[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


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



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








                                                       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
                               __________
                               
  
                         U.S. GOVERNMENT PUBLISHING OFFICE 

20-183 PDF                     WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001                             
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               
                               

               COMMITTEE ON 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:]
   
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
   
    
    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:]
   
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
   
    
    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:]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    
    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:]
   
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
   
    
    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:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
       
    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:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    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:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    

    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:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
  
    
    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:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
   
    
    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:]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    
    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:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
       
    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:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    
        
    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:]
    
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
        
    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:]
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
  
    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:]
    
    
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    
                                    [all]