    [Senate Hearing 111-1217]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 111-1217

     LEGISLATIVE HEARING ON S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER
                                      ACT

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   ----------

                                OCTOBER 29, 2009

                                   ----------

      Printed for the use of the Committee on Environment and Public Works

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                                                           S. Hrg. 111-1217

     LEGISLATIVE HEARING ON S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER
                                      ACT

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 29, 2009

                                   __________

      Printed for the use of the Committee on Environment and Public Works

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://www.gpo.gov/fdsys
                                   __________

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED ELEVENTH CONGRESS
                                 FIRST SESSION

                      BARBARA BOXER, California, Chairman
    MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
    THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
    FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
    BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
    BERNARD SANDERS, Vermont             MIKE CRAPO, Idaho
    AMY KLOBUCHAR, Minnesota             CHRISTOPHER S. BOND, Missouri
    SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
    TOM UDALL, New Mexico
    JEFF MERKLEY, Oregon
    KIRSTEN GILLIBRAND, New York
    ARLEN SPECTER, Pennsylvania

                        Bettina Poirier, Staff Director
                     Ruth Van Mark, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

                                OCTOBER 29, 2009
                               OPENING STATEMENTS

    Specter, Hon. Arlen, U.S. Senator from the State of Pennsylvania.     1
    Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     2
    Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland     3
    Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..     3
    Lautenberg, Hon. Frank R., U.S. Senator from the State of New
      Jersey.........................................................     4
    Bond, Hon. Christopher S., U.S. Senator from the State of
      Missouri.......................................................     5
    Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota....     9
    Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     9
    Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode
      Island.........................................................    12
    Barrasso, Hon. John, U.S. Senator from the State of Wyoming......    12
    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..    13
    Udall, Hon. Tom, U.S. Senator from the State of New Mexico.......    14
    Baucus, Hon. Max, U.S. Senator from the State of Montana.........    60

                                   WITNESSES

    Chiaro, Preston, Chief Executive Officer, Energy Product Group,
      Rio Tinto......................................................    15
        Prepared statement...........................................    17
    Rowe, John, Chairman, President, and Chief Executive Officer,
      Exelon Corporation.............................................    21
        Prepared statement...........................................    23
        Response to an additional question from Senator Sanders......    33
        Responses to additional questions from Senator Vitter........    35
    Kempton, Willett, Professor, Marine Policy, University of
      Delaware.......................................................    44
        Prepared statement...........................................    46
    Winger, Bob, President, International Brotherhood of
      Boilermakers, Local 11.........................................    61
        Prepared statement...........................................    64
    Krupp, Fred, President, Environmental Defense Fund...............    71
        Prepared statement...........................................    73
    Carey, Mike, President, Ohio Coal Association....................   101
        Prepared statement...........................................   103
        Responses to additional questions from:
            Senator Inhofe...........................................   184
            Senator Voinovich........................................   188
    Stallman, Bob, President, American Farm Bureau Federation........   190
        Prepared statement...........................................   192
        Response to an additional question from Senator Voinovich....   204
    Boehlert, Hon. Sherwood, Co-Chair, Bipartisan Policy Center's
      National Transportation Policy Project.........................   225
        Prepared statement...........................................   228
        Response to an additional question from Senator Boxer........   348
        Responses to additional questions from:
            Senator Sanders..........................................   349
            Senator Inhofe...........................................   350
    Millar, William, President, American Public Transportation
      Association....................................................   352
        Prepared statement...........................................   354
        Response to an additional question from Senator Boxer........   361
        Responses to additional questions from:
            Senator Cardin...........................................   362
            Senator Inhofe...........................................   364
    McKeever, Mike, Executive Director, Sacramento Area Council of
      Governments....................................................   366
        Prepared statement...........................................   368
        Responses to additional questions from Senator Inhofe........   388
    Windsor, Barbara J., President and Chief Executive Officer, Hahn
      Transportation, Inc............................................   389
        Prepared statement...........................................   391
        Responses to additional questions from Senator Inhofe........   404
    Podesta, John, President and Chief Executive Officer, Center for
      American Progress Action Fund..................................   423
        Prepared statement...........................................   425
        Responses to additional questions from:
            Senator Sanders..........................................   451
            Senator Voinovich........................................   455
    Helme, Ned, President, Center for Clean Air Policy...............   460
        Prepared statement...........................................   463
    Lash, Jonathan, President, World Resources Institute.............   480
        Prepared statement...........................................   482
        Response to an additional question from:
            Senator Sanders..........................................   492
            Senator Voinovich........................................   492
    Murray, Iain, Vice President for Strategy, Competitive Enterprise
      Institute......................................................   494
        Prepared statement...........................................   496
    Adams, Hon. Linda, Secretary, California Environmental Protection
      Agency.........................................................   559
        Prepared statement...........................................   561
        Responses to additional questions from Senator Boxer.........   573
    Johnson, Dave, Organizing Director, Laborers' Union Eastern
      Region, Laborers' International Union of North America.........   577
        Prepared statement...........................................   579
        Response to an additional question from:
            Senator Sanders..........................................   584
            Senator Voinovich........................................   585
    Dolezalek, J. Stephan, Managing Director, VantagePoint Venture
      Partners.......................................................   587
        Prepared statement...........................................   589
        Response to an additional question from Senator Sanders......   595
    Hawkins, David, Director, Climate Center, Natural Resources
      Defense Council................................................   596
        Prepared statement...........................................   598
        Response to an additional question from Senator Sanders......   652
        Responses to additional questions from Senator Whitehouse....   653
        Response to an additional question from Senator Inhofe.......   656
        Responses to additional questions from Senator Vitter........   657
    Trisko, Eugene, Attorney at Law, on behalf of the United Mine
      Workers of America.............................................   661
        Prepared statement...........................................   663
    Smorch, Matt, Vice President, Strategic Planning, CountryMark....   695
        Prepared statement...........................................   698
        Responses to additional questions from Senator Inhofe........   706
    Cicio, Paul, President, Industrial Energy Consumers of America...   708
        Prepared statement...........................................   710
        Responses to additional questions from
            Senator Whitehouse.......................................   726
            Senator Voinovich........................................   727

                              ADDITIONAL MATERIAL

    Letter to Senator Boxer and Senator Inhofe from the American
      Automobile Association et al., October 28, 2009................   769
    Letter to Senator Boxer and Senator Inhofe from the National
      Association of Regulatory Utility Commissioners, October 28,
      2009...........................................................   771
    Executive Summary from the CNA Corporation, National Security and
      the Threat of Climate Change...................................   774
    Statement of the Family Farm Alliance, October 28, 2009..........   777

     LEGISLATIVE HEARING ON S. 1733, CLEAN ENERGY JOBS AND AMERICAN POWER
                                      ACT

                                  ----------

                           THURSDAY, OCTOBER 29, 2009

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The full committee met, pursuant to notice, at 9:30 a.m. in
    room 406, Dirksen Senate Office Building, Hon. Barbara Boxer
    (chairman of the full committee) presiding.
        Present: Senators Boxer, Inhofe, Alexander, Barrasso,
    Baucus, Bond, Cardin, Carper, Crapo, Gillibrand, Klobuchar,
    Lautenberg, Merkley, Sanders, Specter, Udall, Vitter,
    Voinovich, and Whitehouse.
        Senator Boxer. The committee will come to order.
        We are very pleased to have these distinguished panels. We
    actually have four distinguished panels, and so we are going to
    get right to it. I am going to waive my opening statement, and
    if I have to, make one at the end, and call on, therefore,
    Senator Specter for his 2-minute opening statement.

               OPENING STATEMENT OF HON. ARLEN SPECTER,
              U.S. SENATOR FROM THE STATE OF PENNSYLVANIA

        Senator Specter. Thank you, Madam Chairwoman.
        I want to thank this distinguished panel of witnesses for
    coming in today. This is our third day of hearings, and we are
    examining the very complex issues involved in this legislation.
    It would be my hope that our committee would hold its fire
    until we have heard all of the witnesses and examined the key
    issues as to how we deal with global warming, climate change;
    how we protect the jobs that are at stake; how we deal with the
    electrical rates; and how we deal with the critical issue of
    freeing ourselves from dependence on foreign oil.
        It is hard to avoid the heavy note of partisanship which
    has been present in these hearings. It would be my hope that we
    would look at the facts, be fact oriented. We all want what is
    best for America and reach a public policy decision.
        I want to welcome especially John Rowe, who is the head of
    Philadelphia Electric Company. He is also the head of Exelon, I
    might add, which Philadelphia Electric is a part of.
        Thank you, Madam Chairwoman.
        Senator Boxer. Senator Inhofe.

              OPENING STATEMENT OF HON. JAMES M. INHOFE,
                U.S. SENATOR FROM THE STATE OF OKLAHOMA

        Senator Inhofe. Thank you, Madam Chairman.
        I think we need to get on record here because we have
    talked about this before, and before we go into a markup, the
    Republicans on the committee think it is reasonable to get
    three things: the Chairman's mark of the bill, which we have
    and we thank you for providing that; a score of the Kerry-Boxer
    bill by the CBO; and a full economic analysis of your bill by
    the EPA.
        Now, that is the thing that to me is the most significant
    because I think, you know, the people are entitled to know what
    it is that we have in this massive bill.
        So we don't have the full economic analysis. This isn't
    just my view, but on Tuesday, Lisa Jackson, the EPA
    Administrator, when asked whether the EPA had conducted a full
    analysis, she clearly said no. So that is what we are going to
    have to have in this, and it is my understanding that you would
    tolerate three. You would prefer 2 minutes, so I will give the
    rest of my time to Senator Bond.
        [The prepared statement of Senator Inhofe follows:]

                      Statement of Hon. James M. Inhofe,
                    U.S. Senator from the State of Oklahoma

        Today marks the third--and mercifully last--marathon
    session on the Kerry-Boxer bill. Before I address what we've
    learned about the Kerry-Boxer bill over the last 2 days, I want
    to talk about the next steps in the legislative process.
        Chairman Boxer, before you move to a markup, the
    Republicans on this committee think it's reasonable that we get
    three things: (1) a chairman's mark of the bill, which we
    have--and we thank you for providing it; (2) a score of Kerry-
    Boxer by the Congressional Budget Office; and (3) a full
    economic analysis of your bill by the Environmental Protection
    Agency. Let me focus for a minute on the EPA analysis.
        Madam Chairman, we don't have a full economic analysis.
    This isn't just my view. On Tuesday, Lisa Jackson, the EPA
    Administrator, when asked whether EPA had conducted a full
    analysis, she said, very clearly, ``No.''
        Madam Chairman, I'll cut to the chase: let's work together
    and with the EPA to get the full analysis as well as the CBO
    score. Once we get them, we can proceed to a markup and take it
    from there. I know Senator Voinovich wanted to address these
    issues, so I'll move on.
        Some in this room--well, maybe everyone in this room--will
    be surprised to hear that I've been eagerly awaiting this
    hearing. We've got an excellent lineup of witnesses. The Ohio
    Coal Association, the American Farm Bureau, and the American
    Trucking Association will explain why Kerry-Boxer threatens
    jobs and affordable, reliable energy, particularly in rural
    America. And we'll hear why the cap-and-trade system in Europe
    has been a failure.
        I know my time is short, so I just want to emphasize the
    three important things we've learned about Kerry-Boxer over the
    last 2 days: It will undermine the global competitiveness of
    America's manufacturers, it will weaken America's national
    security, and it's an energy tax that will be paid for by the
    Heartland.
        So I look forward to hearing from today's witnesses so we
    can learn even more about this bill.
        Thank you, Madam Chairman.

        Senator Boxer. OK. We will do that after we hear from
    Senator Cardin, and I believe Senator Alexander will follow.
        Senator Cardin.

             OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
                U.S. SENATOR FROM THE STATE OF MARYLAND

        Senator Cardin. Well, Madam Chair, thank you. This is, as
    Senator Specter pointed out, this is our third day of hearings.
    Yesterday, we started at 9:30. We finished a little before 6,
    and I thought the four panels were extremely helpful.
        Today, we have four additional panels that I think will be
    helpful to us in understanding the importance of getting this
    bill passed, dealing with a new energy policy for America, for
    our security, for our economy, and for our environment.
        I just want to talk about one aspect of the bill, and that
    is transportation. I have talked about transportation before,
    but I think transportation is a critically important part of
    the bill. Thirty percent of our greenhouse gas emissions come
    from transportation. Transportation consumes 60 percent to 70
    percent of our oil.
        This legislation recognizes the importance of transforming
    our transportation system by investing in clean fuel so that we
    can develop new types of liquid fuel such as ethanol from
    algae. I mention that because work is being done on that in
    Baltimore, and we are proud of the work that is being done in
    regards to clean fuels.
        The legislation also invests in clean vehicles. I was
    pleased to see this week Senator Carper and Vice President
    Biden talking about electric cars in Delaware. I am proud of
    the people of Maryland that are going to help build those cars.
    The General Motors hybrid buses being done in White Marsh,
    Maryland, the Mack hybrid trucks in Hagerstown, Maryland--these
    are all examples of clean vehicles that I think will be part of
    our solution for our energy policy in America.
        The bill also invests in CLEAN-TEA or transit. We live in
    the second most congested area in the Nation, Washington, DC.
    It is estimated that on average, a person spends 62 hours and
    42 gallons of gasoline a year stuck in congestion here in
    Washington. If we double the transit ridership of this Nation,
    we can reduce our imported oil by 40 percent.
        As Secretary LaHood said before this committee, it is about
    where we invest for America's future. This bill invests in
    clean energy, clean technology, to build our economy, to make
    us more secure, and to be the right stewards of our
    environment.
        I look forward to hearing from the witnesses.
        Senator Boxer. Thank you.
        Senator Alexander.

              OPENING STATEMENT OF HON. LAMAR ALEXANDER,
                U.S. SENATOR FROM THE STATE OF TENNESSEE

        Senator Alexander. Thanks, Madam Chairman.
        I, too, look forward to the panel, and I thank you for
    coming.
        We have a difference of opinion about how to address
    climate change, just speaking for myself. I don't have any
    problem with the problem. I think it is real. I have a problem
    with the solution. I think the economy-wide cap and trade is
    taxes, mandates, surprises and unnecessary. The costs will
    drive jobs overseas looking for cheap electricity. Applying an
    economy-wide cap and trade doesn't work because it raises the
    price but doesn't reduce the carbon by much. Manufacturing
    doesn't need this burden.
        And if we are going to encourage different kinds of energy,
    instead of having a national windmill policy, we ought to have
    a national carbon-free energy policy and have parity among the
    different forms of energy.
        So instead, all 40 Republicans, and I believe many
    Democrats, would agree to the following four points as a way to
    reach our climate change goals by 2030. One, create an
    environment in which we can build 100 new nuclear power plants,
    just as we did between 1970 and 1990. Nuclear produces 70
    percent of our carbon-free electricity.
        No. 2, electrify half our cars and trucks in the next 20
    years. We could do that without building one new power plant,
    according to the Brookings Institution and the Obama
    administration. Plug them in at night.
        No. 3, explore offshore for low carbon natural gas, as well
    as our own oil.
        And No. 4, four mini-Manhattan Projects to carbon
    recapture, make solar costs competitive, make electric
    batteries better, and recycling nuclear fuel so we don't
    isolate plutonium.
        If we did that, we wouldn't need a national energy tax. We
    wouldn't need to raise the price of gasoline. We wouldn't need
    to run jobs overseas, and we wouldn't need to have 170 billion
    taxpayer dollars subsidizing wind developers to build 186,000
    50-story wind turbines in an area the size of West Virginia
    over the next 20 years.
        Thank you, Madam Chairman.
        Senator Boxer. Well, let us know what you really think
    about that.
        [Laughter.]
        Senator Alexander. If you would give me more than 2
    minutes, I would.
        Senator Boxer. Well, any time.
        [Laughter.]
        Senator Boxer. Let's see--Senator Lautenberg.

            OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,
               U.S. SENATOR FROM THE STATE OF NEW JERSEY

        Senator Lautenberg. Yes. Thanks, Madam Chairman, and
    welcome everybody.
        The hard roadwork is underway, as you see. And one thing
    that I look for in the different differing views here is what
    is it that our mission is? How serious is the mission? And I
    think we have to look for ways to figure out how we get there.
        But not once have I heard here about the importance of
    getting a bill underway, about the importance of reducing
    carbon exposure, of how we can work together, instead of these
    dilatory things that always find a way to impede progress, and
    that is what we are hearing now, for another review by the CBO.
        And I look to my State, New Jersey, the most densely
    populated State in the Union. We had the Chairman of our big
    utility, Public Service Electric and Gas, here. And we now can
    attribute job availability having improved by 28,000 jobs. We
    don't want people to lose jobs. That is not the mission.
        And no matter how they try to color it on the opposition to
    getting something done, it doesn't play the game. It doesn't
    get near what our mission is, a sacred mission to say to our
    kids that we are going to work hard that you are healthy in
    years ahead, and let that be the guiding light, and work under
    that umbrella and say, OK, now we have got to have a solution
    to the problem.
        And I would love to hear our colleagues from the other
    side, I know they love their kids just as much as we love our
    kids. It is just that I don't think they realize the urgency of
    the problem or are unwilling to accept it.
        Thank you.
        Senator Boxer. Thank you, Senator Lautenberg.
        Senator Bond.

            OPENING STATEMENT OF HON. CHRISTOPHER S. BOND,
                U.S. SENATOR FROM THE STATE OF MISSOURI

        Senator Bond. Thank you, Madam Chair.
        Yesterday, we talked about how Kerry-Boxer offers $133
    billion less than Waxman-Markey to protect against higher power
    bills. A closer look reveals many other ways Kerry-Boxer fails
    to protect consumers.
        This chart shows how Kerry-Boxer fails to protect
    electricity consumers from higher power bills. While Kerry-
    Boxer provides consumer protection early in the program,
    funding shown here in blue declines quickly over the years and
    runs out completely less than halfway through the bill.
    Consumers are left exposed, while cap and trade drives
    electricity rates higher, the red line here, up to 42 percent
    higher in Missouri by 2020 and 48 percent higher across the
    country by 2050.
        This chart here shows how Kerry-Boxer fails to protect
    workers. Again, there is a rebate program for energy intensive,
    trade exposed workers, shown here in blue. What workers need is
    shown here in the red line. However, Kerry-Boxer quickly cuts
    worker protection funding and eliminates it entirely by 2034.
        So after a few years of Kerry-Boxer, worker protection is
    not enough, and for half of the bill, Kerry-Boxer leaves
    workers totally exposed to losing jobs. That will also fail to
    protect farmers. Fertilizer producers are relying on this
    program, but its failure will force energy production overseas
    to cheaper countries like Russia. Do we really want to make
    U.S. farmers dependent on Russian fertilizer?
        Some also reference the so-called price collar to protect
    against rising energy prices. However, what Kerry-Boxer
    sponsors do not admit is that while they start the price
    control at a modest $28 per ton, they have a formula in the
    bill that sends the price skyrocketing.
        Every year, Kerry-Boxer adds 5 percent to 7 percent plus
    inflation to the price collar so that by 2020, it is at $50 per
    ton, over $100 per ton by 2030, and $200 per ton by 2035. The
    red line here, showing the collar going through the roof. The
    blue line below is the estimated price of cap and trade. So
    since price control is actually higher than the projected
    price, in no year will it actually help control prices.
        Finally, cap and trade represents a giant $3.6 trillion gas
    tax on America's drivers, farmers, truckers and small business.
    Senator Hutchison and I recently put out a report documenting
    this gas tax, and Barbara Windsor, head of a local regional
    trucking company, joined us when we released this report and
    will testify later today on how the cap and trade tax will hurt
    truckers.
        Our analysis is simple: multiply the price per gallon from
    cap and trade times the amount of fuel America is expected to
    use. As the chart shows, cap and trade will impose what feels
    like a $3.6 trillion gas tax on gasoline, jet and diesel fuel.
    And I will submit the rest of my statement for the record.
        [The prepared statement of Senator Bond was not received at
    time of print.]
        Senator Boxer. Thank you.
        I ask unanimous consent to place into the record a letter
    from AARP, National Consumer Law Center, Public Citizen, and
    Consumer Union: ``Dear Senator Boxer, we are writing to commend
    you for your leadership on protecting residential consumers in
    S. 1733,'' and put the letter in the record.
        [The referenced information follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. And I want to say now that Senator Klobuchar
    is going to speak; she has been taking the lead, and we are
    going to continue to work on this as we move forward.
        Senator Klobuchar.

               OPENING STATEMENT OF HON. AMY KLOBUCHAR,
                U.S. SENATOR FROM THE STATE OF MINNESOTA

        Senator Klobuchar. Thank you very much.
        And thank you to the witnesses.
        I just wanted to thank you, again, Madam Chair, for
    convening these long hearings with eight panels and 50
    witnesses. I just wanted, with Bob Stallman here, to
    acknowledge the agriculture work that is still going on with
    this bill. You know, the agriculture Senators are going to work
    on this outside of this committee and bring forward some ideas
    to the floor.
        But I will say in this bill--we did increase the proportion
    of domestic offsets in the bill from 50 percent in the House
    bill to 75 percent in this bill. This is good for our
    agriculture and forestry sectors because it will result in more
    opportunities for our farmers, who are also able to increase
    allocation of the allowances from .2 percent in the House to 2
    percent for the first 2 years, and [unclear] percent for the
    entire life of the bill.
        So we are working very hard on the agriculture issues,
    seeing farming as part of the solution here. Farmers grow
    things. That is good for the environment. We want to do it the
    right way.
        So I am looking forward to hearing from the panelists.
        Thank you very much.
        Senator Boxer. Senator Voinovich.

            OPENING STATEMENT OF HON. GEORGE V. VOINOVICH,
                  U.S. SENATOR FROM THE STATE OF OHIO

        Senator Voinovich. Thank you, Madam Chairman.
        Serious problems deserve serious solutions. This bill lacks
    analytical support and open dialogue. Even much less
    significant or costly bills are subject to EIA and EPA analysis
    well in advance of the final committee actions. Lesser bills
    are subject to legislative hearings; not so here. Lesser bills
    are designed to meet somewhat realistic assumptions about the
    real state of technology. Not so here.
        I would like to put in the record an editorial from the
    Post referencing Senator Cardin, called The Public Fisker:
    Washington Can Help Build Plug-in Hybrids, But Who Will Buy
    Them? At the end of the article, it says, ``Such are the risks
    of the Obama administration policy which seems to be fertilize
    the fields of green technology and hope at the end at least
    some of it sells.''
        This may be the single most significant piece of
    legislation that has come before the committee, touching every
    sector of the economy and having immense energy, economic,
    environmental and national security consequences. At this
    point, we do not fully understand how this legislation will
    impact on the price, supply and reliability of electricity,
    gasoline and other commodities which millions of Americans
    depend on every day.
        Once more, we don't know if the bill will have an
    appreciable impact on climate change. On Tuesday, Administrator
    Jackson admitted that they had not done a complete analysis of
    this bill. We are talking about a bill that is going to go to
    2050. You would think that we would wait for that data.
        Madam Chairman, I have a Washington Post article, Economics
    of Climate Change at the Forefront. I will submit that, which
    talks about the argument over estimates.
        [The referenced information was not received at time of
    print.]
        Senator Voinovich. The best information that we have right
    now is an analysis by the American Council for Capital
    Formation, which says this bill is an economic disaster. The
    fact of the matter is if you look at this bill, for examples,
    States like Ohio are going to get 70 percent of our allowances
    taken care of, and your State of California is going to get 140
    percent. That means a shifting of $385 million from some States
    to other States around the country.
        And I have a poster here, a chart. If you see the votes in
    the House, folks, these are the people who voted against the
    bill in the House. Here are the States of the people who voted
    for it in the House. And you can see the regional differences
    in the United States. Here we are. I am in the Midwest, the
    manufacturing sector of this country, and we have problems with
    it. But those over here, they think it is OK. California is
    going to make out like a bandit with this legislation.
        So Madam Chairman, I think it is time that we--I am going
    to finish up.
        Senator Boxer. You can ask unanimous consent for a minute
    if you want.
        Senator Voinovich. All right. I think that we need a sense
    of bi-partisanship in this committee, and I don't think we have
    it. You complained the other day that Senator Warner is no
    longer on the committee.
        Senator Boxer. I did.
        Senator Voinovich. I ask, does your definition of bi-
    partisanship mean someone that agrees with you? I mean, this is
    a big bill. We need to really get at it. I am willing to work
    with the people on the other side of the aisle, but to jam this
    thing through here is not going to be good, and America is
    going to be very, very upset about it.
        And I will tell you one thing, the people in Ohio will be
    very upset about it.
        Senator Boxer. I will take my 2 minutes now.
        If you had asked for unanimous consent, I would have been
    happy to grant it.
        Now, here is my definition of bi-partisanship: working
    together like we do on the highway bill, like we do on the
    water bills. We know how to work together. Senator Inhofe and I
    are working together right now, along with other colleagues. We
    would have had an extension of the highway bill, Senator
    Voinovich. You were the only one on this committee to object to
    it.
        Now, here is the situation. I think the speech you just
    made is flat wrong, and I want to explain why. I have the EPA
    analysis, and they say there are barely any regional
    differences whatsoever.
        Senator Voinovich. It is not a complete analysis, and the
    head of the Department said it is not a complete analysis.
        Senator Boxer. I did not interrupt you, Senator.
        Senator Voinovich. Well, you are editorializing on my
    comments as you do everybody else's comments here.
        Senator Boxer. Senator, I am taking my time because I
    didn't take my 2 minutes in the beginning. I am taking it now.
        Senator Voinovich. Thank you.
        Senator Boxer. Thank you very much.
        I will ask unanimous consent to place into the record the
    EPA analysis, which says there are barely any regional
    differences, as well as put into the record the amount of extra
    costs for consumers which we are trying to offset.
        [The referenced information was not received at time of
    print.]
        Senator Boxer. Now, I hear what you are saying, all of you,
    on the other side. I have done everything possible to get some
    of you on the other side to work with us. I praised the
    meetings I had with Senator Voinovich in my opening statement.
    He said he wanted to meet, and we met. We have notes from that.
    He asked us for an analysis. We made it just for him. So to say
    that we haven't reached out is ridiculous.
        Now, we are having an unprecedented number of legislative
    hearings. All of these witnesses, we have asked them to read
    the bill in its entirety. We have asked every witness to do so,
    and they are prepared to speak about the bill either for or
    against the bill.
        And we have an analysis that I would say is one of the most
    thorough ever done, and this is the reason why. Five weeks to
    do the Markey bill, 2 weeks to do the tweaks that we did. Most
    of our bill is very similar to theirs. So it is a 7-week
    process.
        And as far as the CBO, we have been working hand in glove
    with them to make sure that our bill is in fact deficit-neutral
    and maybe even has a surplus. It is the tradition of this
    committee that the CBO score is done after the mark, before the
    bill is on the floor. That is what this committee did under
    Republican leadership and Democratic leadership. And that is
    what we will do.
        I hope we don't see a boycott of the markup of a landmark
    bill. That would be tragic, in my mind. We are ready to look at
    your amendments. We are ready to work with you on your
    amendments. We are ready to accept them if we feel they are
    good, and have votes on them, and you know, who knows how the
    votes will turn out?
        But all of this aggressive kind of argument I just think is
    misplaced. If you go back, and I have, to the history of this
    committee under Republican leadership and Democratic
    leadership, we are doing a tremendously thorough job, and I am
    very proud of the work that has come out of this committee.
        And all of the charges I hear from the other side just
    don't hold up in the light of day. There is just fear mongering
    going on, and the fact is we are going to look at a bright new
    future if we move forward.
        So let's just continue, and we will go now to Senator----
        Senator Inhofe. Let me respond, if I could. I will take my
    second minute that I didn't use.
        Senator Boxer. You have a minute left over.
        Senator Inhofe. Thank you very much, Madam Chairman.
        Let me just say this, in terms of the analysis and the
    time, let's be realistic about it. When we had the Clear Skies
    legislation, we started our first hearing in April 2003. We had
    them in May, June, July, all the way through the rest of that
    year, into February 2005. Finally, we ended up having a markup
    on March 2005.
        We had 2 years of analysis. We had 10,000 pages of
    analysis. And all of a sudden, it is outrageous for us to ask
    for even 2 months of the same thing.
        So I think we need to look back to what we did when we were
    a majority on very similar type of legislation, Clear Skies,
    and it took 2 years before we could even have a markup.
        Senator Boxer. Senator, I so respect what you said, but we
    will have this. When we start our markup, we will put on the
    table the 50 different modeling efforts that went into this,
    the 3 years of hearings, the panels of which we have three more
    today.
        Senator Whitehouse.

             OPENING STATEMENT OF HON. SHELDON WHITEHOUSE,
              U.S. SENATOR FROM THE STATE OF RHODE ISLAND

        Senator Whitehouse. Thank you, Chairman.
        Well, gentlemen, you see what we are up against.
        I will stand by my earlier opening statement. I do want to
    particularly welcome Fred Krupp, who has done such good work
    for so many years in this area, and my old colleague, John
    Rowe, who was the head of the New England Electric System in
    New England back when I was doing my public utility work years
    ago. It is a pleasure to see you here.
        We do look forward to working with any and every colleague
    who wants to work with us in good faith to solve problems that
    may be associated with this bill. The one thing I will say is
    that the pursuit of bi-partisanship should not and cannot lead
    us beyond the realm of reason, beyond the scope of science, and
    outside of the arena of good faith. But other than that, I
    think we are very open to discussion and to compromise.
        And I look forward to this. We are at the very beginning of
    a long and continuing process, and I think it is a vitally
    important one that we succeed at.
        Thank you, Madam Chair.
        Senator Boxer. Thank you, Senator.
        Senator Barrasso.

               OPENING STATEMENT OF HON. JOHN BARRASSO,
                 U.S. SENATOR FROM THE STATE OF WYOMING

        Senator Barrasso. Thank you, Madam Chairman.
        I would like to bring the committee's attention to an
    article that ran in the British newspaper, The Telegraph,
    entitled Britain Faces Blackouts for the First Time Since the
    1970s. The article stated that demand for power for homes and
    businesses will exceed supply from the national grid. That day
    is coming. It states that the gap between Britain's energy
    needs and demand throws fresh doubt on the government's
    assertion that renewable energy can make up for dwindling
    nuclear and coal capabilities.
        That could be the same result here in the United States if
    this House and Senate pass the Boxer-Kerry energy tax bill.
        The ideas that we are looking at say we need to eliminate
    our baseload power, power that runs 24 hours a day, 7 days a
    week, meaning coal and natural gas and nuclear and hydropower.
    Some want to replace that power with intermittent wind and
    solar power, power that runs some of the time, but not all of
    the time. When the sun doesn't shine or the wind doesn't blow,
    the lights will not turn on.
        Someone on this committee just yesterday stated that a
    massive energy tax will unleash the American economy. History
    shows it will unplug it. An Investor Business Daily article
    entitled, Nuts to Copenhagen, highlighted the current
    unemployment in Spain. The article says Spain has been the
    green jobs success story, the example of what a green economy
    should look like. Well, the article then quotes someone from
    the U.K. Telegraph as saying, ``Spain is sliding into a full
    blown economic depression, with unemployment approaching levels
    not seen since the Second Republic of the 1930s.''
        According to the CBO Budget Director, the results of the
    U.S. adopting these policies will be millions of jobs lost. Dr.
    Elmendorf has stated that the fossil fuels sector would mirror
    the massive job losses experienced by manufacturing industry
    beginning in the 1970s. The Rust Belt experience will be
    repeated in communities across America if this bill becomes
    law.
        Dr. Elmendorf's forecast for the U.S. is echoed in the Wall
    Street Journal editorial.
        I ask, as you said, we can go an extra minute. I ask
    unanimous consent for one additional minute. I could do it in
    30 seconds.
        The editorial stated, ``Cap-and-tax, this is a cap-and-tax
    delay,'' written in the Wall Street Journal, ``cap-and-tax will
    most hurt the rural and Midwest States that rely on coal-fired
    power and heavy manufacturing.'' The editorial went on to state
    that ``This energy tax bill is a huge new tax on carbon energy
    whose revenue will largely flow to the wealthier East and West
    Coast. Delaying the bill would be a major victory for the U.S.
    economy.'' That is a quote from the editorial.
        We need to unleash the American economy, not unplug it.
        Thank you, Madam Chairman.
        [The referenced information was not received at time of
    print.]
        Senator Boxer. Thank you very much, Senator Barrasso.
        Senator Udall, I believe.
        Oh, Senator Carper, and then after Senator Carper speaks,
    he is going to speak again later when he introduces Dr.
    Kempton.

              OPENING STATEMENT OF HON. THOMAS R. CARPER,
                U.S. SENATOR FROM THE STATE OF DELAWARE

        Senator Carper. Thanks, thanks very much.
        To our panel, welcome. It is always interesting here. It is
    not always this exciting, and we are glad you could join us.
        I just want to respond briefly, make my opening comments to
    say some of my colleagues will be pleased to hear that the last
    quarter's growth of GDP was 3.5 percent. And so I am very
    pleased to see what the Wall Street Journal reported on
    September 2nd. It will be interesting to see what they report
    today and tomorrow.
        To one of my colleagues who discussed the prospects for
    success for a new plug-in hybrid vehicle, I would just ask you
    to wait until you see it. And the idea to have a vehicle that
    looks that good that gets 100 miles per gallon, I think they
    will sell just fine. And we are very hopeful that they will.
        Climate change is the challenge of a generation, my
    generation, our generation. We need to take bold action. The
    actions we will take now will impact generations to come.
        The best way I believe to bring jobs and prosperity back to
    our country is also the best way to end our dependence on
    foreign oil, clean up our air, protect the Earth for our
    children and for their children. By providing a technology-
    neutral cap on carbon, which is what Senator Kerry's and
    Senator Boxer's bills do, will harness the greatest source of
    power that we have in this country, that is American ingenuity.
        Giving a clean energy market signal will drive the
    production of offshore wind turbines, solar panels, plug-in
    hybrids and nuclear power plants components right here in
    America.
        Today, we will hear about some of the ingenuity. It is
    happening in Delaware regarding offshore wind, which can be
    replicated throughout our eastern and western shorelines, the
    Great Lakes, and the Gulf of Mexico.
        Today, we will also be talking about the gains that flow
    from changing our transportation sector. As many of you know, I
    feel passionately that an economy-wide effort to reduce
    greenhouse gas emissions cannot be successful without
    significant reductions in transportation emissions. I want to
    applaud the Chair for including our CLEAN-TEA legislation in
    her bill and for providing up to 3 percent of allowances for
    clean transportation projects.
        While I believe--in fact I would ask unanimous consent for
    another 30 seconds.
        Senator Boxer. Yes.
        Senator Carper. While I believe transportation deserves
    more allowances, 3 percent is a significant down payment. For a
    sector of our economy, transportation, which produces 30
    percent of the CO2 emissions, it makes sense to me
    that we have a reasonable corollary in terms of allowances, and
    we are getting closer, so we are grateful for that.
        But it is clear that the Chair understands the role that
    public transportation, commuter rail, Amtrak, freight rail and
    smart growth can play in climate solutions.
        And with that having been said, I thank you for the extra
    30 seconds and look forward to introducing a childhood friend
    of Tom Udall.
        Senator Boxer. Is that right?
        [Laughter.]
        Senator Boxer. Senator Udall.

                 OPENING STATEMENT OF HON. TOM UDALL,
               U.S. SENATOR FROM THE STATE OF NEW MEXICO

        Senator Udall. Thank you, Madam Chair. It is great to be
    here today, and it looks like we have a very well educated,
    wonderful panel before us.
        I am a little bit dismayed with the fear mongering we hear
    from the other side, talk about blackouts and those kinds of
    things. And it seems to me that what we should be looking at is
    what do--we face if we don't do anything. And those prospects,
    I think, should bring us all together as Democrats and
    Republicans.
        You know, if we don't do anything and our economy starts
    growing again, we are probably looking at $4-plus gasoline
    again. And it will probably go higher. Nobody wants it to go
    there, but that is probably where we are headed. We are
    definitely headed in the direction of dependence on foreign oil
    and greater dependence. We are approaching 70 percent.
        And so all of these things, and the road that we are headed
    down right now, have a big impact on our environment, a big
    impact on our economy, and as our panel showed us yesterday,
    and this is paramount, a huge impact on our national security
    being over-dependent on foreign oil.
        So I would hope that we would step back from a little bit
    of the fear mongering that is going on and try to be
    deliberative. We know the Senate is this great deliberative
    body. We settle back and deliberate and try to come together as
    Democrats and Republicans, and we have a great panel, I think,
    to make some suggestions to us today on how to move forward.
        So with that, I would yield back so that we can get to the
    panel.
        Senator Boxer. So we are going to get to our panel. And we
    will start off with Preston Chiaro, Chief Executive Officer,
    Energy Product Group, Rio Tinto.

     STATEMENT OF PRESTON CHIARO, CHIEF EXECUTIVE OFFICER, ENERGY
                        PRODUCT GROUP, RIO TINTO

        Mr. Chiaro. Madam Chairman, members of the committee, I
    appreciate the opportunity to appear here today.
        As you said, I am Preston Chiaro, Chief Executive of Energy
    and Minerals for Rio Tinto. Rio Tinto is the largest
    diversified mining company in the U.S., with over 15,000
    employees in this country. Our U.S. assets include coal
    operations in Colorado, Wyoming and Montana; copper in Utah;
    copper projects in Michigan and Arizona; borax in your home
    State, Madam Chairman, in California; talc in Montana and
    Vermont; and an aluminum smelter in Kentucky.
        The energy intensity and the very long lives of our
    operations expose the mining and metals sector both to the
    effects of climate change, as well as climate change policies.
    Unmanaged climate change is a threat to our assets, our
    shareholders and our employees, and also to civil society and
    political institutions.
        Rio Tinto is supportive of a strong global climate
    agreement for the investment certainty that it will bring. That
    will allow us to deliver value to our shareholders, products to
    our customers, and jobs for our employees.
        Our corporate climate position asks us to engage with
    governments in the development of climate policy in all the
    jurisdictions where we operate, to reduce our own energy use
    and greenhouse gas emissions, and to find low emissions
    pathways for our products.
        We engage both individually and through stakeholder groups,
    such as the U.S. Climate Action Partnership, which leverage our
    views and speak to the political center that is essential for a
    workable policy solution.
        We focus on three features when discussing climate policy.
    One is accelerating the development and deployment of low
    emissions technology, including carbon capture and storage,
    also known as CCS. No. 2, minimizing the cost of climate
    policy. And No. 3, avoiding carbon leakage or the migration of
    emissions, jobs and industry from countries with regulations to
    those without.
        So let me say a few words about each of these. On
    technology, the accelerated development and deployment of low
    emissions technologies can lower the cost of meeting future
    emissions goals. Coal currently provides one half of U.S.
    electricity, and CCS technology can transform coal into a low
    emissions fuel. But this effort requires support for CCS
    demonstrations, a regulatory framework for carbon
    sequestration, financial incentives for deploying up to 72
    gigawatts of CCS, and a phased in performance standard which
    mandates CCS retrofits for all coal plants built from this
    point forward.
        We would like to commend Senator Carper and his Coal
    Working Group for their continued efforts to accelerate CCS.
    Our own commitment to CCS is demonstrated by our investment in
    the Hydrogen Energy California project in Kern County, a
    commercial scale hydrogen-powered electric generating facility
    that, when it is fully operational in 2016, will sequester most
    of its CO2 emissions.
        And while I am talking about technology, I should point out
    Rio Tinto was the world's largest uranium producer last year.
    Nuclear power generates around 16 percent of the Nation's
    electricity, and it is a proven low emission energy source
    which we fully support.
        Turning to costs, we believe integrated markets are
    unparalleled in their ability to leverage private sector
    investment and minimize the cost of emissions reduction. The
    Kerry-Boxer bill includes many key cost containment features,
    such as a broad, inclusive cap, banking and borrowing
    provisions, and widespread access to high quality domestic and
    international offsets. A continent-wide compliance market,
    starting with the United States and Canada, would be a great
    start in this direction.
        Finally, carbon leakage is the threat from the migration of
    emissions, jobs and industry from countries with climate
    legislation to countries without. We support the Kerry-Boxer
    use of output-based rebates to prevent leakage, and ask the
    committee for a sufficient transition for energy intensive and
    trade exposed industries. The outlook for a strong global
    policy framework is dim if it jeopardizes our industrial
    competitiveness.
        So in summary, we urge you to retain and support the
    features of support for low emissions technologies, cost
    minimization, and avoidance of leakage in any legislation as it
    works its way through the Senate.
        Thank you.
        [The prepared statement of Mr. Chiaro follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so very much.
        And second, we turn to John Rowe, Chairman, President, and
    Chief Executive Officer of Exelon Corporation.
        Welcome.

        STATEMENT OF JOHN ROWE, CHAIRMAN, PRESIDENT, AND CHIEF
                 EXECUTIVE OFFICER, EXELON CORPORATION

        Mr. Rowe. Thank you, Madam Chairman, members of the
    committee.
        I am Chairman of Exelon, which operates retail companies
    serving 12 million people in Northern Illinois and Eastern
    Pennsylvania with electricity. We also operate one of the
    Nation's largest generating companies, which includes 17
    nuclear units, by far the Nation's largest fleet, and we are
    very proud of that. We produced Exelon 2020, to the best of my
    knowledge the only plan in the industry to reduce, offset or
    otherwise neutralize our carbon footprint by 2020.
        Exelon is a member of USCAP. I have served as a co-chair of
    the National Commission on Energy Policy, and I am a past
    Chairman of both the Edison Electric Institute and the Nuclear
    Energy Institute. I am proud to say that each of these
    organizations has supported in concept a cap and trade system
    to meet the challenge of climate change, although my testimony
    today is only on behalf of Exelon.
        We believe we need an economy-wide bill with realistic
    targets and timetables. We believe that because we think it
    will be the lowest cost solution to the climate challenge. We
    think we need an effective cost containment mechanism and
    allocation mechanisms that give allowances to local
    distribution companies to minimize the early cost to consumers.
        Exelon submits that the bill proposed by Chairman Boxer and
    Senator Kerry, as well as the Waxman-Markey legislation, each
    constitute a very good beginning, although we hope certain
    alterations will be made.
        From our standpoint, the most critical thing is the cap and
    trade system, and with the greatest respect for those
    colleagues who support nuclear and also those people here who
    support renewables, we have spent a great deal of time looking
    at the cost of various ways to reduce carbon.
        In Exelon 2020, and the key data is in our written
    submission, we attempted to the best of our ability to analyze
    the cost of each major way of reducing carbon emissions. The
    low cost ones are clear. They are energy efficiency. They are
    upgrades in existing nuclear plants. And they are more electric
    generation with natural gas. That is simply clear at the
    present time. The higher cost ones are renewables, my own
    favorite, more nuclear energy, and coal with carbon
    sequestration.
        Ladies and gentlemen of the Senate, we very respectfully
    submit that this problem must be dealt with, and we must deal
    with it with a mechanism that uses the market to hunt for the
    lowest cost solutions. This economy cannot afford to do
    everything the high cost way.
        Now, we believe that there are firm safeguards that can
    help address some of the objections that have been raised to
    cap and trade. We support the allocation of 40 percent of the
    allowance to local distribution companies. We do that entirely
    because it benefits our customers. We support a definitive
    price collar on allowances. Again, we don't want the economy to
    be speculating about how much this will cost in the early
    years. We need to know. While we would like to see it made more
    firm, we applaud the Chairman for endorsing a price collar in
    the bill.
        And with that, I thank the committee and the Senate for
    taking this whole issue seriously. Energy is important. Climate
    is important. And we can deal with this in a way the Nation can
    afford.
        [The prepared statement of Mr. Rowe follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much, Mr. Rowe.
        I am going to ask Senator Carper to introduce our next
    witness.
        Senator Carper. Thank you.
        I am going to ask Senator Udall maybe to join me in this
    introduction because he has known Dr. Kempton for even longer
    than I have, and he has some great stories I am sure he could
    tell, but maybe he won't. But I am just delighted that Dr.
    Kempton can be here today.
        He is a Professor in the University of Delaware, used to be
    the College of Marine Studies. It is marine policy at our
    university. And he was really among the very, maybe the first
    person that I ever talked to at the College of Marine Studies
    who shared with me the potential for generating an enormous
    amount of electricity off of the coast of our country in ways
    that will provide economic opportunity, creating jobs for the
    deployment, preparation and the manufacturing of the equipment,
    and the deployment of that equipment, to maintain that
    equipment, but also producing electricity in a very cost
    effective way that creates no carbon dioxide, no sulfur
    dioxide, no nitrogen oxide, no mercury, and is compatible with
    the environment.
        So we are grateful for the great work that you have done
    and the enthusiasm and encouragement you have provided for me
    and for others.
        Let me just yield briefly to Tom Udall for a word or two
    about his childhood friend, Dr. Willett Kempton.
        Senator Udall. Well, I am not, Senator, I am not going to
    tell----
        Senator Carper. I have asked him to give the PG version,
    the PG version.
        Senator Udall. The main thing I want to say is that
    Professor Kempton got here on his own merit. It had nothing to
    do with me, and I think you have learned, and I think the panel
    will end up learning, that he has much to say as to how we move
    forward on alternative forms of energy, which is a great
    resource off your coast and the whole Northeast coast.
        So thank you for the opportunity, but I will certainly ask
    him some questions and draw out his great expertise that he has
    in this area.
        Thank you.
        Senator Carper. And Madam Chair, if I could just add in
    conclusion that several years from now, when people come to
    Rehoboth Beach, Delaware, and they look out to the east, they
    will see something sticking up above the horizon about half the
    size of my thumbnail, and it will be a windmill farm generating
    enough electricity for about 100,000 homes, and we hope to be
    joined in that effort by States from like Maryland and New
    Jersey as well.
        Thank you.
        Senator Boxer. Thank you.
        So with that fantastic introduction, Dr. Kempton, I hope
    you are not too nervous now, but please proceed.

               STATEMENT OF WILLETT KEMPTON, PROFESSOR,
                 MARINE POLICY, UNIVERSITY OF DELAWARE

        Mr. Kempton. It is hard to follow that introduction, but I
    very much appreciate it.
        So, Madam Chairman and members of the committee, I very
    much appreciate the opportunity to testify today.
        Senate bill 1733 aims to create incentives to lead the
    development of new technologies for power with less or no
    release of CO2. Other witnesses will speak to
    nuclear, carbon capture and storage and so forth. I will
    concentrate on new technologies that are carbon-free, very
    large, and near cost competitive today.
        These provide an important regional balance on power and
    offer substantial economic development employment
    opportunities, as Senator Carper mentioned. As we know, the
    Great Plains have abundant wind resources. The Southwest has
    concentrating solar, both large and near cost effective. What
    is available for the U.S. coastal regions, which many members
    of this panel represent, of course?
        My written testimony, which has been submitted, cites
    Federal energy studies comparing offshore resources adjacent to
    the East Coast, Great Lakes, Gulf and Pacific Coasts. Those
    studies show that offshore wind is a very large resource. It is
    actually larger than other ocean renewable power that you hear
    about, waves and so forth. It is also over twice the power
    resource of all U.S. offshore oil. It is a very large resource.
        Now, our group has made a more detailed estimate of the
    total offshore wind resource adjacent to the mid-Atlantic
    coastal States from North Carolina through Massachusetts. That
    is attached as a submitted supporting testimony.
        The conclusion of this is that the practical, as we looked
    at real technologies that exist, water depths, bird flyways,
    and so forth, the practical offshore wind resource of the mid-
    Atlantic is enough to power all electricity of that region, all
    gasoline for automobiles, and all building heating fuels for
    the region. Those together use just half the resource.
        And if we were to do that, this is a paper and pencil
    study. I am not saying that we would build all that out and not
    use other sources, but if we were to do that, that would reduce
    the region's CO2 emissions by 68 percent.
        I calculate also the industrialization employment impacts
    of producing enough gigawatts to do this at 100 percent of
    electricity plus 100 percent of vehicles electrified in the
    mid-Atlantic, so it would require 54,000 offshore wind
    turbines, each with a capacity of five megawatts, average
    production of two megawatts.
        To do this within 15 years, a challenging target, requires
    10 factory complexes, each employing perhaps 500 people, plus
    suppliers, support jobs and so forth. This calculation, spelled
    out in my written testimony, shows that very substantial
    reductions in CO2 are possible in short timeframes
    like 15 years by redeploying some of our existing and rusting
    industrial infrastructure.
        This concrete calculation for one U.S. region supposedly
    lacking in renewable resources also suggests that carbon
    reductions of S. 1733 are achievable.
        I briefly review how a regional cap and trade regime, the
    regional greenhouse gas initiative, like the one before this
    committee, has helped to lead to the first U.S. power contract
    for offshore wind. In Delaware, we face a choice among power
    plants, and three commercial bids were submitted, natural gas,
    offshore wind, and IGCC coal. Costs were compared by the State
    Commission over the lifetime of each generator, which means
    they could take the carbon costs estimated under RGGI and
    incorporate that into the calculation of total cost, as I
    believe companies will be able to do with this bill, especially
    if there is a collar.
        Ultimately, the offshore wind bid was selected by the
    Delaware Public Service Commission. It was more price stable
    than natural gas, although not necessarily lower cost, and it
    was less expensive on a per megawatt hour basis than IGCC coal.
        As a result, the State has a head start on new technology,
    as well as immediately creating 500 jobs during construction,
    70 O&M jobs persisting over the 25 years of operation.
        There are a couple of examples I draw from that. One is
    even modest fees, because the RGGI fees are quite a bit
    smaller, even modest fees as a result of a cap and trade system
    can tip the balance when you have near cost competitive new
    technologies, in addition to other policies that were in place,
    of course.
        And also, the RGGI carbon fees, estimated at a level of
    about $10 a ton over the life of the project, were too small to
    make carbon sequestration cost effective, but it was enough to
    motivate a plant which could have that added later.
        Senator Boxer. Please wrap up now.
        Mr. Kempton. I have a summary.
        Each region in the U.S. has at least one source of carbon-
    free power that is larger than that region's needs. It is being
    produced commercially at utility scale and is near cost
    competitive. A new one is wind along the East Coast. As I said,
    it is sufficient to run the East Coast.
        Based on regional experience, a carbon pricing system like
    S. 1773, in combination with other policies, can tip the
    economic balance toward new technologies which are important
    for the Nation's economic growth.
        Thank you.
        [The prepared statement of Mr. Kempton follows:]

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        Senator Boxer. That was a good summary. Thank you.
        Our next witness will be introduced by Senator Max Baucus.

                 OPENING STATEMENT OF HON. MAX BAUCUS,
                 U.S. SENATOR FROM THE STATE OF MONTANA

        Senator Baucus. Thank you very much, Madam Chairman.
        I would like to introduce Bob Winger. Bob is President of
    Local 11 Boilermakers in the State of Montana. He travels all
    over the country, frankly, all the ways from Billings, and
    travels all over installing boilers, which is helping lots of
    different technologies around the country.
        He is also an avid outdoorsman. All of us in Montana are;
    we hunt and fish. And as Bob knows, we are right in the middle
    of hunting season. I am sure, although he very much appreciates
    being here, he also would like to be back home.
        [Laughter.]
        Senator Baucus. And I think he will probably head home
    pretty quickly. But he is a terrific guy, I have known him for
    a while. And I am very glad, Bob, that you are here.
        So I just ask that the rest of the panel just join me in
    welcoming Bob Winger. He is a very good man.
        I might say, Madam Chairman, that we are here, and the
    interest we Montanans have is pretty deep, especially as we
    transition to a clean energy economy, and we are concerned
    about transportation and also international actions.
        Our State has a lot to gain and a lot to potentially lose
    from this transition if it is not properly structured. The
    Department of Energy estimates that Montana's wind energy, and
    it was very interesting to hear about offshore, Dr. Kempton,
    but Montana's wind energy potential ranges from good to
    excellent to superb, but it lacks some of the transmission
    infrastructure required to carry that renewable resource to
    market. And the thought occurred to me as I listened to you,
    Dr. Kempton, my gosh, with all those windmills offshore, is how
    are we going to get that power onshore.
        Our State's vast coal reserves have been the lifeblood of
    our Nation's electricity generation system for decades. In
    fact, our Governor is fond of saying that we have more BTU in
    Montana coal than there is in the Middle East. There is a lot
    of energy locked up in Montana coal.
        We provide low sulfur coal that allows coal-fired utilities
    to meet tough sulfur dioxide standards. Our BTU content might
    not be quite like our water content. We have low sulfur coal,
    which we deeply are very proud of. Our coal is plentiful, and
    it is low cost. It is low cost input for generating
    electricity, but unless we take steps to develop clean coal
    technology we run the risk of excluding coal from our energy
    mix the next century, which is clearly a risk we can't afford.
        I am very pleased that the Chairman's mark advances the
    development of clean coal technology. Specifically, the package
    provides for advance payment of bonus allowances to a greater
    number of carbon capture and storage projects than does the
    House package. And I want to thank Senator Carper for helping
    to negotiate, and Senator Udall helping to negotiate that
    package.
        This will speed the commercial development of this
    technology and reduce investment risk.
        The coal package in the Chairman's mark also makes some
    changes to the performance standard for new coal-fired power
    plants by delaying the early trigger, but accelerating the
    backstop for this standard to take effect. I think those are
    two important provisions.
        There were compromises on both sides in this package, and I
    am proud to lend my support for those provisions. And I know
    that each of my Democratic colleagues share that view.
        The coal provisions in this bill are one example of where
    the middle lies on climate legislation, and I hope that we can
    mirror our success in this section in other parts of the bill
    as we move forward.
        So thank you, Madam Chairman. I am glad you got what I am
    saying.
        Senator Boxer. I sure did.
        Senator Baucus. I look forward to hearing from our
    witnesses today.
        Senator Boxer. I did, Senator, absolutely. And we have some
    new information we are going to share with your staff, which
    may make you very happy in terms of what the reduction is in
    the bill. But we will talk more about that. I so appreciate
    your being here.
        Mr. Winger, it took a little while, but I think it was
    important to hear from Senator Baucus, so please go ahead.

     STATEMENT OF BOB WINGER, PRESIDENT, INTERNATIONAL BROTHERHOOD
                       OF BOILERMAKERS, LOCAL 11

        Mr. Winger. My name is Bob Winger. I am President of the
    International Brotherhood of Boilermakers, Iron Ship Builders,
    Blacksmiths, Forgers and Helpers, Local 11, located in East
    Helena, Montana.
        On behalf of the members of my Local and our unions
    International President Newton B. Jones, I want to thank
    Chairwoman Boxer, Senator Baucus and the members of the
    committee for the opportunity to testify at this important
    hearing.
        I have been a boilermaker for 28 years. Boilermakers are a
    highly skilled, highly paid trade: welding, rigging, fitting
    steel in heavy industry. I have worked in over 20 States,
    building and maintaining power plants, refineries and paper
    mills.
        It is a career that has allowed me to be solidly in the
    middle class with good health insurance, a fixed pension,
    annuity, and above average wages, enabling me to help two
    daughters through college, and the youngest is in her third
    year. Good blue collar work.
        Opportunities for Americans to get and hold these types of
    jobs have disappeared. These are the types of jobs that can
    flourish with the passing of this legislation. Coal-powered
    generation is clean, cheap, dependable and job intensive. Over
    the years, the coal industry has met the challenges of cleaning
    up emissions: SO2 with scrubbers, NOx
    with SCRs, particulates with bag houses, and in some States,
    including Montana, mercury reduction units.
        As emissions were identified and regulations enacted,
    solutions were created. Those solutions are the jobs this
    country desperately needs. I will take scrubbers as an example.
    As soon as the rules identifying levels of SO2 that
    must be met and a reasonable timeframe was set, American
    ingenuity kicked in. General equipment and methods are
    designed. The equipment is engineered to fit specific power
    plants. Blueprints are drawn up. These are good white collar
    jobs for our college graduates.
        Steel is made in steel mills then sent to shops where it is
    fabricated into parts, which are shipped to the plants, where
    they are put together. The new unit is then put online,
    reducing the targeted emissions, very job intensive through the
    blue collar sector.
        As scrubbers were built, they became cheaper and more
    efficient through lessons learned. Once these add-ons to
    existing plants are built, they must be operated and
    maintained, making more jobs.
        This same process will work for carbon capture and storage.
    There are over 600 coal-fired plants in the U.S. Think of the
    millions of man years of work to build, operate and maintain
    carbon capture and storage units on these plants.
        Happily, this legislation addresses the need to help our
    main baseload power generation source, coal, to clean up. Any
    legislation to reduce greenhouse gases that does not recognize
    the reality that coal is, will and should be our primary fuel
    for power generation is misleading.
        We need to take the lead in developing the technology and
    building the carbon capture and storage units. As leaders, we
    can sell our technology to the developing countries, resulting
    in actual global reduction of CO2. This legislation
    sets the ground rules, thereby removing the uncertainties. In
    Montana, we had the Highwood Generating Station, a 250-megawatt
    fluidized bed coal-fired power plant forced to be canceled by
    lawsuit after lawsuit in an uncertain regulatory environment.
    This plant would have been one of the cleanest in the Nation
    for the pollutants already regulated by the EPA.
        In addition, I was assured by the developers, Southern
    Montana Electric, that they would install CCS when it became
    commercially available. The developer cited the aura of
    uncertainty surrounding U.S. regulations of CO2 as a
    key factor in their decision to cancel the project. Building
    this plant would have employed boilermakers for about 4 years,
    peaking at about 160. Its replacement? A natural gas peaking
    unit that will employ four boilermakers for about 3 weeks.
        I have been talking in job numbers relating to
    boilermakers. That same 250-megawatt power plant would have
    required hundreds of electricians, pipefitters, iron workers,
    operators, carpenters, millwrights, sheet metal workers, and
    laborers. Add to the secondary jobs in the communities where
    the construction takes place, and we are taking jobs recovery.
        Our International has recognized the need to train and
    recruit workers. In cooperation with PP&L Montana, we are
    building a training center in Colstrip, Montana. This borders
    the Northern Cheyenne and Crow Reservations. We plan to train
    applicants in pre-apprentice programs, basic welding and other
    skills necessary for a career in our craft.
        I am not an expert on this or any legislation. I rely on my
    Government Affairs Department for that expertise. I am an
    expert on being employed providing energy to our country, as
    well as the satisfaction of meeting environmental challenges
    during my career. Please get this legislation moving with rules
    and deadlines to remove the uncertainties. Get the investments
    going. Supply the incentives to jump start the technology
    through pilot projects. Keep the wages even and fair, utilizing
    prevailing wages through the consistent application of the
    Davis-Bacon Act. Protect our manufacturers by preventing carbon
    leakage at the border. Don't forget our smaller refineries as
    we divvy up the allowances.
        Again, I want to thank you for this opportunity.
        [The prepared statement of Mr. Winger follows:]

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        Senator Boxer. Thank you for that excellent testimony.
        Our next speaker is Fred Krupp, President, Environmental
    Defense Fund. I want to note that he has headed EDF for 24
    years, and we welcome you.

                  STATEMENT OF FRED KRUPP, PRESIDENT,
                       ENVIRONMENTAL DEFENSE FUND

        Mr. Krupp. Thank you, Madam Chairman and Senators. I am
    honored to be here today as you take one more step toward
    passing U.S. climate change legislation.
        In my testimony before you in August, I focused on three
    major points. We can achieve strong emissions targets for 2020.
    We can meet those at low cost with technologies that are
    already available. And we can grow the U.S. economy at the same
    time.
        Today, I want to add more evidence that capping pollution
    will sustain growth in our clean energy sector and help put the
    U.S. back in the driver's seat of our global economy.
        Earlier this year, EDF launched LessCarbonMoreJobs.org, a
    snapshot of clean energy companies across the country. To date,
    we have mapped out thousands of companies in 22 States that are
    poised to prosper under a Federal cap on carbon. I encourage
    you to explore the site. You will see that many of the
    traditional American manufacturers are finding new life for
    their products in the burgeoning market for low carbon energy.
        In addition, EDF engaged a respected market research firm
    to survey growth in this sector for the past few years. The
    results are astounding. Here is what we found. In 2008, 42
    percent of companies responding said that their sales had grown
    during the past 2 years. Another 42 percent were holding
    steady, and only 16 percent had seen a decrease.
        Today, the numbers are even better. In August 2009, more
    than half said that their sales had increased. Another third
    were holding stead, and only 14 percent had seen a decrease.
    Many of those reporting growth planned to hire more workers,
    and this is during the greatest economic upheaval the United
    States has seen in decades.
        Clean energy is a bright spark in our economy, but we need
    to do more to make it an engine of sustainable economic growth
    in America and help our companies out beyond our borders. The
    U.S. historically has been a leader in the world economy
    because of our ability to innovate, to get there first. But the
    race no longer ends with a patent. You have to produce the
    product to capture market share.
        We have always been a leader in intellectual property. U.S.
    inventors hold half of all clean energy patents for much of
    this decade. Japan was second, with 29 percent, and Germany
    third with only 9 percent. Yet our leadership in intellectual
    property today is not translating into leadership in
    manufacturing. Here is an example. We hold more than 40 percent
    of the patents for solar energy technology. China holds less
    than 5 percent. Market share used to track that trend line. The
    United States had 28 percent of the global market share for
    solar sales in 2001, and China owned only 1 percent. By 2008,
    though, the market share had flipped. The U.S. held only 6
    percent, while China grew to 29 percent.
        Winning the patent race is not enough. We must convert that
    intellectual capital into market share. We need to create the
    internal demand that will give U.S. companies the customers
    they need to grow, and we can do that right now by capping
    carbon emissions.
        The stakes are high. The annual clean energy market could
    reach $500 billion in 2020 with a global effort to curb carbon
    emissions. The race to gain advantage has begun, and we need a
    U.S. cap to win that race.
        I have led EDF now, Madam Chairman, this month for 25
    years, and over that time, I have become a strong believer in
    the power of American entrepreneurs when given a clear goal to
    meet and the flexibility to determine how to get there.
        S. 1733 sets a strong target for reducing pollution. It
    rewards companies who can achieve the goal. It holds
    accountable those who don't. It is the same formula that
    tackled acid rain under the Clean Air Act, faster and at lower
    cost than anyone predicted.
        We know from rigorous analysis that we can meet our climate
    goals with existing technologies at low cost. We know that we
    can build those technologies here in the U.S. and sell them
    throughout the world.
        Solving problems, as Bob just said so eloquently, is how we
    create new industries. It is how we create jobs. Let's roll up
    our sleeves and do it.
        Thank you.
        [The prepared statement of Mr. Krupp follows:]

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        Senator Boxer. Thank you very much, Mr. Krupp.
        Our next two witnesses, we welcome them. They were invited
    by the minority. Mike Carey, President of the Ohio Coal
    Association, a trade association that represents stakeholders
    involved in Ohio's underground and surface coal mining
    production. I don't know if Senator Voinovich wanted to
    introduce you, but let me assure you that you are welcomed
    here, and please proceed.
        Senator Voinovich, would you like to give a further
    introduction to Mr. Carey?
        He doesn't want to give you and introduction, so we welcome
    you and please go right ahead.

                  STATEMENT OF MIKE CAREY, PRESIDENT,
                         OHIO COAL ASSOCIATION

        Mr. Carey. Madam Chairman, Ranking Member Inhofe, members
    of the committee, my name is Mike Carey. I am President of the
    Ohio Coal Association. I also serve as the Technical Vice
    Chairman of the Ohio Coal Development Technical Office, and I
    sit on the National Coal Council, though I am not speaking on
    their behalf today.
        I want to thank you for inviting me for the opportunity to
    speak. The points I will make are presented in greater detail
    in my written testimony.
        I represent the coal industry, its companies, its workers,
    as well as the communities across Appalachia that depend on
    coal for their livelihoods. According to the Pennsylvania State
    University, each coal miner supports up to 11 jobs in their
    community, from truckers to mechanics to railroad employees to
    small business owners.
        These coal miners in Ohio average about $64,000 a year in
    income. That is $25,000 higher than our State's average. These
    high paying jobs fuel our local economies, our police forces,
    and our public works projects. We believe that the Kerry-Boxer
    bill will kill our jobs, devastate our communities, and
    bankrupt our region, and consequently threaten the rest of this
    Nation.
        Coal supplies 52 percent of America's electricity. It is
    our most abundant and least expensive domestic energy resource.
    No one can predict the potential energy and economic
    disruptions that will ensue when you take coal off the table in
    such a rapid and drastic fashion.
        We are told not to worry. The green jobs are on the way to
    rescue us. But a recent study of green jobs from scholars at
    four universities have included that they tend to be low
    paying, clerical, bureaucratic, administrative positions that
    do not produce economy enhancing goods or services.
        Let me tell you what a coal mining job does. It provides a
    steady above average wage, benefits, a sense of community, as
    mines last many decades in their regions. While we applaud the
    efforts of this legislation to include provisions that aid the
    future and transition of coal, in a carbon constrained economy,
    the bottom line is that this bill does kill the coal industry.
        Bill proponents tout carbon capture and storage as coal's
    future. However, simply throwing billions of dollars at CCS
    does not ensure that the technology will be available prior to
    2020 or 2030. And according to this bill, it is the sense of
    the Senate that the CCS needs to be fully developed by 2030.
    Unfortunately, that comes 18 years too late since the
    reductions begin by 2012, so utilities will have already begun
    to fuel switch.
        CCS technology is still in its infancy and has not been
    commercially deployed. Importantly, this bill does not roll
    back the emission caps if CCS does not work.
        Furthermore, I am not here to argue the science of coal
    CO2 emissions, but I would like to point out that
    this bill ignores two other sciences: math and economics.
    Shutting down the entire U.S. coal industry for 100 years only
    changes the CO2 atmospheric levels by 3 percent,
    which is roughly the same difference between today and
    CO2 levels of 5 or 6 years ago, according to the
    U.S. EPA.
        In response to a question from Senator Inhofe at an earlier
    Senate hearing, EPA Administrator Lisa Jackson admitted that
    curbing U.S. CO2 emissions would have no significant
    impact on atmospheric CO2 levels. Moreover, Kerry-
    Boxer doesn't require the developing countries like China,
    India, Mexico to do anything to curb their CO2.
        So as U.S. companies continue to outsource their jobs to
    the developing world and avoid expensive emission caps, they
    will also outsource their emissions. Therefore, Kerry-Boxer
    would not reduce emissions as much as it would merely displace
    them.
        Even NASA's Jim Hansen, perhaps the most outspoken of those
    concerned about CO2, labeled the Waxman-Markey bill
    a ``counterfeit climate bill.'' And he said, ``It is no more
    fit to rescue our climate than a V-2 rocket was to land a man
    on the moon.''
        An analysis of the EPA prepared for Senator Feingold, for
    example, shows that California would receive a windfall at the
    expense of Midwestern States like Wisconsin and that of my own
    Ohio.
        Finally, we urge this committee to acknowledge that the
    threat of the looming EPA regulation of CO2 is a
    canard. EPA CO2 regulation is an optional policy
    decision being driven solely by the Administration. The Supreme
    Court only ruled in Massachusetts v. EPA that the EPA may
    regulate carbon dioxide. It did not rule that it must, and the
    Administration can decide not to act. If Congress is truly
    frightened about the prospect of the EPA regulating
    CO2, then it should simply amend the Clean Air Act
    to prohibit it.
        Finally, what sorts of energy and environmental policy
    should Congress explore instead of cap and trade? We believe to
    promote all forms of domestic energy, encourage energy
    efficiency, avoid policies that favor one over another, reduce
    energy costs to the consumers, and protect existing jobs.
        Madam Chairman, I thank you for the opportunity to speak,
    and I look forward to the questions.
        [The prepared statement of Mr. Carey follows:]

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        Senator Boxer. We appreciate it.
        Mr. Stallman, you are next. Let me give you a proper
    introduction. Bob Stallman is the President of the American
    Farm Bureau, a federation, and he is a rice and cattle producer
    from Columbus, Texas.
        Welcome, sir.

                 STATEMENT OF BOB STALLMAN, PRESIDENT,
                    AMERICAN FARM BUREAU FEDERATION

        Mr. Stallman. Thank you, Madam Chairwoman, Ranking Member
    Inhofe, members of the committee. It is my pleasure to be here
    to testify on behalf of the American Farm Bureau Federation,
    the Nation's largest general farm organization.
        Earlier this year, I testified before this committee to
    outline our concerns with cap and trade proposals. The Farm
    Bureau actively opposed legislation that came before the House
    of Representatives in June. We have similar concerns about S.
    1733 and are opposed to that legislation as well.
        We have a number of fundamental concerns about cap and
    trade and the way such a program is laid out in the House and
    Senate bills. The costs of cap and trade are significant.
    Farmers and ranchers will pay higher fuel, feed and fertilizer
    costs. Families will be hit hard with energy costs alone
    growing by as much as $1,870 per household. Adding in higher
    food prices could mean costs of nearly $200 billion a year to
    our citizens.
        Both the House bill and the Senate counterpart have the
    effect of creating an energy deficit by restricting the use of
    fossil fuels and not laying out any effective program for
    replacing those fuels. Nowhere in the bills is there a pathway
    to reinvigorating the Nation's civilian nuclear energy sector
    to the extent assumed in the EPA projections.
        These bills also seem to be predicated on an overly
    optimistic scenario for the deployment of carbon capture and
    storage. It should be pointed out that the last nuclear power
    plant built in the United States started construction in 1977;
    that there are no current commercially available viable carbon
    capture systems in place for coal-fired plants; nor is there
    international trading in carbon offsets of the scale and
    magnitude contemplated by the bill in existence today.
        Advocates for cap and trade are strident in their
    objections to coal and the use of other fossil fuels. Clearly,
    they are entitled to their opinions. But it is not enough
    simply to be against something. You must be for something as
    well. A mandatory cap and trade program will effectively create
    a hole in our energy supply. It is Congress' job to plug that
    hole, not simply create it, by passing legislation that is
    realistic, straightforward, and that sets out a cost effective,
    pragmatic path for our economy and our energy future.
        Unfortunately, S. 1733 fails to do that. Under virtually
    any scenario, the U.S. agricultural sector will shrink, either
    through payments to landowners to take land out of growing
    crops and to grow trees instead, or through producers going out
    of business because they cannot compete in the new cost
    structure imposed on the sector.
        Let me be clear. It is the sharp movement of land out of
    crop production into forestry that provide the revenue effects
    for agriculture the Administration has been discussing relative
    to this legislation. Those effects are in the EPA analysis.
    That also means a downsizing of American agriculture's
    capability to produce food. That outcome will inevitably mean
    higher food costs for consumers.
        An additional problem is that, at least for the present and
    unlike the House bill, S. 1733 does not specifically provide a
    place for agriculture and forestry in its offset program.
    Instead, the bill places the entire offsets program at the
    complete discretion of the President, with no sector being
    assured that any of the offset opportunities this might provide
    will even be eligible to participate in the program. In this,
    S. 1733 takes a step backward from the House bill.
        As U.S. agricultural production declines, world dependence
    on the U.S. food safety net will be compromised. This is
    especially disturbing because estimates are that we will need
    to produce more food, not less, to feed a growing world
    population. U.S. agricultural producers facing a cost structure
    that is higher than our overseas competitors will see some of
    our markets disappear.
        The irony of this is that U.S. producers are among the most
    efficient in the world. Per unit of product, our greenhouse gas
    emissions are among the world's lowest. Yet, we will be
    reducing that production while other production that is less
    efficient will increase, with some of that production being
    outsourced to Brazil, Russia, China, India and other developing
    countries, we would even see an increase in worldwide
    greenhouse gas emissions from food production.
        The Farm Bureau is not opposed to a revitalized American
    energy policy. We want to see expanded use of renewable fuels,
    in particular biofuels, to help make our Nation cleaner, more
    secure, and more energy independent. But there is a better way
    than a mandatory cap and trade program that imposes large new
    energy costs on agriculture and the rest of America's economy.
        Madam Chairwoman, the Farm Bureau stands ready to work with
    you and members from both sides of the aisle on these
    legitimate issues. If members insist, however, in imposing
    restrictive costly programs that will harm U.S. agriculture now
    and in the future, we will continue to voice our strong
    opposition to such an approach.
        Thank you for the opportunity to testify.
        [The prepared statement of Mr. Stallman follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much, Mr. Stallman, and we look
    forward to working with you and with Senator Lincoln as her
    committee takes a look at some ways we can do even more for
    agriculture because we have done quite a bit, but we are open.
        And as you know, this bill is going to--once it gets out of
    this committee, and we hope that it does, we will then be
    working on the floor with all Members from every State in the
    Union to make this a stronger bill.
        I wanted to mention that there is an article in the West
    Virginia paper today that says, ``Climate bill adds more
    sweeteners for coal industry,'' and Senator Baucus mentioned
    Senator Carper, I just want to say again how grateful we are to
    you, and Senator Baucus, to your staff, to Senator Specter's
    staff, Senator Udall's staff.
        If I leave anybody out, of course, my own staff and Senator
    Cardin's staff, everybody really worked together, whether they
    were for the sweeteners or not for the sweeteners, I have to
    say it is a delicate balance, and that is why, you know,
    Senator Baucus talks about in many ways the sweet spot, and
    there is as sweet spot for this committee. There is a sweet
    spot for the floor. There is as sweet spot for conference. It
    is a long road.
        Let me say, Mr. Carey, you made a very eloquent case for,
    you know, not really changing much, and I understand that. You
    are very eloquent on the point. But let me tell you the problem
    with that. I just want to try to reach you. You point out the
    court didn't say that you had to act. It said if there is a
    danger, you have to act.
        And the EPA, under the Bush administration, we found the
    documentation where there was an endangerment finding made by
    the Bush administration, by the scientists there. It was
    blocked from getting out, and now we got it, we found out what
    it is, and it is very close to the endangerment finding they
    are making today with the Obama administration.
        There is not a difference between the Bush administration
    and the Obama administration scientists on the dangers facing
    America if we do nothing.
        Now, here is the thing, Mr. Carey and others, I am going to
    ask a few of you about from the business community. It isn't as
    if nothing is happening. So much is happening on this subject.
    You know, the one-thousandth Mayor signed on to climate
    initiatives for their cities, meaning that the cities all over
    the country are acting already to reduce carbon. We have 34
    States that are acting--States, you'd be surprised to hear if I
    read them all off to you. Every single region, many of them
    already, 21 participating in cap and trade systems.
        So we are sitting here as if we are the be-all and the end-
    all. I don't believe we are at all. We are following an amazing
    move. And these States are Washington, Oregon, California,
    Montana, Utah, New Mexico, Arizona, Illinois, Iowa, Kansas,
    Michigan, Minnesota, Wisconsin, Delaware, Connecticut, Maine,
    New Hampshire, New Jersey, Nevada, Vermont, Rhode Island, and
    that is just a few. And they are beginning cap and trade
    system.
        So my question to, I am just going to just say the first
    two witnesses we heard from a long time ago, Mr. Chiaro from
    Rio Tinto and Mr. Rowe from Exelon. Would you tell us, I don't
    want to make this such a softball, but I am going to try to say
    this. Would you agree that we are already addressing these in a
    State by State and in a regional way? And would it be more
    helpful for you to have a national law with certainty in it?
        And when you answer the question, if you could tell us how
    many employees you have, again, in how many States. I would
    appreciate hearing that.
        Mr. Chiaro.
        Mr. Chiaro. Thank you, Madam Chairman.
        We have 15,000 employees spread across the U.S., mostly
    concentrated in the West, but a significant number in the East
    as well. In terms of the cap and trade system, we certainly
    support a strong cap and trade bill. Something that is global
    is even better for us as a global company.
        But the worst of all possible worlds for us would be one
    where there is a fragmented approach, where certain States
    adopt one form of cap and trade, other States adopt another
    form of cap and trade. Then we have to deal with multiple
    systems across our company. That just adds costs and
    complexity.
        We prefer to see certainly a national system, but even
    better if we could work toward a global system, that is what
    would work best for us.
        Senator Boxer. And Mr. Rowe.
        Mr. Rowe. Madam Chairman, my company has 17,000 employees,
    most of which are in Illinois and Pennsylvania, some in Texas
    and a small number in New England.
        Nearly every State in which we do business has adopted some
    measure for dealing with climate, in most cases renewable
    energy standards. And the renewable energy standards we see
    being adopted in States involve a mix of technologies which
    cost somewhere between $40 and the maximum I have heard is $150
    a ton in your own State of California. This compares to the $28
    cap you are adopting in your bill. We think $28 is a lot better
    than $50 or $150.
        Senator Boxer. And now that Senator Specter--I just wanted
    to know, how many employees do you have in Pennsylvania
    approximately?
        Mr. Rowe. I believe it is on the order of 5,000.
        Senator Boxer. And are you in the nuclear business?
        Mr. Rowe. We are the Nation's largest nuclear power
    producer.
        Senator Boxer. And how many plants are you running, nuclear
    power plants?
        Mr. Rowe. We operate 17 of the Nation's 103 nuclear power
    plants.
        Senator Boxer. OK. Senator Alexander is such a strong
    advocate of nuclear power, as are many on this committee and
    off this committee. And I guess my last question to you is,
    because he has a very thought out plan about building 100
    nuclear power plants. But in that plan, there would be no
    allowances going.
        In our bill, we have, as I understand it, a half-billion
    dollars of allowances going to nuclear plants to help train
    workers and deal with safety questions. So is that not a
    benefit to the nuclear power industry that we have now a
    nuclear title to this bill, and there are others who want to
    make it even stronger?
        Mr. Rowe. Yes, Madam Chairman. And as you know, Senator
    Kerry and Senator Graham are in fact discussing ways of making
    the nuclear title stronger.
        You know, we in my company are deeply indebted to Senator
    Alexander, Senator Inhofe, Senator Voinovich, Senator Carper,
    virtually everyone on this panel for things that they have done
    to support nuclear. And we, too, believe that a large number of
    nuclear plants will be needed in future decades to support a
    low carbon energy economy.
        The thing that makes us a small voice rather than a shrill
    voice is our own numbers say that at the present time, it is
    something like $75 per ton of carbon dioxide to use nuclear as
    the only solution. We think we need a market-based portfolio,
    and that is why we support cap and trade.
        Senator Boxer. Thank you very much.
        Senator Inhofe.
        Senator Inhofe. Thank you, Madam Chairman.
        Let me first of all say, Mr. Rowe, you are right. We do
    support nuclear and we look across the sea and see what France
    is doing and other countries, and wonder why we are not there.
    But hopefully we will be someday. However, our concern is what
    do we do today, tomorrow and the next 5, 6, 7 years?
        And let me say this to Mr. Rowe. We had a USCAP hearing
    where we had several corporations coming in, and they
    testified. And clearly, Government is picking winners and
    losers. You are a winner. And you know, I have often said that
    if I were on your board of directors, I would probably be
    sitting down there agreeing with you right now.
        The Wall Street firm Bernstein Research said, ``If passed,
    John Rowe calculates that the bill would add $700 million to
    $750 million to Exelon's annual revenues for every $10 a metric
    ton.'' I would be right there in there with you.
        Mr. Carey, you know, we keep hearing that this bill takes
    care of coal. That is the phrase they use. Now, if it takes
    care of coal, and you have just heard about the more sweeteners
    on its way so it is going to take better care of coal, why are
    you opposed to it?
        Mr. Carey. Madam Chairman, Senator Inhofe, when you look at
    this bill, I think there are a number of issues with CCS that
    are yet to be addressed. Let's not talk about where CCS
    currently is, but let's look at the issues. And if you look at
    page 5 of my written testimony, it is addressed to the second
    paragraph, which essentially that CCS is something that we need
    to continue to study, but to base CCS on a cap and trade
    scenario is the wrong answer.
        We continue to need to explore this, but we also need to
    look at the implementation of a national pipeline, including a
    regulatory framework, property rights issues, general liability
    concerns, the impact of other environmental statutes such as
    the Clean Air Act, the Superfund, hazardous waste laws, and
    Safe Drinking Water Act.
        All of these issues have been enumerated in many reports,
    including previously mentioned GAO and CRS reports. Those
    issues are not addressed in this bill.
        Senator Inhofe. Yes, and I understand that, and I only have
    7 and a half minutes, so let me just go on and ask you one
    other question.
        They have said several times before and in two of the
    opening statements they talk about the fact that this
    legislation would preempt the Clean Air Act and trying to
    accomplish the same thing through regulations. And is that your
    understanding, that if we were to pass this, we would not be
    concerned with the EPA using the Clean Air Act for their
    regulations to accomplish some things that could be even worse?
        Mr. Carey. Madam Chairman, Senator Inhofe, I would say that
    you have two train wrecks. And just because one is going to
    happen, why have the other? They are both going to happen if
    this bill passes.
        Senator Inhofe. Yes, what I am saying is, it does not
    preempt, otherwise you would have two after you as opposed to
    just one.
        Mr. Stallman, I have had a lot of conversations with your
    people in Oklahoma, and I think they are really up in arms
    more, I guess, than we hear here in Washington. But let me just
    approach this maybe a little different way.
        Senator Kerry said that this only affects 2 percent of the
    emitters. In other words, it is going to exempt the farmers. It
    is going to exempt all these people. And 2 percent of the
    emitters are responsible for 75 percent of the emissions of
    CO2, which I don't agree with. I don't think that is
    the case.
        But assuming that he is right, and assuming that you are
    exempt, why would your people and my farmers in Oklahoma oppose
    this bill?
        Mr. Stallman. Well, Senator, it is accurate that we are
    exempt as a capped industry under the bill. That is completely
    right. We are not exempt from the effects of this bill.
        Senator Inhofe. Very good.
        Mr. Stallman. And fundamentally, that is what I talked
    about in my oral statement and what we include in our written
    statement of the very serious effects in terms of cost
    increases, and frankly, the very serious effect of downsizing
    American agriculture.
        The EPA analysis to get to the benefits that they attribute
    to American agriculture have in the model an assumption that we
    reduce cropland acres, put it into forestry, have less crop
    acres, and produce less food and have higher prices. That is
    how they do it.
        Senator Inhofe. And I think that is very significant to
    bring out because there is somehow, and we noticed this
    yesterday and the day before in these hearings, this assumption
    that if you are exempt, you don't have any problems. But what
    about the cost of gasoline, the cost of diesel, the cost of
    fertilizer? How much has fertilizer gone up in the last 5
    years, roughly?
        Mr. Stallman. Oh, I couldn't give you the percent, but
    based on my farm, I know I write a lot bigger checks than I
    used to.
        Senator Inhofe. Yes, and of course, the main ingredient
    there is natural gas. This is going to cause that to go up.
    Chemicals, the cost of everything for doing business is going
    to go dramatically up. So even if you were exempt, those costs
    would continue, and you would like to be able to say that all
    those could be passed on. Some will be passed on, so the
    general public, my wife going to the grocery store, my 20 kids
    and grandkids that are eating meals, are going to be paying
    more, but the farmers also are going to be paying more and
    getting less out.
        Mr. Stallman. Absolutely. Twenty percent of our input costs
    in agriculture on average are energy related.
        Senator Inhofe. Thank you, Mr. Stallman.
        Senator Boxer. I am going to call on Senator Specter. But
    before you start, please, I failed to mention the role that
    Senator Specter played in the soft collar that we have in the
    bill. I wanted to recognize his hard work and that of his
    staff.
        Senator.
        Senator Specter. Thank you, Madam Chair.
        Mr. Winger, I have noted your testimony of when a major
    project was canceled in Montana because of the aura of
    uncertainty surrounding the regulation of carbon dioxide. On
    Monday of this week, I met with Building Trades in
    Philadelphia, including Boilermakers, expressing concerns about
    refineries there. You mentioned refineries in your testimony.
        Do you think that in order to have the aura of certainty
    that we have to know from the legislation what the standards
    will be for carbon dioxide, as opposed to continuing the
    regulatory authority by EPA to regulate carbon dioxide?
        I made the point earlier in these hearings that we really
    cannot leave it up to EPA to continue to have regulatory
    authority if we are to have the certainty, and that we really
    have to deal with the legislation. EPA Administrator Jackson
    testified that there were other considerations, and I said,
    well, present those to the committee. If we have got to deal
    with legislation to provide the certainty, then let us do it
    legislatively, as opposed to leaving EPA with regulatory
    authority.
        Would you agree with that?
        Mr. Winger. Yes, I agree with that. The legislation will
    give the incentives. It will lay out the ground rules. I
    believe it is very important to have the legislature legislate.
        Senator Specter. Mr. Rowe, we are concerned about many,
    many values here: the future of the climate, global warming.
    Let me focus on two, questioning you on jobs and the cost of
    electricity. You have talked about two key factors here, local
    distribution, which you would like to have with the allowances
    of 40 percent. The House bill has 35 percent and so does the
    Senate draft bill.
        You also talked about the price collar, which as the Chair
    has pointed out, my staff and I have been working on. This is a
    carryover from Bingaman-Specter on the so-called safety valve.
    Now, when you talk about the price collar, you say you don't
    like 5 percent over inflation, but you would like to have a
    fixed price.
        Now, in concern for the cost of electricity, I know this is
    hard to quantify because there are so many moving parts, but
    you serve a big part of my constituency, as noted. If you end
    up with 35 percent of the local allowances instead of 40
    percent, part A, what will that impact be on the cost of
    electricity? If we end up with 5 percent plus inflation on the
    price collar, what will that be contrasted with a fixed price
    on the price collar?
        You see what I am driving at? I want to know what the cost
    is going to be on the electricity.
        Mr. Rowe. Senator Specter, first, I am grateful for your
    now 5 or 6 years of work on both getting cap and trade to work
    and also having----
        Senator Specter. I need 6 more.
        [Laughter.]
        Mr. Rowe. We estimate that with the Waxman-Markey
    provisions, which we have been able to more fully analyze, the
    increase for a Philadelphia customer would be on the order of 5
    percent. And we are already putting half of that into rates
    just for Pennsylvania renewable standards.
        So it illustrates how important the combination of a price
    control mechanism and the allocations to the local distribution
    companies are.
        To answer your question precisely, I will have to file it
    in writing, but I will do that promptly and send it to you. But
    the answer is very clear, a firm price collar plus allocations
    to local distribution companies like PECO do a great deal. They
    cut the cost of this bill for Pennsylvania and Illinois
    consumers in something like half. It is very important to your
    constituents and my customers.
        Senator Specter. Madam Chair, I have one brief question for
    Mr. Krupp, if I may?
        Senator Boxer. Yes.
        Senator Specter. Mr. Krupp, as President of the
    Environmental Defense Fund, I note your support for Waxman-
    Markey and our favoring cap and trade. And you have heard my
    inquiry about having a fixed determination so that we know what
    the cost will be for carbon capture. Would you agree from your
    perspective that the desirable course for this bill is to fix
    it legislatively?
        In the context of getting the votes here, when you have
    certainty, I think you will have more appeal to Senators like
    myself. There are a lot of considerations on my agenda, but the
    coal industry is one. And I think there will be a lot more
    support if EPA does not retain the regulatory authority to deal
    with this issue. Would you agree that that is the preferable
    course?
        Mr. Krupp. Senator Specter, you raise a couple of issues.
    Let me try concisely to deal with them.
        I think these are very important concerns, and I completely
    agree with you that the cost issue is important, and the bill
    needs to grind down costs. I think this bill does a very good
    job of doing exactly that.
        I think it is very important that this bill fix the ceiling
    of how much pollution we are going to have so we control carbon
    and reduce it. And I think that a price collar properly
    structured can give people assurances that there won't be
    tremendous volatility in the price. Properly structured means
    that, you know, there is a strategic reserve of carbon tons
    that is opened up if a price goes above a certain point.
        So I think we can do both. We can keep the integrity of the
    cap and the carbon control, which is the main purpose of the
    bill, and answer the legitimate concern on costs. I think this
    bill as it is structured now does that very well. I think there
    are other ways that could also work.
        And your second question about EPA regulatory control, I
    think the tighter the tap and the more the reductions, you
    know, the more that cap and trade can be the primary driver.
        Senator Specter. Well, that doesn't quite answer the
    question. Primary is not sufficient.
        Mr. Krupp. I think for conventional pollutants, there are
    regulatory structures that will continue to important to
    protecting----
        Senator Specter. I am just asking about carbon dioxide.
    That is all.
        Mr. Krupp. For carbon dioxide, yes, a cap and trade should
    be the primary driver. That will give industry the flexibility.
        Senator Specter. You are still on primary. That isn't
    sufficient if there is some secondary regulatory authority.
        Mr. Krupp. If the cap is sufficiently tight, and if offsets
    have integrity to them so we are only allowing real reductions
    into the system, cap and trade will do the job.
        Senator Specter. I take that as a qualified yes.
        Senator Boxer. All right.
        Senator Alexander.
        Senator Alexander. Thanks, Madam Chairman.
        I am going to say this again because whenever I do, it
    seems that my Democratic friends don't hear it. Forty
    Republican Senators, and we believe many Democrats, believe
    there is another approach to reaching our climate change goals
    by 2030, even though we have a wide variety of views about
    climate change.
        One is 100 new nuclear power plants--create the environment
    for that in the next 20 years. Two is the environment for
    electrifying half our cars and trucks. We can do that without
    building one new power plant. Three is offshore exploration for
    low carbon natural gas, as well as oil. And four is four mini-
    Manhattan Projects to make solar costs competitive, to
    recapture carbon, to make electric batteries betters, and to
    recycle used nuclear fuel so it doesn't isolate plutonium.
        And we can do all those things without a national energy
    tax that is ineffective in any event on fuel, that raises
    costs, and that runs off manufacturing jobs.
        Now, let me shift to what Mr. Rowe said was his favorite
    option, and I am not going to try to get you in the middle here
    between Senator Boxer and me. I am just going to acknowledge
    that under an economy-wide cap and trade like she has proposed,
    a company like yours, which is the largest operator of nuclear
    plants, is going to--well, that is an award for good behavior
    some people might say.
        I want to look toward the future and think about your
    testimony and that of many others, and even this bill, which
    envisions that to come close to meeting any sort of ambitious
    climate change goal, we would have to have large amounts of new
    nuclear power plants.
        And the concern I have is that a recent paper by the Nature
    Conservancy suggested that any climate change legislation be
    flexible enough to include nuclear power. Yet, when this
    legislation is combined, Senator Carper described this as a
    technology-neutral cap, but when it is combined with the
    renewable electricity standards and the other policies of the
    Federal Government, we suddenly see that we are not technology-
    neutral anymore; that our goal is not carbon, it is specific
    types of other production facilities, usually not including
    nuclear.
        For example, the renewable electricity standard that you
    mention in your testimony and that is coming out of the Energy
    Committee doesn't count nuclear power, municipal solid waste or
    landfill gas as renewable. Seventy-five percent of the so-
    called renewable electricity subsidies enacted since 1978 have
    gone to wind developers, not to carbon-free developers.
        So we have a production tax credit. Now, nuclear does have
    a limited production tax credit of up to 6,000 megawatts, but
    the way I figure it, if you build 20 percent of our power from
    wind, it would take about 180,000 wind turbines. That would
    cost about $170 billion in production tax credits. There is no
    cap on it for wind. There is a cap for nuclear. And if nuclear
    used all of its production tax credit, it would be $6.8
    billion. I think my figures are about right. So it is about
    $170 billion to $6.8 billion.
        So my question is, wouldn't it be better going forward with
    a production tax credit, with loan guarantees, and with the
    renewable electricity standard, that we had a carbon-free
    renewable electricity standard or a carbon-free loan guarantee
    with all forms of production eligible to apply, or a carbon-
    free production tax credit so that we allowed nuclear, you
    mentioned the up-rates, the 8,000 megawatts of up-rates which
    would come on, which by themselves about equal the total wind
    production we have in the United States. By up-rates, I mean
    just adding capacity to the existing 103 plants we have today.
        So my question is, shouldn't we have a carbon-free goal for
    all the subsidies and tax credits, just as is proposed here, a
    technology-neutral cap?
        Mr. Rowe. Senator, I strongly agree with you that a carbon-
    free goal or a carbon-free set of subsidies would be preferable
    to renewable-only subsidies. I think even when you level the
    subsidy playing field like that, you still need the cap and
    trade system to sort. But I ardently support including nuclear
    in the carbon-free package.
        Senator Alexander. Thank you, Madam Chairman.
        Senator Boxer. OK. Let's see. Senator Cardin is next. Next
    after that was Klobuchar and after that is Lautenberg.
        Senator Lautenberg. Neither one of them are on stage.
        Senator Boxer. They are coming. They are coming after,
    correct.
        Senator Lautenberg. OK. Thanks very much.
        And I am sorry that another hearing took time because this
    is an excellent panel, Madam Chairman. But I am sure that there
    are questions that we will be able to read answers through the
    record.
        Mr. Krupp, the Environmental Defense Fund, founding member,
    U.S. Climate Action Partnership, including major employers from
    a wide range of industries. If acting to reduce emissions would
    cause the kind of, forgive me, interruptions from outer space,
    if acting to reduce emissions would cause the kind of economic
    damage that our opponents claim, what do you think companies
    like DuPont and Ford and BP, why would they support it if it is
    so wrong in terms of its impact on our society?
        Mr. Krupp. Senator, I don't think there is any chance that
    they would support it if they believed that. Their analysis is
    quite different from some of the testimony that we have heard
    today. And in the joint statements that we have signed onto
    with them, their statements are that they believe on the
    contrary that this legislation will yield a real economic
    growth in this country.
        And you know, if you look back at the Clean Air Act, the
    sulfur amendments, and many other pieces of environmental
    legislation where there were similar scare stories and fear
    mongering, there wasn't business support for them to the degree
    that there is today for this. And even so, the legislation
    turned out to be very cost effective.
        Here, we have an unprecedented level of business that is
    supporting this legislation because they think it is good for
    the American economy.
        Senator Lautenberg. Many companies that are part of the
    U.S. Climate Action Partnership, they were able to grow quickly
    over the past decades despite reducing their emissions
    dramatically. Dow Chemical, for example, reduced its emissions
    by 22 percent below 1990 levels.
        Do you believe other companies across the economy might be
    able to achieve significant growth with the improving
    efficiency?
        Mr. Krupp. I absolutely agree. And the part of the story,
    Senator, that I think is worth mentioning is that Dow and
    DuPont saved billions of dollars while growing and reducing
    emissions, because in reducing emissions, they found dramatic
    cost savings as well.
        Senator Lautenberg. For Mr. Kempton, there is a great deal
    of energy potential off our shores, but not all energy is
    created equal. What is a better option for creating jobs,
    reducing pollution, protecting existing fishing and tourism,
    with offshore wind energy or offshore drilling? Which of these?
        Mr. Kempton. I haven't personally done an analysis of jobs
    in those two industries. But generally, you have a good deal
    more energy coming out of a single installation, which I think
    would lead to fewer number of jobs. Of course, there are no
    issues with pollution affecting fishing and so forth from wind.
    There are very few liquids and oils in there, mostly mineral
    oil. So I think the oil industry has got a pretty good record
    recently, but there is a possibility of spills that would
    affect fisheries.
        Senator Lautenberg. And Mr. Krupp, clean energy jobs aren't
    limited to manufacturing and installation positions. But we
    need engineers to design products, train operators, truckers
    that ship materials to the factory, to the market, and many
    other jobs that support industry.
        What kinds of jobs might you describe that are created in
    the supply chain when clean energy companies are created? What
    kind of jobs should ensue?
        Mr. Krupp. The word I would use, Senator, is American jobs,
    because they are not green jobs. They are not exotic jobs in
    the spacecraft industry. They are people in machine shops who
    used to make automobile parts are now being hired in Indiana
    and Ohio to make wind turbines and other bolts, nuts,
    fasteners. These are not some different types of jobs. These
    are American jobs at American plants. And these companies very
    much want this legislation to pass.
        Senator Lautenberg. Confirming that view, an Italian
    company just opened up, just broke ground in New Jersey to
    build solar panels. It will employ 300 people coming from other
    countries to create jobs in our country on behalf of--sorry,
    thanks.
        Senator Boxer. Thank you very much, Senator.
        Senator Bond isn't here, so Senator Voinovich is next.
        Senator Voinovich. I was interested in hearing, Mr. Winger,
    your testimony and then Mr. Carey's testimony. One of the
    things that we have to recognize is that many of the people
    that are supporting this legislation are opposed to fossil
    fuel. And the Sierra Club brags about the number of plants,
    coal plants they have closed, even though their integrated gas
    combined cycle, as you know, they are the best plants that you
    can get, but they are shutting them down. They are fighting one
    right now in the State of Ohio.
        So they are pushing very, very hard, and so are a lot of
    other people, so that we are going toward wind and solar,
    failing to mention to the American people that wind and solar
    in terms of providing our energy is about 1.4 percent, maybe 1
    and a half percent, and that they are not baseload generation.
    But the feeling is somehow through solar and wind, we are going
    to replace coal. We are going to replace gas and other things.
        And I think the problem, one of the worries that you have
    is that the technology available for CCS is not around the
    corner. I wish it was. And what people should realize is that
    the CCS technology, if we don't jump start it, we are in big
    trouble because China is putting on two coal-fired plants a
    week. And so this idea is that somehow we will all switch to
    wind and solar, the rest of the world is not doing that.
        And I would like you to comment about the fact that your
    concern about this, and as the allowances disappear, the fact
    that many of these companies are going to switch to natural
    gas, which in itself has about half the emissions as coal.
        Would you like to comment on that?
        Mr. Carey. Madam Chairman, Senator Voinovich, yes, I would
    love to comment on that. And the answer is you are right, and
    also thank you for your years of service in Ohio. We definitely
    have a friend, and we appreciate your years of service.
        But as far as the coal industry goes in Ohio, you know, we
    are looking at 3,500 jobs, and we are talking about American
    jobs. We are talking about well paying jobs, $65,000 a year.
    According to EIA, 80 percent of those are gone by 2030. I think
    that is a real hit to the Appalachian economy. There are 7,500
    coal miners in the State of Pennsylvania, the multiplier 11
    that is, you know, 77,000 jobs that would be immediately hit;
    80 percent of those gone by 2030. The State of West Virginia,
    there is close to 20,000 coal miners.
        This bill is bad. China and India and the developing world
    want us to pass this legislation because they know that we
    cannot have baseload generation and growing baseload
    generation----
        Senator Voinovich. Can I interrupt a minute? Also, I want
    to clarify something.
        Mr. Winger, you have been in the business for a while. When
    we passed the acid rain provisions of the Clean Air Act, there
    had been about 15 years of research on NOx,
    SOx and mercury reduction. And some allege that what
    we have today is, you know, we are going to be able to take
    care of the greenhouse emissions just like we did the acid rain
    provisions of the Clean Air Act.
        Would you like to comment about where the state of
    technology is compared to greenhouse gases as it was to
    NOx, SOx and mercury many years when we
    put that provision in?
        Mr. Winger. I believe that the technology is not there yet.
    I believe that without this bill, without the subsidies or the
    incentives to move forward on carbon capture, that without
    requiring something to be done, then we will never get there.
    And the reality of it is coal has to be part of our energy mix.
        Senator Voinovich. Right. And what you are saying is that
    there has to be a lot of money in here to jump start the clean
    coal technology so that we can continue to burn coal and your
    boilermakers can continue to have work. Right?
        Mr. Winger. Yes. Right now, we are at a standstill. If you
    want to talk about loss of jobs, we are not building any power
    plants right now because of the uncertainty.
        Senator Voinovich. And the lobbying by the Sierra Club and
    others that don't want fossil fuel.
        Mr. Rowe, nuclear, you and I had a talk about nuclear, and
    the feasibility of nuclear coming on to the degree that is
    anticipated in this bill in 2020 and 2030. What is the
    possibility of having that number of nuclear power plants?
        And last but not least, what do you think of the natural
    gas title that is in this bill that encourages the use of
    natural gas? My feeling is that what it will do is take the
    pressure off going forward with nuclear and getting the carbon
    capture technology that we need for coal.
        Mr. Rowe. Senator Voinovich, as I said in your office, I
    believe that the six or eight units that are supported by the
    existing Federal loan guarantee program will go forward and be
    in operation by 2020. I do not think there will be a
    significantly larger number than that.
        If those units are successful, I believe there will be more
    online by 2030, but as I told you in your office, I doubt that
    it will be many tens, let alone a hundred. And as your question
    implies, the economics of new nuclear at the present time are
    haunted by the fact that natural gas is and appears likely to
    be for the next decade at very low prices.
        And so the low cost solution for the next decade is often
    natural gas, and that takes, as you say, pressure off to work
    on either new nuclear or the more advanced forms of renewables
    that others like.
        Senator Boxer. Thank you very much.
        Our next Senator is Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Madam Chairman.
        Thank you to all our witnesses. I know it has been a long
    morning.
        I just wanted to first comment, when I had to go to another
    hearing with the NTSB, when I left, and I know it has been
    continuing. For our C-SPAN viewers, I want them to know that
    despite legitimate concerns from everyone about changes they
    want to see to this bill, that there is some growing bi-
    partisan support in this country to do something about climate
    change.
        And I just thought for a refreshing moment, I would read a
    few paragraphs before I ask my questions, from the recent
    opinion piece written by Senator Lindsey Graham, a Republican,
    well known Republican of South Carolina, a Senator, and Senator
    John Kerry.
        And in their piece, they said, ``We refuse to accept the
    argument that the United States cannot lead in the world in
    addressing global climate change. We are also convinced that we
    have found both a framework for climate legislation to pass
    Congress and the blueprint for a clean energy future that will
    revitalize our economy. Our partnership represents a fresh
    attempt to find consensus that adheres to our core principles
    that leads to both a climate change solution and energy
    independence. It begins now, not months from now, with the road
    to 60 votes in the Senate.''
        And they then conclude, ``The message to those who have
    stalled for years is clear: killing a Senate bill is not
    success. Indeed, given the threat of agency regulation, those
    who have been content to make the legislative process grind to
    a halt would later come running to Congress in a panic to
    secure the kind of incentives and investments we can pass
    today. Industry needs a certainty that comes with congressional
    action.''
        So I just thought that was an interesting thing to put on
    the record, Madam Chair, and to remember that there is some bi-
    partisan work going on here. And again, this bill, whatever
    bill we pass through the committee as you all know will not be
    the end. There is going to be significant work going on with
    many on both the Republican and Democratic side. And I think
    there are some people like Senator Graham who truly want to get
    something done here.
        So my first question, actually to follow up on Senator
    Voinovich, one of the assumptions in this bill is that there
    will be more nuclear reactors. I personally believe that
    nuclear is part of the solution here, as are more short term
    solutions like energy efficiency and solar and wind.
        And I will toss it open to whoever wants to answer this,
    but what do you believe are the incentives that we need to have
    in here to get the 115 or so nuclear plants up and running in
    the coming decades?
        Mr. Rowe.
        Mr. Rowe. Senator, I think there are a group of things that
    are necessary. First, supporting at least uprates, or better
    yet, as Senator Alexander suggested, new nuclear plants as part
    of a low carbon energy package would have a positive impact.
        A legislative finding that onsite storage or surface
    storage of spent nuclear fuel is an acceptable long term
    solution to the nuclear waste issue would be an important step.
    Obviously, increasing amounts of loan guarantees would be
    valuable.
        The challenge for someone like me who deeply believes in
    markets is how to suggest subsidies without looking like you
    are trying to have it both ways, which one usually is. And to
    me, the only answer is we have to look at some long-term things
    like solar, like a next generation of nuclear, as things we
    want to get jump started, but we don't want to go too far so
    the market ultimately makes the choice.
        As many people here have suggested, what we are ultimately
    looking for is to include the cost of climate protection into
    the marketplace, and then let the marketplace make choices from
    decade to decades that none of us are wise enough to make
    today.
        But those would be the principal things I would suggest we
    look at to make certain that nuclear has a chance to
    participate in those solutions.
        Senator Klobuchar. Thank you.
        Mr. Krupp, my last question for you is that just looking at
    how we can get people energized and be part of the
    beneficiaries of this bill I think is key. I know in our State,
    we were able to pass one of the most regressive, aggressive
    renewable electricity standards in the country, agreed to by
    Xcel, our biggest energy company, 25 percent by 2025; 30
    percent for Xcel.
        And part of that I think passed nearly unanimously in our
    legislature, signed into law by a Republican Governor. And I
    think part of that was that people felt that they could have a
    piece of the action, whether it was farmers with the biofuels,
    which was, of course, a separate bill, but incredibly helpful
    for jobs in our State; or whether it was some of the small
    towns that could see some benefit of small wind.
        Could you just briefly address what you see as some of the
    advantages of moving forward to get that kind of grassroots
    support and how we can do that with this bill?
        Mr. Krupp. The amazing thing about the carbon issue,
    Senator, is that there are so many opportunities for people to
    contribute to the solution that cap and trade system, a market
    system gives them those opportunities and engages them. So for
    instance, you mentioned farmers. Farmers can move to no-till
    agriculture, earn offset credits. They can capture animal waste
    and capture methane and pay for the costs of that capture. They
    can generate electricity from methane that they capture.
        There are so many things. Farmers can reduce nitrogen
    loading to more precisely control what the plants need and get
    an offset from that potentially under a bill like this, you
    know, once the process, whatever regulatory process is
    established.
        So there are lots of opportunities for people to benefit.
        Senator Boxer. Thank you so much, Senator Klobuchar.
        Senator Barrasso.
        Senator Barrasso. Thank you, Madam Chair.
        Mr. Stallman from the American Farm Bureau, you just heard
    an answer there. Is that something that you would agree with
    from the standpoint of agriculture?
        Mr. Stallman. Well, absolutely, and we worked very hard to
    get the amendment put into the House bill that set up a
    structured agriculture offset program run by the USDA, with
    specificity as to what would constitute offsets and other rules
    in place that gave us some certainty. That is why I said we
    still really need to do this in this bill.
        It does give farmers opportunities. We are very low
    emitters as an industry, 6 to 7 percent of carbon. We have the
    ability to sequester up to 20 percent of the carbon that we
    emit in the United States, and that is positive.
        The fundamental question, though, is are the benefits that
    farmers achieve, the sequestration, and through selling these
    offsets, if you will, is that going to offset the additional
    costs? And then the corollary to that is: Are forestry offsets
    going to downsize American agriculture in terms of taking crop
    land out of production?
        Senator Barrasso. I hear from my farmers and ranchers in
    Wyoming and they have concerns about higher energy costs,
    fertilizer costs facing the agriculture community. So I want
    you to spend a little bit of time, if you could, just talking
    about some of the problems that our farmers and ranchers are
    facing and what we should really do about it.
        Mr. Stallman. Well, it is clear that energy is important to
    us as an input cost. Roughly 20 percent of our input costs are
    energy-related. As energy costs go up, that puts a very high
    burden on us. Farmers cannot pass through those costs in terms
    of the price for the commodities they get. So that, in and of
    itself, is going to put a real cost price squeeze on farmers.
        In fact, you know, over time it will probably cause a
    adjustments in production because you have to be economically
    sustainable to remain in production. And so one of our biggest
    concerns is this energy gap that we keep talking about, and how
    are we legitimately going to fill this hole in energy, and then
    specifically, you know, what happens with natural gas, because
    that is so important to our fertilizer costs specifically.
        Senator Barrasso. Mr. Carey, you talked about different
    areas of the country. California, the West Coast, the Northeast
    is doing well under the cap and trade regime, or regimen. Most
    States and regions do not. And so I look about what is
    happening in coal producing areas, Ohio, West Virginia,
    Kentucky, Wyoming. Where do those folks go, and what do they do
    if some of these jobs are eliminated? And you yourself have
    said these are very good paying jobs.
        Mr. Carey. Madam Chairman, Senator Barrasso, you know, the
    question is a good one. Where do they go? And quite frankly, if
    you are looking in Appalachia, Ohio or West Virginia or Western
    Pennsylvania, they simply have nowhere else to go.
        One of the things that I say in my written testimony, as
    well as my oral, is the fact that one of the things that coal
    mining families own is their home. And who is going to buy that
    home if the jobs aren't going to come into Eastern Ohio,
    Western Pennsylvania and West Virginia?
        Senator Barrasso. I think you stated that some of the coal
    mining jobs were paying $25,000 a year higher than the average
    income in Ohio.
        Mr. Carey. Again, Senator, yes. That is exactly right, and
    when you look at the region, as Senator Voinovich knows, when
    you look at the region of Ohio where those coal mining jobs are
    located, these are higher, way above the 25 percent higher that
    it is in the State average. It is much higher than that. These
    jobs in Appalachia, in Kentucky, West Virginia, your home State
    of Wyoming, Ohio--they are some of the best paying jobs in
    their region, period.
        Senator Barrasso. And it is not just the specific income
    dollars. You are talking about health benefits, retirement,
    long term. I mean, what I see is the number of people who want
    to get their sons and daughters into these jobs as well because
    it is a good way to be able to raise a family, put bread on the
    table, and clothing on their back, get good educations for the
    kids, and opportunities.
        Mr. Carey. That is right, Senator.
        Senator Barrasso. All right, thank you.
        Thank you, Madam Chairman.
        Senator Boxer. Senator Carper.
        Senator Carper. Thank you, Madam Chairwoman.
        Some of our witnesses have talked today about
    predictability. Some of our colleagues have spoken about
    predictability as well. And I want to direct a question, if I
    could, to Dr. Kempton, with a little twist on predictability,
    if I might. But as we know when we are interested in harnessing
    the energy of the sun, the sun doesn't always shine. Wind
    doesn't always blow.
        My recollection, though, is that when it comes to offshore
    wind, there is actually better predictability. It is more
    consistent, more predictable than onshore wind. And want to ask
    you, is that correct? And second, if it is, do you know some
    ways that we can store some of the energy that we are
    harnessing or prepared to harness off of our shores?
        Mr. Kempton. Yes, Senator Carper. We have studied 20 years
    of NOAA buoy data, which gives us wind resource data from
    Maine, really, to Florida, and looking at that whole system.
    The wind blows enough to produce electric power 85 percent of
    the time.
        There are a couple of comments about wind not going all the
    time. And if it is on 85 percent of the time, it is off 15
    percent. But every power plant is like that. There is nothing
    different about wind other than the numbers and the amount. A
    typical coal plant has an unscheduled outage rate at about 5
    percent. So the electric grid is set up for power plants which
    are sometimes off and they are sometimes off when you don't
    expect them to be.
        So one way of dealing with the predictability is larger
    grids, larger electric grids. In particular, for offshore wind,
    we have modeled an electric grid running along the continental
    shelf. It is not on anybody's property. It can just be reeled
    down by a cable-laying vessel. And there are companies that are
    interested in doing this. It would be part of the whole
    infrastructure.
        When you do that, the wind stays at a medium value most of
    the time. So it is actually highly predictable and that is
    because on the East Coast, storm fronts tend to move north to
    south. So you put a north-south cable in, you have the wind
    blowing somewhere all the time. In 5 years, the wind never
    stopped blowing, literally. So it is not really an intermittent
    resource when you do that.
        Now, storage you referred to as another way of dealing with
    fluctuations in wind. That will be important. I think
    ultimately it will be sometimes long wind, low wind period or
    high load periods you may want to burn fossil. But long before
    you get to that point, the electric vehicle fleet, which I
    think most automakers have shown they believe is coming by the
    models that they have announced for the next 2 years, is a very
    large storage resource.
        So in Delaware, for example, that one big wind farm, 400
    megawatts, that could be leveled out by 5 percent of the
    vehicle fleet being electric, with the ability to draw in power
    when there is excess wind, and put it back out when there is
    not, so-called vehicle-to-grid technology developed at the
    University of Delaware.
        Senator Carper. I have heard of that. I can say for the
    audience and for my colleagues, the most fun I have ever had
    driving a car. Was it a Scion? A Scion that had been
    retrofitted to be an electric vehicle, and I took Congressman
    Mike Castle for a ride and we almost never wanted to come home.
    It was more fun than you can imagine.
        All right. I have another question in terms of jobs, and we
    talked earlier about the jobs that will be coming for plug-in
    electric vehicles in a former GM plant in Wilmington, Delaware.
    But just talk, if you will, about the kind of jobs that might
    flow from a project, a wind project off of our shores. You
    talked about the potential of ships laying cable, you have
    folks that are going to be building components for windmills,
    for windmill farms. Can you talk a little bit about the kind of
    jobs and the number of jobs that might be created for a project
    like this? And could something like that be, say, replicated up
    and down the coast or maybe even in the Great Lakes?
        Mr. Kempton. Yes. Senator, the kind of easiest quick wind
    resources using existing technology are off of the East Coast,
    really the whole East Coast, and parts of the Great Lakes. A
    little bit of California, but we will need deeper water
    platforms for the middle of the Great Lakes and for most of
    California, or the West Coast.
        Jobs, as I mentioned, for that one wind farm in Delaware,
    it is 500 construction jobs, about 75 long term operations and
    maintenance jobs which include three boat operators or three
    boats' mechanics, power traders and so forth.
        Now, if we built out the whole resource that I mentioned,
    we have estimated about 20,000 direct jobs in manufacturing,
    plus the installation jobs. And then four times multiplier for
    indirect jobs. So it really would be a very large industry.
        Senator Carper. My time is about to expire. I want to ask
    one quick question, if I could, of Mr. Chiaro.
        Madam Chair, could I ask unanimous consent for one
    additional minute please?
        Senator Boxer. Yes, but I just want to announce on the next
    panel, we are going to have to keep our questions to 4 minutes.
    Go ahead.
        Senator Carper. Mr. Chiaro, and thank you, Dr. Kempton, for
    those responses.
        Do you believe, and answer this just briefly, do you
    believe the bonus allowances for coal, with CCS, in the
    Chairman's mark would make coal more competitive when the price
    of carbon is low?
        I will say that again. Do you believe that the bonus
    allowance for coal, with CCS, and it is in the Chairman's mark,
    would make coal more competitive when the price on carbon is
    low, say under $20?
        Mr. Chiaro. Yes, absolutely. In fact, I think it is
    essential, particularly when the price of carbon is low.
        Senator Carper. All right. Thanks so much.
        Thank you, Madam Chair.
        Senator Boxer. Thank you.
        Then we will go to Senator Udall.
        Senator Udall. Thank you, Madam Chair.
        There have been several things that have been mentioned
    about agriculture, and I would like to talk a little bit about,
    Mr. Stallman, agriculture in the West and the Southwest. You
    know, we plan to continue improving this bill for agriculture.
    We have increased allowances for rural electric co-ops,
    agricultural programs. We have increased domestic offsets in
    this bill.
        And I believe that preventing severe global warming is
    critical to protect agriculture in New Mexico and the
    Southwest. Basically, the science says if we don't act, our
    climate will shift 300 miles to the south. And if you know the
    geography out in the West, 300 miles to the south for New
    Mexico puts us in the middle of the Chihuahuan Desert.
        And so here we are, this is just conservative business as
    usual in the middle of the Chihuahuan Desert in 2050. So you
    can imagine, no snow pack, less water, bad conditions for
    agriculture. I mean, this really doesn't help agriculture.
        So I really see the way forward for agriculture is being
    aggressive, is putting in place this pollution reduction bill,
    and moving forward with climate change legislation along the
    lines, and that is why I want to turn to Professor Kempton now,
    where we are developing these other resources.
        You know, you have done, Professor Kempton, significant
    work on the potential for offshore wind energy to provide
    significant energy to coast areas. How much of this vast
    resource is it realistic to achieve in the near term and long
    term with or without national legislation to put a price on
    carbon emissions?
        Mr. Kempton. I think without some kind of legislation that
    introduces a price like that, it would be limited to develop.
    There are some other policies that help. Delaware did have a
    local carbon emissions law and renewable portfolio standards,
    which you have advocated, of course, Senator Udall, and the
    protection tax credit which applies to both wind and nuclear
    right now.
        These are all things that help. But I think we are going to
    see a fairly limited amount. We have about 1.2 gigawatts now
    announced. That is 1,200 megawatts. That is already operating
    in Europe. Europe is looking at scale-up with under
    construction 4,000 megawatts, and then a plan for 2015 of
    36,000 megawatts. So that is exponential growth in that
    industry, and they are training tens of thousands of workers to
    do that, building installation vessels and so forth. That
    cannot happen without this kind of law to introduce some kind
    of incentive.
        Senator Udall. So, Professor Kempton, really what you are
    telling us is without a strong, and I think Fred Krupp and
    others have said this, without a strong price signal, we are
    not going to move into these areas aggressively and develop
    these kinds of resources.
        Mr. Chiaro, your company is a large energy intensive mining
    company with vast assets around the world, including a minority
    interest in an active copper and gold mine in Southwest New
    Mexico. With that perspective, I believe our panel should
    listen closely to your testimony as a company that welcomes
    Federal climate legislation.
        Could you describe how your company makes investment
    decisions about whether to invest in one country or another?
    And why you don't see this legislation as a negative for your
    investments in New Mexico or elsewhere in the United States?
        Mr. Chiaro. Thank you, Senator, for the question.
        We make investments over the very long term. Many of our
    operations last 30, 40, 50 years. We have operations in Utah,
    for example, that have been running for more than 100 years. So
    we have to take a long term view.
        And for us, investment certainty is key in our
    decisionmaking process. Having multiple systems or systems that
    aren't settled is, as I said earlier, the worst possible world
    for us. We need to know what the rules of the road are because
    we make investments that amount to billions of dollars when we
    set up a large operation. And knowing what, you know, sort of
    the field of play in advance is essential to making good
    investment decisions. They are always based on NPV, on net
    present value. That is what we look for is value for our
    shareholders. Stability in terms of government regulation is
    vital for us wherever we invest around the world.
        So that is one of the principal reasons why we are asking
    for a broad based market based cap and trade system. Market-
    based systems are things we work in all the time. Commodity
    prices fluctuate all over the place. We know how to deal with
    that sort of volatility. We can certainly manage that with a
    cap and trade system with carbon as well, but it is a system
    that we are quite familiar in working with.
        Senator Udall. Thank you very much, and thank you to the
    entire panel. I think this has been a very helpful panel today,
    Madam Chair.
        Senator Boxer. OK. Well, I think what we are going to do,
    since Senator Whitehouse said he was not going to ask any
    questions, is go to our final questioner, and that is Senator
    Merkley. And then after that--I just want to say in advance,
    because I won't say it later, thank you, each and every one,
    for this amazing education you really gave to all of us. And I
    think we are all the better for it, all of us, regardless of
    where we come out.
        So I want to thank you in advance. The reason I am doing
    that is when Senator Merkley finishes, if you could go out
    quickly because it is quarter to 12. We have another panel
    waiting, and we want to get to hear them as well.
        So this has been fabulous. And Senator Merkley, you are a
    good one to end the questions.
        Senator Merkley. Thank you very much, Madam Chair. I will
    dive right in.
        Mr. Stallman, you made reference in your written testimony
    that the Senate bill is missing the list of offset practices
    for farming and forestry. And there is a list, but I wanted to
    clarify whether you saw that list. It is a 3-page list, page
    534 to 536. Can you explain a little bit what the difference is
    that you see between the list in the Senate bill and the list
    in the House bill?
        Mr. Stallman. Well, certainly, and it is not just in the
    list that I was referring to. It is in the program itself. The
    House bill has a very much more structured program with USDA
    authority to implement it. And this bill is much vaguer, leaves
    the implementation of offsets, frankly, up to the President
    through an advisory committee. We think that creates too much
    uncertainty.
        What we are saying is the list is necessary. Who runs the
    program? You know, the requirement to run the program and
    provide those agricultural offsets is very important, and that
    is what we say is missing.
        Senator Merkley. Great. Thank you. That is helpful, and if
    after the hearing you all have any suggestions for how this
    list needs to be amplified, I certainly would be interested. As
    I read through it, it was like, well, that covers everything I
    could think of, but I am not a farmer. And so any feedback
    would be very helpful, and I appreciate your comment.
        And then Mr. Krupp, I wanted to turn to the broad structure
    here. We are already about 8 and a half percent below the 2005
    levels in carbon dioxide. So would it be fair if we are zeroing
    in, if you will, on 9 percent, is it reasonable for me to
    characterize the goal embedded in this bill of 11 percent
    additional reduction over the next 11 years by 2020 is really a
    1 percent per year goal, that that is about what we are aiming
    for here?
        Mr. Krupp. Yes, I think that is a reasonable
    characterization, Senator.
        Senator Merkley. Well, I think of it that way, and then I
    look at the McKinsey study that you cite in your testimony that
    says that we could close this entire gap, the 2020 goal, with
    just energy efficiency. I look at that and then realize that in
    addition to energy efficiency, we have renewable energy in this
    bill. We have offsets in this bill. We have international
    offsets in this bill. It starts to look like a fairly easy
    target to meet.
        And I don't want to characterize your testimony, but it
    sounded like that was the gist of the point you are making,
    that this is a reasonable, easily reached; this is not
    something that lifts up the American economy and kind of shakes
    it by the shoulders.
        Mr. Krupp. Senator, my belief is this is a very modest
    target. It is ambitious but easily achievable because there are
    an abundance of alternatives. My own personal belief is that if
    we get going, the price of carbon will be much lower, and the
    scientific need will continue to develop, and you will be here
    in a few years' time with the confidence on a bi-partisan basis
    to lower the cap, just as George W. Bush did with acid rain. He
    implemented the CAIR regulation and lowered the sulfur cap by
    70 percent.
        Senator Merkley. One of the things that keeps coming up
    where I feel like they are ships passing in the night is some
    folks refer to the standards set in this bill as an economy-
    wide cap, and others note that it affects only a modest number
    of entities in the United States.
        Senator Kerry has referred to 7,500 entities, including not
    just manufacturers, but energy producers and so forth. The Duke
    University study that is in your testimony says only 1.3
    percent of manufacturers are affected. That is 4,500 out of
    350,000, and that is because of the 25,000 tons per year per
    facility standard.
        So how do we reconcile these ships passing in the night and
    try to get us all on the same vision of what is actually in
    this bill? Is it economy-wide, or is it really affecting only a
    small percentage of producers of carbon dioxide?
        Mr. Krupp. The good news, Senator, is that because such a
    small number of producers produce the bulk of the economy's
    emissions, it can be both something that addresses the vast
    majority, over 80 percent of the economy's emissions, but be
    very selective on only a relatively small number of producers.
        Senator Merkley. Thank you.
        And finally, I am 13 seconds, one reason why it makes sense
    not just to use the McKinsey study and invest in efficiencies,
    but do to cap and trade, is to unleash the creativity of the
    ideas that will attack carbon dioxide and other global warming
    gases from every direction. And can you just close on your
    thoughts on that point?
        Mr. Krupp. When we create the right incentives, American
    entrepreneurs, American ingenuity will explode at this problem
    from every direction, and things just like in acid rain that we
    haven't even imagined yet. Right now, those incentives are all
    misaligned. So just watch what happens when we have the faith
    to give American capitalism a crack at this problem.
        Senator Merkley. Thank you very much.
        And thank you, Madam Chair.
        Senator Boxer. Thank you so much.
        And you said American capitalism--there is someone in the
    audience named Brook Byers. I would ask him to stand for a
    second. He is with one of the most respected venture capital
    firms in Silicon Valley that funded Amazon and Google. And he
    is just here to watch us in our work, which is a little bit
    more convoluted than his making a decision of, yes, I think
    this is a good idea; let's invest in it. We have to go through
    a little more of a process than that, but we are very happy
    that you are here with us.
        So thank you, thank you, panelists. We cannot say thank you
    enough, and we ask the next panel to come forward on
    transportation. The first panel to leave as quickly as you can.
    You have been generous. And if anyone needs to talk to the
    first panelists, I am sure they will be willing to talk with
    you outside the door.
        Thank you, ladies and gentlemen. Now, where is Hon.
    Sherwood Boehlert? Senator Inhofe and I were just discussing
    how happy we are that you are here. And we have William Millar.
    And we are going to start with Hon. Sherwood Boehlert. I will
    wait until everybody settles in.

     STATEMENT OF HON. SHERWOOD BOEHLERT, CO-CHAIR, THE BIPARTISAN
         POLICY CENTER'S NATIONAL TRANSPORTATION POLICY PROJECT

        Mr. Boehlert. Thank you, Chairman Boxer.
        Senator Boxer. Why don't you wait one more minute until we
    are really cleared of the people in the room who are leaving.
        And now everyone, this is a very important panel on
    transportation and the impact of this bill on transportation.
    So please, you have 5 minutes, Congressman Boehlert. Please go
    ahead.
        Mr. Boehlert. Thank you, Chairman Boxer and Ranking Member
    Inhofe, two friends of long standing.
        First of all, I would like to submit--oh, and Senator
    Carper, a classmate.
        Senator Carper. Three from the class of 1982 right here.
        Senator Boxer. How about Senator Lautenberg?
        Mr. Boehlert. And Senator Lautenberg. It is nice to be
    among friends.
        I am here on behalf of the Bipartisan Policy Center, which
    was founded by four former Senate majority leaders: Tom
    Daschle, Bob Dole, Howard Baker and George Mitchell. BPC's
    mission is to develop and promote sound policy solutions that
    can attract public support and political momentum to achieve
    real progress: two Democrats, two Republicans on opposite sides
    of the political divide working in common cause. I think the
    American people are hungry for more of that.
        I am one of four co-chairs of the Bipartisan Policy
    Center's National Transportation Policy Project. The others are
    your former colleagues Slade Gorton, former Congressman Martin
    Sabo, and former Detroit Mayor Dennis Archer.
        Let me start by commending you, Madam Chair, for the
    introduction of S. 1733, which will ensure that the Senate
    addresses an issue that some would rather ignore. Although we
    have witnessed opposition to it, a cap and trade approach,
    while not a perfect policy, represents the best option for
    achieving necessary reductions of greenhouse gases in a timely
    and a cost effective manner.
        A climate bill must have elements of both price and
    emissions certainty. As a co-chair of the NTPP, I strongly
    applaud efforts undertaken in this bill that emphasize
    investment in the transportation sector and situated as both
    central to the reduction of greenhouse gas emissions and to
    improvements in energy security.
        Our report lays a framework for Federal transportation
    policies that are performance driven, linked to a set of
    clearly articulated goals, and held accountable for results.
    This committee has the unique ability to bring transportation,
    energy and environmental issues together as has been done in
    this legislation. And I hope this integration continues with
    the upcoming transportation authorization bill.
        Let me highlight some of the transportation elements of
    this bill that are directly in line with the recommendations of
    the NTPP. Setting aside funds from a cap and trade scheme for
    investment in transportation, as this legislation does, is
    critical. However, revenues set aside for transportation in
    this bill are below the portion the sector should receive based
    on its contributions to climate change. Given that the
    transportation sector contributes approximately one-third of
    greenhouse gas emissions nationally, it should bear an
    appropriate burden and receive a commensurate portion of carbon
    revenues.
        Second, the bill addresses both the environmental
    protection and energy security aspects of transportation
    simultaneously, thus integrating what have historically been
    thought of and addressed as separate policies.
        Third, by devoting a portion of transportation grants to
    investments that will reduce greenhouse gas emissions, this
    legislation establishes an over-arching and specific national
    objective for transportation investments with climate revenue.
    This concept of a national vision and goals, but local planning
    and strategies, is exactly how we should be approaching Federal
    transportation investments.
        Competitive grant programs are essential for encouraging
    innovation as well as flexibility at the State and local level.
    NTPP recommends two competitive grant programs, and we note
    that the CLEAN-TEA competitive grant program embedded in this
    legislation is a competitive program focused on reducing
    greenhouse gas emissions.
        It is a step in the right direction that this bill
    thoughtfully calls for collaboration among Federal agencies in
    updating and regulating the collection of data. With few
    exceptions, the transportation planning processes that
    currently exist at the State and metropolitan levels do not
    support a strategic performance based and accountable approach
    to decisionmaking. These planning processes must be refined.
        Let me wrap up by offering some suggestions. Transportation
    funding should not be awarded for demonstrating reduction in
    greenhouse gas emissions alone. Investments must also
    demonstrate progress toward mutually beneficial goals. Although
    we want to reduce emissions with these investments, at the end
    of the day, they are investments in transportation.
        We are convinced that mode neutral funding leads to greater
    system efficiencies and innovation. While some may be convinced
    of the relative promise of particular transport options or
    strategies, no particular mode represents the best solution to
    all problems in all situations.
        Madam Chair, I see my time has expired. I ask permission to
    include several reports in my testimony.
        Thank you so much.
        [The prepared statement of Mr. Boehlert follows:]

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        Senator Boxer. Absolutely, without objection, and we really
    appreciate your being here.
        Our next witness is--I want to say it right, William
    Millar, President of the American Public Transportation
    Association. And we are very honored that you are here with us.

                STATEMENT OF WILLIAM MILLAR, PRESIDENT,
               AMERICAN PUBLIC TRANSPORTATION ASSOCIATION

        Mr. Millar. Thank you very much, Madam Chairman and Mr.
    Inhofe. We appreciate the invitation to be with you today.
        The Clean Energy Jobs and American Power Act embodied in S.
    1733 makes a strong commitment to reducing emissions from the
    transportation sector, but emission reductions is just one of
    the benefits. The legislation can help reinvigorate our
    transportation system while reducing its environmental
    footprint and expanding much needed employment in America.
        As explained by several earlier speakers, including
    Congressman Boehlert just before me, the transportation sector
    is a major contributor to greenhouse gas emissions, and we
    simply have to deal with the transportation sector if we are
    serious about dealing with this issue.
        Now, what do we know about how to tackle transportation
    emissions issues? We know that we have to improve the mileage
    of cars. We know we have to improve the mix of fuels. Some
    Federal legislation has already been handled in those areas,
    but those alone are not enough. Simply doing those things, as
    important as they are, will be outdone by population growth and
    increasing need to travel as America's economy grows in the
    future.
        So we must do other things as well. We must take a systems
    approach if we are going to achieve the rest of what the
    transportation sector needs to do. Certainly, investment in
    public transportation, but also incentives that would
    coordinate land use, that would improve planning, that would
    allow innovation in parking in road pricing, all these things
    together are going to be necessary to make the improvements
    that we need to do.
        Now, this legislation sets reduction targets which are
    good, and those should then be reflected in the transportation
    sector. Next, with the assistance provided in this bill, the
    States and the large metropolitan areas will be required to
    produce greenhouse gas reduction plans. They can do that as
    part and parcel of their existing transportation planning
    process. Smaller metropolitan areas can also do the additional
    planning if they wish or rely on the States in which they
    reside.
        These are important steps, but planning is not enough. We
    need implementation of good strategy and good projects that
    that planning process will result in. So we strongly endorse
    the bill's allowances that are dedicated to expanding public
    transportation throughout the system.
        Now, we know that public transportation is a proven
    strategy. We know already from previous studies that over 4.2
    billion gallons of fuel, some 37 million metric tons of
    CO2, doesn't go into the air each year because of
    what transit does. In the process, we know transit supports
    about 1.7 million jobs and apropos of what you heard from the
    earlier panel, these are the kind of jobs that all of us need
    to have our economy revitalized.
        By the way, the 37 million tons that are saved, imagine if
    you will if the cities of New York City, Washington, DC,
    Atlanta, Denver and Los Angeles could somehow do without
    electricity. That is the amount of carbon we are already saving
    from going in the air, and we could certainly do much more.
        Now, this bill will build on that success record and expand
    it. We know from Census Bureau work that only about half of all
    American households even have the choice to use any public
    transportation. So we are pleased that this bill would allow
    energy efficient and environmentally efficient transportation
    options to expand to more places in the country so more
    Americans would have the choice to use transit if they chose to
    do so.
        We also endorse the bill's competitive grant program for
    multi-modal investments. As Congressman Boehlert said, you
    know, no one mode is going to be the only answer here. So
    including, as you have, provisions that would allow that
    planning process to produce a variety of strategies, and then
    assist in funding those strategies, is very important indeed.
        And these strategies I think are far ranging, beyond public
    transportation, bicycle, pedestrian facilities, intelligent
    transportation applications, and of course, inner city and high
    speed rail solutions as well.
        So I think that this legislation is poised to help us. We
    look forward to working with the committee and working with the
    Senate.
        I do have one caution in this legislation, though, and that
    is this cannot be a substitute for the existing highway and
    public transit assistance programs. If we were to put a little
    money in the right hand pocket and then take the money out with
    the left hand pocket, we have not helped anybody, and we
    certainly look forward to working with this committee, the
    Banking Committee and others in getting a good, long range
    surface transportation bill.
        Thank you very much, Madam Chairman.
        [The prepared statement of Mr. Millar follows:]

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        Senator Boxer. Well, let me assure you this is not a
    substitute for anything.
        I am so pleased to introduce Mike McKeever because he is
    the Executive Director of the Sacramento Area Council of
    Governments, and that particular organization is near and dear
    to my heart. They are real leaders in transportation planning
    and combining this with land use, sensible, common sense ideas
    that have gone a long way to shape our planning efforts in
    California.
        Just for the record, his region includes the following
    counties: El Dorado, Placer, Sacramento, Sutter, Yolo, and Yuba
    and 22 cities.
        So we are very honored that you could be with us today,
    Mike. Please go ahead.

    STATEMENT OF MIKE MCKEEVER, EXECUTIVE DIRECTOR, SACRAMENTO AREA
                         COUNCIL OF GOVERNMENTS

        Mr. McKeever. Thank you, Madam Chairman and Senator Inhofe,
    for the invitation.
        We also cover about 2.3 million people in the SACOG region,
    and we have been a pretty good test run for many of the
    transportation planning concepts that are in this bill over the
    last few years. In many ways, I think we are a pretty good
    microcosm of the country. Our demographics are similar. We have
    healthy amounts of rural, suburban and urban development. We
    have a very strong agricultural economy. We are at the
    crossroads of major east-west and north-south running freight
    corridors. And we have a transit system that needs help and
    more care and attention. And we also have very diverse
    politics.
        And particularly in light of your morning discussion, I do
    want you to know that the detailed and innovative regional
    planning process information in my written testimony is
    supported by a very broad bi-partisan coalition of people, both
    on my board and within our stakeholder community.
        I think that the bill, the transportation planning portions
    of the bill, will help our region to achieve the goals that we
    have set for ourselves. I think the bill is relatively simple
    to understand, at least in these portions. First, I understand
    the Federal Government will set a national greenhouse gas
    emissions target for the transportation sector. Second, the
    States and regions will have to meet certain standards for
    quality of data and modeling and scenario analysis. And then we
    will set our own targets in that area. And third, then the
    Federal Government will provide guidance, technical assistance
    and financial incentives to help us succeed. It is a good
    construct.
        I do want to acknowledge and thank Congresswoman Matsui
    from Sacramento, who was instrumental in the Waxman-Markey bill
    in these particular provisions that are similar. But I want you
    to know that over the last several years we have engaged
    literally thousands of citizens in this process, given them
    good information and listened carefully to what they had to say
    to us.
        And what they had to say was that we needed to make
    fundamental changes in the way we were growing and the way we
    were funding our transportation priorities. There are three
    quick summaries, and it is common sense. One, they told us we
    need more housing choices. This was based on market research,
    as well as demographic trends. We need town homes, row houses,
    small lot single family, condominiums and apartments to go with
    our abundance of large lot single family products.
        Second, we need more transportation choices. We need viable
    choices in the transit field, pedestrian and bicycle field. We
    need more streets, but different types that are really designed
    for all users, not just the automobile. And we need targeted
    capacity improvements in our freeway and highway system for
    both goods movement as well as the farm to market, reinvesting
    in our farm to market system.
        And finally, in brief summary of what we are doing, we are
    going back to old school community design, building
    neighborhoods and cities the way we used to where homes and
    shops and jobs and schools and parks are all located close
    together, very popular in our region. We have many wonderful
    examples of that built all around this country. People love
    them, and now we are starting to build them again.
        In this capital region, you see mixed use developments
    going up around the metro system. We see suburban developments
    built to smart growth around our region, and we also see
    revitalization going on in rural towns. So this is something
    where everybody participates. It is not just a part of the
    area.
        Now, there are many other benefits to greenhouse gas
    reduction planning as one of my panelists indicated. You have
    less congestion. You have less time in traffic, whether you are
    a trucker or a family member. You have lower water use, lower
    energy use in your buildings. You save more farmland and open
    space, and you reduce health costs from air pollution problems.
    And so there are multiple benefits.
        We do have an innovative new law in California that I refer
    to in my written testimony, Senate Bill 375, that links
    together these different planning disciplines. I do want to say
    that I think the Federal Government has a legitimate financial
    and policy interest in this issue. But we do appreciate that
    this bill is structured to leave the actual writing and
    implementation of the plans to the States and the regions. We
    think that is the right partnership. We think it will promote
    cost efficient cooperation and competitive innovation amongst
    and between the regions and the States, and that is a good
    model, and we appreciate it.
        I do want to thank you again, and thank you in particular,
    Madam Chairman, for your leadership in this area.
        [The prepared statement of Mr. McKeever follows:]

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        Senator Boxer. Thank you so much.
        And we hear from our minority witness, Barbara Windsor,
    President and Chief Executive Office of Hahn Transportation,
    Inc. And we welcome you.
        And I am going to hand the gavel to Senator Carper. Senator
    Carper, I am going to hand you the gavel because I have a call
    to return, and I will be right back.
        And then for our first question, I promised Senator Inhofe
    he could go first, and I will go last between the rest of us.

    STATEMENT OF BARBARA J. WINDSOR, PRESIDENT AND CHIEF EXECUTIVE
                   OFFICER, HAHN TRANSPORTATION, INC.

        Ms. Windsor. Thank you, Madam Chair and members of the
    committee.
        I would like to thank you for this opportunity to testify
    on the Clean Energy Jobs and American Power Act. Yes, my name
    is Barbara Windsor. I am President and CEO of Hahn
    Transportation. We are a trucking company headquartered in New
    Market, Maryland.
        My family built and grew the business for the past 75
    years, and today we operate 100 trucks and employ over 150
    individuals. Our business is very dependent on the plentiful
    supply of affordable diesel fuel. My company purchases
    approximately 2,600 gallons of diesel every day. I am also
    representing the American Trucking Associations as ATA's First
    Vice Chair.
        Trucking delivers virtually all the consumer goods in the
    U.S. Clothing, food, medicine, appliances and fuel are
    transported by trucks. As the industry's costs increase, the
    price of all these essential products must also rise. Our
    industry has made great strides to improve air quality. Efforts
    have resulted in near zero emissions for both nitrogen oxide
    and particulate matter.
        Unfortunately, addressing these emissions has reduced our
    fuel economy as much as 8 to 12 percent, thereby increasing our
    carbon emissions by requiring us to burn more fuel. If we can
    reverse this trend and increase fuel economy, greenhouse gas
    emissions will be reduced.
        The technology used to reduce NOx and PM
    emissions is very expensive. Compliance with the 2002 EPA
    emissions standards added $3,000 to $5,000 per truck. The
    introduction of the ultra-low sulfur fuel added about 5 cents
    per gallon to the price of our fuel. EPA's 2007 diesel engine
    standards added an additional $8,000 to $10,000 per truck. And
    the standards set to take effect in 2010 will further increase
    new engine costs by approximately $9,000.
        While, ATA strongly supports these environmental
    improvements, we note that these gains come at a substantial
    cost to our fleets. Congestion mitigation offers one of the
    most viable strategies for reducing carbon emissions, with the
    potential to eliminate 314 million tons of carbon and save 32
    billion gallons of fuel over the next 10 years.
        ATA supports legislation to reauthorize the Highway
    Program. We believe that reauthorization should have programs
    specifically aimed at addressing congestion and freight
    bottlenecks. And we support increasing the fuel tax to achieve
    these goals.
        However, the trucking industry's ability to fund that fuel
    tax increase could be jeopardized by carbon control mechanisms
    that will increase the price of our fuel without dedicating
    this revenue to highway infrastructure improvements.
        Trucking is responsible for less than 16 percent of the
    U.S. carbon emissions. ATA strongly supports the efforts to
    reduce greenhouse gas emissions and make this country more
    energy independent. However, the proposed cap and trade system
    simply will increase the cost of diesel fuel, while failing to
    reduce carbon emissions from the trucking industry.
        As refineries are forced to purchase carbon allowances to
    cover the emissions of the downstream products they sell, the
    cost of these allowances will be passed on to consumers. Cap
    and trade will also increase the volatility of the diesel fuel
    prices that are fluctuating carbon prices added on to the
    already volatile pride of our fuel. Volatile fuel prices make
    it very difficult for the trucking companies to accurately
    predict their future expense as we sign freight delivery
    contracts.
        The reason that cap and trade will not significantly reduce
    carbon emissions from the trucking industry is rooted in the
    fact that trucking is not a discretionary consumer of fuel.
    Proponents of the cap and trade system believe by increasing
    the price of fuel, consumers will reduce the consumption of
    gasoline. This rationale does not translate into the trucking
    industry, which is a non-discretionary consumer of diesel fuel
    without viable alternatives.
        Even if the price of diesel fuel is dramatically increased
    by cap and trade, the trucking industry must continue to use
    fossil fuel. While various proponents of alternative fuels cite
    natural gas and biodiesel as potential alternatives to diesel,
    our written testimony shows that these fuels are currently not
    viable for our trucking industry.
        As you move forward with the cap and trade legislation,
    refinery carbon caps should not apply to downstream combustion
    of the transportation fuels.
        Thank you for this opportunity to testify. I look forward
    to answering any of your questions.
        [The prepared statement of Ms. Windsor follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. Thank you very much.
        And Ms. Windsor, I had not read your statement that you had
    submitted, but I heard you say a few things here that I would
    like quantified a little bit differently. And I don't mean
    right now, but for the record, it would be helpful to me if you
    would take these things--you mentioned three things that have
    happened, mandates, I would say, that have come from the EPA or
    from us. I would like to see how that translates into fuel
    costs.
        You said that, you know, you don't object to increasing the
    money that would go into the Highway Trust Fund, the cost of
    fuel. But these other things, I would like to have just for my
    own information how that compares to what maybe a 10 cent
    increase would be. In other words, give me something to show
    how many cents a gallon of diesel these things mean to you, how
    that would translate. So if you would look into that and see if
    you can do it.
        Well, we keep hearing that this is a bill that is going to
    create jobs. You have made it very clear that you have had a
    reduction in jobs, and you have had problems in your industry.
    And I would only say that we get testimony after testimony,
    everyone is supposed to be creating all these jobs, but it
    never happens in the industries that are in front of us.
        So have you estimated anything in terms of how many jobs
    would be destroyed in the trucking industry?
        Ms. Windsor. Currently, the freight market is very soft, so
    obviously our jobs are at a reduced part. If in fact, we have
    to add additional costs for diesel fuel, I think we would have
    a decline in jobs versus an increase in positions.
        Senator Inhofe. OK, let me ask it a little bit differently
    then. Senator Bond issued a report that the Waxman-Markey bill,
    and this would be about the same, we think, would have the
    effect of a $3.6 trillion gas tax increase. Now, we all know
    that most of these taxes are going to be passed on. Would you
    say that in terms of the consumers out there depend on trucks
    to deliver goods all over the country, as to how much of that
    $3.6 trillion do you think would ultimately have to be passed
    on to the ultimate consumer?
        Ms. Windsor. It would be very difficult to estimate at this
    time. I can get back with you on that. But ultimately, the
    consumer does pay for any increases. We are currently not able
    to pass on all our additional fuel costs to our consumers,
    though, especially with the soft freight market at this time.
        Senator Inhofe. And you have heard me say this before. One
    of the things that I find most offensive about the debate that
    has been going on. People are concerned about our reliance upon
    foreign countries for our oil and gas. And yet, while we have
    the greatest reserves of any country right here in the United
    States, 83 percent cannot be developed because of the
    bureaucracy. And that is an area that I think would benefit you
    equally if we were able to go out and just exploit our own
    resources.
        Sherry, you said something in your statement here, talking
    about cap and trade is far preferable to the command and
    control approach of the EPA. Well, we are concerned about that.
    We are concerned about the Clean Air Act and how the EPA could
    impose these things. And yet there is not a preemption in this
    bill. In other words, you are supporting the bill, but if you
    are successful and you had your way and we passed a bill, you
    would have that to operate under, but also you would still have
    the EPA. There is no preemption.
        Are you going to try to encourage a preemption if we get to
    the point where we are looking at----
        Mr. Boehlert. Senator, if I were running the show, and I
    could have my druthers, I would pass this retroactively. I
    think you need a partnership between the executive and the
    legislative branch, but I think it is far preferable to have
    the legislative branch address this problem in a meaningful
    way. And that is why I applaud these hearings.
        The worst possible scenario is inaction, no one doing
    anything. Global climate change is so serious, and it is so
    negatively impacting each and every American of all persuasions
    that it would be sinful to do nothing.
        Senator Inhofe. OK. That is not the question. The question
    is, do you support preemption?
        Mr. Boehlert. No. Oh, do I support preemption?
        Senator Inhofe. Yes.
        Mr. Boehlert. You mean, the Feds?
        Senator Inhofe. Yes. If we were to pass something here, do
    you want that to preempt the EPA's regulations doing
    essentially the same thing or something that could be worse?
        Mr. Boehlert. Yes. The answer would be yes to that.
        Senator Inhofe. OK. Very good. Thank you very much.
        Thank you, Madam Chairman, for letting me go first.
        Senator Boxer. Thank you so very much.
        Senator Lautenberg goes first, and Senator Carper will go
    next.
        Go ahead, Senator Lautenberg.
        Senator Lautenberg. I yield to Senator Carper.
        Senator Boxer. Senator Carper will go first, then
    Lautenberg.
        Senator Carper. No, I don't want to go first.
        [Laughter.]
        Senator Carper. No, I do. I am delighted to go first, and I
    thank my colleague for letting me go first.
        Congressman Boehlert, Sherry, it is just great to see you,
    and to each of our other witnesses, thank you so much. Some of
    you are from a long way, and we are delighted that you are
    here. And thank you for excellent testimony, actually.
        I will start off, if I could, with Congressman Boehlert.
    And say how pleased we are to say that you have spent some time
    in our State, and I think your daughter is there, and it is
    just great to see you here as well.
        The existing funding for our Nation's transportation system
    is largely through stovepipes, and you know, we focus on
    building separate types of projects such as highways. We focus
    on transit systems, but we are really not focused much on
    national outcomes.
        And at my request, and a number of my colleagues', the
    Kerry-Boxer bill includes a mode neutral grant program--several
    of you have commented on that today--at the Department of
    Transportation that is designed to reward States, to reward
    regions that strive for the greatest reductions in
    transportation emissions.
        Let me just ask, if I could to start with, do you believe
    this grant program will foster innovation? And second, do you
    believe it provides local communities with the flexibility that
    they need to accomplish national goals of reducing
    transportation emissions?
        Mr. Boehlert. The answer is yes and yes, and the creative
    genius of America welcomes incentives. And when the incentives
    are there, as this bill provides, Katie bar the door. It is
    unlimited in what you can get from that. So I think it is
    extremely important.
        Second, I think it is extremely important that we allow
    State and local governments flexibility. We have established
    broad national goals, objectives that we want to achieve, but
    we shouldn't mandate every step of the way what State and local
    government should bring to the table because each and every
    situation is different. But as long as they develop plans going
    forward, working across jurisdictional lines, that advance
    toward the objectives and goals of the overall bill, we are all
    the beneficiaries.
        Senator Carper. Good. Thank you. Let me just have a follow
    up question.
        I want to thank our Chair for including in the mark the 3
    percent allowance to go to transportation strategies, to reduce
    our greenhouse gas emissions. And I thank you especially for
    scheduling this panel to be before us today.
        But the allowances, I think, will generate up to $3 billion
    annually, split evenly, I believe, between transit funding and
    mode neutral grant programs. And I would just ask, do you
    believe this level of investment is sufficient to address
    transportation's contributions to greenhouse gas emissions? Do
    you believe it is sufficient by itself?
        Mr. Boehlert. It is an important step forward, and I
    applaud when you take that first step toward a goal. Obviously,
    we would like more; 33 percent and 3 percent, there is a big
    gap there. But it is an important first step, and I applaud
    that, and we will be glad to work with you to accomplish even
    more.
        Senator Carper. All right. Thank you.
        Mr. Millar, a follow up question to that. How important are
    the allowances that are provided in the Chair's mark to reduce
    transportation emissions? And what role, if any, do you think
    that inner city passenger rail could play in these efforts?
        Mr. Millar. We believe the allowances are essential. The
    benefit of remissions reduction that public transportation
    provides is when people use public transportation. If, as the
    economic analysis shows, some of the cost of fuel--we believe
    it will be a modest cost increase, but still a cost increase of
    fuel that will occur, that is expenses that the transit systems
    have to absorb. If they have to raise fares, if they have to
    reduce service, then the benefits of having people choose to
    use public transit will be greatly lessened. So we think these
    are essential that these allotments go toward transit.
        With regard to improvements to our rail transportation
    system and network across the country, we think that that is
    something that out of the planning programs, States can
    determine what are the efficient investments there. We think
    the competitive grant program is the right place to get some of
    that. But we think that in all likelihood the size of those
    investments will require additional funding to really make them
    pay off. But as Congressman Boehlert just said, that first step
    is the most important and we appreciate the work in this bill.
        Senator Carper. Thank you.
        And in conclusion, a quick question for Mr. McKeever.
    Again, congratulations on the great work you are doing out
    there and for your leadership, but you have State and local
    funding restraints. Could Sacramento have completed the kind of
    integrated planning process that you have described without
    Federal funds?
        Mr. McKeever. Well, we did use our traditional Federal
    funding to fund a portion of that project, but we also had
    specialized funding both locally and from the State.
        Senator Carper. And do you believe the allowance revenue
    that is dedicated to transportation under the Kerry-Boxer bill
    is sufficient for all regions to complete a similar planning
    process?
        Mr. McKeever. Well, again, I think on the planning side, I
    think it is a very important step in the right direction. I
    think we are going to have to get some good treatment on the
    transportation bill side in order to pull it all together.
        Senator Carper. All right. Thanks.
        Ms. Windsor, I don't have time to ask you my question, but
    I am delighted you are here. We thank you very, very much for
    your testimony.
        Senator Boxer. And Senator, if you wish to include it in
    the record, then she can answer it in the next 24 hours.
        Also, I just have to say, Senator Carper is thanking me. It
    was Senator Carper, Senator Lautenberg, Senator Cardin, Senator
    Specter. It was just a tremendous number of people who worked
    to make sure we did the most we could. It is very difficult,
    because it is a zero sum game. You take allowances and put them
    in one place, you have to take them from another place. And
    believe me when I say Senator Carper would have liked it a
    little higher.
        Senator Lautenberg.
        Senator Lautenberg. Thanks, Madam Chairman.
        I defer to Senator Carper because he has worked so
    diligently on this section of the bill. And we have common
    views in terms of transportation. Our States are neighbors, and
    we get a lot more traffic than the number of people just living
    in our States, that is for sure.
        Mr. Boehlert, if we can move more freight movement to rail,
    there are all kinds of benefits that ensue.
        And Ms. Windsor, don't be afraid. I am not going to say
    take trucks off the road alongside.
        But how would that help us? What do you see as the
    principal values of moving more of the freight by rail?
        Mr. Boehlert. First of all, I have long appreciated both
    modes of transportation. I want you to know that. But rail is
    more environmentally friendly, less emissions, obviously. And
    it is more energy efficient in many respects, lessening our
    dependence on foreign oil.
        But the key point this overall report of the Bipartisan
    Commission makes is that we should not go in with any
    prejudices. It is not what I like or you like or the next
    person likes. It should be mode neutral. So you have these
    broad national objectives and goals you are trying to achieve,
    and each one of them should be addressed individually as you
    determine where you are going to make the investments in our
    transportation infrastructure for the future.
        Senator Lautenberg. Mr. Millar, Amtrak, for instance, which
    is a major focus of mine, not to prejudice your thinking, I
    promise, but it is a lot more efficient than airplanes, 24
    percent more efficient than automobiles.
        So it sounds like we are delinquent in the investments that
    we have made in rail service. And what I am looking for is your
    view and confirmation of what we have seen. We had the
    opportunity in the last couple of days to talk to people from
    the E.U., members of the Parliament, and we discussed their
    investments, for instance, Germany, France, Italy, Spain, they
    make us look like a third world country. So what do we do about
    the national investment in passenger rail service?
        And I fought like the devil, and we got $13 billion over
    the next 5 years reauthorized for investments in Amtrak. We got
    an $8 billion program for high speed rail investments
    throughout the country. Where do you think we ought to go to
    get even more invested in passenger rail service than we have?
        Mr. Millar. First, sir, let me thank you for your
    leadership over many, many years on this issue and on public
    transportation issues. We admire your expertise and appreciate
    your fortitude in moving forward.
        There is no doubt about it. The U.S. is a third world
    country, maybe even a fourth world country, if that is
    possible, when it comes to passenger rail. We simply have
    refused to make the kind of investments that our competitors
    and our future competitors have been and are making at the
    moment. The President's support in the stimulus package and the
    concurrence of the Congress was an important first step, but a
    very tiny first step.
        Most Americans don't really know what good train service is
    anymore, unless they have traveled to Japan or some other
    country. And I think what is going to happen here, it is going
    to be a little like good roads were in the 1930s and 1940s. We
    built a few of them, and people said, hey, we need more and
    better roads, and surely we did. And we built the world's
    greatest road system. I think the same thing has to happen with
    intercity rail, and particularly high speed rail. I think
    Americans, when they get a sample of something that is that
    good and that useful and that efficient, they will demand more.
        As to the funding package, it is going to take a solid
    effort by the Congress to figure that one out. And whether it
    is bits and pieces that are all put together to make enough, or
    whether we can come up with a genius approach such as was done
    with the interstate highway system, I don't know. But we stand
    ready to work with the Congress on that. We need to make that
    commitment.
        Senator Lautenberg. Thank you. I thought I had a coup
    d'etat here and the Chair was empty, so I will just continue
    for a moment or more.
        [Laughter.]
        Senator Boxer. You have that right.
        Senator Lautenberg. That is very kind.
        Senator Boxer. After all you have done for transportation
    in this Nation, they even named a train station after you, for
    God's sake.
        [Laughter.]
        Senator Lautenberg. We don't talk about that.
        [Laughter.]
        Senator Boxer. Take me to Lautenberg Station.
        Senator Lautenberg. I had to leave the Senate. You know, it
    is bad form to have things named for you while you are a
    sitting Member of the Senate or a sitting Member. So I left for
    2 years. I got a railroad station, a courthouse and a
    vocational school. And then I said, OK, back.
        [Laughter.]
        Senator Lautenberg. So here we are. It was a nice tribute
    that the people of New Jersey gave me.
        Ms. Windsor, one of the things, and I admire the fact that
    you are here representing a family established company.
        Ms. Windsor. Thank you.
        Senator Lautenberg. And I had the privilege in my lifetime
    of establishing a company, but not family. And so every year,
    we see 5,000 people killed in crashes involving large trucks.
    But in your testimony, you call for larger trucks, increasing
    the size and weight of large trucks. What is the justification?
    I mean, it takes longer to stop these vehicles. There is a
    question about wear and tear on the roads, the infrastructure
    that we built for traffic, and had no concept of what the
    volume of this traffic might be, nor the kinds of opportunities
    there were for moving goods and people.
        So what do we do with more large trucks? I have not been a
    friend of increasing truck size, as you may know. It doesn't
    mean we are not friends.
        Ms. Windsor. Right.
        Senator Lautenberg. But could you give us an explanation of
    the validity of doing that?
        Ms. Windsor. Well, obviously, one of the issues is
    productivity of the equipment that we currently have without
    adding additional tractors and trailers on the highways. Many
    of our units that we run now are not fully loaded because of
    weight restrictions.
        As we see the next generation of safety items that have
    become available to us, and our tractors that we now have with
    all the emission devices, the equipment is now becoming heavier
    and heavier. Our fuels are heavier. Our tractors are heavier.
    And again, if we add additional safety devices that we all
    would like to have on our equipment, we are increasing the
    weight of the equipment.
        By giving us a tolerance above our 80,000 pounds, then we
    know that we will not have as many tractors and trailers on the
    highway.
        Senator Lautenberg. Fifty-three feet?
        Ms. Windsor. Yes, we do run 53.
        Senator Lautenberg. Are you advocating triples?
        Ms. Windsor. In the areas where they can be run. Obviously,
    not around the capital beltway.
        Senator Lautenberg. All right. We run into opposition here
    on this because I think we have to resort to what is the
    safest, best way to do it. And there are lots of places where
    trucks and trucks only can carry it, and we have to provide
    investments there as well. So thank you very much.
        Senator Boxer. Well, transportation safety is something
    that, Senator, you are my leader on that.
        If I could just ask unanimous consent to place into the
    record a statement by the American Bus Association, and we
    thank them for giving us their insight.
        Again to this panel, we thank you. I am not going to burden
    you with questions. If I have a burning question, I will put it
    in writing and ask that you get it back to us ASAP. Your
    testimony is very, very helpful, and very clear.
        And you know, I just think it is a patriotic duty that you
    performed really well today, coming all the way from places
    near and far. Thank you very much.
        We stand adjourned. We will be back at 2:15 sharp to start
    the third panel, and we are going to continue on until the
    evening until we are done with these hearings.
        Thank you very much. See you later.
        [Recess.]
        [The referenced statement follows:]

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        Senator Boxer. The committee will come to order. We are
    back for our third panel of very distinguished speakers all,
    and we are very grateful to you for taking the time out of your
    hectic lives to be here with us.
        We are not going to make any opening statements here, which
    should be good news to you since it usually takes a long time.
    We are going to right ahead, and we are going to start.
        This panel deals with actions in other countries, and we
    are going to hear from those folks who are really involved in
    this and who know it, to share your wisdom with us.
        We will start with John Podesta, who is President and Chief
    Executive Officer of the Center for American Progress. It is a
    think tank he formed in 2003, and of course, prior to that he
    served as White House Chief of Staff to President Clinton. He
    has a number of very interesting parts of his bio that I don't
    have time to share, but will you proceed, Mr. Podesta?

               STATEMENT OF JOHN PODESTA, PRESIDENT AND
     CHIEF EXECUTIVE OFFICER, CENTER FOR AMERICAN PROGRESS ACTION
                                  FUND

        Mr. Podesta. Thank you, Madam Chairman and Senator Inhofe.
    Thank you for inviting me to testify before you. I know you
    have a lot of witnesses. I have a long written statement that
    you have included in the record. So let me just make a few
    points.
        First, in my view, we are losing valuable ground to our
    competitors every day that we do not take action. Our economic
    competitors are embracing the future, investing in new
    economic, energy and environmental opportunities to capture the
    clean energy technology edge, grow their domestic clean energy
    markets, expand new employment opportunities, and increase
    production of secure domestic renewable energy.
        The real threat to U.S. competitiveness is not in embracing
    the future, but being stuck in the 20th century energy systems.
    For example, China is spending 34 percent of its stimulus
    dollars, $586 billion it is spending on stimulus on clean
    energy and clean energy infrastructure, nearly twice what the
    United States is spending, second only in percentage terms to
    South Korea.
        Between now and 2011, they are investing $300 billion in
    the largest railway expansion in the world. I recently traveled
    from Beijing to Tianjin, going 250 miles an hour on their new
    intercity high speed rail service. They own 40 percent of the
    solar PV production market, almost the same share the U.S. had
    in 1995. Now, we are under 10 percent.
        Germany has the world's largest installed capacity of solar
    photovoltaic panels and second largest amount of wind power.
    The renewable energy sector now employs 280,000 people. It is
    estimated to grow to 500,000 by 2020.
        Spain is conquering the intermittency problem associated
    with renewable energy and generates about a quarter of its
    electricity through renewable resources, about 8 times more
    than the United States. It is on track to generate 40 percent
    of its electricity from renewables by 2020 by investing in a
    state of the art national smart grid.
        And even India is investing $20 billion to expand their
    solar capacity to 20 gigawatts by 2020, 4 gigawatts more than
    the total worldwide solar capacity installed today.
        Passing the Clean Energy Jobs Act would signal to the world
    that the United States will seize the defining economic
    opportunity of the 21st century. This bill can unleash a tidal
    wave of innovation here at home and draw on America's proven
    ingenuity and entrepreneurial spirit to build new businesses
    and to lead the world in clean energy technologies and
    practices, just as we have in info tech and telecommunications,
    but we must take action now.
        My second point is that the Clean Energy Jobs Act would put
    people back to work. Reputable, sophisticated economic models
    all show that comprehensive clean energy legislation is the
    pathway to creating millions of new jobs at a time when we need
    them the most. My colleague, Kate Gordon, testified before you
    yesterday, so I won't go into detail but only note that a study
    we commissioned from the Political Economic Research Institute
    at the University of Massachusetts used economic modeling to
    determine that the clean energy job creation impact of the
    House version of this legislation plus the stimulus bill that
    was passed earlier this year would generate $150 billion per
    year in new clean energy investments in the United States over
    the next decade, most of that dominated by private sector
    investments, and would generate 1.7 million jobs.
        Finally, I would just like to underscore the need to
    include several key elements in any future package to create a
    green economy and put the U.S. on track for long-term
    sustainable economic growth. I would urge the inclusion of a
    Clean Energy Deployment Administration, a so-called green bank,
    to open credit markets and motivate businesses to invest in
    clean energy technologies that could create some new financing
    tools to stimulate private sector investment. We have seen
    Germany and Canada take that step to good effect. Senator
    Bingaman has that feature in his legislation, and I urge its
    inclusion in a final package.
        I would also urge more emphasis on efficiency and
    retrofitting building stocks. I think this bill takes a giant
    step down that path, but we, along with the Energy Future
    Coalition, released a report arguing that 40 percent of U.S.
    building stock could be retrofitted at great savings for
    consumers and commercial building owners and create 600,000
    jobs in the process. And we have some ideas about how to get
    that done.
        I applaud the inclusion of strong tropical deforestation
    provisions in this bill. I recently completed a bi-partisan
    study with your former colleague, Senator Linc Chafee, and we
    put forward some ideas about how to strengthen and build that
    program out. Most of those are probably applicable to
    implementation on the executive branch side, but we urge you to
    consider those.
        And finally, the clean energy bill has provisions that
    would expand the use of natural gas. We think more could be
    done. My testimony goes into that in some detail, but I would
    definitely urge the inclusion of the Nat Gas Act, which uses
    natural gas to power particularly heavy duty trucks and fleet
    vehicles.
        Thank you.
        [The prepared statement of Mr. Podesta follows:]

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        Senator Boxer. Thank you. You got a lot in there, John.
    That was very well done.
        Our next speaker is Ned Helme, President, Center for Clean
    Air Policy. Mr. Helme is the Founder and President of the
    Center for Clean Air Policy, with 25 years of experience in
    climate and air policy. And I understand you worked on the
    Clean Air Act amendments.
        Mr. Helme. That is right.
        Senator Boxer. A big success for us, a bi-partisan success.
    So please go ahead, Mr. Helme.

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

        Mr. Helme. Thank you very much, Madam Chairman.
        It is really a pleasure to be here. As you know, I am Ned
    Helme, President of the Center for Clean Air Policy. We are an
    environmental think tank based here in Washington. We also have
    offices in Brussels and Paris and New York and San Francisco
    and Beijing. We do a lot of work with a number of developing
    countries on the ground, China, Brazil, Mexico, Indonesia, et
    cetera. And we bring together the negotiators from the 30 key
    countries several times a year for off the record discussions
    helping to feed into the process that is going on this week in
    Barcelona and on into Copenhagen.
        I want to make four points this afternoon. First, I think
    the myth of developing country inaction has finally been set
    aside. I can say with confidence the announcements we have seen
    from several countries in the last few weeks, the actions we
    have seen by China, Brazil, Mexico and others are quite
    substantial. We no longer have a question about whether
    developing countries are going to act or are their partners,
    trading partners going to act. They clearly are.
        The second point I want to make is that Copenhagen is not
    Kyoto. We are in a different world. Kyoto was all about
    developing countries didn't have to take any action. Whatever
    action they did was really to help Annex I developed countries
    meet their targets by creating credits under the clean
    development mechanism. This new structure is going to create a
    shared responsibility. All the countries are going to be in the
    same boat. We are going to move forward together, a very
    significant change from where we were a decade ago.
        The third point I want to make: competition for our key
    industries, the key piece of your legislation, S. 1733, I think
    it is critical in the transition period while we are getting
    China and Brazil and company up to speed, to protect our
    cement, steel, aluminum, the key industries that are highly
    internationally competitive, protect them in the interim while
    that transition is happening. And then once we have the
    transition, we can move forward in a complete program.
        Finally, I want to say that it is very important that we do
    something on monitoring, reporting and verification. If we are
    going to make sure we are successful in protecting our
    companies, we need to know what is going on in every country.
    So we, as the U.S., need to support international standards to
    measure, report and verify what is going on in every country,
    not simply in Annex I countries.
        Let me turn to the specifics. I have a table over here you
    can see, and it gives you a sense--you see the red column shows
    you China, Brazil and Mexico, three key developing countries.
    This is the net of reduction below business as usual they will
    achieve by 2010. So as you see, Madam Chairman, that number is
    nearly--it is larger than what we will do in Kerry-Boxer in
    2015, and it is almost equivalent to what we will do with
    Kerry-Boxer in 2020. So that is action today on the ground, not
    for the clean development mechanism, action done by China,
    Brazil, Mexico, China doing a lot of things in terms of energy
    efficiency, in terms of renewables, in terms of vehicle
    standards, a very aggressive program; Mexico, some aggressive
    programs as well.
        So I think this tells a story graphically. You can see the
    one on the far right, the blue is Europe and shows you that
    comparable, the action of those three countries by 2010 in
    terms of total tons, is quite comparable.
        Senator Boxer. Do you have some charts that you can give
    us?
        Mr. Helme. Yes, I can give you more detail.
        Senator Boxer. If you would. And BAU stands for?
        Mr. Helme. Business as usual, so the projected level they
    will be reaching.
        Senator Boxer. Thank you.
        Mr. Helme. Of course, you have to remember, Europe is under
    the Kyoto caps.
        Senator Boxer. I do know. Yes.
        Mr. Helme. That is different than us.
        Senator Boxer. But I really need that, if you could get
    that.
        Mr. Helme. I will be happy to do that, happy to do that.
        OK, let me turn to my point about Copenhagen not being
    Kyoto. What we are seeing here is a shift where developing
    countries in the Bali Action Plan have agreed to take
    nationally appropriate mitigation actions, NAMAs, that will be
    monitorable, reportable and verifiable, specific actions across
    sectors, not just individual projects like they did in the CDM,
    but full scale programs in the cement industry and the steel
    industry and the electricity industry. And that will be
    monitorable, reportable and verifiable. And Annex I countries,
    the developed nations, are asked to help with some of the
    financing, the incremental costs to make that happen.
        It is a new paradigm, very promising, looks like it has a
    good chance of being a part of what we get out of Copenhagen. I
    want to say, your legislation, S. 1733, is a perfect fit with
    this context because it provides the financing. By setting
    aside 7 percent of the allowances for R&D and for new
    technology and for adaptation, you are creating the financing
    part of this deal, which is really critical. And you are doing
    something significant, as you see here, in terms of the size of
    the reductions.
        So the two things that really matter in Copenhagen are: Do
    we have a real target that is substantial? And are we helping
    developing countries move forward? I think the answer is yes. I
    would urge movement on this legislation as soon as possible.
        Let me say a word about competitiveness. As I mentioned, I
    think it is key here that we protect our key internationally
    competitive industries. Your bill does that. It provides free
    allowances to cement, steel, aluminum, all the industries that
    are at risk. I think that is key. And I think what we will see
    from the Finance Committee will offer some border tax
    adjustments. So if after 2020, one country is dragging its
    feet, let's say India, we can stick that on that one country
    for that sector. So it is a much more targeted approach. I
    think that combination ensures the competitiveness, and that is
    critical.
        My final point on monitoring, reporting and verification,
    if we are going to be careful, we are going to be sure that
    what we are doing is matched by others. We need international
    standards for monitoring, reporting and verification. We know
    in the U.S., EPA, our Government, will monitor, report and
    verify in this country. What we want to be sure of everybody
    else is doing that. And that requires that our delegation to
    the international negotiations supports international standards
    for monitoring, reporting and verification. That needs to
    happen, so that is a very key piece.
        So let me close with one last point.
        Senator Boxer. You need to close, yes.
        Mr. Helme. Yes, one last point.
        We have talked a lot about protecting existing industry. As
    John said, we also need to look at the industries of the
    future. China and Korea are eating our lunch today in these new
    industries. Your bill moves us in that direction. I think the
    single best thing we could do to move the legislation, move the
    Copenhagen situation, is to move the legislation here. So I
    commend you.
        [The prepared statement of Mr. Helme follows:]

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        Senator Boxer. Thank you so much, Mr. Helme.
        And next speaker is Jonathan Lash, the President of the
    World Resources Institute. Mr. Lash has been President of the
    Institute since 1993, and we are very pleased to have you here.

                STATEMENT OF JONATHAN LASH, PRESIDENT,
                       WORLD RESOURCES INSTITUTE

        Mr. Lash. Thank you, Senator Boxer, Senator Inhofe, Senator
    Klobuchar. I have appeared before you a few times before as a
    representative of the United States Climate Action Partnership,
    but today I am here on behalf of the World Resources Institute,
    not USCAP.
        If we are to achieve the goal that was agreed to last
    summer by the U.S. and other major economies of limiting
    warming to 2 degrees, then the U.S. needs to act immediately to
    reduce its own greenhouse gas emissions, and it must negotiate
    a global agreement that commits other nations to do so.
        Senate passage of S. 1733, or legislation like it, would
    represent a crucial step toward both goals. It would lay out an
    ambitious road map for U.S. emissions reductions. It would
    catalyze innovation and create jobs. But it would also enable
    us to take advantage of significant new actions and commitments
    by other countries to control their emissions.
        Locking in those commitments by other countries would be in
    our economic, security and environmental self-interest. Almost
    every country which is a significant source of greenhouse gas
    emissions, developed and developing, has in recent months taken
    actions or made significant proposals for emissions reductions.
    Mexico pledged to reduce emissions by 50 percent by 2050 using
    a cap and trade system.
        Brazil pledged to reduce deforestation, which is
    responsible for most of its emissions, by 70 percent. South
    Africa has offered a detailed plan of policies to peak and
    begin to reduce its emissions by 2020, astonishing for a poor
    nation. Japan proposed to reduce emissions 25 percent below
    1990 levels by 2020 if other nations act.
        And as you know, President Hu Jintao of China in the first
    speech by a Chinese head of state to the United Nations,
    pledged to reduce China's carbon intensity over the coming
    years by a notable margin in addition to the 20 percent
    improvement in energy intensity that they will have achieved by
    2010.
        Nations that had for years insisted that reducing emissions
    was solely the responsibility of industrialized countries are
    now signaling, in the words of Environment Minister Ramesh of
    India, ``We may not have caused the problem, but we have to be
    part of the solution.''
        But how much do these commitments mean? In my written
    testimony, I provided a detailed summary of actions and
    commitments by other countries. But can we count on them to do
    what they say they will do? Can we verify that they are doing
    what they say? I would like to focus on that point and why I
    believe the answer is yes.
        Twenty years ago when President Reagan negotiated nuclear
    arms reductions with Russia, he quoted the Russian proverb
    ``Trust, but verify,'' not because he trusted Russia, but
    because he didn't. The treaty he signed provided the means for
    verification, the issue that Mr. Helme was referring to.
        Whether or not we start with trust of other nations,
    multiple redundant tools are available to verify action and
    outcomes. Verification is feasible, and provided it is included
    in the agreement, that agreement can be the basis for trust. We
    have broad experience with both developed and developing
    nations in international verification. Examples include the
    Montreal Protocol, the Nuclear Nonproliferation Treaty, the
    WTO, IMF. None is perfect. They all have flaws. But each of
    them provides a basis for the United States to assert its
    interests and monitor the actions of other countries.
        U.S. Governments are on the ground working on energy and
    environmental policy implementation and reporting in most of
    the countries of concern. We can reap benefits by taking
    advantage of this capacity. U.S. EPA, for example, has worked
    in China on successful efforts to improve control of
    SO2 and is beginning to work on greenhouse gas
    emissions, a program that we are involved with.
        There are multiple outside sources for cross-checking
    national energy and emissions data, including not only U.S.
    Government experts, but those of Europe and Australia and a
    broad array of academic institutions that have specialized in
    that area.
        And finally, the capabilities of satellite systems are
    extraordinary. My own organization has a decade of experience
    tracking deforestation around the world using satellite data.
    We can show you an individual tree being illegally harvested in
    the Congo basin.
        Verification is feasible, but it depends on completion of
    an international agreement. We can collaborate with rapidly
    growing developing countries to reduce global emissions, create
    new markets for low carbon technologies and services, and
    guarantee that the competition for those markets takes place on
    a level playing field. But international progress depends on
    U.S. domestic progress on pending legislation.
        U.S. commitment is a pre-condition for international
    agreement, and international agreement will make U.S. action
    both more effective and more secure--the two reinforce each
    other. The United States has led the world through great
    economic and social changes. It has thrived by doing so. This
    is an occasion for leadership once more.
        Thank you.
        [The prepared statement of Mr. Lash follows:]

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        Senator Boxer. Thank you so much, Mr. Lash.
        And our next witness is a minority witness, Iain Murray,
    Vice President for Strategy, Competitive Enterprise Institute.
        Welcome.

        STATEMENT OF IAIN MURRAY, VICE PRESIDENT FOR STRATEGY,
                    COMPETITIVE ENTERPRISE INSTITUTE

        Mr. Murray. Chairman Boxer, Ranking Member Inhofe, thank
    you for inviting me to testify today and for the opportunity to
    participate in such an outstanding panel.
        Despite our deep disagreements over policy, I very much
    respect those who have preceded me and their commitment to
    their ideals. Only by maintaining a civil discourse where all
    views are heard can we ensure that our democracy reaches the
    right policy decisions. So I am glad to be able to present a
    different argument here today opposing passage of the Clean
    Energy Jobs and American Power Act.
        Let me start by reading you three headlines from this
    week's edition of a weekly European environmental newsletter:
    ``Britain set to miss 2020 carbon reduction target,'' ``Revised
    E.U. energy efficiency plan faces delay,'' and ``E.U. fails to
    agree to strategy for surplus carbon credits.'' On top of that
    is a further headline: ``U.N. confirms upward trend in rich
    nations' emissions.''
        These headlines confirm something that is important to
    recognize. Even those nations that have taken on emissions
    reductions targets are not finding it easy even in a general
    financial climate that is conducive to emissions reduction. It
    comes as no wonder that the Hadley Centre in the United Kingdom
    is advising that the only way to reduce emissions as much as it
    wants is via a planned recession.
        As you will see in my written testimony, my own United
    Kingdom, probably the best placed member of the E.U. to meet
    reductions from 1990 levels, owing to its change from coal- to
    gas-fired electricity in the early 1990s, will almost certainly
    not meet its own reduction targets.
        Germany is beginning to realize that its 20-year experiment
    with feed-in tariffs and other subsidies to promote renewable
    energy has been a failure. Only a negligible 0.6 percent of its
    electricity production comes from solar power, despite $73
    billion worth of subsidy this decade.
        Spain has decided to cut its subsidies to renewable energy,
    having realized that it has created a green energy bubble. And
    those countries that have invested in green jobs are learning
    that most of them are transitory at best.
        On top of that, the European Union's mission trading scheme
    has been an expensive failure. It has notably failed to cut
    emissions at all, but at extreme costs to E.U. taxpayers. My
    colleagues at the TaxPayers' Alliance in London are today
    releasing a study that finds the total cost of the ETS to
    European citizens amounts to as much as $171 billion, all for
    no reduction in emissions.
        Indeed, as Matthew Sinclair of the TPA told me, current
    climate change policies, the renewable obligation, E.U.
    emissions trading scheme and the carbon emission reduction
    target make up around 14 percent of average British domestic
    electricity bills. On the industrial side, for an average
    medium size consumer, the renewables obligation, E.U. ETS and
    climate change levy, together contribute around 21 percent to
    industrial electricity bills. So much for the industrialized
    world.
        I think, however, it is more important to recognize that
    meeting a global target of 50 percent reduction in emissions by
    2050 will require significant reductions, even on a per capita
    basis, of emissions in the developing world. This is
    unconscionable.
        Increased access to affordable energy represents the single
    best way to lift billions out of poverty. While unchecked
    global warming could do significant damage to developing
    countries, the effect of leaving people in poverty now and
    forever, to use Lord Stone's phrase, would be even worse. That
    is exactly why Indian Environment Minister Jairam Ramesh said
    just last week, ``India will never accept internationally
    legally binding emission reduction targets or commitments as
    part of any agreement or deal or outcome.''
        The developing world needs to develop. If we cannot accept
    the comparative advantage that developing will give other
    countries, while we constrain our emissions, then keeping
    people mired in poverty is not a moral or acceptable solution.
        Let me finish on a personal note about something else we
    can learn from the United Kingdom. My grandfather was a coal
    miner and union official in the industrial northeast of
    England. I grew up in coal mining country. I know first hand
    how wonderful the people of coal mining communities are and how
    tight knit their society is.
        Unfortunately, decades of socialist government in the U.K.
    kept many mines alive when they could have been closed down
    organically with little disruption. And so the Conservative
    government had to close them down at once. This imposed
    significant hardship.
        Just as surely, the bill before this house will close down
    the American coal industry in one fell swoop, but while it is
    still an economic benefit to the Nation. The devastation this
    will cause to coal mining communities will be difficult to
    observe, just as it was in England. These communities are
    located where they are because of the pit, as we called it.
    They have no way to attract new industries like Senator Kerry's
    fabled wind companies.
        If you pass this bill, communities will die, and ordinary
    working class people's lives will be affected massively for the
    worse. Near where I grew up is a colliery town of Easington. It
    has a population of 5,000; 1,500 of them were employed in coal
    mining, and all lost their jobs at once when the mine closed.
        Today, 30 years later, Easington is the fourth most
    economically deprived place in England and has the highest
    childhood obesity rate in the Nation. That is what you will do
    to coal mining communities if you pass this bill.
        Senator Kerry said on Tuesday that the effects of climate
    change would be worse for Senator Inhofe's constituents than
    the economic costs. Tell that to the people of Easington. Every
    day is a bad climate day for them.
        [The prepared statement of Mr. Murray follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you, sir.
        You know, I don't know much about these towns in England,
    although I know you do. But I do know about my own State. So I
    want to put in the record the Pew Charitable Trust information.
        [The referenced information follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. You said these jobs are transitory. False.
    We show the last 10 years of growth, the big star has been the
    clean energy jobs. And that is why, and it doesn't even count
    the last year. This is just to 2008. We have had $6 billion
    plus of venture capital funds. We have had 1,400 patents. That
    doesn't even count this year. And in 2007, so it doesn't even
    count the last 2 years, 125,000 jobs and 10,200 businesses.
        What I am trying to tell you is--I could say this. I would
    say this about the coal industry. All of us on this committee
    are trying to make sure that we can, in fact, use the coal we
    have. We want to. We think it is important that everybody play
    a part in this.
        Without this legislation, and the--I forget, $100 billion
    we are going to pump into clean coal; $100 billion from these
    allowances. The chances are the coal industry's future, not
    good. And here is the reason. We have laws in this country. One
    of them is the Clean Air Act. We now know that greenhouse gas
    emissions are covered under that Clean Air Act. We know an
    endangerment finding was put together by the Bush
    administration, but it was deep sixed and never came to light.
    We now know what it said, and it is what our Administration
    said.
        So our point of view is that we are working with our coal
    Senators, and I was very pleased that Senator Byrd's comment,
    which is he is pleased with the improvements we are making in
    the bill to help coal country. They want to do a lot more, and
    I am sure you are going to see a lot more.
        But I just wanted to put in the record, as we will put in
    definitely your eloquent testimony and your heartfelt
    testimony. In my State, these jobs have been the leaders.
        Now, I brought this over here, reductions from business as
    usual. I wanted to share it with Senator Klobuchar and Senator
    Cardin and Senator Inhofe, where we could see it a little bit
    better because this counters what Mr. Murray said about the
    rest of the world.
        Would you go through that chart again, Mr. Helme, and tell
    us what it shows, and where you got your documentation?
        Mr. Helme. Happy to.
        Senator Boxer. Do you want to stand up and go over there?
        Mr. Helme. Oh, sure.
        Senator Boxer. You won't have a mic, but that is OK.
        Mr. Helme. There is probably not room. Probably easier to
    do it from here.
        Senator Boxer. OK. Can you see it?
        Mr. Helme. Yes, I can see it fine from here.
        Senator Boxer. OK.
        Mr. Helme. So this is a comparison of what three key
    developing countries have done with laws that are on the books
    today that are being implemented and that are not for
    generating credits to be sold under the clean development
    mechanism. So these are unilateral reductions by Brazil, Mexico
    and China.
        And you can see the total there is almost 2 billion tons.
    You know, our national emissions are about 6 billion, so it is
    a third of our emissions today. But just to give you a sense,
    and that is made up of about 1.5 billion from China, this
    energy intensity program and some of the other things they have
    done where they are cutting their energy intensity by 20
    percent in every sector of the economy. And they have been
    measuring this each year. They are already well over 12 percent
    on the way to that 20 percent. It will be complete in 2010.
        For Brazil, it is the last 2 years of significant
    reductions in deforestation, several hundred million tons. And
    for Mexico, it is the new Mexican program that my colleague
    Jonathan Lash alluded to, where they are going to get about 50
    million tons by 2012. So that is the combination of how we get
    those tons.
        The gray on the far left is the first phase of Kerry-Boxer
    by 2015. Remember, everything isn't kicking in 2015, so that is
    why it is quite a bit smaller. And the green is Kerry-Boxer,
    the first part of the graph, the lighter green, is the cap
    itself on U.S. sources. And the upper piece, the supplemental
    red, is your provisions to take 5 percent of the allowances,
    set them aside, invest them in Brazil and Indonesia and so on,
    and get reductions, not offsets, reductions in those countries
    in addition.
        So you can see sort of what the total is. In thinking about
    that, you can see that in terms of our cap compared to what
    China, Brazil and Mexico are doing, they are actually doing
    more. When you add the additional effort your bill suggests,
    then it is a bigger effort in terms of Kerry-Boxer.
        And then the final one is the E.U., and it shows you where
    the E.U. would be a minus 30. Now, the E.U. has said they will
    do minus 30 if everybody else steps up. If not, they will only
    do minus 20. If they did minus 20, obviously they would be
    smaller than China, Brazil and Mexico.
        So the point here is this myth that developing countries
    are not moving and that they are only doing stuff that we pay
    for is flatly a myth, and this shows you that.
        Senator Boxer. OK.
        Mr. Podesta, I know from listening to you that you believe
    we have to take strong action now. Why is it important, if you
    could expand, because you said it very clearly. Why is it
    important to act quickly to maintain our competitive edge? And
    if we fail to do it, you know, what price do our workers pay,
    do our businesses pay, do our people pay?
        Mr. Podesta. I tried to highlight what other people are
    doing investing in these technologies of the future. It is
    clear that in the 21st century, we are going to turn over our
    energy platform, if you will, from the one that Mr. Murray
    described, which is really one of the late 19th century
    perhaps, rather than even the 20th century, to a cleaner,
    newer, greener energy future.
        And I will repeat one statistic I gave. In 1995, the United
    States had 45 percent of the photovoltaic market. Today, we
    have less than 10 percent. China, in contrast, has 40 percent.
    There are still strong American solar companies importing cells
    from China, manufacturing them here, putting them on buildings
    here. If we want to create an engine of innovation, of growth,
    if you look at where venture capital is going in the United
    States, it is in these clean energy industries.
        But they need policy signals. They need the support that is
    being provided by this bill both to push renewable energy,
    energy efficiency, but ultimately to put a price on carbon so
    that we begin that path toward a clean future.
        Senator Boxer. OK.
        Senator Inhofe, I will give you an extra minute and a half.
        Senator Inhofe. Oh, that is----
        Senator Boxer. No, no. We will give you an extra----
        Senator Inhofe. Well, thank you, Madam Chairman.
        First of all, I say to my friend, Mr. Podesta, you have
    always been one of my most respected adversaries, and I
    appreciate very much the comment you made about natural gas.
    Because as you know, and I think everyone knows, the successes
    in using it as a fuel in liquefied natural gas, now compressed
    natural gas.
        But there are bureaucratic problems with that. I have a
    bill, the Fueling America Act, and I have Democrats and
    Republicans on that, to accomplish what you want. So I would
    like to have you take some time to look at it, and maybe want
    to publicly endorse it. I think you probably would.
        The comments that were made, Mr. Helme, by you and Mr.
    Podesta, about China. You have to keep in mind, China is still
    cranking out two a week of the coal-fired plants. Now, things
    are going well in China now. I imagine they are going to
    continue to go well if they keep that up, because as our
    manufacturing base seeks the energy necessary to operate, that
    is like where they would go.
        Mr. Murray, I want to get some more details on the cap and
    trade and how it is working in Europe. As you know, it is
    interesting that the European Environment Agency, Madam
    Chairman, the EEA, reported in August that Europe is now likely
    to meet its Kyoto targets. And they go on to elaborate, this is
    the EEA, the reason emissions reductions ``reflect the effects
    of global economic recession which began in 2008, which
    resulted in reduced industrial output and reduced energy
    consumption by industry and correspondingly reduced freight
    transportation.'' So Europe is on track primarily because of
    the recession.
        So Mr. Murray, this is pretty relevant as to what is
    happening. It is because there is a view in the Senate that the
    Kerry-Boxer 20 percent target reductions by 2020 is not that
    big of a leap because, get this, America is in a recession and
    emissions have dropped. Well, what has happened over there is
    happening over here now. This is, in fact, a global recession,
    which you have taken into consideration as you look at this
    chart over here.
        So anyway, give me a sense, Mr. Murray, of what our economy
    would have to look like, let's say in 2030 when the Kerry-Boxer
    target of 42 percent, more than double the 2020 target; how
    many jobs would we have to lose? How many businesses would we
    have to shut down to meet the targets of this bill? Any idea?
        Mr. Murray. Well, Senator, one thing that we do know is
    that certainly over here, obviously business conditions and in
    Europe and business conditions here are not directly
    comparable. But we do know that from the latest data on
    CO2 emissions from 2008 for the United States, that
    CO2 emissions dropped about 2.8 percent. Job losses
    from December, 2007 to 2008 were 3 million, just over 3
    million. So that is about just over 1 million jobs for the
    percentage cut in CO2. Of course, this ratio might
    not hold true for international cuts, but that is about the
    level that we are looking at.
        To get to the sort of 20 percent level of reduction, then
    we would be looking at at least 20 million jobs lost, I would
    imagine, quite possibly rather more.
        Senator Inhofe. I see. And I am going to be attending, at
    least I am planning to, the Copenhagen conference. I am
    interested in your view as to what we should expect. I guess
    now that President Bush is out of office that they will reach
    an international agreement, and everyone will be happy. Is that
    what you think is going to happen?
        Before you answer the question, let me tell you what I
    think, what Evan DeVore, what is his title? He is the top
    climate change official for the U.N. He made the statement, ``A
    fully fledged new international treaty under the framework, I
    don't think it is going to happen. If you look at the limited
    amount of time remaining and where we are today, it is clear.''
        Do you agree with him on that?
        Mr. Murray. Well, I think I can tell you what I think the
    press reports will be like. I think that at the last minute an
    historic agreement will be reached, tears will be shed,
    champagne corks popped. The USA, I think, will still be blamed
    for the near failure to reach agreement. But in the cold light
    of day, the agreement is simply going to be an agreement to
    talk again.
        The developing world, as Minister Ramesh of India has said,
    will not accept mandatory emissions reductions. The developed
    world will accept some non-binding targets for the medium term
    and may promise some funding for the developing world. But I
    think that next year the clamor will simply begin again for a
    comprehensive treaty to be negotiated at the COP meeting next
    December, and the same accusations will be hurled between
    developing and developed nations as we have seen this year.
        I think this cycle is going to continue as long as
    emissions reductions are the focus of lobbying efforts and not
    adaptation, building resilience, and research into new
    technology.
        Senator Inhofe. OK, thank you.
        Mr. Helme and Mr. Lash, you heard what Mr. Podesta said in
    terms of natural gas. I would like to ask you if you agree with
    his comments. And then for the three of you, including you, Mr.
    Podesta, your thoughts about China's increasing or the
    continued use and development of coal-fired generating plants.
        First on natural gas, do you agree with him on his
    comments?
        Mr. Lash. I do, Senator. I favor anything that reduces
    CO2 emissions, nuclear power, natural gas, energy
    efficiency, all of it. We need it all.
        Senator Inhofe. I agree we need it all.
        Mr. Lash. Second, on China, a significant part of what
    China has been doing has been replacing old, inefficient, small
    power plants with larger, much more hypercritical power plants.
    So their coal fleet is now more efficient than the U.S. coal
    fleet. The Chinese understand exactly what was implied by
    President Hu's commitment to make a quantitative reduction in
    their CO2 intensity, and I believe they are going to
    implement it.
        Senator Inhofe. Thank you.
        Mr. Helme. I would agree with Jonathan. I think natural gas
    is a very promising option. With the development of shale gas
    in this country, gas prices have separated from oil prices. So
    we see that as a very attractive near term option for reducing
    CO2 emissions.
        Senator Inhofe. Well, I think that is right. When it came
    out last week and said that we were number on in terms of
    reserves, that wasn't even counting shale. So there is huge
    potential there.
        And I also agree when you talk about all of the above, that
    is what we have been saying all along. We need oil, gas, coal,
    nuclear and renewables.
        Mr. Helme. And I agree with Jonathan on the question about
    China. They are, in fact, retiring a lot of small coal plants
    aggressively. They also have the most aggressive wind and
    renewable energy program in the world. They were No. 1 in
    investment last year, $10 billion, of any country in the world.
    And they have met their targets. Every time they set a target
    in a 5-year plan, they have actually beaten those targets, and
    they plan to do that. They see this, as Mr. Podesta indicated,
    a huge opportunity.
        Also, one that you will be interested in, nuclear, they
    originally had nuclear not as part of their strategy, nine
    gigawatts out of their whole thing. They are going to go to 70
    gigawatts.
        So they are looking at a number of options that are
    promising in terms of the climate picture.
        Senator Inhofe. Thank you.
        Senator Boxer. Yes, finish up if you can.
        Mr. Podesta. Just very briefly, I think that, to put some
    numbers on this, just since 2006, they have closed down more
    than 34, maybe as much as 50 gigawatts of power in China from
    small boilers. They have made a pledge to close 30 gigawatts
    more in the next 3 years.
        And I think that with respect to these investments that
    China is making, Ned said that they are eating our lunch. I
    suggested to my staff a bit ago, a different body part that
    begins with kicking, but they told me I couldn't use that in
    the committee hearing.
        But I think that their investments are just astronomical. I
    would suggest that the committee might take the time--you might
    want to go over and review that.
        With respect to gas, Senator, I made the point that I think
    that replacing, particularly backing out oil, which has
    CO2 benefits, but it also has profound energy
    security benefits, to try to reduce our dependence on imported
    foreign oil, and move that base, particularly for heavy duty
    trucks, to domestically produced natural gas is now available
    to us because we can exploit these vast unconventional sources,
    particularly the oil shales.
        Senator Inhofe. Thank you.
        Senator Boxer. I am going to call on Senator Klobuchar.
        I just want to point out, Mr. Chairman, we have a natural
    gas title in our bill which was not in the House bill. We are
    moving forward. A lot of us agree with your point of view
    there. And we also have a nuclear title. And I think, you know,
    my Republican friends, I know where they are coming from on
    this. But I think there is room for us to work together, I
    hope.
        And the last point I would make, I don't know where you
    come up with 20 million jobs lost. You kind of got that off the
    top of your head. So I just want to make sure that you know
    that the studies that we have looked at from the Center for
    American Progress to the Pew Charitable Trust to the EPA
    analysis all predict job growth in America of about 2 million
    jobs.
        So I just needed to say we will put your testimony in, as
    well as those studies.
        Senator Inhofe. Well, let me say----
        Senator Boxer. Yes?
        Senator Inhofe. On the nuclear and the addressing natural
    gas, it needs to be a lot stronger, and perhaps you will be
    working in that direction.
        Senator Boxer. We will be working on the floor, absolutely.
    And we hope that you will work with us.
        Senator Klobuchar, the floor is yours.
        Senator Klobuchar. Thank you.
        I just wanted to follow up with some of the last questions
    that were asked about China. I know that the Wall Street
    Journal reported that this summer for the first time that
    investment worldwide in renewable energy outpaced traditional
    energy, and that China accounted for 10 percent of the world's
    total, and that the Chinese government will invest $462
    billion, that is nearly a half-trillion, in renewable.
        I know that, Mr. Podesta, you kind of let out, dangled out
    there where they are investing. Could you elaborate a little
    bit more about what they are doing and what repercussions this
    could have for our country, which oftentimes developed a lot of
    this technology but now has been leapfrogged by these other
    countries?
        Mr. Podesta. Yes. They are making major investments in
    wind. They are already the largest producer of photovoltaic
    cells. A lot of that is for the export market. They have now
    recently created the right kinds of investments so that a lot
    of that production is going to being installed in China.
        A major investment on the transportation sector. I
    referenced the $300 billion they are spending on building out
    the rail and high speed rail. They intend to by 2011 produce
    14,000 kilometers of high speed rail. I know that the stimulus
    bill put $8 billion into that. I wonder how many miles you
    think the United States will actually have built by 2011 of
    high speed rail going 200 miles an hour in intercity
    transportation, which has both reduced congestion and really
    reduced their air traffic between their cities. They are making
    major investments in building efficiency and in new
    technologies.
        They are using--this is one place where American companies
    have been invited into the Chinese market. I think Secretary
    Locke is over there arguing that we need to have more access to
    the Chinese market for American companies. One place where we
    have had some access is on building controls in particular,
    where the United States leads the world.
        But particularly, our wind manufacturers and others have
    been locked out of the Chinese market or blocked out because of
    their procurement rules there. So I know that Secretary Locke
    is pressing ahead to open up access particularly for American
    companies.
        Senator Klobuchar. I just had a hearing back in Minnesota
    on exports and small businesses. And you know, there are these
    little solar companies there, places that are just dying to get
    into this market. And again, part of it is that we haven't
    sent, what you pointed out, the kind of market signals to make
    it easier. It feels to me sometimes that these little companies
    are way steps ahead of this town in terms of understanding of
    the demand out there.
        The other thing that we talked about at this hearing we had
    is just that the dollar is weak. There are some excellent--as
    bad as it can be for other reasons, there are some very good
    possibilities for us to actually export. And when you look at--
    maybe you want to comment on how we are doing vis-a-vis Europe,
    because if you just say, oh, it is labor costs, I mean, they
    have similar labor costs to ours. And yet they have taken a lot
    of this solar market and they have also accounted for 82
    percent of meeting world demand in 2008. Spain was the No. 1,
    followed by Germany.
        You know, what are our prospects for moving ahead in terms
    of this energy race? We won the space race in the 1960s, and
    that was because we put a singular focus of this Nation in
    getting ahead. What do you see as our prospects of moving up in
    the ranks here? Mr. Helme.
        Mr. Helme. Well, I think it is critical. And I think the
    bill that you have before you will help in that regard.
        I just wanted to add on this China question, you know, we
    often think of the Chinese 5-year plans. Oh, this is the plan,
    and they are not really going to make it. Look at renewables.
    They had a target of 30 gigawatts of wind by 2010. They have
    upped that to 100 because they passed the 30 gigawatts in 2006.
    Same thing in solar. They were at 1.8 gigawatts. They moved
    that up to 10 because they beat the solar target.
        Senator Klobuchar. So are they going to have their own
    renewable electricity standard?
        Mr. Helme. Yes, they do. They have an RPS like you do in
    Minnesota. It is 15 percent. And I think very likely, President
    Hu will announce as part of the Copenhagen scene that they are
    going to step that up even further. I think we can expect a
    significant move there and similarly on hydro.
        And I think the other thing that is interesting, I
    understand the discussions with the U.S. on this bilateral
    agreement on technology, we would have thought CCS would be the
    top of the list. Apparently, some of the ball bearings that are
    in these windmills are the kinds of technologies China is
    saying we really want collaboration with the United States on
    these technologies.
        So it is a very serious business, and you know, it is a
    sign that we are seeing real movements. And I think for us, as
    Mr. Podesta said, you know, we need some real incentives to
    help those companies because these guys are out there, and they
    are fast, and they want our technology, and they want to
    manufacture it in China.
        Senator Klobuchar. Yes, I have been actually frustrated
    with the renewable standard we have right now. It is not coming
    through this committee, but the bill in the House and the one
    in the Senate Energy Committee is arguably about where we are.
    It is not aggressive enough. And I know that Senator Udall has
    been working on this as well. We have a bill that is similar to
    the Minnesota standard because we have just seen this growth in
    the green jobs in our State while the rest of it has been--we
    haven't seen that kind of growth.
        And it was again a bi-partisan Republican Governor signed
    it; nearly unanimous support from our legislature, Democrat and
    Republican. And people believe in it, and we are seeing that
    kind of job growth.
        And so when I have seen that in our State and seen the buy-
    in from people because they can get a piece of the benefits, I
    just don't understand the kind of resistance that we are seeing
    to an electricity standard when you see what has happened in
    these other countries.
        Mr. Helme. And it makes a huge difference on the
    CO2 front, because once you have built those plants,
    we have done the modeling in a number of States, once they are
    built, you run them, and that is what we are seeing in China.
    China is saying, you know, I showed you that chart with 1.5
    billion tons with their energy efficiency. There is another 1.2
    billion tons in the renewables available, huge.
        Senator Klobuchar. Right.
        Mr. Helme. So once you have done it, and I think it makes
    sense that both cap and trade and the renewables standard, not
    just cap and trade, because you don't necessarily build the
    renewables if you just have cap and trade. If you build the
    renewables first, then the cap and trade pushes you to run them
    harder, which is great.
        Senator Klobuchar. All right. Thank you.
        Senator Cardin. Let me proceed, if I might. Let me first
    start in asking my question to acknowledge that I strongly
    support the United States moving forward. I think it is in our
    economic interest to do that regardless of what happens
    internationally.
        But I do believe the international community is responding.
    And your testimonies here today certainly give us chapter and
    verse of what is happening in the major countries of the world
    and where the United States, if we want to be competitive, we
    are going to have to move, or otherwise we are going to lose
    jobs. So it is important that we take action.
        And I also just really want to respond to some of the
    concerns Mr. Murray has raised. If we are successful in
    Copenhagen, and I certainly hope we are successful in
    Copenhagen, it is going to be a first step. We have a lot of
    work to do after Copenhagen.
        I mean, in Copenhagen we hope that we have commitments to
    move toward targets, and we have a mechanism to get us to those
    goals and that there is an adequate financing mechanism to deal
    with the legitimate concerns of the developing world.
        And I want to see in Copenhagen also a commitment to move
    forward on an issue that you raised, and I think several have
    raised during the course of the last 3 day, and that is the
    concern of leakage and the concern of enforcement.
        So what I hope will happen, and we know that in the House-
    passed bill there was a provision for what is basically a
    border adjustment in the event that the United States moves
    forward and other countries do now, that their products would
    be subject to a border adjustment for the cost of the carbon
    reductions that are not reflected in that product.
        And what I have been urging is that we would be much better
    off doing this in Copenhagen under the framework of a global
    climate agreement than under the WTO being challenged where it
    is unclear as to whether that is an adequate mechanism to deal
    with this issue.
        If we were successful in getting that type of negotiations
    in a climate agreement, then you really are saying that you
    have an international responsibility to meet your international
    targets, not what one country says you need to meet, but what
    the international community has said that you meet.
        And by the way, the adjustments could go to international
    funds. It doesn't have to go to a particular country, so they
    really are achieving the goal set out in climate change
    legislation.
        Now, I have been told this is going to be difficult. It is
    going to be difficult to get China or India or other countries
    to agree on this. Everything is difficult. Nothing is easy in
    the international community.
        But I do think that the concern of individual countries
    action, which is a red flag internationally, as well as the
    political concern that the United States may very well act, and
    if India and China do not, does that mean that we are not going
    to achieve our international targets, can be answered through
    an enforcement mechanism that speaks to each country having to
    meet its international responsibilities.
        John Podesta is one of my heroes on these issues. I welcome
    your thoughts, Mr. Helme. I welcome your thoughts, Mr. Lash,
    Mr. Murray, as to whether this mechanism makes sense.
        Mr. Podesta. Well, Senator, I think that there is a timing
    question. I think the bill basically proceeds in the right
    direction, which is to take the trade sensitive and energy
    sensitive industries and provide extra allocation to them so
    that they are buffeted from any increase in their cost in the
    near term while we work out the border adjustment assistance
    procedures.
        I think in my own view that needs to happen, but chances of
    that happening between now and Copenhagen I think are
    relatively small. And I think the one thing that I think all of
    us would probably agree with is that, and I certainly agree
    with what Mr. Helme said, we are going into, Copenhagen is not
    Kyoto. We are going into a different framework.
        And I think it is really critical that the national
    commitments that we have talked about here today, from the
    Chinas, from the Indias, from the Brazils, from the Indonesias,
    from the South Koreas, Mexico be worked into and bound to in an
    international agreement so that we can see the overall picture.
        Senator Cardin. With enforcement?
        Mr. Podesta. And people take on internationally binding
    commitments. That is my hope.
        Senator Cardin. With enforcement?
        Mr. Podesta. With enforcement. I think that goes to the
    question of being verifiable, measurable, and having a
    mechanism that you really have integrity in the system, which
    again Mr. Helme discussed. But I think that is the first step.
        And as we are doing that, we need to work out these border
    adjustment questions, but I think they are best worked out in
    the way the Chairman's mark does it, which is to provide those
    allocations in the near term.
        Senator Cardin. With the Chairman's permission, I would
    like Mr. Helme to respond.
        I would just urge you all to just get stronger
    international interest on dealing with the enforcement issue. I
    mean, I think it is a critically important issue for us to
    resolve in America, to get our bill done. But it is also
    important to reach the international targets. It is going to be
    an issue in every country.
        Mr. Helme, if the Chairman----
        Mr. Helme. I agree completely with Mr. Podesta's thoughts
    on this question of the border tax adjustment. In fact, India
    and China have talked about putting a provision in the treaty
    that says you cannot have border tax adjustments. So I think it
    would be a very tough sell, but I think your question about
    enforcement is critical, and we do need to go there.
        This is one place where I have been happy with where our
    delegation has come forward. They basically suggested that we
    use a model where each country would do national communication
    with all of its data, its inventories, every 2 years.
    Currently, developing countries can do it when they please.
    They don't have to do it every year.
        I think they are agreeable to it. I sat down with the
    Indians. They were willing to go for this route. Every 2 years,
    you have a monitoring, and you have reporting. You set it up
    like the WTO, and I am not a WTO lawyer, but my understanding
    of the way the WTO works is you put your stuff on the record,
    your performance. You are open to question from all the other
    parties, the other countries in the U.N. process, and there is
    a name and shame sort of process here to really focus the light
    of day on what we are and what we are doing. So I think that is
    a doable way to get there.
        The other piece that is critical, though, Senator, I think
    is that we also have to look at what our compatriots in Annex
    I, the developed countries, are doing. We can't argue that, oh,
    we can't have these international standards. There is a real
    fear on the part of our delegation of what the Senate thinks,
    and they, oh, we shouldn't have international standards because
    we shouldn't have anything more than China is doing.
        And my sense is, in fact we desperately need those
    international standards so that it is transparent, so we can
    all see it, and in that kind of WTO process it is very public
    what is going on because that is the heart of how we get this
    done.
        Senator Boxer. Thank you.
        Senator Udall.
        Senator Udall. Thank you, Madam Chair.
        And thank you to the panel. It is great having you all here
    today.
        Mr. Lash, you testified that the Chinese government knows
    its energy use is unsustainable, which is in contrast to some
    members of this committee that believe that China will never
    take action to reduce emissions. What makes you believe China
    is changing? Are there statements by its leaders or facts on
    the ground? I mean, what is happening? I am going to expand it
    out to the panel after you speak on this subject.
        Mr. Lash. So, all three of the indicators that you
    mentioned are present. The Chinese signed on to the commitment
    this summer that we should limit emissions in order to achieve
    no more than a 2 degree warming. They understand that that is
    impossible to achieve if their emissions continue to grow at
    the current rate.
        President Hu Jintao explicitly and unequivocally committed
    China to reduce their carbon intensity in coming years, and
    they have done that rapidly over the last 4 years, and will, as
    we have said often, by next year have done a 20 percent.
        We have talked about the whole set of policies they are
    implementing to reduce their energy growth. But what is much
    more important is that they are acutely aware that they will
    have to commit to a date at which their emissions peak and
    start down. The world can't do this without both the U.S. and
    China committing to that process.
        And they understand that by buying the 2 degree target and
    by buying into a Copenhagen agreement, they are accepting that
    they will have to start their emissions down.
        I spent last week in China. I met mostly not with
    government officials but with business leaders of non-state
    owned enterprises. And President Hu's speech had a profound
    impact on them. They all accept that they will be operating in
    a low carbon market, that the incentives are all going to be
    for this new economy, not the old economy. They are going
    there.
        Senator Udall. Mr. Helme or Mr. Podesta.
        Mr. Helme. Yes, I would agree with Jon and couldn't say it
    better than the way Jonathan said it. And I think this last
    point is critical. Up until that speech in New York a month
    ago, it was all about energy efficiency. It was all about
    things that were win-win, that made sense. You know, they have
    big oil imports just like we do. That is why they did the car
    standards.
        This is a shift. When he said we are going to have carbon
    intensive standard, that is a major shift. And as we have seen
    with these 5-year plans, these things get implemented. They
    follow them. That is what a command and control economy is
    about.
        And so I think we are going to see a big shift, and I am
    hopeful we will see that announced at Copenhagen.
        Mr. Podesta. You know, we have gone through some of the
    commitments they have put on the table. I think the one
    question you might ask is why. And I think actually there are
    two answers to that, or maybe three.
        One is they get why creating a platform that creates
    greater energy efficiency creates a stronger growth model as a
    first matter. Second, they sense that the new industries of the
    future, as we suggested, all of us I think on the panel, are in
    these clean energy technologies. And they want to be leaders
    and first in those technologies, so they are putting enormous
    amounts of resources into them.
        They want to be the leader in electric cars. They want to
    be the leader in high speed rail. I mean, you could go down the
    list, and they are making tremendous investments.
        But third, and I would say this is probably of equal
    stature to the others, is they are very vulnerable to climate
    change, very vulnerable to crop loss in the north. They are
    engaged in very large projects to move water from the south to
    the north. Their coastal regions where so much of their
    economic development has been is highly subject to storm surge
    and sea level rise. The loss of the water resource in the
    Tibetan Plateau has enormous implications for their stability
    going forward.
        So I think, you know, they get it. I guess it helps to have
    a government that is filled with engineers, but they are a
    bunch of engineers. And I think they get it, and they made the
    turn, and they are moving into this clean energy future.
        Senator Udall. Thank you. Thank you very much. Great panel.
        Thank you.
        Senator Boxer. Thank you so much, Senator.
        Senator Merkley, followed by Senator Lautenberg.
        Senator Merkley. Thank you very much, Madam Chair.
        We have been hearing in various testimony and comments
    different stories about Chinese strategy for the future of
    coal. We have heard that they are building two to three plants
    a week and planning to do so forever. We have heard that they
    are building new plants to replace older plants, and the newer
    plants are much more efficient. And we have heard that they are
    considering changing dramatically coal and its future in the
    Chinese energy economy.
        I was wondering if you all can bring your expertise to bear
    and kind of give us a sense of where is China really headed on
    coal.
        Mr. Lash. Senator Merkley, I would emphasize two points.
    They are, like the United States, heavily dependent on coal
    now, and they understand that they cannot change that in a few
    months or a few years. But they are taking measures to
    substitute much more efficient and therefore lower pollution
    plants for old inefficient plants at a tremendous rate.
        I would repeat what I said. Their coal fleet is now more
    efficient than the U.S. coal fleet because they have had this
    high turnover. But they completely understand that they cannot
    go on growing on the basis of coal-fired power over the next 20
    years and still meet the targets that they are setting for
    themselves in terms of reduced carbon intensity, ultimately
    having their emissions peak, and achieving no more than a 2
    degree warming.
        So if you work with all of their semi-official think tanks,
    which all of us do, they are all heavily modeling when can they
    peak emissions and start down; where do they have to invest;
    how quickly can they do it; and what can they offer the United
    States. They are frankly mystified that we haven't offered them
    anything.
        Senator Merkley. So in terms of simple points for public
    dialogue, would it be accurate to say that, yes, they are
    building two per week, but they are replacing two per week with
    more efficient coal plants?
        Mr. Lash. I actually think that figure is no longer true. I
    don't think they are building them that fast. But yes, they are
    building new coal-fired power plants, and most of that is now
    going to replacing inefficient plants because the growth in
    energy demand was slowed by their commitment to improve energy
    efficiency.
        Senator Merkley. Have they reached a point within the coal
    energy economy where total carbon dioxide production has
    actually leveled off?
        Mr. Lash. No. If they would commit to do that sometime
    before 2030, it would be a huge achievement. It would signal
    that we are really going to move forward.
        Senator Merkley. OK. Thank you.
        Mr. Podesta, I appreciate your support for the Clean Energy
    Deployment Administration proposed by the Energy Committee. I
    have proposed creating within that organization a program to
    provide low cost financing to do energy efficiency retrofits up
    front. And I was wondering if you were familiar with that, and
    of course the concept is folks would make the loan payments out
    of the value of the energy savings but would get the work done
    earlier, create jobs and save a lot more.
        Mr. Podesta. Senator, I would heartily endorse that idea. I
    think there is generally a financing problem with respect to,
    particularly right now, with respect to getting money flowing
    and moving. And I think that as we have seen with the Canadian
    bank, the German bank, providing some loan guarantees, some
    loan benefits, credit enhancement can really be effective at
    low cost and return money back to the Treasury by creating a
    revolving fund that produces this, you know, the flow of
    capital into clean energy in general.
        But this building efficiency problem is a particularly
    vexing issue because generally the builder, the real part in
    interest, et cetera, at the front end is not the person who is
    paying the energy bills at the back end. And I think that the
    more we can build models that create the right financing
    mechanisms, build them in.
        We put out a paper with the Energy Future Coalition that
    suggested both providing more financing in that sector, but
    also ways of essentially converting mortgage-backed instruments
    to capture the value of the reduced energy payments going
    forward. I think that would be tremendously helpful, and I
    think it has proved to be vexing particularly in the single
    family or multiple unit housing sector to get what really was
    promised, I think, by the recovery bill, really rocking and
    rolling, if you will.
        Senator Merkley. Thank you very much.
        Thank you, Madam Chair.
        Mr. Helme. Can I respond?
        Senator Merkley. I am out of time.
        Senator Boxer. We need to move on.
        Senator Alexander.
        Senator Alexander. Thanks, Madam Chairman.
        Thank you all for coming.
        I just had a couple of questions I wanted to think about in
    terms of our position in the world.
        Mr. Podesta, I know you worked on this pretty hard. We have
    talked about it, as a matter of fact, before. Looking down the
    road, do you think it would be a good idea in our country as we
    think about trying to encourage carbon-free forms of energy,
    and I am not talking so much about the cap and trade, which I
    have expressed my--I have a different suggestion--but I am
    talking about the part of the bill that is likely to be added
    to this bill in terms of encouraging renewable energy and other
    forms of carbon-free energy.
        Do you think it would be a good idea for that to be
    technology-neutral? I mean, in other words, should the
    production tax credit, should the renewable energy standard be
    a standard that includes all forms of carbon-free energy
    production?
        Mr. Podesta. Well, I would like to see a lot more carbon-
    free energy production, and I think that the question is
    whether there could be, I would suggest to you, Senator, that
    what might make sense is to add on top of the renewable
    electricity provisions, some additional benefits for carbon-
    free energy. If you are specifically talking about nuclear, I
    think that is probably the way to go. Maybe I answered your
    question.
        Senator Alexander. Well, yes, but----
        Mr. Podesta. I think that the targets in the bill would be
    insufficient if you are talking about a blended program.
        Senator Alexander. Why would we encourage, why would we
    have a subsidy, why should 75 percent of the renewable energy
    subsidies go to wind power?
        Mr. Podesta. Well, there is a heck of a lot of subsidies
    that already go to nuclear power, and I think we are talking
    about adding some more. And I think there are externalities. I
    am not, you know, Senator, I just----
        Senator Alexander. No, let's be specific about it. I mean
    the Obama administration says we want to make 20 percent of our
    energy from wind, the way I compute it, with a production tax
    credit with no cap on it, that is $170 billion over 10 years.
    There is a 6,000 megawatt production tax credit for nuclear.
    That is the way I compute it. That is $6.8 billion over 8
    years.
        So whether it is solar or whether it is wind or whether it
    is geothermal, why----
        Mr. Podesta. But there are loan guarantees, there is Price-
    Anderson. I think you have to do a full accounting, and I think
    that----
        Senator Alexander. In terms of loan guarantees, wouldn't it
    be better to say let's have $100 billion of loan guarantees for
    all carbon-free technologies, including wind and including
    solar and including geothermal? Wouldn't it better to have a
    production tax credit for all carbon-free technologies? I mean,
    why should we be picking? If I were picking, I would pick
    nuclear and leave wind alone. Someone else might pick wind and
    leave nuclear alone. But why would we exclude nuclear? It is 70
    percent of our carbon-free electricity.
        Mr. Podesta. I think, Senator, if you are looking at a full
    cost accounting, including storage, you know, I think that you
    would have to look at are you providing additional benefits to
    those technologies. In the past, it is clear that the U.S.
    subsidy policy to date has favored nuclear, not these
    renewables.
        Senator Alexander. No, sir. That is absolutely wrong. The
    EIA has done a study on that at the request of several
    Senators, and wind is far and away the big winner. I mean, wind
    got 31 times more subsidies per kilowatt hour than all other
    renewable forms of energy, not including nuclear.
        Let me ask one other question while we----
        Mr. Podesta. Let me put my numbers in for the record, then,
    Senator.
        Senator Alexander. OK, sure. I would love to have them, but
    the EIA says it is 31 times other renewables, and if you add
    up, all I am saying is looking forward, shouldn't the
    production tax credit, the renewable energy standard, all those
    be carbon-free standards, rather than picking and choosing
    winners.
        Mr. Podesta. It depends on where you want to place the
    number for. Of you want to take the carbon-free number up a
    good deal, then I think you and I might----
        Senator Alexander. Here is my last one, we have 30 seconds.
        Mr. Podesta. I don't know what the Chairman would do, but
    you and I might have something to talk about.
        Senator Alexander. I have 30--oh, I do. You know I do want
    to take it up, and number. My question is, the President said
    at a town hall meeting in New Orleans we would be stupid, in
    his words, not to use nuclear power because Japan and France
    are doing it. I was delighted to hear him say that. He went to
    the U.N. and made a speech about climate change and didn't
    mention it, even though China is starting a new nuclear plant
    every 2 or 3 years. Japan is--you know the story. France is 80
    percent nuclear.
        What can we do to get the Obama administration as
    interested in nuclear power, which produces 70 percent of our
    carbon-free electricity, as they are in building windmills?
        Mr. Podesta. Well, Senator, I don't speak for them. I think
    that you ought to talk to the President directly about that.
        Senator Alexander. I would be glad to. I would be glad to.
        Senator Boxer. I think, Senator, if you did speak with the
    President, and you have spoken with Steven Chu, they are very
    interested. And I am going to reiterate this again, because
    this is an ongoing discussion.
        The modeling shows that under the Kerry-Boxer bill, we will
    have more than 150 nuclear power plants built in this country.
    Under the Senator from Tennessee's plan, it is 100 plants.
    There are more plants being built because when you put a price
    on carbon, that is what happens.
        In addition, I don't know why the Senator is so hostile to
    the bill. We are giving half a billion dollars over the life of
    the bill to nuclear power plant people in order to train
    workers, which they would have to do on their own for safety.
    And that number may well go up because Senator Graham is
    working with Senator Kerry. I wish the Senator from Tennessee
    would join your little group and let's talk.
        Senator Alexander. I have tried to say to the Senator
    repeatedly what my views are. I think the economy-wide cap and
    trade doesn't work with fuel. I think it adds costs, and I have
    a list of things that I think would help produce more nuclear
    power. We have had that discussion before.
        Senator Boxer. We will, and we will continue.
        Senator Lautenberg.
        Senator Lautenberg. Thank, Madam Chairman.
        And thanks to you for being here to express your views.
    They are critical in what we are doing. As we all know, our
    goal long term, 83 percent by 2050, has to be met in order for
    us to do what our responsibilities demand that we do. In order
    to get there, we have to be on a glide slope that says by 2020
    that we have to be reduced by 20 percent.
        And so I ask--John Podesta, good to see you. The E.U. has
    set even stronger emission reduction targets, as have Japan and
    other economies. Don't we risk falling behind other countries
    in the race to lead the world in clean energy technology if we
    don't stick with our strong short-term target?
        Mr. Podesta. Well, Senator, absolutely. I think that,
    again, as my testimony indicates, I think that the world is
    rushing ahead of us, and if we don't set the right policy
    framework for these new investments, we are going to be left
    behind. Business is going to go over there. Production is going
    to go over there. And they are going to service those markets.
        So it is I think critical to get this bill passed, and get
    it passed soon.
        Mr. Helme. I would agree on that point. I just want to add
    one thing that is very important in your bill, and that is this
    idea of a supplemental goal. You have the minus 20 and then you
    have the investment in R&D and you also have the investment in
    clean technology. And this is a critical piece for the
    international negotiations. It is a critical opportunity for
    developing our players, our companies making investments in
    these key emerging economies. So it is a brilliant piece you
    have in that bill, and I hope you keep it in.
        Senator Lautenberg. And you know, involved in this is a
    benefit that we didn't plan for and haven't paid for, and that
    is America has gained respectability from its poor behavior
    about environment in the past. So at least now other countries
    believe that we mean what we say, and we are going to hold to
    our mark. So that is a real jump up from where we were.
        The European Union invests nearly 20 percent of its climate
    related spending on clean energy research and development. And
    while we thank our Chairman for increasing funding for R&D
    above the levels in the House bill, I think that we are still
    falling behind other countries.
        And will they gain a competitive advantage if we lack the
    commitment to invest in R&D for the next generation of energy
    technology? Anyone?
        Mr. Lash. We earlier, Senator, all talked about the extent
    to which that is already happening. In country after country,
    those industries are developing rapidly because they are making
    an assumption about tomorrow's markets that we haven't yet
    grasped.
        Senator Lautenberg. We saw an interesting thing in New
    Jersey last week. There was a groundbreaking ceremony for an
    Italian company that wants to build solar panels here. They are
    really good at it. The panels apparently, as we heard, are
    really high producing, very effective panels.
        But they are coming to New Jersey to build the plant. That
    means other countries will bring their technology to us so that
    we can perhaps be in the race, although I-- Mr. Helme, what is
    the single biggest thing we can do in our committee here to
    send a positive signal as we go into the international
    conference in Copenhagen?
        Mr. Helme. There are two pieces of your bill that are
    critical. Passing your bill is No. 1. That is the most
    important thing.
        The two things that are critical are----
        Senator Lautenberg. Even they agree.
        [Laughter.]
        Mr. Helme [continuing]. The target, the minus 20, plus this
    supplemental piece, and the fact that the supplemental piece
    says we are serious about putting some money on the table to
    assist developing countries in this new architecture.
        Those two elements are critical. That is the test of our
    stance in Copenhagen. Are we on the line for real reductions?
    And are we on the line to help others make that move?
        Mr. Lash. Senator, could I add one word to that?
        Senator Lautenberg. Sure.
        Mr. Lash. It is essential that the legislation that you
    pass include provision for international adaptation, not for
    all countries, but for the poorest countries. We have ratified
    the framework convention on climate change which explicitly
    commits us to that. It is a part of the negotiations that is
    essential. It won't be expensive, but it is necessary.
        Senator Lautenberg. Well, the one last thing, Mr. Lash.
    Both Europe and Asia have made substantial investments in
    passenger rail. It built sophisticated high speed networks, and
    perhaps you know, a thing of mine has been Amtrak and high
    speed rail.
        Might some money, more money spent there help improve the
    quality and the reach of our passenger rail system, with all of
    the benefits that come, not the least of which is better use of
    energy and, of course, all of the other advantages that go with
    that?
        Mr. Lash. As we impose limitations on carbon, the necessity
    of having high speed rail to replace short haul aircraft is
    going to be obvious. And it seems a terrible shame that we are
    not making that investment now, and we are rather waiting until
    it is an emergency later.
        Senator Lautenberg. Thank you.
        And thanks very much, Madam Chairman. Thanks.
        Senator Boxer. Thank you so much, Senator Lautenberg.
        Senator Specter.
        Senator Specter. Thank you, Madam Chair.
        Mr. Podesta, picking up on your statement looking for more
    energy sources, more carbon-free energy production, in my State
    that may pit natural gas versus coal. And that is one of the
    factors that a Pennsylvania Senator has to balance in looking
    at this bill.
        What do you think the future of coal will be now that there
    has been this enormous discovery of natural gas on the
    Marcellus Shale?
        Mr. Podesta. Well, I think there is enormous opportunity on
    the natural gas side, and it is obviously about 50 percent of
    the CO2 production of the use of coal. And I think
    switching in the short term, in the near term switching
    particularly the oldest coal-fired power plants over to natural
    gas is it would be positive step from a climate perspective.
    And I think there is plenty of production capacity in the
    United States to do that economically.
        In the long term, both sources really require the
    investments that this bill is making in turning those sources
    of energy into carbon-neutral sources, but through carbon
    capture and sequestration.
        Senator Specter. So you think coal can survive, flourish
    with the direction that this bill will take the whole energy
    field?
        Mr. Podesta. I think this bill gives the lifeline to coal
    to become an energy source in the future, not just here, but in
    China where there is, you know, the other places we are talking
    about. But we have to find a way to manage the carbon load that
    is coming from coal, and that requires much more investment in
    development of the technology, testing it, demonstrating it,
    creating a regulatory regime for carbon capture and
    sequestration. And again, I think the bill has very strong
    provisions in it for that.
        Senator Specter. Mr. John Rowe this morning, on behalf of
    Exelon, testified that the renewables are more expensive. In
    the stimulus package, we have allocated some $70 billion, some
    estimates as high as $80 billion, to renewables, solar, wind
    and hydro power.
        Mr. Helme, let me ask you, to what extent will that
    enormous investment speed up the process where the renewables
    will be on the market and bring the price down so that they can
    be competitive with other energy sources?
        Mr. Helme. I think we have some good track record on that.
    In terms of my colleague at the end of the panel here said that
    he thought the German feed-in tariff had been a failure. I
    don't have the slide with me, but I can show you that the price
    of renewable wind power and so on dramatically cut, more than
    50 percent cut in costs per kilowatt hour in a 10-year period
    with that feed-in tariff.
        So I think you are exactly right. When you start building
    these and there is a market, they will come, and they will
    drive down the price.
        Senator Specter. Do you think the 10-year period will do
    it?
        Mr. Helme. I think the 10-year period will really help. I
    think it would be good to have a little more certainty beyond
    that, but I think it would help.
        I want to go back to your question, if I can, Senator, on
    the gas versus coal. This new development on shale gas, it is a
    commercial operation where you are punching a whole series of
    holes. It takes a lot of workers. It has a very good economic
    development potential for a State like Pennsylvania in terms of
    jobs.
        You know, we think of gas, oh, it is not much employment.
    In fact, the shale gas is quite a bit of employment, good jobs
    in the same places where the coal is. So we don't have to
    necessarily say it is one versus the other. This is an economic
    development engine, and it goes beyond the Appalachia region.
    It extends to Michigan. It extends to New York State, and of
    course for Pennsylvania. It is a very bright future and a very
    competitive price that could help on this jobs question.
        So from an economic development perspective, a push with
    this carbon bill could really help Pennsylvania in terms of the
    net jobs over time.
        Senator Specter. Mr. Lash, when we talk about China,
    reducing its emissions, the thought crosses my mind as to what
    impact that may have on their steel industry. That is another
    issue which is very important in my State, but really important
    nationally on an industrial base, and having steel if the
    necessity arises in terms of national defense.
        And we have enormous problems with steel imports, and have
    very little relief from the International Trade Commission. The
    rulings have been reversed by the President under our law.
        My question to you is, with China reducing its emissions,
    do you think there is any possibility that would lead them to
    cut back on their steel production to be less aggressive on
    subsidized and dumped steel taking jobs away from the United
    States in violation of the international trade laws?
        Mr. Lash. May I respond briefly?
        Senator Boxer. Yes.
        Mr. Lash. The strongest pressure on China to reduce steel
    exports is the increased demand within China. They aren't
    producing enough for their own purposes. As they reduce
    CO2 emissions, they will be forced to modernize
    parts of their steel industry that are still quite primitive in
    high emissions.
        In this bill, you have included a provision that provides
    impact assistance to carbon-intensive industries. Steel is at
    the top of everyone's list. And it is not just Chinese
    competition. Of course, it is Indian competition as well that
    they are thinking of.
        Mr. Podesta. Fixing the current problem would help too,
    Senator.
        Senator Specter. What?
        Mr. Podesta. I said fixing the currency problem would help
    as well.
        Mr. Helme. And one quick point, on steel, China actually
    has new export tariffs to cut down the steel for exactly the
    reason Jonathan said. Similarly on coke, they have had
    significant export tariffs to discourage this, to improve their
    ability to meet their carbon target and other things.
        So you are actually seeing some very positive moves.
        Senator Specter. Thank you, Madam Chair.
        Senator Boxer. Thank you very much, Senator Specter.
        We want to thank this panel. You are all so smart and know
    a lot, and we appreciate it. And we would ask you to go home
    knowing that you really did give us a lot of information. And I
    am looking forward to getting that chart.
        Now, there may be some questions coming to you from
    panelists. We would urge you, please, we need them in as soon
    as possible, by tomorrow close of business.
        Thank you very, very much, and we look forward to getting
    the chart from you, Mr. Helme.
        OK. We would ask our next panel to come up: Hon. Linda
    Adams, Dave Johnson, Stephan Dolezalek, David Hawkins, Eugene
    Trisko, Charlie Smith, Paul Cicio.
        We are going to ask our panelists to come as quickly as
    they can because it has been a long day for you and for us.
        So, hi, David.
        Linda Adams, are you here? Where is she? Where are all our
    panelists? Do we know where our panelists are, Bettina? OK.
        We are asking our panelists to please take their seats. We
    welcome you all. We are very honored at your presence. We look
    forward to your wisdom as we grapple with this issue.
        I am going to introduce Hon. Linda Adams because we are so
    proud, I am so proud. She is the Secretary of the California
    Environmental Protection Agency, and Governor Schwarzenegger
    appointed Secretary Adams to this position in 2006. She
    oversees the California Air Resources Board, which is
    responsible for implementing A.B. 32, which is California's
    market-based climate legislation.
        California EPA has undertaken a variety of studies on the
    impacts of climate change on our natural heritage and economy.
        So it looks like all of our panelists are here.
        So Ms. Adams, will you begin? And again, welcome.

               STATEMENT OF HON. LINDA ADAMS, SECRETARY,
               CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY

        Ms. Adams. Thank you very much, Senator, for that kind
    introduction. I am Linda Adams, Secretary of the California
    Environmental Protection Agency, and I very much would like to
    commend this committee for considering this very critical
    legislation.
        Combating climate change is no small task, and it will
    require strong political leadership. I am thankful to Chairman
    Boxer and Senator Kerry for their leadership in introducing the
    Clean Energy Jobs and American Power Act. We look forward to
    working with you to pass effective legislation during this
    Congress.
        California has a long history of environmental leadership,
    and I believe we can provide some on the ground experiences
    that may be useful in the development of our Nation's energy
    and climate strategy.
        In California, we recognize the threat of climate change to
    our environment and our economy. Continued global warming will
    harm California's health, reduce drinking water supplies,
    threaten our $30 billion agriculture industry, put our 1,200
    miles of coastline at risk, and intensify deadly and
    devastating wildfires.
        But we believe this challenge also presents a critical
    opportunity to transition our economy to one that promotes
    clean energy. California has experienced tremendous economic
    success with the implementation of cutting edge environmental
    and clean energy policies. Last year alone, venture capital
    investment in California clean technology companies was $3.3
    billion, over 50 percent of all U.S. venture capital
    investment, creating 125,000 new jobs.
        We also know first hand that the status quo is harmful to
    our economy. We have seen the economic consequences of our
    dependence on foreign oil, and a national climate policy will
    help us win our energy independence, grow a green economy, and
    combat climate change.
        The demand for renewable and low carbon energy, energy
    efficiency technologies, and sequestration technologies is
    likely to create significant growth industries in the coming
    decade. By leading the way, we can capitalize on the $6
    trillion international energy market. An aggressive long-term
    Federal policy on climate change is needed now, one that
    recognizes and builds on the important and valuable role of the
    States.
        States are the laboratories for innovation. We are on the
    front line of promoting clean energy and combating climate
    change. For years, well crafted State policy adapted to local
    conditions has been the most dynamic driver of clean energy
    technology, and it serves as a key component of our economic
    development strategy.
        Existing State authority to implement clean energy and
    climate policy must be preserved. Without State authority to
    address climate change, the significant advances we have
    already made in combating climate change would not have been
    possible. And it is these important advances that should be
    financially supported by Federal climate policy.
        A significant portion of allowance value under a national
    cap and trade program should come back to States to be
    reinvested into successful homegrown clean energy programs that
    directly improve people's lives and State economies.
        The last point I would like to make, Senator, and you and I
    recently shared an award by Oxfam International--I am putting
    on a different hat. I am an ambassador for Oxfam America's
    Sisters on the Planet Program. This important initiative
    highlights the impact of climate change on the world's most
    vulnerable people, especially women.
        So I encourage you to adequately address the consequences
    of climate change for those with the least capacity to adapt to
    severe weather events and water scarcity.
        Madam Chairman and members of the committee, now is the
    time for action. It is time to forge the framework for energy
    independence and plant the seeds for our green energy future. I
    urge you to vote to free the U.S. from its addiction to foreign
    oil, unleash American ingenuity and competitiveness, and be a
    leader in the 21st century global economy.
        Thank you for the opportunity to speak today.
        [The prepared statement of Ms. Adams follows:]

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        Senator Boxer. Thank you so much. You speak for me with
    your statement.
        Next, we hear from Dave Johnson, Organizing Director,
    Laborers' Union Eastern Region, Laborers' International Union
    of North America, a 12-year member. And Mr. Johnson is
    responsible for coordinating and overseeing organizing activity
    for the five boroughs of New York City, Long Island, New
    Jersey, and Delaware.
        It is a union of construction workers and public service
    employees, and we are very pleased you are here.

            STATEMENT OF DAVE JOHNSON, ORGANIZING DIRECTOR,
     LABORERS' UNION EASTERN REGION, LABORERS' INTERNATIONAL UNION
                            OF NORTH AMERICA

        Mr. Johnson. Thank you, Chairwoman Boxer and members of the
    Environment and Public Works Committee. Thank you for having me
    here today.
        My name is Dave Johnson, and I am the Eastern Region
    Organizing Director for the Laborers' International Union of
    North America, LIUNA for short. LIUNA is a proud union of
    500,000 construction workers who do the hard work of building
    America's infrastructure. I have had the pleasure of working
    with Laborers' Local 10 and 55, Locals set up for our members
    who weatherize homes in New York City, Long Island, New Jersey
    and Delaware.
        LIUNA supports the extraordinary work being done by both
    Chairwoman Boxer and Senator Kerry and this committee and by
    the Energy and Natural Resources Committee. We support cap and
    trade as an effective way to force reductions in greenhouse gas
    emissions. A strong climate change bill will also put millions
    of Americans back to work.
        Since 2003, LIUNA has been working with contractors in 17
    States to help build wind farms. In addition, LIUNA members are
    prepared to expand the building of solar farms and to help
    modernize our inefficient and outdated electrical grid. The
    Laborers' also call on Congress to invest in new technologies
    such as carbon capture and sequestration techniques, natural
    gas technologies, and the use of nuclear power as a necessary
    way to meet carbon emission reductions.
        I would like to take a moment to tell the members of this
    committee about the Laborers' success in working with community
    groups, community action programs, State governments, and our
    union's training fund to put Laborers' into weatherizing homes.
    When the Obama administration made weatherization a priority by
    injecting stimulus money into its Weatherization Assistance
    Program, Laborers' Local 55 in Newark was already working with
    the Garden State Alliance for a New Economy to provide
    weatherization training for unemployed Local residents.
        In January 2009, a crew of 22 LIUNA members performed
    energy audits, sealed air leaks with caulking, applied weather
    stripping around doors, wrapped pipes and hot water heaters,
    and installed fiberglass insulation in 30 homes to demonstrate
    the program's potential to create jobs and deliver energy
    savings to homeowners. Three months later, 23 Newark residents
    graduated from LIUNA's Pilot Training Program.
        Since then, the Newark model has caught fire in our region.
    State officials in Delaware and New Jersey have established new
    weatherization training standards and career pipelines and have
    asked LIUNA to help contractors meet the new requirements. The
    largest provider in New York City, Community Environmental
    Center, has signed with LIUNA to train and represent its
    weatherization work force.
        Nearly 80 low income community residents in New Jersey have
    been trained as LIUNA installers, and hundreds more have come
    to informational meetings seeking to participate in the
    program. We will be able to deliver.
        Our training center recently won a bid to train 600 workers
    for the New Jersey Department of Labor over 18 months, and the
    State hopes to place 90 percent of the trainees in jobs. Demand
    for the program is high because all LIUNA weatherization
    workers earn family supporting wages and receive employer-paid
    family health care.
        Building on its success in the eastern region, LIUNA has
    launched a breakthrough nationwide program. LIUNA's more than
    70 training centers around the country are equipped to provide
    local unemployed workers with training as well as access to a
    network of future employment connections.
        Outside the eastern region, programs have been launched in
    Colorado, Mississippi, Nevada, Oregon, Washington State and the
    District of Columbia, with many more coming online soon. Our
    goal is to train and represent at least 50,000 weatherization
    workers nationwide within 5 years, increasing production by
    nearly a million homes a year.
        LIUNA has also developed a market building approach. Along
    with the Sierra Club and entrepreneurs from the Clean Economy
    Network, LIUNA and the Change To Win Labor Federation have
    sponsored a national retrofit road show that is bringing
    together local and State stakeholders.
        Finally, as part of our commitment to support the emerging
    industry, LIUNA supports the development of national standards
    for all residential energy efficiency programs. Such standards
    are in line with the recently released Recovery Through
    Retrofit White House report that identifies a skilled and
    certified work force as one of three barriers to a successful
    national energy efficiency ramp-up.
        LIUNA applauds your bill, the Clean Energy Jobs and
    American Power Act, as a strong step forward in this
    legislative process. LIUNA, along with our partners in the
    environmental community, want to help Congress and the
    Administration put America on a path to preserve a livable
    climate and create a clean energy economy.
        Thank you for the opportunity to testify before this
    committee.
        [The prepared statement of Mr. Johnson follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so much.
        And I want to make sure that our next guest gets his name
    pronounced correctly. Is it Dolezalek? You tell me.
        Mr. Dolezalek. Dolezalek.
        Senator Boxer. Dolezalek. Stephan Dolezalek, Managing
    Director of VantagePoint Venture Partners. And you are from my
    home State, is that correct?
        Mr. Dolezalek. That is correct.
        Senator Boxer. We are very proud of that. He joined the
    firm in 1999, and he served as head of co-head of the firm's
    Software and Life Sciences Group. Prior to creating the firm's
    clean tech platform in 2002, he spent 23 years in Silicon
    Valley working with technology driven companies. And
    VantagePoint has established a leading practice to meet the
    large and rapidly growing opportunities in clean technology.
        So welcome, sir.
        Mr. Dolezalek. Thank you.

         STATEMENT OF J. STEPHAN DOLEZALEK, MANAGING DIRECTOR,
                     VANTAGEPOINT VENTURE PARTNERS

        Mr. Dolezalek. Chairwoman Boxer, Ranking Member Inhofe and
    members of the committee, I am Stephan Dolezalek, Managing
    Director and CleanTech Group Leader at VantagePoint Venture
    Partners. Thank you for the opportunity to be with you to share
    my perspective on the need for action on this very important
    topic.
        Today, VantagePoint has the largest clean energy position
    in the venture capital industry with just over $1 billion
    committed. We are the largest stockholder in leading companies
    in the solar, vehicle electrification, biofuels, LED lighting,
    power storage, and smart grid industries.
        The issues that we face today in resource scarcity, energy
    security, climate change, and particularly in competition for
    global economic leadership represent a challenge and an
    opportunity greater than any that we have previously witnessed.
        The United States' global competitors understand the
    transformative potential of clean energy. They are aggressively
    seeking to establish dominant positions in key markets. They
    are using incentives that include direct capital investments,
    consumer and business tax incentives, and market making
    regulatory mandates.
        China is an important example. The Chinese are currently
    investing far more in clean energy than the United States as a
    percentage of their GDP. Are they doing it to address their
    levels of pollution in CO2? Of course they are. But
    they are also doing it in large part because they believe that
    it will lead to greater levels of national wealth and global
    competitiveness.
        Europe has long taken a strong position with respect to
    carbon emissions, but Europe is also focused on developing
    industrial leadership in the new clean energy industries,
    whether that be solar in Germany and Spain, or wind in Denmark
    and the U.K. Even that global bastion of fossil fuels, the
    Middle East, is putting a great deal of capital to work in
    luring leading clean technology companies to locate their
    businesses in the developing Masdar City.
        The percentage of global capital being attracted into the
    clean energy industries is rising. However, the danger is that
    instead of flowing into the United States, as it has
    historically done to support our leadership in information
    technology and in biotech, it will increasingly flow into those
    countries that have most clearly established their support for
    clean energy industries. If we fail to act, we will lose our
    technological edge. We will lose the jobs associated with these
    companies, and ultimately we will pay others to import their
    clean energy technologies the way that we today pay others to
    import their oil.
        Simply put, we can't win if we don't play. The Kerry-Boxer
    bill is the way to ensure that the United States is in the
    game. Acting now signals that we intend to lead not only in
    building new clean energy generation, distribution and storage
    technologies, but also that we intend to lead in developing the
    technologies that will make our existing strengths in coal, oil
    and natural gas more competitive.
        Our Nation is built on the notion of change and the ability
    to question the status quo. In energy more so than in any other
    aspect of our lives, we have drifted into a state of reliance
    on others. The sooner we get on with the task of building our
    energy infrastructure for the future, the greater the
    likelihood that when the rest of the world builds its clean
    energy infrastructure, it will look to U.S. companies to build
    and export those technologies.
        I should also note that the clean energy industries of the
    21st century are being built all across this country. As we
    have already seen with wind and solar, next generation
    lighting, advanced power storage, and electric transport will
    create manufacturing jobs that can be located almost anywhere
    in the continental United States.
        The Kerry-Boxer bill has several powerful components that
    will demonstrate that the United States is serious. First,
    Senate bill 1733 will be an essential step in stabilizing the
    boom and bust cycle of investing in promising new technologies
    by setting a price on carbon. A growing percentage of the
    Fortune 500 community has signaled that establishing price
    certainty with respect to carbon is far better for business
    than continued uncertainty, given growing certainty elsewhere
    around the globe. We need this certainty even more for the
    emerging companies that we represent.
        Second, I am pleased to see that Senate bill 1733 sets more
    robust targets for near term emissions. Even small increases in
    the 2020 target send an important signal that we need to start
    making changes now.
        The legislation needs to be about economics and America's
    growth potential. We have too frequently been misled into
    thinking that this is a choice between the environment and
    prosperity. Quite to the contrary, those that win the battle
    for clean energy jobs and technologies will have the prosperity
    to afford whatever level of environmental commitment they
    choose.
        Thank you again, Chairwoman Boxer, Ranking Member Inhofe
    and members of the committee, for your time.
        [The prepared statement of Mr. Dolezalek follows:]

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        Senator Boxer. Thank you so much for very good testimony.
        And now it is David Hawkins, Director, Climate Center,
    Natural Resources Defense Council. He has worked for NRDC for
    more than 30 years, except he took time out to work in the
    Carter administration. And he is, as most of us know, NRDC is a
    member of USCAP. And I just want to say how helpful, Mr.
    Hawkins, you have been in just helping us get to the facts, and
    NRDC to be there as a resource, it has been very helpful to all
    of us who work on this bill.
        Welcome.

     STATEMENT OF DAVID HAWKINS, DIRECTOR, CLIMATE CENTER, NATURAL
                       RESOURCES DEFENSE COUNCIL

        Mr. Hawkins. Thank you, Madam Chairman. And thank you for
    having me before the committee again.
        I would like to start with two broad points. First,
    protecting the climate is an opportunity that is disguised as a
    challenge. The billions of dollars that we spend to cut
    greenhouse gas emissions are going to be spent on good things.
    They are going to be spent delivering new industries,
    delivering new jobs and delivering a stronger, more secure
    energy future for us.
        The second thing is that action now is going to help, not
    hurt, total economic growth. Why do I say this? Well, left
    unchecked, climate disruption is also going to disrupt the
    economy. That is something that is easy to miss because all the
    economic analyses that we look at have a business as usual
    forecast for economic growth that assumes that climate is going
    to have no effect whatsoever on economic growth.
        We know that is wrong. We know there will be disruption of
    the economy. So any analyses that you see that suggests that
    there is a cost to doing this are ignoring the fact that the
    baseline economic growth with a disrupted economy is going to
    be a lot lower than the one you are being told about.
        Next, I would like to talk about some key design principles
    for the legislation. First, a good target for 2020 is critical.
    The Kerry-Boxer bill aims for 20 percent cut in 2020. We should
    keep that target. It is feasible without adverse economic
    impact. Because of banking, borrowing, cost controls, we can
    set a 2020 target with minimal added program costs. EPA
    estimates maybe a 1 percent additional impact.
        We need at least this reduction to put us on a path to the
    deeper reductions that we need later. And we need this
    reduction to support the level of ambition that we require from
    other countries. The rest of the world is anxious to match U.S.
    leadership, but we have to provide it.
        Second, cost containment must protect emission reduction
    targets and not bust the cap. The bill's strategic reserve will
    provide price protection. We need to work within that framework
    and not adopt approaches that would increase allowable
    emissions.
        Third, effective offset regulation is critical. Offset
    compliance instruments, no less than modern financial
    instruments, require careful oversight. We have seen what
    divided regulatory authority has done in the financial markets.
    We must not permit that to happen in offset markets. EPA should
    be given primary oversight authority with broad consultation
    with expert agencies like the Department of Agriculture.
        Fourth, we need to use performance standards to complement
    the cap. A broad cap is a core tool, but performance standards
    for key sectors can help us make progress at the speed we need.
    Vehicles, vehicle fuels, power generation, buildings,
    appliance, all are key contributors to total emissions, and new
    investments in these sectors should be guided by effective
    minimum performance standards in this bill, and by retaining
    Clean Air Act authorities. This bill and current law can work
    effectively together and we strongly support retention of
    current Clean Air Act performance standards authorities.
        Fifth, the power of efficiency. Efficiency investments
    work. When we spend less money on fuel, we free up money to
    create jobs. Over the past 30 years, California has saved $56
    billion through efficiency and created one and a half million
    more jobs. With the changes we recommend, the Kerry-Boxer bill
    can do an even better job of producing efficiency. We recommend
    that State regulators be directed to put at least a third of
    allowances given to the local distribution companies into cost
    effective energy efficiency investments.
        Sixth, a sound bio-energy framework is critical. Greater
    reliance on bio-energy can have great benefits, but only if it
    is done right. That means we need to calculate greenhouse gas
    emissions fully and not assume that all bio-energy has zero net
    emissions.
        Second, we need to remember that bio-energy on the
    landscape can be in tension with other core values, including
    protection of biodiversity, habitats, and water resources. We
    must maintain safeguards to assure the growing bio-energy
    industry does not threaten these values.
        To wrap up, I recently read Senator Everett Dirksen's
    speech to the Senate from 45 years ago pleading for an end to
    the filibuster on the great Civil Rights Act of 1964. He said,
    ``Stronger than all the armies is an idea whose time has
    come.'' He continued, ``There is another reason why we dare not
    temporize with the issue which is before us. It is essentially
    moral in character. It must be resolved. It will not go away.
    Its time has come. Nor is it the first time in our history that
    an issue with moral connotations and implications has swept
    away the resistance, the fulminations, the legalistic speeches,
    the ardent but dubious arguments, the lamentations and the
    thought patterns of an earlier generation, and we pushed
    forward to fruition.''
        Thank you for the opportunity to testify.
        [The prepared statement of Mr. Hawkins follows:]

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        Senator Boxer. Thank you for those words. That was
    wonderful.
        Our next speaker is Eugene Trisko, Attorney at Law, on
    behalf of the United Mine Workers of America. The United Mine
    Workers is a union with a membership that includes coal miners,
    clean coal technicians, health care workers, truck drivers,
    manufacturing workers and public employees throughout the
    United States and Canada.
        We are very pleased you could be here with us, Mr. Trisko.

             STATEMENT OF EUGENE TRISKO, ATTORNEY AT LAW,
            ON BEHALF OF THE UNITED MINE WORKERS OF AMERICA

        Mr. Trisko. Thank you, Madam Chair, Ranking Member Inhofe
    and other distinguished members of the committee. We appreciate
    the opportunity to be here today to testify on behalf of the
    Mine Workers.
        Because the Chairman's mark may be expanded with the
    addition of energy and other proposals or otherwise revised,
    the union does not take any position on the bill at this time.
        The UMWA has sought technological solutions to the
    environmental challenges facing coal use for decades. The union
    prefers balanced national climate legislation to U.S. EPA
    regulation of greenhouse gas emissions or piecemeal regional
    climate programs.
        The union recognizes that national legislation is the best
    means to balance competing energy, economic and environmental
    interests, while assuring incentives for the deployment of
    carbon capture and storage technology. These technologies are
    essential for meeting any global carbon reduction goals over
    the next century.
        The UMWA greatly appreciates the work of the Senate Coal
    Group, much of which is reflected in the Chairman's mark. The
    union remains concerned, however, about several aspects of the
    bill. S. 1733 would impact virtually every aspect of energy
    supply and demand in this country. We look forward to complete
    EIA and EPA analyses of the legislation.
        We endorse the adoption in section 125 of non-budget
    support for the early demonstration of CCS technologies.
    Appropriated funds cannot provide the security for financial
    planning that developers of these projects require.
        We also agree generally with the bill's allocation approach
    for the electric sector. At the same time, however, we note
    that allocations based in part on electricity sales can
    penalize coal dependent States and benefit States with lower
    carbon emissions. The union prefers the use of an emissions
    based formula to reduce economic impacts of the bill on coal
    States.
        Let me highlight a few of the areas of real concern to the
    union as it considers this legislation. First, the 20 percent
    reduction target by 2020 is certain to lead to massive
    switching from coal to natural gas because CCS technologies
    will not be widely deployed by that time. The bill recognizes
    the commercial use of CCS by 2020 will likely be limited to a
    handful of early mover plants. Reducing our greenhouse gas
    emissions 20 percent below 2005 levels is equivalent to
    removing 218 million passenger cars, trucks and SUVs from the
    road by 2020, virtually the entire fleet, or eliminating all
    energy related emissions from 92 percent of U.S. homes. And
    this calculation assumes no growth of emissions.
        EIA's August, 2009 analysis of the House bill shows that
    coal use in the basic case is 47 percent below projected 2030
    reference case levels. Moreover, if EIA's assumptions about
    tripling nuclear power by 2030 are optimistic, utilities would
    have little choice but to switch from coal to natural gas on an
    unprecedented scale. We therefore urge moderation in the choice
    of the 2020 target.
        Second, CCS bonus allowances received approximately 4.6
    percent of the House allowance pool, compared to an 8 percent
    allocation in the 2007 Bingaman-Specter bill, a bill we
    supported along with the AFL-CIO. With a smaller Senate
    allowance pool, a larger percentage allocation is needed to
    match the number of allowances provided by the House bill. The
    bill also needs to resolve long-term liability issues for early
    mover demonstration plants.
        Third, we need strong border adjustment provisions. I will
    leave it at that, based on the testimony of the previous
    panels.
        EIA's analysis shows that offsets are critical in
    moderating the economic impact of climate legislation. We
    believe additional improvements to the bill are warranted on
    the international side independent of the outcome of the
    negotiations in Copenhagen, and we are working with Senate
    staff on this front.
        Our statement offers a few observations on the prospects
    for longer term international progress on climate change
    targets and mitigation and cautions against a unilateral
    approach to reaching targets that have not yet been adopted by
    the U.N. framework convention process.
        We welcome questions on all of these issues and appreciate
    this opportunity. Thank you, Madam Chair.
        [The prepared statement of Mr. Trisko follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you so very much.
        We want to thank very much our next panelist because he
    stepped in for Charlie Smith, who was the President and Chief
    Executive Officer of CountryMark, one of our minority
    witnesses. And Mr. Smorch is also associated with that company.
    He is the Vice President--right? Is that correct?--of Strategic
    Planning for CountryMark, and he was a former Refinery Manager.
    And we are very pleased that you stepped up to the plate.
        How is Mr. Smith doing? He has the flu, I understand.
        Mr. Smorch. He feels better today.
        Senator Boxer. Good. Send him our regards.

               STATEMENT OF MATT SMORCH, VICE PRESIDENT,
                    STRATEGIC PLANNING, COUNTRYMARK

        Mr. Smorch. Good afternoon, Chairman Boxer and Senator
    Inhofe. My name is Matt Smorch, and I am Vice President of
    Strategic Planning for CountryMark Cooperative.
        I appreciate the opportunity to represent CountryMark, our
    employees and our farmer-owners in today's hearing. Today, I
    will share the CountryMark story and our perspective on the
    Clean Energy Jobs and American Power Act.
        CountryMark's history started in the 1920s when local
    Indian farmer-owned cooperatives joined together to
    collectively purchase lubricating oils for their farm
    equipment. With the discovery of oil in the Illinois basin in
    the late 1930s, the regional farmer cooperative decided to
    construct a refinery.
        Since then, this regional energy cooperative has grown from
    the ground up based on the hard work and ingenuity that is
    found in the American Midwest. Today, CountryMark owns and
    operates over 400 miles of crude gathering pipelines, a 27,000-
    barrel-per-day petroleum refinery in Mount Vernon, Indiana, a
    238-mile product pipeline that spans the State of Indiana, and
    five product terminals located throughout Indiana and Kentucky.
        CountryMark is Indiana's only American-owned oil refining
    and marketing company, and it is a true success story in the
    American energy business. Today, CountryMark employs 350
    people, has assets near $600 million, average annual profits of
    $37 million, and in 2008 we had annual sales of $1.3 billion.
        Most of our employees live in rural Indiana and Illinois.
    In Posey County, Indiana, alone, nearly $27 million in wages
    and benefits are provided every year. These wages are paid
    mostly to hourly workers with little opportunity to find
    equivalent employment in the area.
        CountryMark refines 100 percent American crude that is
    produced in the Illinois basin, which is located in Southern
    Illinois and Indiana and western Kentucky. In 2008, we
    purchased more than 9 million barrels of oil, representing $800
    million that went into the Midwest economy. This money provides
    revenue to over 40,000 people and supports employment of 20,000
    people in the tri-State area.
        Unlike most other refiners, CountryMark is owned and
    controlled by its local member cooperatives that are in turn
    owned and controlled by 100,000 individual farmers in Indiana,
    Michigan and Ohio. This investment by CountryMark's farmer-
    owners represents a time honored business model of joining
    resources for the common purpose of purchasing vital goods and
    services.
        In addition to having a secure source of quality products,
    ownership provides an opportunity to share profits through the
    cooperative system. Over the past 5 years, CountryMark has
    returned over $90 million in cash to member cooperatives.
    CountryMark fuel and lubricants are delivered daily throughout
    Indiana and neighboring States of Michigan, Ohio and Illinois.
    CountryMark's fuels power approximately 75 percent of Indiana's
    production agriculture industry and about half of the public
    school buses that deliver Indiana children to school each day.
        CountryMark has taken a leadership position in the growth
    and adoption of renewable fuels. The majority of CountryMark
    gasoline contains ethanol, and CountryMark is Indiana's leader
    in offering biodiesel. It is estimated that 85 percent of the
    biodiesel sold in Indiana in 2008 came from one of
    CountryMark's petroleum terminals.
        Even though CountryMark only represents 0.15 percent of the
    domestic refining industry, by focusing on the integration of
    American source petroleum and biofuels we have emerged as a
    recognized leader within the Indiana energy industry. As one of
    the country's smallest refineries, CountryMark has built a
    durable operation by providing value added goods and services
    to our farmer-customers. Our decision to actively promote
    renewable fuels was not inspired by a Government mandate, but
    was a prudent business decision. In our view the future market
    for renewable fuels is strong, and CountryMark is evaluating
    ways to increase the distribution and production of these
    fuels.
        The reality of a viable renewable fuels industry is that it
    will be regional in nature. To keep the cost of biofuels low to
    consumers, production facilities will need to be close to both
    the feed source and the product distribution network.
    CountryMark and our cooperative members are well positioned to
    participate in a renewable fuels industry.
        Cap and trade legislation will force CountryMark to rethink
    these plans because of its extraordinary cost. Even after
    distribution of no-cost allowances, the cost of carbon taxes on
    CountryMark are estimated to exceed $100 million per year
    compared to our average annual net income for the past 5 years
    of $37 million, this burden clearly indicates the magnitude of
    current legislation's impact on our economic sustainability.
        As a minimum, by requiring CountryMark to purchase
    allowances exceeding $100 million per year, our finite capital
    is diverted to the Government, which prevents us from making
    additional investments that promote renewable fuels. However, a
    financial strain of this magnitude could also render
    CountryMark insolvent. The end of CountryMark as a business
    could deprive our Midwest economy of the investments previously
    described and trigger a cascade of financial doubt through the
    farmer cooperative system.
        In essence, the high cost of cap and trade legislation has
    the potential to destroy all American companies like
    CountryMark and the farmer cooperative system who will be
    valuable partners in developing and distributing renewable
    fuels. CountryMark urges Congress to reject cap and trade and
    rethink the important strategies needed for this Nation to
    reduce its carbon emissions, develop viable renewable gasoline
    and diesel fuels, and avoid destruction of critical aspects of
    our economy in the process.
        This legislation as currently drafted does not achieve
    these goals. However, the goals are achievable through a
    transparent and practical dialog with small business refiners
    such as CountryMark.
        Thank you.
        [The prepared statement of Mr. Smorch follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you. I am going to talk to you more
    about that small business situation, Mr. Smorch, because I
    think we are trying to work on that.
        Now, Mr. Cicio. That is easy. Let me tell a little bit
    about you, sir. Paul Cicio is the President of Industrial
    Energy Consumers of America. He has been invited by the
    minority, but we welcome you.
        Mr. Cicio. Thank you.
        Senator Boxer. He has been President of the Industrial
    Energy Consumers of America. He was appointed to a number of
    Federal commissions and other bodies during the Bush
    administration, including the Energy Markets Advisory
    Committee, the U.S. Department of Interior Outer Continental
    Shelf Advisory Committee, and the National Coal Council.
        We welcome you.

                  STATEMENT OF PAUL CICIO, PRESIDENT,
                 INDUSTRIAL ENERGY CONSUMERS OF AMERICA

        Mr. Cicio. Thank you. Thank you, Chairman Boxer, Ranking
    Member Inhofe, and members of the committee. My name is Paul
    Cicio, and I am the President of the organization. We are
    unique organization in that all member companies are
    manufacturers and we are all energy intensive, and they come
    from all segments of the economy.
        IECA supports cost effective action so long as it does not
    impair our competitiveness. A long list of policy
    recommendations is included in our written testimony.
        Unfortunately, S. 1733 would impact our competitiveness. It
    would increase the price of natural gas, electricity, and
    transportation fuel costs substantially. Increased job losses,
    it will lower capital investment in manufacturing. It will
    impede increased production of manufactured goods, impede
    exports, and increase imports.
        Madam Chairman, the U.S. manufacturing sector has lost 5.4
    million manufacturing jobs over the last 10 years. That is 43
    percent of all manufacturing jobs. Of the members of the
    committee, I am going to just list from your States the top
    five job losses in manufacturing. California, unfortunately, is
    at the top of the list with the loss of 475,000 jobs in 10
    years; Ohio, 370,000 jobs lost; New York, 265,000 jobs;
    Pennsylvania, 262,000; Tennessee, 168,000; and New Jersey,
    146,000. The average job loss on a percentage basis of this
    committee, looking at all of your States, is a loss of 26
    percent of all your manufacturing jobs in 10 years.
        Manufacturing output and investment per GDP has fallen
    consistently, and imports have risen sharply. Approximately
    40,000 manufacturing plants have been closed in the last 7
    years. We have lost 11 industries that we were once dominant
    in, and by the end of last year we were dealing with trade
    imports that exceeded exports.
        S. 1733 includes provisions that provide declining
    allowances for energy intensive and trade exposed manufacturing
    sectors. This is a good thing. It is helpful. But this will not
    preserve the competitiveness of these companies, and
    unfortunately it will impair growth. These industries will be
    fully exposed to higher energy costs that could be substantial.
    Major questions exist about how many of these companies and
    industries will receive free allowances and what those will
    mean in terms of cost abatement.
        Given the costs of S. 1733, it will be necessary that a
    border adjustment provision be included, and they need to take
    place at the beginning of the compliance period. However, IECA
    wants the Congress to know that border adjustments at large are
    not acceptable policy, and they will not work effectively. They
    will not stop imports of energy intensive products, and they
    will cause reciprocity of our trading partners, and they will
    distort trade. And this is not inconsequential. This issue by
    itself is reason not to use cap and trade that impose costs on
    the manufacturing sector.
        A simple example of why border adjustments will not be
    effective is illustrated with aluminum, a very electricity
    intensive product. A Chinese producer of aluminum when
    confronted with the threat of paying a border adjustment carbon
    fee will simply start producing the product that uses the
    aluminum and import that. So they will be importing instead of
    the bulk aluminum, it will be the aluminum wheels. It will be
    the aluminum auto parts. It will be the aluminum aircraft
    parts, and so on and so forth. And that description applies to
    all energy intensive products.
        Last, IECA is deeply concerned that S. 1733 will
    immediately drive up the price of natural gas. We talk to a lot
    of the electric utilities. We consistently come up with a
    number that the utilities will be short some 400 million metric
    tons of carbon starting in 2012. And there is no way in those 2
    years to use carbon capture and sequestration to offset that or
    nuclear. There is not scale enough in 2 years for renewable
    energy and for energy efficiency. So the only option that the
    utilities are going to have is natural gas.
        Converting all 400 million metric tons would amount to a
    little over 4 trillion cubic feet of gas. It is a significant
    increase. The highest increase in natural gas production that
    the U.S. producers have been able to provide is a .5 trillion
    cubic feet per year increase. So it is question of scale.
        When prices of natural gas goes up, it also drives the
    price of electricity up as well.
        Thank you.
        [The prepared statement of Mr. Cicio follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Boxer. Thank you, Mr. Cicio.
        I am going to start off. I want to agree with what you said
    that this bill will have an impact on our competitiveness. It
    is going to make us competitive. It is going to make us the
    leader of the world. I would suggest you read Thomas Friedman's
    book, Hot, Flat and Crowded. Very important work, I think. He
    went to China and just saw, and he basically said to them, he
    was at a meeting. He testified here. It is a great story.
        And he said to the leaders there, well, are you ready to
    help us get rid of the carbon? And they said, well, why should
    we do that? We want to grow like you grow. And he says, OK,
    fine, you just continue to grow the old way. We'll do it the
    new way, and you are going to lose the edge, and we are going
    to just clean your clock. At which point they sat up and said,
    oh, wait a minute. Let's talk about it. And we know that the
    country that does this is going to be the leader.
        I also agree with you that the last 7 years were
    devastating during those Bush years. It was devastating for
    manufacturing. There is no question about it. You put it on the
    record.
        Now, we know, finally we found out that as a result of a
    lot of efforts of our President and some of us here, a lot of
    us here, it looks like we have turned the corner in this
    recession. We can't be sure, but today we learned there is 3.5
    percent GDP growth. We are very worried about unemployment
    because it is still a lagging indicator.
        But I could tell you we also have deficits and debt, and we
    don't want to keep on thinking that we can cure all the
    problems. We need the money that Mr. Dolezalek is going to pour
    into these companies, the John Doerrs, the Brook Byers, the
    Silicon Valley, who came here and told us they are going to
    put, Mr. Cicio, twice the money they put into high tech and
    biotech combined into these clean energy companies.
        So I agree with the way you laid your case, but I think
    your conclusion is completely the wrong one, which is status
    quo. Status quo is why we are losing all these jobs. Status quo
    is why we had the recession. Status quo is why we are losing
    our competitive edge.
        In terms of our border adjustment, it is going to be WTO-
    compliant. Senator Baucus will see to that, that it will be
    WTO-compliant. And Senator Cardin is working to see if we can't
    work with our parliaments throughout the world to make sure
    there is one simple way to adjust for this.
        So I just feel you laid the whole scenario out, but your
    conclusion is don't do this. And I say the status quo is
    killing us, and let's make this jump because if we do it, it is
    going to be the best thing.
        Now, I think the other thing that is interesting is Mr.
    Smorch's testimony. Very important. That is why we work with
    colleagues to make sure that the small refiners got a huge
    break in this. They are going to get half--it is in the
    Chairman's mark--the bill dedicates almost half of the $1.6
    billion per year reserve for refineries to small businesses
    like yours. We want to sit down with you. We want to show it to
    you. Also, small business refiners are delayed until 2015. The
    rest of the refineries come under the cap a year earlier.
        So I would love to just get the chance to work with you on
    this because we have made a very strong distinction between the
    smaller refineries and the larger ones, and this is one that I
    have been involved in since I started to sit down and write the
    bill.
        I have a question for I think it is Mr. Trisko. Do you
    believe the status quo will provide a sustainable future for
    coal dependent industries? Or will additional certainty be
    necessary to ensure a role for coal in America's future? In
    other words, I know you have some issues with the bill, and I
    respect that very much. And we are going to be working with
    you, believe me, as we get this bill through the floor.
        But the status quo is trouble because the Clean Air Act is
    going to have to be implemented. And we think this gives so
    much more flexibility to everyone, and gives some help. So
    could you talk to me about that?
        Mr. Trisko. Madam Chair, that is a great question, and
    really describes concisely the quandary in which we are in. The
    United Mine Workers was one of the first labor unions to
    support national climate change legislation. We endorsed the
    recommendations of the National Commission on Energy Policy in
    2005. And we worked with Senators Bingaman and Specter in the
    design of their legislation in 2007, and that was supported by
    all the entire labor community, Edison Electric Institute, and
    so forth.
        Since that time, we have been struggling with the details
    of cap and trade legislation and the specific impact that
    specific legislation would have on coal miners. It usually
    comes down for us to a fundamental question of how much and how
    soon relative to the availability of the technology. And it is
    unlike the acid rain debate, where my colleague David Hawkins
    and I fought for years----
        Mr. Hawkins. In a friendly way.
        Mr. Trisko. In a friendly way, in a mutual effort to
    encourage the use of scrubber technologies by power plants,
    because my workers recognized that that was the way to retain
    employment in eastern coal fields. We got a little bit in the
    form of some bonus allowances in the 1990 amendments, but we
    didn't get nearly enough to protect our interests.
        Senator Boxer. So let me sum it up because I have run out
    of time for sure. What you are saying is you supported the
    Bingaman-Specter bill, and you are looking to make this bill
    look more like that. Is that a good sum up?
        Mr. Trisko. I think that is a good summary.
        Senator Boxer. Is that a fair way to sum it up?
        Mr. Trisko. Madam Chair, and we are also trying, as we
    emphasized in our preliminary discussions with committee staff,
    we have always sought to play a constructive role in this
    debate.
        Senator Boxer. You have.
        Mr. Trisko. And one of the issues that we are pursuing, and
    as far as we know are one of the few groups doing it, is there
    is a lot of concern about the availability of international
    offsets. There was testimony last month to the effect that the
    CDM program before the United Nations has been in effect for 7
    years. It has generated only 300 million tons of CO2
    offsets throughout the life of the program. And yet this bill
    is so critically dependent upon the availability of both
    domestic and international offsets in terms of moderating the
    economic impacts of the bill.
        If you have all the offsets that you promised to deliver,
    the reduction of industrial shipments, and I am citing EIA's
    analysis of the House bill, the reduction of industrial
    shipments is about 2 percent in the year 2030. I think that is
    a number that a lot of people could live with. But if the
    offsets aren't there, if they are not available in the
    quantities promised----
        Senator Boxer. Right. Well, that is why we increased the
    numbers of domestic offsets. But my time is over.
        Mr. Trisko. OK.
        Senator Boxer. We will work with you. We will continue to
    work with you. We appreciate your being here.
        Senator Inhofe, we will give you an added couple of minutes
    on to your time.
        Senator Inhofe. Well, thank you very much, Madam Chairman.
        Mr. Cicio, for a minute let's leave these euphoric utopian
    visions and get down to reality. If you are really concerned
    about unilateral action, stopping and realizing that your
    manufacturers we are talking about that you visited are going
    to have to go someplace for energy. If the third world
    countries, if China and India and Mexico and other places are
    not going to join in this thing, then they are going to have
    the access to the energy. And I quote now, I could quote, if
    there were time, from all these countries, but India's
    Environmental Minister said, ``India will not accept any
    emission reduction targets, period.'' This is a non-negotiable
    stand. So I assume they are not going to do it.
        Now, you combine that statement with the very honest
    response that the Director of the EPA, Lisa Jackson, said, and
    that is that if we unilaterally do something in this country,
    it will not have a reduction in CO2 emissions.
        So kind of explain to me, you know, what your feeling is
    about that. It goes back to something we seem to have forgotten
    about. It is called supply and demand. Where are we going to
    get our energy?
        Mr. Cicio. Thank you, Senator. Manufacturers are a unique
    sector of the economy, and each CEO of these companies have,
    most of them have a global perspective, and they have a
    responsibility to their shareholders to protect shareholder
    value. And for companies who use a lot of energy to make their
    products, they have to go where the energy is affordable on a
    relative basis.
        I make this point because it is important. If energy went
    up in price around the globe to deal with climate change, we
    would not be damaged. But if energy cost goes up in the United
    States and does not go up in places where we compete--China and
    India, all these other places----
        Senator Inhofe. To be competitive, they have to go where
    the energy is competitive.
        Mr. Cicio. They will move. And they have moved and
    unfortunately they are going to continue to move. And the
    promise of higher prices is greatly concerning to their
    competitiveness.
        Senator Inhofe. I appreciate that, Mr. Cicio.
        And Mr. Smorch, when you were talking about small
    refineries, we in my State of Oklahoma, we have the Wynnewood
    Refinery, the Ponca City Refinery. We have small refiners
    throughout our State, and the Chairman made some statements
    about all of the relief that is there for small refineries. I
    read the language and I think it may have the effect of
    delaying your execution, but what is your feeling about what is
    going to happen, insofar as after you have heard the
    expressions from the Chairman, of the small refineries?
        I am very concerned about this because that is a major
    thing in my State of Oklahoma.
        Mr. Smorch. Well, from CountryMark's perspective, as I
    talked about, even after looking at no cost allowances that are
    even proposed in the current legislation, we look at our costs
    will exceed over $100 million per year. And when you compare
    that to our average annual income of only $35 million a year,
    we don't see how that adds up. So from CountryMark's
    perspective, I don't believe that it goes far enough at this
    time.
        Now, as far as small business refiners and small refiners
    as a group, I am not the spokesman for all small refiners.
        Senator Inhofe. Yes, but you are the closest thing on this
    panel.
        Mr. Smorch. That is true. And I can't talk for everybody
    because everybody is different configurations and everything
    like that, but in my opinion, I think most small refiners are
    in the same boat that CountryMark is in, and it is going to be
    a huge cost that we just do not have the money for.
        Senator Inhofe. Yes.
        And Mr. Hawkins, we have been getting a lot of mixed
    feelings in discussions and references to coal. NRDC, on your
    Web site you have defined coal: coal is dirty; coal is
    dangerous; coal is the single greatest threat to civilization
    and all life on our planet.
        Do you agree with these statements?
        Mr. Hawkins. I think that all of those statements are
    referring to the way coal is used today. We have many
    statements on our Web site, and in my testimony before this
    committee on numerous occasions and in the work we have been
    doing on this bill and the House bill, supporting a pathway for
    coal so that it doesn't continue to be used the way it is
    today. That is why we support the billions of dollars in
    allowances for carbon capture and storage deployment.
        So NRDC's position on coal is not to be against coal. It is
    to be against the abuse of the way coal is used today.
        Senator Inhofe. Do you think the way they are doing it now
    in the new plants, the new coal fired generating plants in
    China is something that is acceptable and that you would
    encourage in the United States?
        Mr. Hawkins. The first thing to do with a coal plant, of
    course, is to improve its efficiency, and China is building
    more efficient plants, and any coal plants built in the United
    States should be efficient as well. But we believe that any
    coal plants built in the United States should deploy carbon
    capture and storage.
        Senator Inhofe. Which China does not.
        Mr. Hawkins. That is right. And we are working in China to
    persuade them that this is a sensible thing to do, and every
    time we talk to them about it, they say, what is the United
    States doing? So I hope to be able to come back with a stronger
    argument the next time I visit.
        Senator Inhofe. Mr. Trisko, do you think that coal is dirty
    and dangerous and is the single greatest threat to civilization
    and all life on our planet?
        Mr. Trisko. No, Senator, I disagree with that statement. I
    think that coal has historically provided tremendous benefits
    to our society and to our industrial economy. Coal is a 2 cent
    energy commodity, basically, and what we are talking about in
    terms of a transition to a cleaner renewable energy economy is
    an 8 cent or a 10 cent form of energy.
        So when you make a transition from a 2 cent per kilowatt
    hour fuel to an 8 or a 10 cent, that transition is going to
    have some costs associated with it.
        But that being said, we know well, and EPA's reports
    document clearly, that the utility sector has achieved a very
    solid record of progress in reducing its emissions of criteria
    pollutants like SO2 and NOx over the
    years and will continue to do so under the Clean Air Act.
        Senator Inhofe. Well, I hope you will take back to some of
    your people my experience in an area I was privileged to go to
    in Ohio, right on the West Virginia border, and meeting with a
    lot of the coal people and the terminology they used as to, we
    are talking about fourth and fifth generation people who have
    lived their lives for coal. And here we are dependent upon coal
    for 53 percent of our ability to run this machine called
    America. You can tell them there are several of us up here who
    want to help them.
        Mr. Trisko. Thank you, Senator.
        Senator Boxer. And the bill is very much dedicated to clean
    coal. Most of this bill is dedicated to clean coal.
        Senator Merkley.
        Senator Merkley. Thank you very much, Madam Chair.
        And I am going to mispronounce your name, but Mr.
    Dolezalek, it sounds from your testimony that from an economic
    and business perspective, you could do more than a 20 percent
    reduction in 2020. A greater education could mean a greater
    investment in clean energy technologies, creating more jobs. Is
    that the way you frame it, or do you think from a business
    perspective the 20 percent target is something we can achieve?
        Mr. Dolezalek. Our experience has been that on a lot of
    these things, we underestimate what people as individuals can
    do. Obviously, as a venture fund, we tend to invest in
    individual entrepreneurs and small businesses. Much of what we
    hear in these committee meetings, whether it goes all the way
    back to the problem about Y2K, about the switch to unleaded
    gasoline, about the switch to digital television, tends to
    focus on how difficult it is for corporations, for large
    organizations to make those moves.
        Our experience has been that when we look at those same
    things after the fact, we actually make far more progress
    because we unleash the innovation, the dedication, the
    creativity of the American public. We think we will do the same
    thing here. But at the same time, obviously, there is a
    difficult balancing of interest. And I think what this bill has
    done a very, very good job with is to recognize that change is
    a hard thing to do.
        We are fairly comfortable that we will actually do far
    better than these targets. But at the same time, there are
    those who need to be convinced of that, and the balancing of
    those interests is a delicate process.
        Senator Merkley. If indeed through, we had testimony
    earlier about just energy efficiency could close the gap
    between where we are now, which is closing in on 9 percent
    below 2005 and the target of 20 percent below 2005, so that is
    basically a 1 percent reduction per year over the next 11
    years.
        We had testimony earlier that just energy efficiency could
    close that gap. If indeed energy efficiency is pursued
    aggressively, does that imply then that that is really going to
    keep a downward pressure on the cost of the allocations?
        Mr. Dolezalek. I think it will. The reality, again, is that
    a lot of these technologies have moved far further than even we
    thought. We have seen, for example, that the pricing of LED
    lighting has dropped precipitously just in the last year. That
    obviously has a huge impact. Lighting is roughly 22 percent of
    the building energy use. If you can suddenly take a big chunk
    of that cost out and save the energy, it has very, very
    immediate impacts.
        So what I think, again, we tend to focus on wind. We focus
    on solar. We focus on sort of the bigger measures. What I think
    we are going to continue to see is the surprises in this. We
    have seen it in electric automobiles which went from impossible
    to suddenly every major manufacturer in the world is announcing
    their electric automobiles. Those surprises will do a lot to
    keep these prices down.
        Senator Merkley. One of the efficiency issues that I am
    very conscious of because I go around before my house before I
    go to bed is all the vampire electronics, the copier, my son's
    video game operation, the computers that are sitting on that
    look like they are turned off, but they are not.
        And I believe that I read that Europe has been much more
    aggressive about how they structure consumer electronics in
    terms of this vampire issue. And I was wondering if you or
    other members of the panel could comment on that and how we
    might be more aggressive on that here in America?
        Mr. Dolezalek. What is interesting is our
    telecommunications industry is doing an awful lot in terms of
    transitioning to address just this. And surprisingly, it is
    doing it even before sort of regulation forces it to happen
    because what we are seeing is the same devices that you use to
    create wireless connectivity in your house can start measuring
    what your refrigerator does, measuring when you are home, when
    you are not home, and start controlling automatically the power
    load in the house to be appropriate to your presence. Those
    technologies, again, are moving much, much more rapidly because
    they rely on what we have done for the last 30 years and they
    are simply reapplying them to the grid from where they were
    applied in the telecom field.
        Senator Merkley. I have 10 seconds left. Would you like to
    comment on that, Mr. Hawkins?
        Mr. Hawkins. Yes. The opportunity to save energy
    consumption in these appliances and other ubiquitous things
    like the soda vending machines is enormous. And we at NRDC have
    been working with the designers of these technologies, and
    there is a long list of ideas to improve their performance. And
    if they cost a few pennies more for the initial cost, there is
    a barrier however. And we can overcome that barrier with smart
    policy that rewards efficiency.
        Senator Merkley. Thank you very much.
        Thank you, Mr. Chair.
        Senator Inhofe. And before going to Senator Voinovich, I
    have a couple of documents I am going to ask for unanimous
    consent to be a part of the record. One is the study from the
    TaxPayers' Alliance. It comes to the conclusion that of how
    much the British consumers are having to spend, some $3 billion
    in 2008, as a result of their efforts, along with several
    letters. I would like to submit those for the record.
        Hearing no objection, so ordered.
        [The referenced information follows:]

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        Senator Inhofe. I am not.
        Senator Voinovich.
        [Laughter.]
        Senator Boxer. Thank you.
        Sorry. Senator Voinovich.
        Senator Inhofe. It felt kind of good to take over for a
    minute.
        Senator Boxer. Oh, did you enjoy that? Did you put the
    letters in the record?
        Senator Voinovich. That is 4 minutes of my time gone.
        [Laughter.]
        Senator Voinovich. Mr. Trisko, you and Mr. Hawkins are
    sitting next to each other. Have you ever talked to Mr. Hawkins
    about the number of coal fired plants that the NRDC and the
    Sierra Club have fought and closed down in many States
    throughout the United States?
        Second of all, would you agree that if they are not going
    to burn coal, that they are probably going to go to burning
    natural gas?
        Mr. Cicio, you talked about loss of jobs. People just don't
    understand that environmental policy has a real impact on jobs.
    And back in 1997 and 1998 we exported $19 billion worth of
    chemical products. Today, we import those products. In other
    words, the cost of natural gas has had a tremendous impact on
    our economy.
        At the beginning of the recession in the State of Ohio, the
    acid rain provisions that everybody keeps making reference to--
    the fact of the matter is that when they went into being, and
    you still probably had a debate at the time, I was there in
    Ohio when AEP built a scrubber, $650 million. We subsidized
    coal a dollar a ton so that could make that happen. And I would
    like all of you to comment.
        By the way, I want to mention, too, I am glad that you
    asked this committee to have a complete analysis of this
    legislation, which we do not have today. And we are going to
    insist on that, Mr. Trisko, I can assure you. We want a
    complete analysis of this legislation.
        But let's face it, if coal has got a problem in terms of
    greenhouse emissions, we need the CCS technology. We know that
    they say it is 10 years away. So what do we do in the meantime?
        Second of all, Mr. Rowe was here this morning, who runs
    Exelon, and he said to me in my office, I asked him what is the
    future of nuclear. And today he testified that maybe we will
    get six or seven plants by 2020. He said that with the
    financial condition that we have in the country today, having
    the nuclear necessary to get the job done is not going to be
    there.
        So let's say if we can't burn coal, if we can't do nuclear,
    where in the world does this country get the energy, the
    baseload energy that we need to fuel this economy that we hope
    will grow? Where is it coming from?
        And we have people here at this table and others that have
    come in here and said, it is wind, and it is solar. I want to
    ask all of you: Where are we going to get the energy? If coal
    is bad, nuclear is not going to come on board the way we say it
    is. And by the way, we don't even give nuclear a chance in
    terms of renewables. We haven't included nuclear. Where are we
    going to get the energy to supply the baseload energy for this
    country during the next number of years if this cap and trade
    legislation goes into being?
        Mr. Cicio.
        Mr. Cicio. Yes, thank you, Senator. This is a very
    important question. I mean, if the country does plan to address
    climate like it is through this bill and others, the key is
    having an abundant supply of low cost carbon energy. OK? That
    is the only real solution.
        We don't have that. And as I said in my comments,
    particularly in the short term, there is no solution other than
    natural gas. We have a lot of natural gas in the reserves, but
    what I am concerned about in my testimony is there are 400
    million metric tons of carbon that the utilities are going to
    be short for 2012. Carbon capture is not available. Nuclear is
    not available. Scale from renewable is not renewable. You can't
    scale energy efficiency in that time period.
        The only thing available is natural gas. There is 550,000
    megawatts of natural gas fired power capacity out there. It is
    being used for peaking. All it takes is for them to say we are
    going to burn more gas. The capacity is there, and it could use
    4.5 trillion cubic feet of gas in the period of the next couple
    of years.
        Senator Voinovich. Mr. Rowe said to me that if you let the
    market control the situation, that we will shift to natural gas
    to produce the energy that we need for this country. And the
    point he made is that natural gas emits about half of what coal
    emits, and once you have built those, and they are in place,
    then when do you get rid of them in terms of their producing
    energy in this country?
        Mr. Trisko, would you like to comment on that?
        Mr. Trisko. Senator, you started this line of questioning
    with a reference to a conversation that Mr. Hawkins and I may
    or may not have had about the environmental community's
    opposition to the construction of new well controlled coal
    fired power plants around the country.
        Senator Voinovich. NOx, SOx, mercury,
    the best in the world, and they won't let them come in.
        Mr. Hawkins. Exactly, and the environmental community was
    highly successful in that campaign. And the irony, misfortune
    of the success of that campaign is that it prevented the
    retirement of some of the older, less efficient and dirtier
    plants that would go offline inevitably when new highly
    efficient plants are brought online.
        You can deal with the carbon emission issue from the new
    plants through relatively simple design measures so that the
    plant will be subsequently capable of removing its carbon and
    storing it underground when we have that technology in place.
        But in my judgment, our society has lost an opportunity to
    replace that aging fleet of power plants as a consequence of
    the success of that movement.
        Could I comment on your gas question?
        Senator Boxer. I am sorry. We have gone over a minute and a
    half right now.
        Senator Voinovich. I thank the Chair.
        Senator Boxer. So we are going to stop.
        I just want to be clear on something, which is the
    modeling, since a line is being drawn in the sand by Senator
    Voinovich. Well, here are the facts. The facts are that our
    bill, 90 percent of our bill in terms of the modeling section
    is taken from Waxman-Markey. They had a 5-week study. We had 10
    percent difference. It took another 2 weeks. This is the
    longest study there is.
        Now, I assume when you talked about modeling, you were
    talking about once we get this bill to the floor and once it is
    changed again, because it will have to be remodeled at that
    stage.
        We are not going to waste taxpayer money because somebody
    drew a line in the sand. We spent 5 weeks at EPA studying
    Waxman-Markey, 2 weeks studying Kerry-Boxer that is 90 percent
    the same as the other bill. And we are going to stand on that.
    The EPA stands on it. The Obama administration stands on it.
        Senator Voinovich. Can I have equal time, Madam Chair?
        Senator Boxer. No, just a minute. Yes.
        Senator Voinovich. You are editorializing again, and I
    think I have an opportunity to share my opinion also.
        Senator Boxer. If you wouldn't mind letting the Chairman
    finish her remarks.
        Senator Voinovich. Well, the Chairman sometimes
    editorializes and doesn't let us even speak up.
        Senator Boxer. I am happy to give you equal time.
        I am not making an editorial comment. I am giving you my
    view and the view of the majority.
        Now, you may not agree with it, but this Chairman is not
    going to waste taxpayer money to delay a bill that doesn't have
    to be delayed because of some reason that doesn't hold up since
    we have had 7 weeks of study.
        And Senator Voinovich, you have been very clear, and I
    wanted to make sure because I respect you that you knew that
    the view of the majority is that we have a very important study
    from EPA that is complete. And I just wanted you to know that
    because I don't want you to come here next week and say, I told
    you I wasn't going to do anything unless you had a full study.
        I want you to know that we stand by the study, and I am
    happy to give you equal time to respond.
        Senator Voinovich. Thank you very much.
        Senator Boxer. Of course.
        Senator Voinovich. The fact of the matter is that I have a
    hold on an individual at the Environmental Protection Agency
    because we never have received a full analysis of Waxman-
    Markey. I said to the head of the EPA, Lisa Jackson, look,
    forget that right now. Let's go to the Boxer-Kerry bill, and
    let's do a full analysis. I asked her on Tuesday. She said,
    ``We have not run a full economic modeling.''
        And all I would like to have before we mark up the bill
    would be the same kind of analysis that was done after the fact
    last year when we had Warner-Lieberman, and then it came out
    afterwards. If we are going to intelligently deal with this
    issue, we need to have the modeling by the Environmental
    Protection Agency. I need to have it. My citizens in Ohio would
    expect me to have it before we would go forward with it.
        And, you know, the fact is it is not there, and it is
    absolutely certain that we need to have it if we are going to
    deal with this intelligently.
        Senator Boxer. OK. So to be continued. I don't think I am
    going to convince you, and you are not going to convince me. So
    let's not go there today, but we will obviously be revisiting
    this.
        Senator Whitehouse.
        Senator Whitehouse. Thank you, Chairman.
        Secretary Adams, in your testimony you described the Clean
    Air Act as a complementary regulatory structure to the
    comprehensive program outlined in the legislation before us and
    described it as a hugely successful and adaptable bedrock of
    American environmental policy.
        Could you give me your reaction to efforts to strip Clean
    Air Act requirements as a part of this bill? And efforts to add
    what are around here referred to as 3-P, the other three
    pollutants into a cap and trade regime and out of the Clean Air
    Act regulatory model as a part of this legislation?
        Ms. Adams. I think the Clean Air Act obviously is a very
    important tool. There may be some tailoring of the Clean Air
    Act, some common sense change to perhaps raise the permitting
    threshold to exempt greenhouse gas emissions from national
    ambient air quality standards. But other technology
    accelerating standards we think should be retained.
        We think the Clean Air Act has been very successful and
    needs to be retained as a tool. We believe that carbon dioxide
    should be expressly excluded from title I and not be defined
    with a national ambient air quality standard. And the threshold
    for requiring a permit should be raised to exclude all but
    major new sources.
        Senator Whitehouse. Thank you.
        Mr. Dolezalek, in your testimony you say if we fail to act,
    we will lose our technological edge. We will lose the jobs
    associated with these companies, and ultimately we will pay
    others to import their clean energy technologies the way we
    today pay others to import their oil.
        What is it about the present circumstance that requires
    this legislation to get us there? Why won't the market get us
    there on its own?
        Mr. Dolezalek. We have been investing in these technologies
    since 2002. At the time, most of these were very small, young
    companies, and the venture community was perfectly capable of
    providing the funding needed.
        We have now reached the stage where more and more of them
    are coming to commercial scale and building factories. Building
    factories for energy generation, for automobiles, for very
    large lighting is much, much more capital intensive than the
    venture industry has historically had to fund.
        We have come to that time period at a point in time when
    the global funding sources that would normally have stepped in
    and provided a lot of that funding have shifted. So a lot of
    the money that would have gone into funding capital development
    for U.S. new energy companies has gone to Europe. It stayed in
    the Middle East. It is staying in China. The longer we wait
    from a signaling standpoint, the longer that capital stays
    where it has gone to.
        Senator Whitehouse. In addition to the capital availability
    question, is there also a market distortion question related to
    the implicit subsidy that the polluting coal and other
    industries have received for so many years by having all of us
    bear the costs of their pollution, rather than having the
    emitters bear the costs of the pollution?
        Mr. Dolezalek. We have long said all we really need is a
    level playing field, and we will do the rest. We still are a
    long, long ways from a level playing field. I am not at all
    certain that we even get close to a level playing field even if
    we adopted this bill in its fullest extent, but we get a lot
    closer, and it makes us a lot more competitive. And a choice
    between not being competitive and at least being more
    competitive, we clearly choose to be more competitive.
        Senator Whitehouse. And if I could ask, my time is running
    out so this will probably be a question for the record for Mr.
    Cicio, but I would be interested to know, the record of your
    member companies of off-shoring jobs during the last 10 years.
        To put that in context, my take on this is that for many
    managements, off-shoring jobs from America to other locations
    where lower wages, poorer working conditions and the ability to
    evade environmental responsibility allowed more return to
    management and shareholders has been a fairly prominent goal of
    CEOs and big corporations in this country for the last decade
    or so.
        And given that, I take with a little bit of a grain of salt
    management expressed concerns about the loss of jobs, when the
    people whose jobs were off-shored, the folks that represent
    them, the labor unions, are here speaking in favor of this
    legislation. In that context, it would be useful to me to know
    what the off-shoring record is of your membership companies.
        And my time has expired.
        Senator Boxer. OK.
        Oh, Senator Carper is here. OK, Senator, we were just about
    to close down and we welcome you in the nick of time.
        Senator Carper. Thanks, Madam Chair.
        I apologize to our panel. I have been working on
    cybersecurity, and given the luncheon conversation we had with
    one of our former colleagues, we understand how important that
    is.
        It is a good issue. It is a bad issue, but it is a good one
    to try to be on top of.
        Mr. Trisko, is it Gene Trisko?
        Mr. Trisko. Yes.
        Senator Carper. Also known as Eugene Trisko.
        Mr. Trisko. As you prefer, Senator.
        Senator Carper. All right, Mr. Trisko. Thank you for being
    here.
        Thank you all for coming today. Some of you we have had
    before this committee any number of times before, so welcome.
    And for those of you who are for the first time, we welcome
    you, too.
        A question, if I could, for you, Mr. Trisko. Do you believe
    that there are uncertainties for using coal to create
    electricity, but uncertainties other than those relating to
    carbon dioxide, that may be preventing coal plants either from
    being built or from continuing to be utilized in this country?
        Mr. Trisko. Certainly, Senator, I suspect we are leading to
    a 3-P discussion here. Prominent among the uncertainties facing
    the power generation sector today are what EPA plans to do in
    terms of the replacement of the CAIR rule for the control of
    SO2 and NOx emissions. We expect a
    proposal next spring, followed by a final rule the year after
    that.
        And of equal and perhaps greater importance, what the
    agency intends to do concerning the regulation of mercury and
    other hazardous air pollutants pursuant to the Court of Appeals
    decision on that, and the recent consent decree that was agreed
    to. It is out for comment now.
        Those two rulemakings together constitute a significant
    source of uncertainty for the industry in its planning. And
    there is a case to be made, just as there was as this body was
    considering the Clear Skies legislation several years ago, as
    it has considered the Clean Air Planning Act that you, Senator,
    have been championing for a number of years.
        Senator Carper. Which I nicknamed at the time ``Really
    Clear Skies.''
        Mr. Trisko. Right. There is a real case to be made that a
    legislative solution to the criteria and now hazardous air
    pollutant issues facing the industry is desirable. As always,
    the devil is in the details, and my understanding is that some
    of the issues that are surrounding the current legislative
    proposals on 3-P are basically on the numbers side and the
    years side. It always comes down to that.
        And from our perspective, we have looked at the
    legislation. We have similar concerns about the impact of your
    bill on the industry as we do in climate, and that is that if
    the caps are set too tight and they occur too soon, that that
    will lead a number of power generators to take offline the
    smaller and older inefficient generating facilities that
    perhaps could have been replaced by new plants if that scenario
    had occurred, and shut them down or put them in cycling mode
    and replace them with the combined cycle generation, natural
    gas generation.
        So we have six of one and half a dozen of the other. But
    there is a benefit in achieving legislative certainty with
    regard to the timetables and levels of control to be required
    by the power generation sector, no question about that.
        Senator Carper. All right, thanks for that response. I
    would just note that there are a number of States--one of our
    targets for reduction is mercury. We call for reducing mercury
    emissions by 90 percent in our legislation, not a cap and trade
    approach, just a directive to reduce it for those who haven't
    already addressed mercury.
        And I remember sitting literally in the same room 6--5 or 6
    years ago at a hearing on mercury and to what extent we were
    able to actually reduce mercury emissions. And for the most
    part, everybody said at the panel, except maybe one person who
    represented the industry that tried to develop ways to reduce
    mercury emissions. Everybody said there is no way we can get to
    90 percent reduction by 2015. And as it turns out, the
    technology is there, and it has been implemented not throughout
    the country but in a lot of places. So I think we have seen
    just in a few years how far we have come.
        Sometimes I think there is value in saying, all right, this
    is our target; this is where we need to be, provide a
    reasonable amount of time to get there, and to sort of like get
    out of the way of the innovations and say go to work, and they
    will get it done. So we will see.
        I have one more quick question, if I could, for you. This
    is actually for David Hawkins. Let me just talk, if I could,
    very briefly about the LDC allowances, the local distribution
    companies. I believe that now we just asked the public utility
    commissions to designate how the LDCs can use that money to
    help consumers. Is that correct? Is that your understanding?
        Mr. Hawkins. There is a general directive that says that
    the allocation value should be used to benefit consumers, and
    we are recommending more specific direction.
        Senator Carper. All right. I was going to ask you, do you
    have any recommendations for changing the current language, and
    it sounds like you might?
        Mr. Hawkins. Yes, we think consumers would be much better
    protected if we have a presumption that a certain fraction of
    this allowance value be used for energy efficiency investments.
    The record is clear, energy efficiency works. There are many
    barriers in the existing regulatory system to full and fair
    consideration of efficiency. What we are asking is that that be
    where the process starts.
        And if a demonstration is made that all of the cost
    effective opportunities for energy efficiency have been
    pursued, then that presumption goes away. But we think that is
    where it needs to start. You take a hard look at efficiency
    because efficiency saves money. People care about their
    electricity bills much more than they care about their
    electricity rates. And efficiency can bring those bills down.
        Senator Carper. Good. Thank you so much.
        And Madam Chair, thank you for giving me that extra minute.
        Senator Boxer. Thank you so much. And could you stay
    around, Senator, I want to talk to you after.
        Senator Carper. I would be pleased to.
        Senator Boxer. Thank you.
        I just want to place in the record before we thank you and
    let you go on your way, this is interesting. It is a press
    release from April 10th, 2009, about a Chinese--I can't
    pronounce it--HUAENG Group inks clean coal technology export
    agreement with a U.S. company in Pennsylvania. I don't know
    whether you are aware of this. A two-stage pulverized coal
    pressure gasification technology, and they are going to apply
    it to a 150-megawatt IGCC power plant, and it says in order to
    reduce the carbon dioxide. So it is interesting that we are now
    working with Chinese companies to come in and clean up our coal
    fired plants.
        We can't continue this way. We need to take the lead in all
    of this. So that is the purpose of our bill. Our purpose of our
    bill is to keep coal in the mix big time. We are very smart. We
    know there is 200 years' worth of coal, and we want that to be
    there. We want it to be clean. And the point is, the status quo
    is the worst thing for coal because it is going to mean at the
    end of the day that EPA comes in, and there is no way to
    offset, and there is no way to get allowances.
        So we are excited about this approach, and we know that we
    are gaining ground, but it is, as we heard from Stephan, since
    I am not going to butcher your last name again, Stephan said it
    well. This is all a balance. It is very difficult. Some people
    think we are this way, we are tilting; some people think we are
    that way. And we are trying to reach for this.
        Well, we want to thank you all so much for being here.
    Every one of you was wonderful. And we may have some questions
    that are coming in to us for you, and we need them back within
    24 hours. I know that is difficult, but we know you are such
    experts that you will have those answers at the top of your
    brains, and you will get those out.
        So thank you.
        We stand adjourned.
        [Whereupon, at 5:10 p.m., the committee was adjourned.]
        [The referenced press release was not received at time of
    print.]
        [Additional material submitted for the record follows:]

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