly speaking on behalf of my company, the 
first thing it will do is it will unleash additional investment 
by us in various technologies designed to prepare for the cap-
and-trade system that is coming.
    So, you know, this may be counterintuitive, but I think 
quite the contrary, in the near term it will actually unleash 
investment and create jobs. And we and many of the companies 
that sit here, we have very substantial capital. I think my 
company and Jeff's are the two smallest at this panel. We sit 
with $1.5 billion in investment capital ready to invest, but we 
need to know in what direction.
    Mr. Nolen.  I would make one comment to say we have talked 
a lot this morning about cost. I think, as a group, and I know 
for myself that we are much better at driving costs down than 
we are with uncertainty. And this is what we have tried to do, 
is bring some certainty to our program so that we then can 
plan. My personal belief is that the uncertainty has caused a 
lot more of our stock prices and employment loss than the cost.
    Mr. Gingrey.  Well, I want to make sure you understand my 
question before we get another response. It is really a value 
question, a value judgment. Even if you would respond and say, 
well, no, you believe we won't lose more jobs, we will create 
jobs, but I want you to respond to me in regard to that value 
judgment of if, in fact, jobs will be lost.
    It is a question, I guess, of collateral damage. We ask 
those questions all the time of our military: Is it worth the 
sacrifice wherever we are engaged? And so that is my question 
now.
    And it is all about the timing and how important is it. Is 
this something that, in 2007, in January, was clearly 
appropriate to say ``with all due haste,'' when everything 
looked kind of rosy out there? But right now, when things look 
pretty grim, is ``with all due haste'' really appropriate in 
regard to mandatory cap and trade, or is it something that 
might not be put too much on the back burner but could wait a 
couple years?
    Mr. Rowe.  Congressman, in your job there are no no-risk 
votes. In my job there are no no-risk energy supply options. We 
both labor as best we can to make decisions or recommendations 
that try to minimize risk.
    In my judgment, the economic efficiency of a cap-and-trade 
system radically reduces the risk of dealing with climate 
change, which we must do. In my judgment, starting soon, with 
appropriate cost constraints, protects the economy better than 
putting off a solution and then perhaps doing something more 
drastic or more disingenuous. It is all a matter of trying, in 
our frail way, to handle risk as best we can.
    Mr. Waxman [presiding]. Thank you, Mr. Gingrey.
    Mr. McNerney?
    Mr. McNerney.  Thank you, Mr. Chairman.
    Sitting here with this panel in front of me is like a child 
in a candy store. So, unfortunately, I only have 5 minutes.
    I would like to start with Mr. Darbee. I have a long 
relationship with PG&E as a customer and as a business partner, 
and I have always found PG&E to be a good business partner to 
deal with.
    Now, my question for you is, you are embarking on a very 
aggressive program for efficiency and bringing in other 
technology to generate new power. Could you explain briefly how 
that benefits your bottom line?
    Mr. Darbee.  Well, with energy efficiency we have 
collaborated with the State of California. And what occurs 
there is that the cost of new energy efficiency to our 
customers is about 3 cents.
    What we have entered into is a framework in California of 
where, if demand for energy goes up, our revenues go down. It 
is called decoupling. So we are indifferent to the amount of 
power we sell. And if we create savings for our customers, what 
happens is that we share some of the savings, a small fraction 
of the savings. So on energy efficiency, which is one way that 
we meet increased power needs, we make money that way.
    If we build new power plants--and most of the power plants 
are built by others--if others build new power plants and we 
procure that power, we make zero money. It costs X, we pay X 
for it, we make no money. About a third of the new power plants 
that we build, if we build them we earn a return on the 
investment, the equity investment that we have in it.
    Is that responsive to your question?
    Mr. McNerney.  It is. Thank you.
    My next question will be for Mr. Immelt. GE is a leader in 
producing new energy technology, renewable energy technology. 
And I have to say, some of the work I did in the earlier life 
benefited the technology that you are using.
    Do you see this as a growing part of your bottom line? And 
will cap-and-trade legislation help that bottom line grow as a 
part of your business model?
    Mr. Immelt.  I think, Congressman, we are already maybe a 
$40 billion or $45 billion company just in energy. And we 
invest heavily in R&D as part of that. And so we have products 
that do coal, gas, wind, solar, nuclear. We are really almost 
agnostic, as to technology. We do it on a global basis. And so, 
even without a cap-and-trade program, we would have a 
prosperous energy business, because we are really technically 
agnostic.
    What I would say as a businessman and as an American 
businessman is that the energy sector has been chronically 
underinvested for a generation, in terms of new innovation in 
technology. If you just look at a pie chart of where the 
aggregate R&D dollars have gone in this country since World War 
II, it is hard to find energy on that segment.
    I like solving problems with technology. That is what GE 
does as a company. So anything that makes technology come to 
the fore is going to be good for GE over time. And what I 
believe is that a price for carbon will allow many of these 
technologies that have been around for a generation--coal 
gasification has been around for a generation. Nuclear has been 
around for a generation. Elements of the smart grid have been 
around for a generation. We just haven't commercialized them 
and taken down the cost curve to make them as competitive as 
they can be.
    You know, we all come at this with a different perspective. 
I view it at its core as a price for carbon is going to bring 
energy technology into the 21st century and give the United 
States a chance to lead.
    Mr. McNerney.  Thank you.
    Many of my colleagues on the other side of the aisle have 
decried the failure of the European cap-and-trade system. Now, 
when I hear Mr. Krupp and Ms. Claussen talk about offsets, I 
get nervous, because I am thinking about grandfathering, which, 
in my opinion, is largely responsible for whatever problems the 
European cap-and-trade system has had.
    So would you be clear about whether you are including 
grandfathering on offsets, Mr. Krupp?
    Mr. Krupp.  Well, first of all, I want to acknowledge the 
concerns of the members of the minority about the European ETS 
system. It got off to a rough start. Since then, they have 
corrected many of the earlier problems.
    The principal problem in Europe is that they didn't have 
good inventory numbers for the baseline, which, in this 
country, thanks to legislation passed out of this committee in 
1990 in part of the Clean Air Act amendments of 1990, we have 
long had excellent baseline information about the emissions of 
CO2 from power plants. I don't think we will repeat 
that mistake.
    In Europe, one of the mistakes, I believe, is that they 
have not allowed agricultural offsets in the system. And we do 
recommend that EPA start a process that could lead to verified, 
scientifically valid offsets from the agricultural sector to be 
part of the system.
    Mr. Waxman.  Thank you, Mr. McNerney.
    Ms. Sutton?
    Ms. Sutton.  Thank you, Mr. Chairman.
    Thank you all for being here. I appreciate that you are 
coming together to try and create a solution.
    In fact, Mr. Immelt, I noted in your testimony you said, on 
the final page near the end, ``Our commitment as a group now is 
to work with Congress, both Houses, both parties, the new 
administration, and other stakeholders to enact this year, if 
possible, climate legislation consistent with the principles 
underlying the call for action and the blueprint, namely. That 
legislation must be fair, environmentally protective, and 
economically sustainable for our country.''
    And I would just add a couple of words as a Representative 
from Ohio, that after the word ``country'' we say, ``including 
Ohio.'' OK? So, from now on when you guys are looking at that 
statement I want in the back of your minds to be ``including 
Ohio.'' And I am sure that that is what is intended.
    As a new member to the committee, I do have a question; we 
have heard some discussion about who is at the table and who is 
not at the table. Could somebody just briefly explain to me how 
you all came to be and whether or not there is a place at the 
table for organized labor, or are they welcome at the table? 
Could someone answer that for me?
    Mr. Immelt.  Well, I would say that, you know, we have been 
doing this for maybe 2\1/2\ or 3 years, and the idea was to try 
to get a representative sample, you know, of different industry 
sectors and NGOs to come together. In that sense, probably most 
of us have reviewed a lot of the elements of this with our own 
unions, our own teams inside the company. There was never a 
desire to exclude anyone from the table.
    But I can tell you, with 31 people, it has been hard enough 
to get to this point, from a standpoint of how far we have 
gotten. And we look forward to further dialogue, under your 
leadership, to make sure everybody is represented. But there 
was always a sense that the more people we have in, the better.
    Ms. Sutton.  I appreciate that and also, as a Member of 
Congress, the ability to work in a large group.
    So a couple of you--manufacturing obviously is important to 
me and the considerations of manufacturing as we foster this 
solution that I believe can be attained. Several of you, Mr. 
Immelt and Mr. Nolen in particular, have talked about the 
timing of what we are doing--or I think, Mr. Nolen, you more 
specifically--and the need to pass this climate legislation 
quickly for several reasons: one, you said, to send the right 
signal to get the investment going.
    Do you also have concern about the delay resulting in what 
would be even steeper requirements to be achieved more quickly 
in the future? And tell me how that would impact your 
organizations.
    Mr. Nolen.  I think that Jeff put it correctly first, is 
that, just like his company, our company is in all of these 
spaces. We also have limited capital as to where we need to go 
and to make those investments. In order for me to meet Mr. 
Rogers' time frame to do more with sequestration and other 
things, we need to put more capital into that, and we need to 
have more certainty on the return on our investment in those 
areas.
    We have choices as to where we put it. Do we put more in 
gas, do we put more in wind, do we put more in these areas? And 
these are all decisions that we must make. And that is why we 
need to speed it up, in order to make the end of the line 
really happen. Because it starts, really, with Jeff and 
ourselves and other large companies who put the capital in to 
build the innovation into these products.
    Mr. Immelt.  Certainty in the investment world is critical 
to success. And what we lack today is certainty in terms of 
what is going to happen and when it is going to happen.
    I would argue that, today, we have almost the worst of all 
worlds. We have 17 States that are developing their own 
programs. We have RPS in some areas, not in others. The fact is 
that the last 40-plus coal plants haven't been permitted. You 
know, so we have an energy policy, it is just that nobody knows 
what it is. And it shows up in terms of those consequences.
    So, look, I am not--I say this with great respect to my 
colleagues--I didn't come to this as an environmentalist. I 
come to it as an industrialist. I am a capitalist, pure, plain 
and simple. And I just think the system we have today is 
untenable over the long term, insofar as, you know, the science 
is so compelling on global warming. Something is going to 
happen. The more certainty you can give us, the better we can 
respond and be efficient on behalf of our shareholders.
    Ms. Sutton.  Mr. Rogers, did you have a comment?
    Mr. Rogers.  I see this from the perspective of 700,000 
customers just in Ohio and the families and businesses behind 
them. And I am making decisions today about what to build and 
to get prepared. And the sooner we get started, I think the 
better off we will be, because Ohio is very dependent on coal. 
And if we can smooth out--and that was what was appealing about 
the compromise that was reached here. There was a recognition 
that we had to buffer during the transition period on the 
consumers of Ohio and all the consumers.
    So, in a sense, as a CEO of a regulated utility, I am here 
really standing in the shoes of my consumers, saying let's do 
this in a way that minimizes cost increases and cost impacts, 
because there will be increased costs, and let's smooth it out. 
If we delay this 3 years or 5 years, it is only going to 
translate, I believe, in a steeper cost curve and a more 
draconian outcome for consumers.
    Mr. Waxman.  Thank you, Ms. Sutton.
    Ms. DeGette?
    Ms. DeGette.  Thank you, Mr. Chairman.
    Several of the witnesses today have mentioned the renewable 
portfolio standard. And I think it was Mr. Rowe who said that, 
as a tool for change, it is sort of a blunt instrument and that 
he would prefer to see a cap-and-trade system that might be 
more flexible.
    And I was kind of struck, too, by what Mr. Immelt just 
said, which is that we have this patchwork of energy policies 
right now, different renewable portfolio standards in many of 
the States, nothing in some States, different standards in 
other States.
    But I have always felt that giving people some kind of a 
goal for reduction is a good idea. The devil is always in the 
details, as to what would that standard look like. And, as many 
of you probably know, last year we were actually able to pass 
an RPS through the House, and it narrowly failed in the Senate.
    So I guess I would like to ask you whether you feel that a 
national renewable portfolio standard could be developed that 
would be part of the overall framework and that would be 
workable at helping to set goals.
    Mr. Immelt.  I would start, but then have my colleagues. I 
would say that that is an area where you will see different 
opinions on the panel. Some are in favor of it; some aren't in 
favor of it.
    Ms. DeGette.  Well, let's hear from somebody who is not in 
favor of it.
    Mr. Rogers.  I would raise a question about it that hasn't 
been resolved. For instance, we are in the wind business. We 
have over 500 megawatts under operation, 5,000 under 
development in Texas, Oklahoma, and Colorado, because that is 
where the wind is. But we are not developing wind in North and 
South Carolina because there is no wind. We are not building it 
in southern Ohio or Kentucky or southern Indiana because there 
is no wind.
    If you look across the country and you put a wind map on 
the country and then you put a solar map on the country, what 
you see, certain regions are very attractive for making 
investments in either wind or solar, but it is not uniform 
across the country.
    Ms. DeGette.  Well, sure, and you are absolutely right 
about that. But, on the other hand, those other States--nobody 
is going to do RPS that says you have to get a certain amount 
of your energy from wind or a certain amount of your energy 
from solar.
    And, in truth, as someone who has worked on these issues 
for a long time, I will tell you, every region of the country 
has some kind of renewable energy. The trick is to set the 
standard at a level that would be a workable level for 
everybody.
    Mr. Rogers.  And I think you are absolutely right about 
that, in terms of getting the right renewable level. But what I 
find that has been the most difficult, I talk to people who 
want wind, because I am in that business, but the same people 
that support ITC and supporting wind are also the same people 
that oppose eminent domain so I can build a transmission line 
and get it to the customer. So, until there is some consensus, 
it is unrealistic to hope for wind without passing eminent 
domain legislation.
    Ms. DeGette.  I understand.
    Let's hear briefly from somebody who supports a national 
RPS standard.
    Mr. Sterba.  Ms. DeGette, I happen to be one of those rare, 
maybe, utility folks who does support a national standard. And, 
frankly, the reason is I have seen in the West what happens 
when States create their own individual standards and they take 
the view that it is not renewable unless it is in my State. And 
that disadvantages renewables.
    Ms. DeGette.  Right. Right.
    Mr. Sterba.  Because it creates the least effective 
resources being built, as opposed to the most effective.
    So we need to develop this system. And I 100 percent agree 
with Jim that, along with this, we have to address the issue of 
transmission, transmission access and siting. And it just 
doesn't make sense for natural gas pipelines to be built under 
one set of rules and electric transmission lines to be built 
under another set of rules, where we cannot get this 
infrastructure that is necessary.
    Ms. DeGette.  I would just say that, in Colorado, we 
passed, as most of you know, we passed an RPS several years ago 
as part of a voter initiative because all of the utilities 
opposed it. And within about 1 year, we had exceeded that 
standard. The legislature adopted a new standard that was a 
much more stringent standard that they worked with the utility 
companies to agree to.
    So I hear what you are saying about some of the eminent 
domain issues, but I think we could arrive at something, a 
fairly low threshold, and then build from that.
    Mr. Rogers.  I don't want to leave you with the wrong 
impression. While I might not support a national renewable 
portfolio standard, I have supported a renewable portfolio 
standard that was approved in North Carolina, as well as one 
that was approved in Ohio.
    So I have actually, within the States, approved it because 
the local law was written in a way to reflect what the 
opportunities were for renewables there, rather than trying to 
have a national standard where one size fits all.
    Ms. DeGette.  I think, though, you could take into account 
the regional differences.
    Thank you, Mr. Chairman.
    Mr. Waxman.  Thank you, Ms. DeGette.
    The next would be Mr. Sarbanes.
    Mr. Sarbanes.  Thank you, Mr. Chairman.
    I wanted to go back to the consumer question for a minute, 
because that is the one that could create the kind of political 
blow-back that would make all of this just an academic 
exercise.
    So I assume you built some models along with these 
projections. And I was curious, if you take the 2020 target, 
which was to get to 80 percent, to 86 percent of 2005 levels, 
if you went forward over this next period and up to that year 
without the kind of buffering that you have suggested needs to 
happen--and I confess I don't quite understand how the 
buffering would work--but without it, you know, give me an 
average rate payer and tell me what the percentage increase 
would be in their bill if you didn't have the accommodations in 
place. And then tell me what you think you could achieve if you 
did do the buffering that you mentioned.
    Mr. Rogers.  We did a lot of modeling in the Lieberman-
Warner bill and all the various aspects of it, so I am going to 
kind of recall a lot of those studies. It won't be precise, but 
it will give you a zip code.
    If you go--and it depends, really, on the State--if you are 
in a State like Ohio, where 86 percent is coal, versus a State 
like Indiana where it is 94 percent, versus a state like South 
Carolina which is 24, it produces different answers. And I 
think, in Maryland, I think it is pretty close to 50 percent of 
the electricity comes from coal in Maryland. But under 
scenarios like that, you are looking at 20 and 40 percent 
increases in the price of electricity without--without--any 
ability to mitigate cost.
    And that is why it became so critical in this blueprint 
that we had provisions in there that allowed for the mitigation 
of cost. Because, absent that, I agree with your observation 
that, if we could pass legislation and if it translates into 20 
to 40 percent increases in the price of electricity, the 
backlash to that could be devastating to our ability to address 
climate change long-term.
    And that is why it is so critical and why this group came 
together around allowances and came together around the 
recognition that 40 percent of the allowances should go to the 
utility sector, where 40 percent of the emissions come from, 
and that a significant portion of those should be used to 
mitigate cost increases during the transition period.
    Mr. Sarbanes.  With the goal of getting them to what kind 
of level against the 20 to 40 that you----
    Mr. Rogers.  We didn't agree to the specifics of that. But 
we all recognized, by using the words ``significant portion,'' 
that we had to make sure it didn't translate into a draconian 
increase in prices during this interim period.
    Ms. Claussen.  If I could just add one thing to that, this 
blueprint stands as a whole. Everything is linked. Our ability 
to meet the kinds of targets that we put here, which are quite 
aggressive, is based on having some allocation to the local 
distribution companies. It is based on the cost containment 
measures that we have in here, including the use of verified 
real offsets.
    So we sort of view this as a way, as a whole, to protect 
the environment and have a sustainable economy and not increase 
prices hugely to consumers.
    Mr. Immelt.  Congressman, I would just add one other thing, 
is that, you know, the way to think about what we proposed, 
there is probably an 80 or 90 percent overlap with an energy 
policy and really taking control over technologies that are 
going to give us long-term control over energy costs.
    Our electricity bills did go up by 40 percent a year ago as 
the spike in oil and other natural resources took place. And I 
think, when we execute on this plan, we are going to have, over 
the long term, a set of technologies that I believe are going 
to allow us to have more control over time and more security 
over time about how to think about energy technologies and 
productivity.
    Mr. Sarbanes.  Did the projections of what the, sort of, 
unbuffered scenario would be accounted for what you hoped the 
new technologies will produce in terms of efficiency, or they 
did not?
    Mr. Rogers.  It did. We did take into account the 
availability of the technologies, how long it would take us to 
bring a nuclear unit on and shut down coal units so we would 
reduce our CO2 footprint, and what the cost 
implications would be. We looked at the prospect of bringing on 
carbon capture and sequestration with respect to existing 
facilities. We looked at energy efficiency and did scenarios on 
really aggressive energy efficiency and succeeding there. And 
we actually looked at different scenarios on renewables, in 
terms of the cost implications as well as the availability on a 
24-7 basis and that implication.
    Mr. Sarbanes.  My time is up. I would just say, all the 
more reason to be as aggressive on the energy technology as you 
are trying to be. I am troubled that so much of that technology 
is being purchased overseas, because I think we have lagged far 
behind.
    Mr. Waxman.  Thank you, Mr. Sarbanes.
    Before I recognize other members for questioning, I know 
that a number of you have to leave, and I want to express my 
appreciation. I know you were going to leave at 12:30, and you 
have extended your time to be with us. And this has been very 
helpful. I have listened to your responses to the questions, 
very important and legitimate questions from the members. And I 
think it has been very helpful in clarifying the matter.
    You do represent a remarkably diverse panel, a cross-
section of American industry and environmental advocates. And 
your call to us is to adopt comprehensive, environmentally 
protective, economically sustainable, and fair legislation to 
address global climate change. And the economic crisis, as I 
have heard you all say, is not a reason to not move forward, 
but is a real reason why we should move forward at this time.
    So I thank you so much for being here, and I appreciate all 
the work you have done as a panel in developing the proposals 
you have sent to us.
    I am looking forward to working with Members of the 
Congress on our committee, both sides of the aisle, from 
various regions, with the various stakeholders, with the new 
President, with Members of the House and the Senate in 
leadership positions on both sides of the aisle, as well, in 
seeing if we can accomplish this goal this year. It is a very 
aggressive timetable.
    So I am going to excuse those who have to leave, but I know 
we have others that will stay behind to answer further 
questions from the members of the committee. Thank you so much.
    In fact, it probably isn't a bad idea--if any of the 
witnesses that are going to be testifying want to take a quick 
break, we can do that.
    No, no, we have a whole new group that is coming in from 
USCAP that are prepared to answer the questions. They are not 
the CEOs, but they are people who have been very involved in 
the issues.
    We are going to pick up questions where we left off, but I 
want to introduce a new set of witnesses. We have Elizabeth 
Thompson, the Legislative Director of the Environmental Defense 
Fund; Betsy Moler, Executive Vice President of Government and 
Environment Affairs for Exelon Corporation; Ann Renee Klee, 
Vice President for Corporate Environmental Programs for General 
Electric; Daniel Lashof, Ph.D., the Director of the NRDC 
Climate Center for NRDC; Steven B. Corneli, Senior Vice 
President, Market and Climate Policy for NRG Energy; Janet 
Peace, Vice President for Markets and Business Strategy for the 
Pew Center on Global Climate Change; Steve Kline, Vice 
President of Corporate Environmental and Federal Affairs for 
PG&E Corporation; and Robert L. Bendick, Jr., Director of U.S. 
Government Relations for The Nature Conservancy.
    We are delighted that you are all here to further answer 
questions from members of the committee.
    As I indicated, it is going to be the practice of our 
committee that all witnesses testify under oath. So before you 
sit down and get too comfortable, I would like to ask if you 
would stand and raise your right hand.
    [Witnesses sworn.]
    Mr. Waxman.  The record will indicate that each of the 
witnesses answered in the affirmative.
    Mr. Rogers, you would be next in asking questions. Do you 
wish to be recognized?
    Mr. Rogers of Michigan.  No.
    Mr. Waxman.  Ms. Schakowsky was next. She is not in the 
room at the moment.
    Mr. Welch, you are next.
    Mr. Welch.  Thank you, Mr. Chairman.
    I want to go back to a line of questioning that was asked 
by Mr. Markey. There are two things. One, this committee, with 
Chairman Waxman and Chairman Markey, are intent on having a 
significant climate change bill by Memorial Day. It is very 
ambitious.
    Second, Mr. Rowe, an earlier witness, pointed out the 
obvious, and that is: all of us have to make decisions that 
minimize risk. And there is a debate, and there will be an 
intense debate among members of this committee and in Congress 
as to what will be the economic consequences of the action that 
we take.
    But the question I have for each of you--and I just want to 
go down--is this. And I would just like to get a yes or no 
answer, because this is really a threshold issue for us.
    Does doing nothing to address climate change--in other 
words, us getting unable to resolve the debate about the 
consequences of action--does doing nothing to address climate 
change, inaction, threaten our economy, in your view, yes or 
no?
    Mr. Pershing.  Jonathan Pershing with the World Resources 
Institute. Yes, it does.
    Mr. Welch.  OK.
    Mr. Kline?
    Mr. Kline.  It does, sir.
    Ms. Moler.  Yes, sir, it does.
    Mr. Welch.  OK. 
    Mr. Corneli.  Yes, it does.
    Mr. Lashof.  Yes, it does.
    Ms. Klee.  Yes, sir.
    Ms. Peace.  Yes, sir.
    Ms. Thompson.  Yes, absolutely.
    Mr. Bendick.  Yes, sir.
    Mr. Waxman.  There are buttons on the base of the mikes, so 
be sure you press them.
    Mr. Welch.  Well, I want to thank everyone, because the 
threshold question is whether we have to act. And one of the 
debates we are going to have is whether the risk of acting is 
greater than the risk of not acting. And it is that elemental.
    And, as you have heard from listening to the questions of 
the members of the committee, there is a division of opinion, 
less about whether global warming is a threat, but a very 
lively debate about whether action will be worse than inaction. 
And I find it very heartening that leaders of the advocacy 
community and the industrial and energy community are united on 
urging Congress to be a partner in acting.
    Let me ask--is it Ms. Klee from General Electric?
    Ms. Klee.  Yes.
    Mr. Welch.  Mr. Immelt was here, and your company is a 
pretty good size, as I understand it. What are the consequences 
of inaction economically, as you see it, to General Electric 
and the work that you do?
    Ms. Klee.  I think you heard the CEOs identify some of the 
risks this morning. There is the lack of investment that will 
be made, because there is uncertainty as to where to put 
limited investment dollars.
    There is also the fundamental fact that there will be 
regulation. EPA will move forward, but it may not move forward 
in the most cost-effective way. So we may have a lost 
opportunity by not pursuing legislation.
    And there will be the additional cost that we believe will 
be incurred if we have to act more quickly later.
    Mr. Welch.  I see.
    Ms. Klee.  So those three things, I think, combine to make 
it a very costly decision one way or another.
    Mr. Welch.  So I if understand what you are saying, it is 
not only important to act, it is important to act sooner rather 
than later.
    Ms. Klee.  That is our belief. And it is important to act 
smartly.
    Mr. Welch.  OK. Well, you are asking a lot for that. But I 
am glad you have--hope springs eternal.
    Mr. Kline, how about you?
    Mr. Kline.  I think one of the things that we see is that 
both in terms of protecting our customers from the kind of 
increases that the first panel talked about in terms of their 
electricity rates, we also see an incredible lost opportunity 
if we don't act now.
    Mr. Welch.  That being?
    Mr. Kline.  That is that there are these amazing, 
developing new technology centers across the United States, and 
we see those jobs going overseas and that technology 
superiority going overseas. And so, in terms of our service 
territory, where Silicon Valley is putting a lot of time and 
energy into these technologies, we are going to lose that if we 
don't act now.
    Mr. Welch.  OK.
    Ms. Moler, a lot of the critics who raise legitimate 
questions about cap and trade point to the experience in Europe 
that they cite as a failure. Your view on the European 
experience and how that should inform us about a cap-and-trade 
approach?
    Ms. Moler.  We do not have substantial operations in Europe 
or any significant ones at all. However, as a student of 
climate change, I think we have learned a lot of lessons from 
the European experience. We need a robust cap-and-trade system. 
We need to deal with cost containment, as we call it. We have, 
in the mechanics of our proposal on cost containment, we have 
applied some of the lessons learned from Europe.
    I would also say that, ultimately, we hope there will be a 
worldwide program, that it will not be just the United States 
and just the EUTS trading system. And so we need a program that 
is ultimately going to work on a multilateral basis. And we 
hope that, by starting here, we will get it developed.
    Mr. Welch.  OK, thank you.
    Ms. Peace, could you comment on that?
    Mr. Waxman.  Mr. Welch, your time has expired.
    Mr. Welch.  Oh. Thank you, Mr. Chairman.
    Mr. Waxman.  Thank you.
    Ms. Castor?
    Ms. Castor.  Thank you, Mr. Chairman.
    And I would like to thank Chairman Waxman and Chairman 
Markey for starting us off less than 1 week after the Congress 
was sworn in, starting us off on climate change.
    And thank you to the panel for your participation.
    Can you all chronicle the current research efforts in 
carbon sequestration, various research efforts that are showing 
some promise at all? Who is conducting that research? What is 
being done right now?
    Mr. Corneli.  Well, Congresswoman Castor, Mr. Chair, that 
is a great question. And we actually tend to think that there 
are several phases on the continuum from research to deployment 
that are involved with all of the promising technologies.
    With respect to carbon capture and sequestration, one of 
the exciting things is some of the technologies are very close 
to commercial deployment. You heard Mr. Nolen from Siemens 
earlier talk about part of the need of this program is to get 
competition and market customers established for the major 
developers of the technology and, with coal gasification, the 
technology to actually scrub the carbon out, compress it.
    Ms. Castor.  But who is conducting that research?
    Mr. Corneli.  Well,that is not even research anymore. That 
is being done by private companies who are ready to do it.
    Ms. Castor.  OK. What is that private company?
    Mr. Corneli.  Well, private companies like GE, like 
Mitsubishi, like Siemens, like--we can get you more 
information.
    Ms. Castor.  Yes, because there was a utility in my neck of 
the words, in Florida, that was held up very early as one of 
the prototypes for carbon sequestration, and they have 
abandoned their research project for many different reasons. So 
I am trying to now get a little more detail on who is 
conducting the research.
    Mr.Corneli.  One of our views as a coalition is that we 
need these complementary measures that were described earlier 
to jump-start things like carbon capture and sequestration. 
Because, right now, all the technology can be put together. It 
hasn't gone down the cost curves, like Mr. Immelt said. It is 
not cheap enough or widely available enough to use everywhere. 
And we think creating more demand and more supply will help 
make those things happen quickly.
    Ms. Castor.  Can anyone else shed some light?
    Mr. Bendick.  I am Bob Bendick from The Nature Conservancy. 
My name tag is somewhere here.
    Of course there is a great deal of very specific evidence 
on sequestration by trees and by other natural systems. And I 
think we know pretty precisely what different forest types 
sequester, how quickly, both in the U.S. and outside the U.S.
    And that is why, sort of, forest carbon issues are part of 
the blueprint, because we know what those are. It is a very old 
technology and one we can count on in very specific ways if the 
regulations surrounding keeping those trees in place are good 
ones. And that is what we advocate.
    Ms. Klee.  If I could just add, we are working with our 
customers and have a project with Duke in Indiana for an IGCC 
coal plant with carbon capture and storage and other facilities 
to be CCS-ready. And our customers have been very receptive to 
that.
    And we also have a lot of experience, and other companies 
do as well, with CO2 injection as part of enhanced 
oil recovery.
    So the technologies are there. It is a question of getting 
them to be economically feasible. And the research for large-
scale projects is very, very resource-intensive, cost-
intensive. And that is why----
    Ms. Castor.  So it is mostly going on in the private 
sector, not at universities. Or is it?
    Ms. Klee.  It is going on at both, but it is very cost-
intensive. And that is why getting funding is important, to 
ensure that we can take it to that next level.
    Mr. Lashof.  I just want to say, in terms of universities, 
there has been quite a bit of work. Lawrence Berkeley National 
Laboratory has done work characterizing the underground 
geology. Mr. Chu, nominated to be Energy Secretary, has been 
involved in overseeing that work.
    There is a lot of work at Stanford University and elsewhere 
in the academic community and in the Department of Energy 
National Labs, Battelle and other National Labs, as well as 
Berkeley.
    Ms. Moler.  There is also a great deal of collaborative 
research being done by the Electric Power Research Institute in 
our industry. And then Harvard has a major coal research 
project under way, as well.
    Ms. Castor.  Do you all--go ahead.
    Ms. Peace.  I would just add that a lot of folks talk about 
CCS as being a new type of technology. And they have been using 
CO2 for enhanced oil recovery for 30 years in the 
Permian Basin. Granted, it is a little bit different if you 
want to sink it in to a brine aquifer, and it requires a lot 
larger cost, because you are not getting the revenue back from 
the oil.
    Mr. Waxman.  Thank you, Ms. Castor.
    Ms. Eshoo?
    Ms. Eshoo.  Thank you, Mr. Chairman. And thank you for 
making the very first hearing in the 111th Congress of Energy 
and Commerce on this issue in your new chairmanship. I think 
that that bodes very well for the country.
    And I want to compliment the USCAP team for the work that 
you have done. This has been a very interesting morning, to 
listen to all of the testimony.
    Our colleague, Mr. Markey, has a saying, and that is that 
there is no place to take a sick planet to, no hospital to 
treat a sick planet. So I think that, as we talk about the 
internals of a national policy of how we clean up and move on 
in a new way to not only protect our resources but also to move 
on economically and everything that comes with it, that we will 
be making a contribution to the world community, as well. I 
can't think of anything more important for all of us to be 
working on.
    I am a member of the House Intelligence Committee, as well 
as this one. And back, I think, 2 years ago, there was a CNA 
report that was issued, and it was written by admirals and 
generals that found that global climate change posed a 
significant threat to America's national security. So this 
isn't only an issue covering the items that you all have spoken 
about this morning and members have asked questions about. This 
is an issue that does and will continue to have an impact on 
America's national security.
    And to that end, both myself and Mr. Markey, chairing the 
Select Committee on Global Climate Change, and myself as a 
subcommittee Chair at the Intelligence Committee, held an open 
hearing, a public hearing, last year on this very issue.
    Here are my questions. I would like to know if any of you 
can tell us about where the gaps in R&D are, as to the major 
research and development that needs to take place on these 
issues. And if you have any recommendations to us about what 
role specifically the Federal Government should play in these 
investments that won't overlap with what currently is taking 
place with private-sector R&D that should be considered or are 
under way.
    That is my first question. I have been here for a long 
time, so I am going to get all my questions in first.
    I would like to know how you are all measuring your 
successes. There are many successes that have been mentioned 
this morning. And I hope you had the benefit of hearing what 
your forebears at the table spoke about. I would like to know 
about that.
    And thirdly, given where we are in our country with what 
has happened in the private sector and the rip-offs that have 
taken place, I would like some of you to comment on what 
recommendations you would have to us on how we don't end up in 
the traps of not having enough oversight.
    I know that Mr. Tercek, before he joined The Nature 
Conservancy, was with Goldman Sachs. And I think we still have 
someone from The Nature Conservancy here, whether you can 
address this or not.
    So I guess my question is, do you believe that oversight of 
the market is really an issue in this whole debate, and what 
Congress can and should do and address as it designs climate 
legislation.
    I think without effective oversight of the Congress that, 
most frankly--and it is not a pretty depiction of what goes 
on--is that there are companies and corporations, private-
sector people that end up chewing their limbs off of their own 
corporate body in order to get a leg up. And it hurts everyone 
and everything. I don't think anyone wants to see a repeat of 
what we are experiencing now and the huge toll, the damage that 
it has taken on our national economy, not to speak of 
individuals and families and communities.
    So those are my three questions. And I thank you for the 
work that you have done.
    Mr. Waxman.  Well, the gentlelady's time has almost 
expired. But I do think it is fair to have her questions 
responded to, so I would like to have any of you on the panel 
volunteer to answer some of those questions.
    Ms. Thompson.  Well, I will start with the response on the 
market oversight. I am speaking for Environmental Defense Fund, 
who believes a lot in cap and trade.
    Market oversight is fundamental. That is part of what makes 
it work. Transparency, accountability--I think you have already 
heard those things throughout the day.
    Now, the blueprint does not go into detail on that, in part 
because we did not have the experts on that. But I think that 
is a serious issue and one that we hope to work with Congress 
on.
    Ms. Klee.  We would support that entirely. I mean, we feel 
very strongly that transparency is key to the success of this 
program and a strong oversight role is appropriate.
    I would like to quickly address how we, from a company 
perspective, define success. And Mr. Immelt mentioned it this 
morning, but it is really our Ecomagination program. That is 
what has shown us that reducing greenhouse gas emissions and 
increasing energy efficiency is good from a business 
perspective.
    We save over a hundred million dollars a year through what 
we do internally as a company. And from a product placement, 
product perspective, we are increasing our revenues. And we set 
targets for that. We will hit $20 billion in revenues next year 
and have a goal of hitting $25 billion by 2012.
    And those are technologies that increase energy efficiency 
and reduce greenhouse gas emissions. So these are key measures 
of success for us.
    Mr. Corneli.  Another measure of success I think that is 
important to us as a coalition as oppose to as individual 
companies would be measured in the things that you all measure 
and produce so well, and that's votes. We really are serious 
that we want to see this legislation pass as quickly as 
possible. We really want to work with you. We want to sort of 
provide a stimulus or a push to Congress, and we want to be 
pushed back by members on all sides so there can be an 
effective good debate and a very good policy that will be good 
for our environmental colleagues, good for our corporate 
colleagues, good for the country.
    And that's how we will measure success as a coalition. In 
terms of the gaps, you know, of R&D, we do think there's a lot 
of resource--a lot of technologies ready to go now that can 
step into the gap and that can go down that cost curve. We 
think there's a whole bunch of new ones that we have not yet 
even really been invented yet that with the right price signal 
and the right kind of R&D support, we can drastically lower the 
cost of powering our economy, building buildings, creating 
building materials and information management, food, fiber 
without emitting carbon. And we would like to see the United 
States be the leader in that. That's fundamental research as 
well as strong assistance for continuous deployment of 
technologies.
    Mr. Waxman.  We have very little time left and we have two 
members who want to ask questions. As you think about the 
questions that Ms. Eshoo and other members have asked, we would 
like to invite to you submit additional comments for the 
record. Mr. Rogers.
    Mr. Rogers of Michigan.  I know that Mr. Inslee has a quick 
question, so if I could just yield just a minute of my time to 
him, and then I will take the remaining time, Mr. Chairman.
    Mr. Inslee.  Thank you, Mr. Rogers. Just quickly, I want to 
ask this issue about how the permits should be allocated for a 
cap and trade system. Europe had an experience where they gave 
them away instead of auctioning them, instead of using a 
market-based system, they just gave them away. And they found 
that very suboptimal because it did not create a price on 
carbon, citizens felt abused because an asset they own, which 
is the atmosphere, was just given away for free and simply 
reduced the effectiveness of the program. Many of us think that 
we ought to start with a mixture, heavily weighted to an 
auction with perhaps some accommodation for energy intensive 
industries to ameliorate some of these issues as a preferable 
way to do this. I'd appreciate any of your suggestions, 
particularly those who sort of agree with me.
    Mr. Lashof.  Mr. Inslee, that is an excellent question. It 
is a very important and consequential decision that this 
committee and the Congress has to make about how the 
allocations are made. We do I think in the blueprint take 
notice of the experience in Europe and make recommendations to 
avoid it in several ways. First of all, we do recommend 
following the approach that you proposed with respect to energy 
intensive industries. So that's one area where we believe an 
allocation is warranted as opposed to an auction. Also phasing 
out is those things--as those competitive distortions are 
addressed. With respect to allocations for the electric 
industry, rather than give allocations primarily to generators, 
most of the allocations that we're proposing would go to 
regulated local distribution companies, specifically on behalf 
of their customers. And we specifically talk about the need to 
avoid windfall profits as part of that.
    And finally, with respect to merchant generators, such as 
NRG, we do propose some allocations. But they're limited to the 
net compliance cost that those companies have.
    Mr. Inslee.  Thank you. And I want to thank Mr. Rogers for 
his assistance.
    Mr. Waxman.  Mr. Rogers.
    Mr. Rogers of Michigan.  Thank you, and time is short, so I 
will be quick if I can. Ann from General Electric, is your 
company still in the appliance business? You build appliances?
    Ms. Klee.  Yes, sir, it is.
    Mr. Rogers of Michigan.  What percentage of those 
appliances by component is built outside of the United States?
    Ms. Klee.  I don't have that information, but I can get it 
for you.
    Mr. Rogers of Michigan.  It is pretty significant though, 
isn't it? You over time have moved quite a bit of the 
manufacturing, at least components?
    Ms. Klee.  We have significant manufacturing in the United 
States.
    Mr. Rogers of Michigan.  Sure. But you have also moved 
significant manufacturing outside of the United States?
    Ms. Klee.  We have manufacturing and partnerships and 
sourcing outside as well.
    Mr. Rogers of Michigan.  Did the Federal Government tell 
you that you needed to go into Ecomagination?
    Ms. Klee.  No, sir.
    Mr. Rogers of Michigan.  You did that entirely on your own.
    Ms. Klee.  That was an entirely voluntary effort.
    Mr. Rogers of Michigan.  Great program. My point here being 
that congratulations. I think the market is showing that you 
can do this on your own. And is it not true that General 
Electric would benefit significantly financially from their 
business model if we passed a cap and trade bill?
    Ms. Klee.  I think what Mr. Immelt said this morning is our 
energy business is strong right now, and we will do well with 
it regardless.
    Mr. Rogers of Michigan.  He's also reported as saying, and 
I quote--well, he has made it clear that he would be getting 
rid of--this is not a quote--made it clear that they would be 
getting rid of lower margin businesses. Manufacturing in 
today's day and age is a low-margin business.
    Ms. Klee.  I did not see that quote but I am quite certain 
that he was not referring to the energy business in the United 
States.
    Mr. Waxman.  Mr. Rogers, will you yield to me just to point 
out to you that there is 2 minutes and 40 seconds left in the 
vote on the floor. I will let you go ahead and continue with 
your questions.
    Mr. Rogers of Michigan.  I won't go on too much. My point 
here being, Mr. Chairman, I think climate change is incredibly 
important as well. But there are some great industries that are 
voluntarily getting into the economics of the environment, 
which is fantastic. We all win when that happens. And I think 
we need to be very careful about our witness panels who are 
basically saying--especially a company like General Electric 
who has already skirted rules and regulations in the United 
States to make money overseas perfectly legal. If we make it 
more difficult to manufacture things--and that's what we do in 
the State of Michigan--you are going to kill a State like 
Michigan. And it worries me a lot that there is maybe a better 
approach to this rather than this very complicated cap and 
trade system that has brought corruption to Europe. And I think 
you addressed that through your transparency question, which is 
great. But the reason that we don't--you don't have it in your 
blueprint is because nobody knows how to do it, that you don't 
run into these corruption problems. I just hope that we take 
our time, we do this right, if maybe not at all, or build in an 
incentive for businesses to adopt what General Electric has 
done and is excited about in their environmental sector of 
business.
    And if we don't do that, I think we are all certainly going 
to regret it. From a State that still likes to build stuff in 
America and build the middle class in America that is slowly 
eroding away because we can't build things anymore, we'd 
better, we'd better understand what that means for the average 
person who gets up and still builds things in this country. So 
I appreciate the opportunity, and the chairman was very 
gracious to let me go. And now I'm going to introduce a rule 
change package here in the House. Thank you very much. I 
appreciate your time. I am adjourning the hearing. This may be 
the only time I get to do this in 2 years. Hearing adjourned.
    [Whereupon, at 1:30 p.m., the committee was adjourned.]
    [Material submitted for inclusion in the record follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    

                                 
