[Senate Hearing 111-143]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-143
 
            PATHWAYS TO A ``GREEN'' GLOBAL ECONOMIC RECOVERY

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



                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 19, 2009

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       Republican Leader designee
BARBARA BOXER, California            BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JIM DeMINT, South Carolina
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
JEANNE SHAHEEN, New Hampshire        ROGER F. WICKER, Mississippi
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        


                              (ii)        



                            C O N T E N T S

                              ----------                              
                                                                   Page

Kerry, Hon. John F., U.S. Senator from Massachusetts, opening 
  statement......................................................     1
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     4
Rogers, James E., president and CEO, Duke Energy, Charlotte, NC..    13
    Prepared statement...........................................    15
Stern, Lord Nicholas, chair of the Grantham Research Institute on 
  Climate Change and the Environment, London School of Economics 
  and Political Science, London, United Kingdom..................     6
    Prepared statement...........................................     9

              Additional Material Submitted for the Record

Prepared statement by the staff of the Friends of the Earth, 
  Washington, DC.................................................    37

                                 (iii)




            PATHWAYS TO A ``GREEN'' GLOBAL ECONOMIC RECOVERY

                              ----------                              


                         TUESDAY, MAY 19, 2009

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:25 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry 
(chairman of the committee) presiding.
    Present: Senators Kerry and Lugar.

            OPENING STATEMENT OF HON. JOHN F. KERRY,
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. This hearing will come to order. I apologize 
for the lateness of our starting, but it is genuinely for 
circumstances beyond both Senator Lugar's and my control. The 
Senate chose to vote at 2:15, and the caucuses were both going 
on; both parties had their Tuesday caucus, and the result is 
that folks have been delayed there and we have come over from 
the vote. But, we're really happy to welcome both of you here 
today.
    It's very special for us to have two of the world's leading 
advocates for decisive action against climate change, Sir 
Nicholas Stern and Jim Rogers.
    Lord Stern's 2006 report, which is now known throughout the 
climate policy world simply as the Stern Report, remains the 
seminal document on the global economics of climate change. And 
Jim Rogers, the CEO of Duke Energy, has confounded many of the 
naysayers in the industry by continually remaining a very 
powerful and important, courageous advocate for aggressive 
action. I think ``commonsense advocate'' ought to be added to 
that too, because he believes it's good for our economy and 
good for business. I might comment that he recently cut Duke 
Energy's ties with the National Association of Manufacturers, 
citing, in part, his fundamental differences on climate change 
policy.
    This hearing comes at a very timely moment in our national 
climate change debate. The House Energy and Commerce Committee 
is, right now, considering a comprehensive climate change 
energy bill that would reduce emissions by 83 percent by 2050, 
and it is a bill with a real chance of becoming law. We are 
focused, here in the Senate, as never before, on this issue, 
working continually, with weekly meetings, in an effort to 
advance this. And just earlier this afternoon, the President 
announced a plan to accelerate our fuel efficiency standards 
and goal in the country to 35.5 miles per gallon by 2016. I 
might comment parenthetically, China has actually set a more 
aggressive goal, and they have set the year of implementation 
for next year. So, it is not something where the United States 
is moving in a lonely way. The President also announced a 
tailpipe emissions plan that would, for the first time in the 
American economy, set a nationwide carbon dioxide emission 
standard.
    Let me just say, personally, that this is a milestone in 
the fight against climate change. In 2002, Senator McCain and I 
introduced the first major fuel economy legislation, and I'm 
extremely pleased that the Nation is now adopting these 
aggressive measures, which will help ensure that the American 
automobile industry is viable for decades to come.
    As our two witnesses will share, taking action to address 
climate change is not just an urgent scientific imperative, it 
is also a tremendous economic opportunity. Just this morning, 
we had several witnesses--Chad Holliday, of DuPont Company, and 
Mark Stiles and Liz Warner, of a startup company that is 
involved in algae production in New Mexico that is producing 
algae, which can create fuel for jet fuel, for diesel, and 
become a biocreated fuel that is economically viable in the 
commercial marketplace.
    So, this is a chance to create millions of new jobs here at 
home. It's a chance to help spark a global recovery that brings 
clean growth to the developing world and lasting benefits to 
all of us.
    We really have no choice but to undertake these policies at 
a difficult economic moment. Some people try to argue, ``Well, 
we're in tough economic times. How do we afford this? We can't 
afford to do it.'' But, as we will hear from Sir Nicholas Stern 
and Jim Rogers, we really can't afford to delay. That's where 
the greater cost lies.
    Both our Nation and other countries are, right now, making 
historic investments that are going to shape priorities and 
constrain spending for years to come. The reality is, though, 
there will never be a better moment than this one to transition 
the world's economies on to clean development pathways. As we 
act to address the financial crisis of this day, our challenge 
is also to use this opportunity to avert the financial crisis 
of tomorrow.
    We're taking important steps. In addition to the 
President's announcement today, America's domestic recovery 
package invested, as we--a lot of Americans aren't aware of 
this, but in the package that we passed, the so-called American 
Recovery and Reinvestment Act of 2009, there's $80 billion of 
direct green stimulus measures; that is second only to China's 
remarkable $200 billion.
    And anybody who wonders whether China is going to be part 
of this ought to just go back and read the New York Times of a 
couple of months ago, where a front-page story carried the news 
of how China is determined to quickly become the world's 
leading electric car manufacturer. Let me tell you, when the 
command-control economy such as theirs, as we've seen with 
China, decides to move in that direction, they will move in 
that direction. And many people who wonder what China is doing 
today are going to wake up in a couple of years and find that 
the United States is actually chasing China, trying to catch up 
to some of the things they're doing.
    The fact is that, just last week, the Department of Energy 
announced a $25 million stimulus fund to support a state-of-
the-art wind-turbine blade testing facility in Charlestown, MA. 
There is a competitive process for determining its location, 
but obviously I'm pleased it is there. It'll begin in 
construction this fall; it'll bring 250 new jobs to the greater 
Boston area. And local officials expect the facility to become 
a clean-energy hub that actually attracts new businesses and 
new jobs.
    While the economic recovery package represents America's 
largest investment ever in clean energy, this is, frankly, just 
the first step. Congress needs to pass strong, comprehensive 
climate change and energy policy. And as Jim Rogers knows 
better than anybody, climate change is not just something you 
talk about in the abstract, all by itself. The only response to 
climate change is energy policy. Energy policy, whether it's 
new and alternative creative fuels or alternative renewable 
energy, or whether it's energy efficiency, those are the ways 
in which you affect emissions.
    So, emissions are almost secondary, in a funny way, to the 
economic transformation that is staring us in the face through 
the clean energy jobs that we can win. Economists warn--and 
we'll hear this from Sir Nicholas Stern today--that to ward off 
catastrophic climate change--and I say this again and again to 
people who say, ``Well, what about the cost? How much is this 
going to cost?'' Folks, the costs are negligible. The McKinsey 
Company study shows that, in the first 20 years or so--20 to 30 
years--it pays for itself through the energy efficiencies to 
actually make this transformation. So, it is not costs up front 
in that regard, although there's some capital outlay. But, the 
savings come back to pay for themselves.
    But, the costs of not doing anything are going to be far 
greater. And the fact is that the Green Revolution needs to 
happen three times faster than the Industrial Revolution did in 
order for us to be able to meet this challenge.
    The good news is that America has innovated on a massive 
scale before; and with the right incentives, we can do it 
again. America was the engine of the IT revolution. That 
revolutionized the way the world does business today. Today, 
the IT economy is estimated at $1 trillion, without about 1.5 
billion users worldwide. Obviously, we're trying to grow those 
users. But, energy is a $6 trillion market, with 4 billion 
users worldwide. The opportunities for innovation and growth 
dwarf any other sector that we can imagine. Until now, we have 
ceded the initiative to other countries. We invented the solar 
photo voltaic cell at Bell Labs in 1954, but it was Germany 
that put in place strong policy mechanisms to drive investment 
in solar power and other renewable energy sources. As a result, 
renewable energy uses have tripled, to 16 percent, in Germany, 
creating 1.7 million jobs. By 2020, Germany's clean energy 
sector will be the biggest contributor to the nation's economy.
    Last week, Tony Blair testified before this committee that 
the U.K. already employs far more people in green technologies 
than in traditional sectors, like coal, steel, and 
shipbuilding, industries which the British pioneered. These new 
jobs are the direct product of sustained policy incentives 
designed to spark private investment.
    We know that with each dollar the government invests, we 
can create 3.5 times as many green jobs as old industry jobs, 
or as oil industry jobs. We also know that green jobs pay 17 
percent more than the median national income. As unemployment 
levels continue to rise, this is very simply one more reason 
why can't afford to wait until the economic downturn passes in 
order to try to implement strong energy policies. Strong energy 
policies are part of the economic recovery.
    And, while the domestic imperative for acting to address 
climate change is huge, make no mistake, this is also a test of 
America's willingness to lead in meeting global challenges. Our 
domestic policy--I have heard this with Foreign Minister after 
Foreign Minister, Environment Minister after Environment 
Minister, country after country, preparing to go to 
Copenhagen--our domestic policy will motivate others to advance 
their own clean energy priorities, and that will, in turn, 
drive investment globally and open new and vibrant markets for 
the export of U.S. energy technologies. The question is not 
whether the 21st century economy will be the green economy; it 
has to become one. And I believe it will. The question is 
whether America will lead, and whether the world can change 
course fast enough to prevent a climate disaster.
    Our two witnesses today have powerful insights into these 
economic opportunities and the challenge that is presented. I 
look forward to hearing their testimony.
    Senator Lugar.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Well, I'm pleased to join you, Mr. Chairman, 
in welcoming our distinguished witnesses. They truly offer two 
unique perspectives on the economic consequences of climate 
change.
    As an economist, Lord Nicholas Stern issued a far-reaching 
report, which you've mentioned, in 2006, including that the 
cost of addressing climate change will increase, the longer we 
delay taking action. As a businessman, Jim Rogers of Duke 
Energy knows firsthand the direct costs of dealing with climate 
change.
    Steps to address climate change in the United States, as 
elsewhere, will occur in a political context that will be 
deeply affected by the current recession, by varying 
perceptions of risk, regional differences, and other factors. 
This would seem to be stating the obvious, but policymakers 
must continually remind ourselves that, even if some type of 
international agreement on climate change is possible, it won't 
mean much if the American public and publics around the world 
reject it as unfair or too burdensome.
    American participation in any global agreement on climate 
change is likely to bring profound changes to the American 
economy and the culture that require achievements of much 
greater consensus than at least I perceive we now have.
    By ``consensus,'' I'm not speaking just of agreement, on 
the reality of climate change, or even the necessity of taking 
action. I believe we need much broader agreement on how we 
structure our response and what sacrifices will have to be made 
by the American people. Absent a reasonable consensus on these 
points, implementation of a climate change policy is far more 
likely to be ineffective, economically damaging, and divisive.
    When I discuss, with Hoosiers in Indiana, the threats that 
the United States faces from our over-reliance on foreign oil, 
they understand both the economic and national security risks 
of our situation. When Hoosiers open a new biofuels or 
geothermal plant, or unveil a new windmill, they are proud; 
but, their interests in these technologies is not always 
academic. They want to know how many jobs will be created, how 
many dollars will be returned by the investment in the long 
run, how the project fits into broader efforts to achieve 
energy independence for our country. Most Hoosiers are pleased 
that the project also reduces carbon emissions, but that is 
rarely their central motivation for embracing new technologies 
and conservation measures.
    Now, I'm hopeful that the U.S. climate change response can 
be centered on steps that simultaneously reduce our reliance on 
foreign oil, promote soil and water conservation, contribute to 
rural development, leverage new energy technologies, and create 
jobs. Public support will be strongest for emissions-cutting 
measures that are seen as contributing to additional U.S. 
economic or national security priorities.
    As I mentioned during the last hearing on climate change, 
the American political debate on this issue has not progressed 
on the same timetable as international negotiations. I've 
called on the Obama administration, both in private and in 
public, to vastly improve and broaden its education campaign on 
climate change. An essential step in this process must be to 
provide a much clearer picture of the overall elements of the 
problem and the administration's strategy in structuring a 
potential agreement. I understand that climate talks are fluid, 
but the American political debate must be sufficiently informed 
to reach some conclusions about what steps are economically and 
politically plausible.
    If negotiations proceed without these public reference 
points, congressional approval of any climate change agreement 
will be exceedingly difficult, and we will fall far short of 
the type of consensus that is needed to sustain an effective 
program.
    I look forward to the insights of our witnesses. As always, 
I appreciate your calling the hearing, Mr. Chairman.
    The Chairman. Well, thank you, Senator Lugar. And let me 
just say, with respect to those comments, I appreciate them 
very much. You and I were at a conference in Spain together, on 
the subject of the Aspen Institute, and you've reflected some 
of your concerns here again today, which is the purpose of this 
hearing, obviously, and of further discussion. And I hope Mr. 
Rogers, who represents one of our largest energy-producing 
companies in the country, and, I think, has a strong voice in 
manufacturing, can help engage some of those people who are 
wondering about what the impact of this will be. So, we look 
forward to continuing that dialogue, and I intend to pass those 
words on to the administration, to make certain that they hear 
what you said today.
    Sir Nicholas, would you begin?
    Mr. Rogers, if you don't mind, I would like to sort of 
afford our guest the opportunity of sharing, sort of, the 
economic framework first, then I think that'll allow you to 
come in underneath it with a very much more specific piece. 
Thank you.

    STATEMENT OF LORD NICHOLAS STERN, CHAIR OF THE GRANTHAM 
   RESEARCH INSTITUTE ON CLIMATE CHANGE AND THE ENVIRONMENT, 
   LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE, LONDON, 
                         UNITED KINGDOM

    Lord Stern. Thank you very much, Chairman Kerry, and thank 
you very much, Ranking Member Lugar, for inviting me to be with 
you here today. It's a great privilege to be back, testifying 
to the Senate. And it's also a pleasure to be on a panel again 
with such a distinguished industrialist as Jim Rogers.
    I'm Nicholas Stern, professor at the London School of 
Economics. I'm a Member of the Upper House in the U.K. 
Parliament, a lot less influential than your distinguished 
body, Senators.
    Let me start with why we're doing all this. What are the 
benefits of action? Well, the benefits of action are the other 
side of the costs of inaction. Given where we are, at around 
435 parts per million of CO2 equivalent concentrations in the 
atmosphere, and we're adding around 2\1/2\ parts per million a 
year, and that 2\1/2\ parts per million is rising, 100 years of 
that would put us at well over 750 parts per million, and that 
would give us at least a 50-50 chance as a world, sometime at 
the end of this century, beginning of next, being 5 degrees 
Centigrade above preindustrial times. That is truly enormous. 
The planet hasn't seen that for 30 million years. It hasn't 
even seen 3 degrees for 3 million years. And we humans have 
been around for about 100,000, maybe 200,000 if you relax your 
definition of sapiens in Homo sapiens. We simply don't know how 
we could cope with that, but what seems certain is that the 
changing pattern of coastlines, of where the deserts are, the 
absence of snow, essentially, in such a world, and ice, 
hundreds of millions of people would have to move, and we would 
see extended conflict over many decades.
    That is the scale of the risks that we run. This isn't 
overdramatizing, it's just simply taking the simple science of 
where we're likely to get to if we don't act. If we're to bring 
those probabilities down to anything like acceptable levels, we 
as a world are going to have to peak in the next 5 or 10 years, 
which means the rich countries have to peak almost immediately, 
and the poorer countries have to peak by around 2020. 
Increasingly, you're seeing Mexico, Brazil, China come in with 
plans which look as if they could achieve peaking in 2020. We 
all hope they'll do more.
    What would it cost us to do this as a world? Well, I've 
said 1 or 2 percent of GDP to cut emissions by--as a world, by 
50 percent by 2050, which would be what would be necessary to 
hold emissions concentration--to hold concentrations in the 
atmosphere below 500 parts per million of CO2 equivalent, and 
then start the process of bringing it on down from there.
    Many estimates--Mr. Chairman, you quoted that from 
McKinsey's, which is a very good one--are much, much lower than 
those numbers. Those numbers leave a lot of scope for good 
policy to bring those costs down, and they don't assume much 
learning. We can do much, much better than that, in my view.
    But, there's actually a rather deeper point, which is that 
this simple calculation of costs in the way that most 
economists do it--you know, What slice of GDP do you have to 
make out to make these changes?--usually the number is small, 
as I argued, but I think that's the wrong way to look at it. We 
have to look at it in a much more dynamic way. If you just look 
at this next year or two, we can, through a green recovery, 
have a very powerful force for coming out of recession. Roughly 
speaking, for $10 billion, you create 100,000 jobs in 
weatherproofing. That's--and the tremendous returns to that, in 
terms of energy saving. You probably save $2 or $3 billion a 
year simply on energy from that whilst creating those jobs. The 
Peterson Institute's come up with those numbers; they're quite 
similar to what we've done in the Grantham Institute at London 
School of Economics. So, great returns in the short run.
    We would embark, second, on two or three decades of very 
powerful growth driven by investment in low carbon technology. 
We'd have a true Schumpeterian story of innovation and 
investment driving growth would be similar--indeed, probably 
bigger than the railways, electricity, the motor car, or IT. 
There's a very dynamic story of growth there.
    Third, if you run that forward 40 or 50 years, we'll have 
low carbon growth. That will be much more attractive than the 
alternative. It will be cleaner, in the normal sense of less 
polluting locally. It will be much more energy secure. It will 
be quieter, it will be safer, it will be more biodiverse. And 
further, in a still longer period, it'll dramatically reduce 
the long-term risks.
    This is an investment program, with returns in years and 
months, and with returns in a few decades, a return in several 
decades, returns over the century. It is enormously attractive, 
and a narrow view of short-run costs doesn't pick up that 
dynamic story.
    And, above all, it's a growth story. High carbon growth 
kills itself--first, on very high prices of hydrocarbon, and 
second, on the very hostile physical environment it creates. 
Low carbon growth is the only growth story, and the United 
States is in a tremendous position to lead. The constant 
innovations and new ideas that you see, in large measure, come 
from this country.
    We are, of course, in an economic crisis. That just 
strengthens the arguments still further. The argument of the 
economic crisis for delay is simply confused and wrong. We 
should surely have learned that risks ignored are risks 
magnified. That must be a lesson from this economic crisis. We 
should surely have learned that you don't come out of one 
crisis and sow the seeds of the next crisis. I would suggest 
that's, in part, what we, as a world, did when the dot-com 
bubble burst around the turn of the century; we sowed the seeds 
of the next one. What we must surely do is lay the foundation 
for the real growth story of these next few decades.
    If you just take a narrow view, over this next decade, of 
the new jobs in renewables, it's probably a few million in the 
United States and a few million in Europe. That's a very narrow 
view of renewables. We have to see energy efficiency as 
pervading the whole construction industry, as pervading the 
whole of public transport and of private transport. If you take 
that view, I believe you're going to talk about a big slice of 
our workforce in the new technologies, the new construction, 
the new transport, and so on, that's coming forward.
    So, the challenge, then, is to manage the transition, and 
to do it well. We know the kind of policies that are 
necessary--prices for carbon and regulation, investing in new 
technologies, public and private, promoting energy efficiency, 
avoiding deforestation, and adapting to the carbon--adapting to 
the changes which will take place. We know what we have to look 
out for--problems of competitiveness and leakage. We can 
analyze how big they are.
    Joe Aldy and Betty Pizer, a recent paper, have showed that, 
actually, the problem is very small, and, for a reasonable 
estimate, the carbon price in the United States, the change in 
employment in manufacturing would be negligible.
    There'll be a few areas where it is most important, and we 
have to focus our policy on working out how to manage those. 
But, I believe, again, there's a great deal we can do in, for 
example, adjusting the speed of auctioning permits, which could 
be different in industries with different challenges. That 
would be one way of doing it. But, of course, much the best way 
is to work together as a world to get everybody along this 
path, and that's the opportunity we have in Copenhagen.
    I've tried, in the book ``Global Deal,'' which was 
published here in the United States last month, to set out what 
such a global deal would look like. I believe that the United 
States, China, and the European Union will lead that global 
lead. They're responsible for about half of global emissions. 
The big story is the relationship between the United States, 
China, and the European Union. That will shape where this 
global deal goes.
    We have to recognize what other people are doing. And you, 
in your introduction, sir, you described very clearly that 
China is moving quickly. The European Union is moving very 
quickly. I spend a lot of time in discussions with European 
Union leaders and with Chinese leaders, and I always try to 
explain to them what United States is doing. But, what I'm 
saying here is that United States position is critical. The 
technologies that you set as standards will change the world. 
In the United States, you went from leaded to unleaded petrol; 
everybody else had to follow. And they did. At the same time, 
the action which people will take, themselves, will depend very 
much on what United States does. So, you have a tremendous 
leadership role, which I believe you are starting to take, and 
you have the ability to have a tremendous multiplier effect, 
not only through your ideas and technologies, which will be 
fundamental, but also in the policies and actions which you 
make, going forward. And I think you're already seeing the 
world starting to follow where the world thinks United States 
is likely to go, and I think that's a tremendous move forward. 
I'm not an American, as you can tell from my accent, but 
looking at United States from outside, I think the leadership 
that's emerging is tremendously important. And, of course, if 
it doesn't emerge, it would be very damaging for a global 
agreement. But, I'm much more optimistic now than I was before.
    So, thank you very much for the opportunity to be here.
    [The prepared statement of Lord Stern follows:]

   Prepared Statement of Lord Nicholas Stern, Chair of the Grantham 
 Research Institute on Climate Change and the Environment and IG Patel 
Professor of Economics and Government at London School of Economics and 
               Political Science, London, United Kingdom

                                overview
    The world currently faces both an economic crisis and an even 
deeper climate crisis. This global economic recession, triggered by a 
major financial crisis, draws into sharp focus the economic and social 
impact of not taking into account the risks of our actions. The climate 
crisis is altogether of a different scale and magnitude. Continuing 
with current practice will, by the end of the century, take the world 
to a point where eventual global warming of more than 5 C is more 
likely than not. Temperature increases on this scale would disrupt the 
climate and the environment so severely that there would be enormous 
consequences for where and how people lived their lives. Large scale 
migration, possible of hundreds of millions of people, would probably 
result in extended conflict. In other words, the current path of high 
carbon growth cannot sustain itself over the long term. Low carbon 
growth is the only sustainable growth path for the future. Moreover, 
the transition to a low carbon global economy offers substantial 
opportunities for a surge in economic growth led by innovation, 
investment and job opportunities, whilst supporting energy security and 
a cleaner, safer, quieter and more biodiverse environment. Many of the 
necessary technologies are already understood, but new ones will be 
created along the way offering substantial opportunity for investment. 
Those countries which act early are likely to reap significant economic 
rewards and ensure their growth will be resilient to climate change in 
future. Those countries who fail to anticipate change will be left 
behind. The United States has a historic opportunity to lead the 
transition to a global low carbon economy, demonstrating that low 
carbon growth is feasible and affordable. Moreover, the United States 
has a critical role to play if the world is to achieve a global deal on 
climate in Copenhagen in December 2009.
                          the case for action
    The basic science is well understood. The rising concentration of 
greenhouse gases in the atmosphere, due to emissions from a wide range 
of human activities, is increasing average global temperatures. This 
process affects the timing, distribution, averages and extremes of 
temperatures as well as the intensity of rainfall, likelihood of 
extreme weather events and pace of sea level rise. Without strong 
action the world will, in the next decade, commit future generations to 
a temperature rise of at least 2 C relative to preindustrial levels--a 
level which many scientists already deem too dangerous. A temperature 
rise of at least 5 C is unknown territory for humans and greater than 
the difference between now and the last ice age. There would 
undoubtedly be catastrophic consequences for the planet.
    Climate change is already having an impact in the United States. 
Increases in weather extremes such as storms, floods, droughts, and 
heat waves have already led to significant economic damages in both 
rural and urban areas and further impacts and increasing damages are 
forecast. Globally, it is the poorest countries and poorest within 
those countries that will be hit earliest and hardest but these impacts 
will be felt worldwide. The risks of severe hardship and dislocation, 
water stress, mass migration and rising conflict will pose a severe 
foreign policy challenge for the United States in the future. The need 
to manage risks to United States economic, national, and energy 
security therefore dictates early and strong action on climate change.
    Climate change policy is not only sensible risk management. It is 
also the means for boosting growth today whilst laying the foundations 
of stable and sustainable growth for future generations. It is vital 
that all countries act together in order to achieve emissions cuts on 
the scale required. The United States has an important leadership role 
to play and can lead the world in the transformation to a low carbon 
global economy, generating new investment and employment opportunities 
and positioning itself as a global leader in new innovative 
technologies. Policies for a ``green recovery'' will create a pathway 
for more sustainable growth whilst also sharply reducing climate change 
risks. This is the only growth strategy for the future.
                future growth must be low carbon growth
1. Economic opportunities in early and strong action on climate change
    The question of what economic opportunities strong action on 
climate change could bring should start with an overview of what the 
policy framework should look like. The following key components make up 
the essential elements:

   Placing a price on carbon to correct market failures by 
        making it possible for markets to reflect the right signals;
   Policies to stimulate the development and deployment of low 
        carbon technologies through addressing market failures and 
        bottle necks;
   Encouraging behavioural change, particularly energy 
        efficiency;
   Promoting adaptation to climate change that is already 
        unavoidable;
   Globally, bringing an end to deforestation.

    If applied in the right way, policies to tackle climate change 
present both short-term benefits during the current global recession 
and underpin large and growing investment opportunities for decades to 
come. For example, pathways for green global recovery include short-
term policies that can stimulate employment creation and investment, 
all of which can play a vital role in supporting aggregate demand and 
growing out of recession. In the medium to long term there are clear 
win-wins from a strong policy framework to tackle climate change, 
including the stimulus to innovation from structural change, addressing 
longstanding market failures and barriers preventing behavioural change 
and uptake of new technologies, and important co-benefits such as a 
cleaner environment and greater energy security. The era of low carbon 
growth promises to be exciting, creative, and transformational.
    For these reasons, the debate around climate change action should 
not be seen purely through the lens of containing and managing economic 
costs. There will indeed be costs of transition, but these can be 
managed through carefully targeted policies and programs. More 
importantly, there will be investments with very high returns. 
Moreover, taking action today is crucial to avoid the high costs of 
delay. Continuing business as usual emissions will build stocks of 
CO2 in the atmosphere, resulting in higher concentrations 
and making the starting point for reductions both more challenging and 
more expensive. Slow initial action not only increases the chances of 
going above 2 C, but also means that low-cost mitigation options are 
missed and high carbon technologies and infrastructure are locked in. 
It is therefore vital to strengthen the understanding among 
governments, businesses and consumers of how key policies to tackle 
climate change, both domestically and at a global level, can promote 
and sustain economic recovery and growth in the future.
    The economic arguments that climate change policies can be growth 
enhancing have most recently been debated in the context of the 
economic stimulus and recovery packages implemented in many of the 
world's major economies. At time when declining demand in the world 
economy is driving economic downturn, causing a sharp deterioration in 
the economic outlook, the case for a fiscal stimulus becomes clear 
cut--helping to sustain demand, use otherwise idle resources, save 
money through improved energy efficiency and create jobs. To be 
effective, however, fiscal policies need to be timely (with a 
significant proportion of expenditures being carried out within the 
next year), well targeted (with long-term social returns, positive 
lock-in effects and use of underutilized resources) and time-limited 
without bringing into question the long term credibility of the fiscal 
framework.
    In several recent papers \1\ on this issue, public spending aimed 
at stimulating private investment to reduce green house gas emissions 
was seen to perform very well against these criteria for an effective 
stimulus, whilst increasing energy efficiency and security. Through 
addressing market failures and stimulating private investment, these 
measures generally avoid crowding out private sector activity. Such 
policies not only make sense in the current economic context, but also 
more generally as the drivers of future innovation, job opportunities 
and to lay the foundations for growth in the future that is far more 
sustainable than the path the world is currently on. Crucially, these 
policies avoid the risk of locking in high carbon infrastructure for 
the coming decades.
---------------------------------------------------------------------------
    \1\ ``Towards A Green Global Recovery--Recommendations for 
Immediate G20 Action,'' O. Edenhoffer and N. Stern, April 2009. And, 
``An Outline of the Case for a Green Stimulus,'' A. Bowen, N. Stern, S. 
Fankhauser, and D. Zenghelis, February 2009.
---------------------------------------------------------------------------
2. Key areas for investment and action
    A key example of this is in spending to improve energy efficiency. 
All major economies have the potential for substantial energy 
efficiency improvements, which in total could make up a significant 
proportion of the emissions reductions required to meet global 
stabilisation targets. Energy efficiency measures have a high 
multiplier effect (raising aggregate demand through fiscal spending) 
being concentrated in sectors strongly affected by the decline in 
global demand, such as construction. Furthermore, lower spending on 
energy costs frees up income that can be spent on the products from 
other sectors of the economy. Energy efficiency measures also lay the 
foundation for a more sustainable future, simultaneously reducing 
emissions and energy costs, cushioning against future resurgent oil 
prices. In all countries, substantial potential for energy efficiency 
improvements remain. The IEA \2\ has identified 25 energy efficiency 
policies, including in buildings, transport, appliances and industrial 
sectors that can be implemented at low or negative cost impacting 
economic activity in the short term and reducing consumer energy bills 
in the future.
---------------------------------------------------------------------------
    \2\ ``A Clean Energy New Deal: Ensuring Green Growth in a Time of 
Economic Crisis,'' December 2008.
---------------------------------------------------------------------------
    Policies to upgrade physical infrastructure are another good 
example of measures to create short-run benefits whilst laying the 
foundations for future sustainable growth. Investment in infrastructure 
can have a high multiplier effect in times of economic recession. If 
well targeted, it can also have strong implications for the profile of 
emissions in the future. This is nowhere truer than in the power 
sector. Ageing capital stock in industrialized countries presents an 
excellent investment opportunity, for example in the transmission and 
distribution grid, storage of electricity and other elements of the 
network to absorb innovative low carbon technologies and avoiding lock-
in of high carbon systems. Investing in networked technologies to 
ensure energy is produced, distributed and consumed more efficiently 
through integrated ``smart'' systems which monitor and reduce waste 
also have great potential to save money and reduce emissions. 
Investment in public transport is another strong example, contributing 
to the decarbonisation of infrastructure, for example through setting 
emissions standards for CO2 and local air pollutants and supporting the 
switch from petroleum to electricity.
    Policies to support clean energy technology are a further crucial 
part of the mix, contributing directly to job growth and fostering 
innovation, creativity and comparative advantage in a key future growth 
sector. If the world is to put itself on a path to achieve the 
necessary cuts in emissions, a fundamental transformation is required 
in the way energy is produced and consumed. Key technologies including 
renewable energy (solar, wind, hydro, tidal, wave, biomass, and 
geothermal), nuclear and carbon capture and storage for coal will 
require significant investment for demonstration and deployment if 
growing world energy demand is to be met. The IEA estimates $1 trillion 
a year in energy supply investment between now and 2030 is needed. The 
difficulties caused by current credit market constraints and other 
bottlenecks make this challenge even more daunting. Nonetheless, there 
could be significant economic opportunity for early movers who strive 
to get ahead of the curve. As we learn more about technologies from 
research and experience and exploit economies of scale, costs fall over 
time. Moreover, the job growth potential in the clean energy industry 
is increasingly clear, with countries such as Denmark and Germany 
amongst many others already reaping rewards. Early investment in low 
carbon technologies also makes clear sense from a cost perspective, 
reducing a key source of uncertainty about the scale of future 
mitigation costs. Furthermore, it can promote energy security through 
securing against future supply disruptions and support resistance to 
future price shocks.
    These are only three examples of policy areas that can secure the 
immediate benefits of stimulus and employment creation, whilst laying 
the foundations for a low carbon world. Governments around the world 
are already taking strong action in this direction, evidenced by the 
$430 billion fiscal resources dedicated to climate change investment 
themes as part of recent stimulus packages. This includes the $65 
billion committed by the U.S. administration to green energy, through 
spending and tax incentives. In the U.K. 2009 budget, 1.4 
billion new spending was announced to support the low carbon sector. 
China and South Korea are also major economies with policies for low 
carbon growth making up an important part of their fiscal stimulus 
packages and approaches to future wealth creation and sustainability. 
There are many more positive examples at the firm level, where globally 
competitive companies are embedding energy savings and low carbon 
policies at the centre of their business planning. Recent research 
shows that better managed firms generally tend to me more energy 
efficient, reducing energy usage without hurting their employment and 
output. In the United States, companies such as Cisco, IBM, DuPont, Dow 
Chemical, General Electric, and Duke Energy are at the forefront of the 
climate change debate, recognising that strategic global importance of 
low carbon growth and energy savings to their business models.
    The current global financial crisis has clearly brought into 
sharper focus the need for an economic recovery which leads to a more 
sustainable global economy. Action currently being taken around the 
world is only the beginning of the pathway that is necessary to achieve 
a low carbon global economy, consistent with the international targets 
necessary to avoid dangerous climate change. In future, there is both a 
need and an opportunity to deepen these policies at the national level 
and make them even more impactful through globally coordinated action. 
Without this, it will not be possible to stimulate the global flows of 
trade and investment that is vital to support deep emissions cuts on 
the scale required, whilst sustaining economic growth and supporting 
the international development and diffusion of critical low carbon 
technologies. The United States has a historic opportunity to lead the 
world in the era of low carbon growth, acting early to create new forms 
of comparative advantage and foster a sustainable growth path for 
itself and others in the future. Leadership has already been shown in 
some United States States, such as California, to introduce regulation, 
cut emissions and support low carbon industry. Furthermore, there is 
enormous scope for developing the renewable industry in the United 
States, given its natural resource endowments.
3. Fostering the transition and managing the costs of adjustment
    Like any adjustment process, there will be costs of transition 
inherent in transforming the economy to a low carbon growth path. 
Placing a price on carbon, whether through cap and trade or a carbon 
tax, requires the market to readjust. There will clearly be winners and 
losers from this process, as with any adjustment process. However, with 
the right policy framework these costs should be manageable and are not 
a reason to delay strong action. Complementary policies to support 
adjustment at the firm level, innovation and uptake of new 
technologies, to encourage behavioural change and to enable trading 
will help support least cost abatement potential and keep costs at a 
manageable level.
    Concerns about competitiveness and carbon leakage are often heard 
and are important considerations for any government. It is important to 
understand and quantify these impacts as closely as possible, to ensure 
they are not overstated and that any compensation program can be well 
targeted. Existing research shows that these concerns are mainly 
relevant to a small number of specific industries and sectors rather 
than the wider economy. In the United States, only 1.6 perecent of GDP 
and 1.7 percent of employment are generated from carbon intensive 
sectors. Moreover, the influence of small carbon costs on location 
decisions is dwarfed by commercially more important factors such as 
access to markets, raw materials, skills, technologies and 
infrastructure. Recent research by the Pew Centre \3\ confirms that the 
competitiveness impacts from a unilateral United States climate policy 
on domestic manufactures as a whole are small (approximately 0.7 
percent) for a $15 per tonne CO2 price. This implies policies are most 
efficiently targeted at supporting the transition in specific 
industries. Protectionist trade measures should be avoided. They are 
blunt measures and risk affecting unrelated industries if trade dispute 
results.
---------------------------------------------------------------------------
    \3\ ``The Competitiveness Impacts of Climate Change Mitigation 
Policies,'' J. Aldy and W. Pizer, Resources for the Future, May 2009.
---------------------------------------------------------------------------
    Equally important are the concerns around costs to consumers and 
households through energy price rises, brought about by placing a price 
on carbon. Whilst cost passthrough of the carbon price from industry to 
the consumer does occur as part of the clear price signal that is 
necessary to incentivise behavioral change, the average cost to 
household budgets can be contained through careful measures, including 
through compensating low-income households. Moreover, encouraging 
companies to improve their efficiency and allowing companies access to 
cheaper abatement opportunities abroad would reduce the price of 
emission permits, leading to lower cost being passed through to the 
consumers. Household energy consumption can also be reduced through 
behavioral change, awareness, low-cost actions, and investment 
decisions. Capturing such opportunities would mean less income spent on 
energy, and hence help keep cost down for vulnerable families. In other 
words with the right flanking measures, a carbon price should not 
necessarily entail excessively higher cost to consumers.
 achieving a global deal on climate change--a leadership role for the 
                             united states
    A global deal on climate change is necessary if the world is to 
achieve the necessary global targets. The timing is urgent, with the 
negotiations for a post-Kyoto framework shortly to get underway in the 
buildup to Copenhagen 2009. Both developed and developing countries 
have a role to play in building positive momentum for a global deal. 
This must be global collaboration on a scale never witnessed before in 
our lifetimes. The United States has a historic opportunity to play a 
crucial international leadership role to achieve this. The world will 
look to U.S. leadership in setting clear and strong mid-term targets 
for 2020, on a credible pathway to achieve its goals by 2050. The rest 
of the world will watch the domestic debate on U.S. climate legislation 
more closely than ever before, and if the United States demonstrates 
strong ambition for its own emissions reductions the rest of the world 
will follow. Moreover, the support which developing countries require 
to achieve low carbon growth, including vital flows of finance and 
technology, can only be successfully designed and implemented with 
strong U.S. backing. The chances of achieving a credible and enduring 
global deal on climate change depend on the United States playing a 
central role.
                               conclusion
    Strong action on climate change is feasible and affordable and 
creates substantial economic opportunity. The economic and climate 
arguments for the green fiscal stimulus have enabled governments around 
the world to better understand the framework for supporting 
opportunities, whilst managing the economic costs. Fiscal stimulus 
measures for example in energy efficiency, investment in alternative 
power infrastructure, low carbon RDD&D, infrastructure and transport 
will both enable a green recovery and lay the foundations for the 
future more sustainable growth. This is only the beginning of what 
needs to be done to set the world on a pathway for avoiding dangerous 
climate change. The scale of the challenge is daunting, but full of 
opportunities. The task now rests with Governments to put in place as 
quickly as possible a clear, consistent and credible set of policies 
and measures to support the transition to a global low carbon economy, 
bound into an international framework.

    The Chairman. Well, thank you, Sir Nicholas. And we do look 
forward to being able to ask you a few questions. But, your 
opening statement sets a good stage, and we appreciate it very 
much.
    Mr. Rogers.

  STATEMENT OF JAMES E. ROGERS, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, DUKE ENERGY, CHARLOTTE, NC

    Mr. Rogers. Mr. Chairman, Ranking Member Senator Lugar, I 
am delighted to be here today to share with you my thoughts on 
how we can work together to drive a green global economic 
recovery.
    My name is Jim Rogers. I'm the CEO of Duke Energy. We 
provide electric power to more than 11 million people in five 
States, and, as Senator Lugar knows, we're the largest utility 
in Indiana. We're also the third-largest electric power 
generator, based on kilowatt-hour sales, in the Americas, both 
North and South America. We produce electricity from 
renewables, solar, wind, and biomass, coal, nuclear, natural 
gas, and hydropower.
    As I sit before this committee, I recognize, as you all do, 
that we face two simultaneous and urgent crises: Global climate 
change and a deep financial downturn. There are great 
similarities between them. No one nation or entity can solve 
either problem. It will take policy leaders and businesses from 
around the world to solve both.
    There's a great opportunity for us in both crises. If we 
structure our approach to climate change effectively, we can 
address the global climate crisis, which will provide a pathway 
to help address the global financial crisis.
    Climate legislation in the United States is not going to be 
free, it's not going to be easy or quick, but it must be fair, 
and it must be now, to drive a green global economic recovery.
    There are several reasons why action, now, is important. By 
putting a cap on emissions and a price on carbon, it will allow 
our country to get the best bang for the buck from the green 
portions of the stimulus. This linkage will create a roadmap 
that will allow capital-intensive industries, like my own, to 
start planning for future investments and the creation of 21st 
century high-tech jobs, because the building of new 
transmission, renewables, nuclear, cannot be done overnight; it 
can be completed over the next 3 to 10 years. Most 
importantly--and I want to underscore this--it is confidence in 
this roadmap that will help us all rebound from this recession 
that we find ourself in today.
    I'd further note that, as I look at our own company, as one 
of the largest generators in the country, by 2050 virtually 
every powerplant we own today will be retired or replaced. And 
that's an ``aha'' for me, in the sense that it says that, if we 
want a low carbon generation fleet in this country, getting 
about the business now will allow us to make this transition in 
a way that creates jobs and generates advanced technologies.
    The second reason is--action now is important--is because 
the United States, in my judgment, lags behind its global 
competitors in the race to fuel the clean energy future. 
According to research firm New Energy Finance, the value of low 
carbon energy market worldwide is expected to reach $450 
billion annually by 2012, rising to $600 billion annually in 
2020. Without a U.S. carbon program, we will not be 
participating in these lucrative markets.
    If you look today at China, you will find that they are 
investing roughly $221 billion over the next 2 years in clean 
energy. That's double the U.S. investment in everything from 
wind to solar to advanced batteries. I understand very well the 
arguments against action on energy and climate, with concerns 
focused on our economy today; but, the reality is, we can't 
afford not to act if we hope to compete and lead.
    The right--underscore ``right''--comprehensive carbon 
legislation can provide, not only the certainty and rules of 
the road by which we can plan, build, and compete, they can 
also protect consumers during the transition to this low carbon 
world. The sooner Congress provides a clear set of rules, the 
sooner investments will be made.
    I strongly believe that one of the most effective 
approaches to solving the climate issue would be to develop a 
series of public and private partnerships with countries and 
businesses around the globe. Through domestic action and 
international leadership and cooperation, we can drive a green 
economic recovery worldwide.
    For instance, we have an opportunity to establish a new 
spirit of cooperation between China and the United States. The 
most important long-term issue that both countries face is the 
same: The challenge of responding to climate change while 
providing for economic growth. It is an issue for which 
progress would be mutually beneficial. Think about it. Both 
countries rely heavily on coal. Both rely on oil, a national 
security issue for both. Both are at risk, due to climate 
change. Because of these shared concerns, this area is ripe for 
collaborative endeavors that would build additional trust 
between China and the United States.
    It is my judgment, and the recommendation that I would make 
is, that the United States should appoint a senior climate 
negotiator to work directly with China to build what I would 
characterize as a ladder of cooperation which engages both the 
public and private sectors. I believe China would respond in 
kind. And I think that's an important point. This cooperative 
effort, I believe, would be like a living laboratory to further 
action on electric cars, the identification of new energy 
efficiency capabilities, research and deployment of carbon 
capture and sequestration, which is so key to our continued use 
of coal. I believe that we will be able to scale carbon capture 
and sequestration faster in China, with their buildout of 
plants, than we can in the United States; and by working 
together, we can do it even faster. It will also lead to work 
on Smart Grid technologies, and are involved, as a company, in 
some of those efforts, and advanced technologies for the 
monitoring of greenhouse gases. These are just some of the 
areas that we could work together with the Chinese on that 
would advance for both of us.
    Cooperation and progress in the development and deployment 
of clean energy technologies are not just important in their 
own right, they also encourage a new spirit of Chinese 
leadership in United Nations climate negotiations.
    It's my belief that China is better equipped than any other 
developing country to help the world define pathways for all 
nations to follow toward emission reductions. First, by taking 
cost-effective steps to cut energy waste, and second, by 
graduating to real and enforceable emission limits. Working 
together on clean energy, the United States and China may also 
be able to show the way to a new global agreement on climate 
change.
    And this idea is not original with me; this idea actually 
comes from former Prime Minister Tony Blair, who talks about 
the significance of the G2, not just the G8 or the G20, but if 
the G2 can come together, not in a way that--to the exclusion 
of the rest of the world, but because we have these common 
interests and these common issues, that we could help mold a 
post-Kyoto agreement. Our company stands ready to work both 
with the administration and Congress to get this done.
    Thank you very much.
    [The prepared statement of Mr. Rogers follows:]

 Prepared Statement of James E. Rogers, Chairman, CEO, and President, 
                 Duke Energy Corporation, Charlotte, NC

    Mr. Chairman and members of the committee, I am delighted to be 
here today to share with you my thoughts on how we can work together to 
drive a green global economic recovery. My name is Jim Rogers and I am 
chairman, CEO, and president of Duke Energy Corporation.
    Duke Energy provides electric power to more than 11 million people 
in five States: North Carolina, South Carolina, Ohio, Indiana, and 
Kentucky. We are the third-largest electric power holding company in 
the United States based on kilowatt-hour sales. Our diversified 
generation portfolio of 37,000 megawatts mirrors the mixture of supply 
in the United States as a whole with a blend of coal, nuclear, natural 
gas, and hydropower.
    We have also made sizeable investments in renewables, notably wind 
where we have more than 500 megawatts in operation and another 5,000 
megawatts under development, and in biomass where we have formed a 
joint venture that has targeted the construction of at least ten 50-
megawatt biopower facilities in the United States over the next 5 
years. Finally, Duke Energy owns and operates approximately 4,000 
megawatts of electric generation facilities in Central and South 
America. About 75 percent of this capacity is hydroelectric.
    My views on these international challenges are not just shaped by 
my responsibilities running a large U.S. energy company with 
significant international operations. My perspective has also been 
formed from my membership and participation in the World Economic 
Forum's Task Force on Low-Carbon Economic Prosperity, the Club of 
Madrid and U.N. Foundation ``Global Leadership for Climate Action,'' 
Globe International, the World Business Council for Sustainable 
Development, and the Copenhagen Climate Council. We are a founding 
member of the Joint U.S.-China Cooperation on Clean Energy where we are 
focused on sharing information, experience, and expertise. And we are 
the only U.S. utility that is a founding member of the China Greentech 
Initiative. Some of the other U.S. members are Dell, Cisco, and GE.
                     two crises, two opportunities
    Here and around the world we are facing two simultaneous and urgent 
crises: Global climate change and a deep financial downturn. There are 
great similarities between them. No one nation alone can solve either 
problem. With both, government, NGOs, and business must work together 
to find the right way forward.
    Yet there are key differences: The economy has sustained a cycle of 
boom and bust for generations, whereas the environment is close to 
``bust,'' and it is not cyclical. We are fast approaching thresholds of 
irreversible damage to our global climate. But the government has the 
chance to address this great market failure to still minimize its worst 
impacts. And there is a great opportunity for us in both crises: If we 
structure our approach to climate change effectively, addressing the 
global climate crisis can also be one of the keys to addressing our 
global financial crisis.
    I agree with a key point Sir Nicholas Stern has made: We must act 
now because if we don't, the economic costs, including the cost of our 
security here at home, will be much greater. Moreover, the costs and 
harm to those who are least able to adapt to the impacts of global 
climate change will rise significantly absent action now--and the 
unjust irony is they have contributed least to the problem.
             consumers are at risk: we must get this right
    I might add that my company and my customers are at ground zero for 
both the environmental and economic storms we face. Duke Energy is the 
third-largest consumer of coal in the United States and we emit around 
100 million tons of carbon dioxide annually. And as Senator Lugar 
knows, the Midwest has been particularly hard hit by this recession. 
With so much of this region dependent upon traditional coal-fired 
powerplants, we have to be very careful about how we make the 
transition to a ``decarbonized'' economy. Yet we also know that new 
clean technology manufacturing can help restart closed factories as the 
Gamesa wind turbine facility has in Pennsylvania.
    So how do we move forward to capture this economic opportunity here 
at home and globally? We need government leadership to partner with 
industry to transition our economy to be cleaner, more efficient, and 
more competitive. The Waxman-Markey bill currently being marked up goes 
a long way toward providing a solid foundation upon which we can build 
a green global economic recovery. It creates a 40-year roadmap for U.S. 
carbon reductions; in our sector, it seeks to minimize consumer impacts 
and regional disparities by effectively distributing allowances 
directly to consumers of electric power; it creates enormous incentives 
for renewable energy; and it focuses needed resources on the 
development of the next generation of coal powerplants that will 
include carbon capture and sequestration.
                     american economic opportunity
    By putting a cap on emissions, encouraging energy efficiency and 
deployment of clean energy technologies, and providing a transition to 
allow carbon economy, the right climate legislation will not only 
increase our competitiveness by reducing energy consumption and 
reliance on foreign oil, but will also create clean energy jobs here at 
home in engineering, manufacturing, and construction.
    The carbon intensity of the United States has begun to show steady 
declines on a normalized basis--that is greenhouse gas emissions per 
unit of GDP. Since 1950 U.S. energy use--measured per dollar of GDP--
has declined more than 75 percent, from 9.4 British Thermal Units per 
dollar of GDP to just 2.5 BTUs.\1\ Yet we have much more work to do.
---------------------------------------------------------------------------
    \1\ Joel Makower,`` Strategies for the Green Economy.''
---------------------------------------------------------------------------
     According to the McKinsey Global Institute, ``each person in the 
United States today consumes the equivalent of almost seven gallons of 
oil--80 percent more energy than Northwestern Europe, 94 percent more 
than Japan, and seven times the level of China.'' This waste harms our 
competitiveness. Yet, according to this same analysis, by deploying 
existing technologies that have an investment return of 10 percent or 
more, the United States can increase its energy productivity to cap our 
energy demand at today's levels.\2\
---------------------------------------------------------------------------
    \2\ ``Wasted Energy: How the U.S. Can Reach Its Energy Productivity 
Potential,'' McKinsey Global Institute, July 2007, available at: http:/
/www.mckinsey.com/mgi/publications/wasted_
energy/index.asp.
---------------------------------------------------------------------------
    Of course one key aspect of this is in the utility industry is the 
disincentives to saving energy. Working as cochair of the National 
Action Plan on Energy Efficiency, which has developed Vision 2025, a 
plan to increase dramatically energy efficiency by 2025, we encouraged 
States to examine the disincentives to utility energy efficiency and 
identified the barriers that consumers have to meeting that energy 
efficiency goal.
    The United States also lags behind its global competitors in the 
race to fuel the clean energy future. According to the research firm 
New Energy Finance, the value of low carbon energy market is expected 
to reach $450 billion annually by 2012, rising to $600 billion annually 
in 2020. In 2007, global investment in sustainable energy broke all 
previous records, with $148.4 billion of new money raised in 2007, an 
increase of 60 percent over 2006. Total financial transactions in 
sustainable energy, including acquisition activity, was $204.9 
billion.\3\
---------------------------------------------------------------------------
    \3\ ``Global Trends in Sustainable Energy Investment,'' 2008, New 
Energy Finance and United Nations Environment Program.
---------------------------------------------------------------------------
China is Investing in Greentech
     While I recognize that the Chinese market differs substantially 
than the United States, it is still worth noting that China has 
committed $221 billion over the next 2 years toward their clean energy 
economy. That's double the U.S. investment in everything from wind to 
solar to advanced batteries. China now has renewable energy, energy 
efficiency, and fuel economy standards that are all more aggressive 
than our own. I also realize that China is developing more coal plants 
than the United States, but the point that should be emphasized is they 
are also preparing to meet new energy challenges.
    According to the Chinese Sustainable Energy Programs: ``By 2008, 
average Chinese passenger cars had to meet a 36-miles-per-gallon (mpg) 
fuel efficiency standard. In late 2007, the U.S. standard for passenger 
vehicles was raised to 35 mpg, but not until 2020. China is also in the 
process of setting fuel economy standards for trucks and agricultural 
vehicles. These policies together are going to reduce China's GHG 
emissions by 488 million tons of CO2 by 2030.'' \4\ In comparison, the 
EU commitment under Kyoto is about 300 million tons of CO2 between 1997 
and 2012.
---------------------------------------------------------------------------
    \4\ The China Sustainable Energy Program is a joint project of the 
Packard Foundation and the Energy Foundation.
---------------------------------------------------------------------------
    Perhaps most striking, China has established the world's most 
aggressive energy efficiency target, which calls for a 20-percent 
reduction in energy intensity between 2005 and 2010 (which is a 
nation's energy consumption per unit of GDP). If fully implemented, 
this target would translate to a reduction of over 1.5 billion tons of 
CO2 in just 5 years. Although China is not yet on track to fully reach 
this goal, they are working toward it and are already taxing the least 
efficient performers in major emitting industries to increase 
productivity.\5\
---------------------------------------------------------------------------
    \5\ Ibid.
---------------------------------------------------------------------------
    China's Renewable Energy Law, which came into force in 2005, has 
set the world's most aggressive renewable energy target. By 2020, 15 
percent of all energy is to come from wind, biomass, solar and 
hydropower energy, compared to its current 7 percent. China projects 
that it will have 137 gigawatts of renewable power generation by then, 
plus vehicle fuels with at least 15 percent renewable energy content. 
In August 2007, China's National Development and Reform Commission 
launched its Medium to Long-term Renewable Energy Development Plan. By 
2020, installed capacity for small hydro, wind, biomass, and solar will 
reach 75 GW, 30GW, 30 GW and 1.8 GW, respectively. Estimated total 
investment needs for realizing these target amounts to nearly US$270 
billion. As you know, the United States has yet to establish a national 
renewable energy platform.\6\
---------------------------------------------------------------------------
    \6\ Ibid.
---------------------------------------------------------------------------
    These investments and policies are paying off. This year, China is 
expected to become the world's largest wind turbine manufacturer. Until 
the late 1990s, the United States dominated the global solar energy 
market. Now Japan, China, and Germany are the leaders. These other 
countries have policies that have created better markets for clean 
technologies, so the business opportunities have moved overseas. 
According to recent research by Lazard, of the world's top 10 solar, 10 
wind, and 10 advanced battery manufacturing companies, only five of the 
30 are American companies.\7\
---------------------------------------------------------------------------
    \7\ Lazard research for Kleiner Perkins Caufield and Byers.
---------------------------------------------------------------------------
    Arguments against action on energy and climate suggest we can't 
afford to take action; yet the reality is we can't afford not to act if 
we hope to compete and lead. We need comprehensive energy and carbon 
legislation to provide the certainty and rules of the road by which we 
can plan, build, and compete. The sooner Congress provides a clear set 
of rules, the sooner investments will be made. We must unleash the 
spirit of economic entrepreneurship to tackle this challenge.
            a global deal to drive a green economic recovery
    Internationally, I have been working to develop recommendations and 
help shape the structure of a global agreement through the World 
Economic Forum's Gleneagles Dialogue, through Global Leaders for 
Climate Action (under the auspices of the Club of Madrid and the U.N. 
Foundation), and as a member of the executive committee of the World 
Business Council on Sustainable Development.
    It is clear to me that just as effective comprehensive carbon 
legislation in the United States is what we need to drive our economic 
recovery, so too can a smart global agreement on climate change support 
global economic prosperity. And there are other benefits to agreement: 
First, the sooner we act, the lower the costs of impacts we will face 
in the future; second, the opportunities to cooperate on policy and 
technology strategies can improve our relationships; and by reducing 
global impacts from climate change, we will increase stability and 
improve national security.
    To reach a deal that includes developing countries the United 
States must demonstrate leadership and reengage in international 
negotiations. Seventy to eighty percent of the existing greenhouse gas 
concentrations in the atmosphere are from developed countries, and the 
United States continues to emit one-quarter of the world's emissions 
with only 5 percent of the world's population. There is a short window 
of opportunity for the United States to show its commitment to 
resolving the climate change challenge through strong action.
    Without a mandatory cap on greenhouse gas emissions here, it is 
highly unlikely that key developing countries like China will make 
their own commitments. And without a new agreement we won't have the 
market signals to drive financial flows to more efficient, cleaner 
energy, and greater global productivity. A global deal will also expand 
opportunities to find the lowest cost emission reductions; a global 
approach to emissions reductions allows each dollar to be spent where 
it can go the farthest.
    So to facilitate a truly global deal, we need a strong legislative 
package of medium- and long-term domestic targets, along with a suite 
of commitments and mechanisms to engage internationally. These include:

--Mandatory domestic reductions of greenhouse gas emissions;
--Provisions for valuing standing forests and other types of 
    international offsets;
--Bilateral and multilateral mechanisms to accelerate clean technology 
    deployment overseas;
--Financing for investments in these clean technologies (clean energy 
    and carbon mitigation technologies) in developing countries; and
--Assistance to the most vulnerable populations for adaptation to 
    climate change, to reduce climate change's greatest impacts such as 
    drought, flooding, and sea level rise. Oxfam estimates that 
    developing country costs of adaptation will be some $50 billion.
          benefits of a global deal with developing countries
    These provisions also serve America's interests. Mandatory 
reductions here drive domestic competitiveness and the development of 
vital new technologies. Carbon reductions from protecting international 
forests are low cost and have great co-benefits from poverty 
alleviation, to protection of biodiversity and will bring nations like 
Brazil and Indonesia to the table for the global agreement. Support for 
clean technology deployment and financing in developing economies 
benefits American innovators because it is these developing economies 
that can be the greatest market opportunities.
    According to New Energy Finance, in 2004-05, developing countries 
accounted for 10 percent of global asset finance, which doubled to 20 
percent in 2006-07, reflecting a surge in sustainable energy capacity 
in these countries. In addition, investment in shipping, airline, and 
auto efficiency and cleaner technologies and fuels also reduces our 
dependence on oil. Finally, adaptation assistance serves America's 
national security interests as well: As the Center for Naval Analysis 
has found, climate change is a great potential threat to our national 
security, undermining our stability and efforts to alleviate poverty 
which also exacerbates global instability. To ensure U.S. leadership, I 
understand that Senator Kerry has informed the Senate Budget Committee 
of his support for a $5 billion reserve fund to assist with the 
implementation of agreements reached at the 15th Conference of the 
Parties in Copenhagen this December.
Competition and Cooperation With China
    Some have argued that to ensure China and other rapidly 
industrializing countries make their own commitments, the United States 
needs to put in place border tax adjustments for carbon-intensive 
imports. However, China and India, the primary targets of U.S. trade 
measures in domestic legislation, are not leading suppliers of carbon-
intensive exports to the United States. Therefore, U.S. trade measures 
may not create substantial leverage to shape climate change policies of 
other countries--particularly China and India--even though they could 
provoke retaliation that hits U.S. exports.
    The United States should consider leading with cooperation, 
engaging China and India in the climate negotiations so as to reach 
global agreement and contribute to cooperative financing and technology 
arrangements that move all of us to reduce carbon emissions. Secretary 
Clinton has called for the United States and China and Japan to 
collaborate on clean cars and building efficiency. In fact investments 
in efficiency are the cheapest carbon reduction investments we can 
make. The electrification of transportation will reduce emissions and 
oil consumption, both leading to reduced carbon emissions and better 
U.S. security as we wean ourselves off massive infusions of foreign 
oil.
    I strongly believe that one of the most effective approaches to 
solving the climate issue will be to develop a series of public and 
private partnerships with China. Thus we are currently working with 
several Chinese organizations (and seeking other Chinese partnerships) 
to speed the development of smart grid and carbon capture and 
sequestration technologies. I have also been involved in efforts to 
have the three largest consumers of coal, the United States, China, and 
Australia, combine their efforts to quickly test and deploy advanced 
coal technologies including facilities with carbon capture and 
sequestration.
    I am proud that Duke is currently building the first ``next 
generation'' coal gasification plant at our Edwardsport station in 
Indiana. We are also working to add carbon capture and sequestration to 
this project. But with China opening new coal-fired powerplants on a 
monthly basis we have to accelerate our work on not just carbon capture 
from new plants but create retrofit options as well. This is a 
formidable technological and financial challenge. I think it behooves 
the United States to work with the other two ``coal powers,'' China and 
Australia, to pool our resources, to share data and to develop standard 
approaches that can quickly move this key solution from conception to 
commercial installation.
                        conclusion: we must lead
    Through domestic action and international leadership and 
cooperation, we can drive a green economic recovery worldwide. The 
energy provisions in the stimulus package were a downpayment on the 
transformation of our economy. But we need Congress to pass 
comprehensive climate legislation to build off of the stimulus 
investments, to continue the transition to a cleaner, more prosperous 
future for this country, and to regain our technological and moral 
leadership on this challenge globally.
    We stand ready to work with both the administration and Congress to 
get it done. We can lead. And we must lead.

    The Chairman. Well, thank you very much, Mr. Rogers. We, as 
I said earlier, greatly appreciate the leadership.
    Lets dig in. I know, Sir Nicholas, you have a plane that 
you need to catch, and we're sort of dealing with about a 45-
minute period, here, but I'm confident that Senator Lugar and I 
will have you out of here on time.
    Mr. Rogers, speak to the concerns that, as Senator Lugar 
has pointed out, and some other folks have in their States, 
about the transitional impact, here. What is it that you see, 
in terms of the imperative to move now, and the feasibility of 
doing so, that some other CEOs don't share with you? And you've 
had a lot of these discussions.
    Mr. Rogers. I've had the good fortune to spend the last 
several years working with USCAP. It's a group of 25 companies 
and four NGOs who have worked to mold what we call a 
blueprint----
    The Chairman. Just for the record's sake--I know who they 
are, but lay out the companies that are involved in that.
    Mr. Rogers. Well, I probably can't name them all, but GE, 
DuPont, some of the major auto industries, ConocoPhillips, Rio 
Tinto, which is the coal business; on the NGO side----
    The Chairman. Dow Chemical--I think, Florida Power & Light.
    Mr. Rogers [continuing]. Florida Power & Light, Public 
Service of New Mexico, PNM, Pacific Gas & Electric, also----
    The Chairman. Almost all of them, Fortune 500 companies.
    Mr. Rogers. All Fortune 500 companies.
    The Chairman. Right.
    Mr. Rogers. NRDC, EDF, WRI, the Pew Institute--so, we have 
a--that process, Mr. Chairman, has given me 2 years to work the 
issue and to think through the issue. And we were able to come 
together with a blueprint that I think points the way forward.
    And let me characterize it in my words, because, in 
Indiana, as Senator Lugar knows, 96 percent of our electricity 
comes from coal, and we need to make the transition to the low 
carbon world without having to pay twice for the transition. 
So, through USCAP, what we've found is that we can have 
aggressive timelines and targets and protect the environmental 
quality of the legislation. That, you put over here on one 
side. We can achieve that. It's 80 percent type reductions by 
2050, it's milestones in 2030 and 2020. So, we have very 
aggressive targets there.
    But, the other thing that's recognized is the importance of 
making the transition. When I said, a few moments ago, it 
wouldn't be free or easy or quick, but it had to be fair, what 
I really meant is, yes, it's going to cost more money. There's 
no question about that. And some regions of the country more 
than others. Second, and it's not going to be easy, because 
virtually every way we generate electricity needs advances in 
technology. Wind needs it, solar needs it, coal needs it, with 
CCS, natural gas needs it, with a way to capture carbon, 
nuclear, with spent fuel. Virtually every way we generate 
electricity, we need advances in technologies. It won't be 
quick, because, either with CCS, unless we can scale up faster 
by working with the Chinese, could be a decade to 15 years off.
    One of the things that we all came together around is, How 
do you make the transition? And the key to that is really the 
same way we did it under the Clean Air Act amendments in 1990, 
as you may remember, where we adopted cap and trade and we used 
an allowance system to allow companies like ours to continue to 
generate power from our plants until we could either retire or 
replace or retrofit. That system, I would suggest to you, 
worked well for SO2, will work well for CO2 in this country, 
and mitigate--and I'm looking directly at Senator Lugar when I 
say this--mitigate the cost impact on the consumers in his 
State, but allow us to make that transition to a low carbon 
world.
    My last point in this. In Indiana, we're building what will 
be the world's largest coal gasification plant. We're building 
it because it will be, from a SOX/NOX, 
mercury, fine-particulate standpoint, the least emissions of 
any coal plant in the world. Part of that is a result of 
participating in a demonstration project in the early 1990s, 
where we got comfortable with the technology. This is a private 
funding, with some public health. But, here's the important 
point. We had the capability in Indiana, with that plant, to 
develop, and we are now investing over $18 million for carbon 
capture and sequestration, which will become the largest 
sequestration project in the world, done here in the United 
States. And I think it shows leadership on our part, as we move 
forward, that we can deliver electricity and reduce carbon from 
coal.
    The Chairman. That's very helpful.
    Sir Nicholas, what about from your point of view? What do 
you say to the manufacturers or others in coal-burning States 
where they face the potential of an increased cost of the coal 
itself, or the production, because they've got to capitalize to 
put out their new technologies or the conversions? What's the 
response to that?
    Lord Stern. I think that we have to look to manage that 
transition process, as Jim Rogers has described. One way in 
which we handled that in European Union when we have different 
countries differentially dependent on coal--and Poland, for 
example, is very dependent on coal--is that you can allow for 
the process of auctioning to be adjusted over time so that 
those kinds of areas or industries go more slowly toward the 
fuller auctioning than elsewhere. So, that's one mechanism of 
adjustment.
    A second is that any revenues you get from different kinds 
of auctioning systems can be used to protect those people who 
are hit earliest or hit hardest by this story. The MIT work 
from the Global Action Labs described that it should be 
possible in United States to carry out these adjustments, these 
increases in prices, because some electricity must be more 
expensive. But, it's possible to carry that out in a way where 
these revenues can be used to protect low- and middle-income 
households.
    So, part of it is through the way in which you cooperate 
with the companies themselves--for example, through the auction 
process that I described--and second is through the consumers, 
and--compensate those consumers who might be hardest hit.
    The Chairman. Then the----
    Lord Stern. But, at the same time, recognizing that the 
sums involved there, the impact on consumers, are not huge in 
this story.
    The Chairman. The plan, as we currently contemplate it, 
does look at a major rebate to taxpayers out of the revenues 
off the auction, to whatever degree you decide to auction. I 
personally am in favor of as much of it being as close to 100 
percent as you can get. Now, we're not going to get 100 
percent, we're going to have allowances in there, and we all 
understand that. But, if you put those revenues back into 
primarily cushioning any impact on consumers, second, into R&D, 
and third, into some of the things we need to do to help less-
developed countries do it, you can, I think, patch together a 
pretty good equation here.
    The question that some folks have is, Will this 
disadvantage them in the global marketplace? Will this somehow 
make them noncompetitive? What do you say to that, both of you?
    Mr. Rogers. First, I would start and, in a very respectful 
way, suggest to you that USCAP said we would evolve to a full 
auction, but that we had to allocate 40 percent of the 
allowances to the electric sector and start with a high 
allowance level going directly to the LDCs, and then being 
phased out over time, because that proves to be the most cost-
effective way--because, take a State like Indiana, which is the 
largest coal-producing State in the country; that will keep the 
rates down. In fact, the steel industry in our country is one 
of the least carbon-intensive steel industries in the world. 
So, keeping the power costs down for these capital-intensive or 
energy-intensive industries is one key way to do it. So, I 
would suggest to you, as you think your way through this, 
mirroring more the approach of the CO2 program will produce 
better results without administrative costs and without the 
diversion of money with the auctions.
    As a for-instance, there has been great debate, as you 
know, with the notion of 100 percent auction, which has been 
proposed, which is nothing more than a carbon tax; and that 
money would be diverted from the 25 States where more than 50 
percent of the electricity comes from coal to the coast. And, 
interestingly enough, in Indiana, specifically, the GDP per 
capita is lower than the States on the coast. And this 
redistribution of wealth would be for tax reductions, so maybe 
specific payments, but the reality is, it wouldn't be to solve 
this ecological crisis that we face. And I think that's one of 
the reasons a full auction is flawed from the get-go.
    The other point I would make is--and I say this very 
respectfully--is that we really pushed hard, in the Kyoto 
negotiations, Mr. Chairman, as you know, for cap and trade. The 
reason that it didn't work in Europe is because they didn't 
really have a baseline with respect to that, so it was 
difficult to make allocations. And second, they had a 
fundamentally different power sector. It had been liberalized. 
As a consequence of it, there were windfalls. Given the way our 
country structures our utility industry, there is no potential 
for windfall, and we have clear baselines. So, whatever 
failures or shortcomings happened there won't happen here.
    The Chairman. Well, I happen to completely agree with that. 
I was at--as you know, was part of the negotiations in Kyoto, 
and I remember distinctly--first of all, the Europeans didn't 
want to do it, because they didn't believe in it. So, there was 
an inherent resistance to the idea. And I think the early 
implementation began with some of that, with great skepticism 
about its ability to work.
    Second, there was, as we know, a sort of negative impact on 
selected sectors--cement, a few others--giveaways that took 
place in--without sufficient understanding.
    Europe has now understood that very well, and has moved to 
correct it. And, in fact, it serves as a terrific baseline of 
understanding what not to do as we approach it, and how to do 
it right. But, I helped write the original bill. As a 
Lieutenant Governor back in 1983, I chaired a Governor's Task 
Force, and we devised the whole concept of trading emissions, 
and put it in place for CO2. And I might comment that the CO2 
experience is one which showed that all the predictions came in 
way below the original--everybody's fears--and it happened a 
lot faster than everybody predicted, and with much greater 
ease. And I am absolutely confident the same thing is going to 
happen here, because technology and the marketplace are just 
going to take over, and this is going to be a lot easier than 
people think. That would be my judgment.
    Do you want to comment, Sir Nicholas?
    Lord Stern. Yes, Mr. Chairman. On the first question of the 
competitiveness and costs, there's a tremendous amount that can 
be done on energy efficiency, which actually brings costs down. 
Help firms to focus on that, giving incentives to firms to 
focus on that, setting the right kinds of standards, can 
actually bring costs down. And we see a lot of examples--I'm 
sure Jim has seen far more than I have directly--is that if you 
help a strong focus in this area, it's really remarkable the 
kind of results that you can get.
    Second, there will only be a few industries for which the 
cost increases are of any great substance. And I think it's 
very important to be analytical and work through and focus 
where those problems are.
    And, basically, we know what the energy-intensive 
industries are. It's not a secret. I mean, it's aluminum and 
steel and, you know, paper and cement. It's a few; it's not 
more than half a dozen or so. And there, I think the first 
challenge would be to try to get global agreements on standards 
in those sectors. And there, I think that we're beginning to 
see some movement forward on industries like steel, which are 
measuring, in a comparable way now, their emissions right 
across through their international industry associations.
    So, I think the first step is energy efficiency. The second 
step is global agreement, but all on the back of a careful 
analysis of where the problems really are, and how big they 
are.
    Now, commenting on the question of the European experience 
in cap and trade, actually phase 1, 2005 to 2007, of the 
European Union emissions trading scheme was very much about the 
kind of learning that Jim Rogers has just described. When we 
came out of phase 1--and I think probably the most important 
thing was the--by then, after those 2 or 3 years, we had 
managed to be able to measure much more carefully what was 
going on, industry by industry. And I think the United States 
is probably already there, so that particular learning phase of 
understanding what the baseline was and, therefore, what the 
emissions allocations and the permits should be, has probably 
already been done in this country.
    You were also pioneers of the SOX trading 
scheme. So there's direct experience of that. And probably in 
Europe we didn't learn enough from the United States, but the 
mistakes that we did make in the early stages, I think, are 
worth remembering, although they are pretty obvious that, if 
you give out too many permits, you'll crash the price, and you 
don't need a degree at London School of Economics to work that 
out. I do not think that there's any danger, really, of your 
making that mistake in this country.
    I do think that it's starting to work and showing real 
results. I think, by the end of phase 2, 2012, that emissions 
will be 9 percent lower than they were in 2005, when the 
trading scheme started. So, we're already starting to see those 
results on prices which have varied between 10 euros and 30 
euros per ton of CO2. The exchange rate between the dollar and 
the euro has moved around during that time, all over the place, 
and I tend to think of one-for-one, although I know it's not 
exactly one-for-one right now. But, you can see though, roughly 
speaking, what those prices have been.
    I think, as we get a bit more ambitious in Europe, those 
prices will go up, and that will be part of the process of 
cutting back. But, we'll be getting much more carbon-efficient 
along the way. And so, whilst the price of carbon will go up, 
its effect on prices and goods which are produced will not be 
anywhere near that much because of the learning about how to be 
much more efficient, relative to energy and to carbon.
    So, I think the cap-and-trade scheme is going well now. 
You'd expect the price to fall a bit during a recession, 
because demands for energy will be less. Probably no bad thing 
that that happens. It's one of the countercyclical aspects of 
the price mechanism. But, we don't want too heavy fluctuations. 
I think strong ambition will mean that the price stays steady, 
and I think it's important that it doesn't fluctuate too much, 
although some fluctuation is inevitable and, I believe, 
acceptable.
    So, I think that your cap-and-trade scheme here, along the 
lines I've been reading it as proposed, I think has excellent 
prospects for having the effects that you expect it to have.
    The Chairman. Thank you very much, sir.
    Senator Lugar.
    Mr. Rogers. Mr. Chairman, if I may----
    The Chairman. Yes.
    Mr. Rogers [continuing]. Echo Sir Nicholas' comments in a 
couple of ways. One, with respect to energy-intensive industry, 
I think what we have learned, there is not that much worldwide 
trade with respect to steel and cement, aluminum, and those 
areas. There's actually an excellent study, by the World 
Resources Institute and the Peterson Institute, where they get 
into great detail, in terms of how to address these issues, 
that I would recommend to you.
    Second, with respect to energy efficiency, I have the good 
fortune of having cochaired the National Action Plan on Energy 
Efficiency, and now also cochair the Alliance to Save Energy, 
here in Washington. And there's been a tremendous effort made 
to change the regulatory models at every State level to incent 
utilities to invest in residential consumers, in businesses, in 
industry, to help stimulate productivity gains in the use of 
electricity. I think we've just begun with respect to those 
kind of investments. And I believe if we're able to continue to 
make it and we're incented to make it, I believe it will 
happen, and it will play the kind of role that was just 
suggested in dealing with these issues.
    The Chairman. Very helpful, thank you, sir.
    Senator Lugar.
    Senator Lugar. Mr. Chairman, let me just begin by saying 
that I come back to the thought that many people who are my 
constituents in Indiana really are sold on the idea of 
conserving energy. They see the cost savings for their 
businesses, for themselves. And so, that's important, that 
there are a great number of public efforts.
    At Ball State University, a week ago, I was the 
commencement speaker, but after we finished, we went out to 
drill the first hole of 3,700 that will make Ball State 
University campus, several hundred acres, a thermal energy 
situation, the largest one in the United States. And it's 
likely to take 4 or 5 years, and probably $41 to $70 million to 
do this. But, nevertheless, we described this to the graduates, 
to the 15,000 people that were there. People were very proud of 
the fact that that's going to occur there in Muncie, Indiana.
    Likewise, they're proud of the fact that their 
architectural school is involved in renovating huge office 
buildings in New York, in addition to small houses in Indiana. 
There is excitement about this.
    This has been true, although controversies abound, over 
ethanol. Nevertheless, many people have been thoughtful about 
how we replace oil, and there are some savings, when it comes 
to conservation. They're interested in what happens in biofuels 
and hybrid cars, and we have hybrid engines being produced.
    Now, this is tremendously important regarding the issue 
we're talking about today. We have sort of a threshold in which 
the broad use of climate change, as a term, or cap and trade, 
as a mechanism have not caught on. I've been looking, maybe in 
vain, for what would be almost a small picturebook of what 
happens in the world as things change due to excessive CO2 in 
the atmosphere or other emissions. Al Gore, when he appeared in 
this room before this committee, had some excellent 
illustrations in which we saw, not only ice melting, but 
progressive changes of temperatures, year by year, at least in 
the schematics that he had, that would make a change, not only 
in Iceland or up in Greenland, but across various areas of 
Africa or of the United States.
    Even here, skeptics, say, in Indiana, find this ambiguous. 
Some say, ``Perhaps our growing season would be longer. In 
fact, corn yields might be better.'' Now, granted that in Sri 
Lanka things may be going very badly, and we're sorry about 
that; but, nevertheless, we have a major case that this is the 
catastrophic situation that is being portrayed for everybody, 
maybe for somebody. Now, you're not making that case, either, 
but you're saying the dislocations, the conflicts that might 
occur, the suffering in humanity would be large, that all of 
us, as human beings, have some common stake in mankind.
    I just come back to the fact that it has been very 
difficult for me to find, just physically, the materials, 
pieces of paper, small books, pictures, schematics. I think you 
may have had the same problem, but if you haven't, let me say, 
just as a working politician, this is where rubber hits the 
road right now with regard to all of this.
    Now, fortunately, in our State, Jim Rogers is involved. I 
pay tribute to him, because, pragmatically, Duke is a large 
producer of power in Indiana. And a year ago or so, when Jim 
and I had a conversation about the so-called Lieberman-Warner 
bill, he was already informed by USCAP and by conversations as 
to why he felt this was probably not the best piece of 
legislation to cosponsor and to move on, at that point. I'll 
not try to reiterate all that conversation, but essentially it 
came back to considerations that we have in our State; namely, 
a fear that the price of electricity for ordinary consumers, a 
few months after cap and trade is adopted, might go up 40 
percent. Now, that may have been an exaggeration, but that was 
commonly the figure that was cast about in the press and in 
arguments. And some would say, ``Well, tough luck. You folks 
are using coal. This is dirty. You're putting the CO2 in the 
atmosphere. You ought to pay for it.'' If, in fact, you live in 
New England or California, why, that's their problem. 
Nevertheless, people come back and say, ``But, listen, 
historically we have 96 percent of our electricity from coal. 
Even if we started changing immediately, who all is going to 
change that immediately? Will Duke Power begin tearing down all 
the installations, and thus, there is no electricity available 
at all to us, or precisely how does the world work in my 
generation or for my grandchildren, what--really, where is the 
scheme?''
    The lack of sensitivity toward these arguments led to 
crash-and-burning of Lieberman-Warner, very fast, sort of 1 
week of cap and trade, and that was it for the year.
    Now, this year it has an expected better run ahead of it. I 
don't know all the details of the House committee's 
deliberations, nor all the amendments that may be offered 
during the markup which will be transpiring shortly, but 
essentially it appears that some Members have tried to meet 
some of the things you've talked about today; namely, how 
rapidly to progress in this. What is the transition period? How 
can consumers, ordinary people, be compensated for what is 
occurring in industry or the government, in the meanwhile, so 
that there are not egregious differences between 25 States of 
the Union and the other 25?
    Furthermore, the moneys that are engendered if we were to 
have an auction of any sort, where does it go? Originally, in 
some budget schemes that were proposed, it might have gone to 
pay for almost anything in the world. This has been more 
narrowed, in terms of its focus, as we've come on. But, that 
will be a very critical element. So will be the thoughts that 
Mr. Rogers presented about the carbon sequestration experiment. 
None of us know how well that works, how efficiently, how well 
it will be adopted by others. But, it's an important step 
forward; critical, really, if coal is to be utilized, and will 
probably be utilized for a while in our world.
    I like the idea that has been presented today of 
international cooperation. This will have to be very 
sophisticated, because at least we are routinely told that the 
Chinese open up a coal-fired powerplant every week somewhere in 
China, even while they're giving plans and ideas that are of 
worldwide significance. Why? Because, in a practical way, they 
would say, a lot of very poor people are moving from the farm 
to the city, heating their houses for the first time in life, 
using cars for the first time. We've got to understand that, 
and we try to. But, this is going to require very sophisticated 
international diplomacy.
    Let me just ask this question. What are the metrics that 
are available for any of us to try to gauge, first of all, 
where we stand and where we're headed? Now, there are, I 
appreciate, many scientific studies that have made estimates of 
what type of carbon is in the atmosphere presently. That has to 
be sort of the threshold from which we gauge that we've made 
headway. Can this be done by nation, by sector? How often is it 
published?
    In the financial press, why, people who are interested can 
find the Dow Jones Average every day. Now, it may be 
impractical to get a CO2 fix each day, in terms of our 
understanding, but for most of us it's pretty hard to find it 
at all, except in journals or abstruse documents. And it 
appears to me, for instance, from the standpoint of my 
constituents, they would say, ``Are we making headway? Are the 
things that we are doing making any difference in all of this, 
given what we feel is the sacrifice and the inconvenience, 
dislocation of our lives?''
    I think the metrics of this will be extremely important, as 
well as a check-and-balance with everybody else in the world as 
to how well all of us are coming along with this thing, how 
much of the sharing and cooperation may be available.
    Do either one of you have any comments about that? That is, 
the measurements currently, the information available, 
information that could be available, and then, finally, this 
very broadcast situation for rudimentary illustrations so that 
there is a gut feeling on the part of even a majority of people 
in my State that this is worth tackling, quite apart from the 
personal enthusiasm I would have or others, such as yourselves, 
who wander through our State.
    Lord Stern. If I may go first, as I will have to leave 
fairly shortly.
    I think the communications side of this is absolutely 
vital, and the media, the politicians, the academics, the 
industrialists, just to take categories of people in this room, 
I think all have a major responsibility here.
    I think the way I like to understand it is the risks of the 
kind of transformation that I described. I mean, 5 degrees 
Centigrade is enormous. It's way outside human experience. It 
rewrites the physical geography of the world. In Europe, we 
would have to see much of southern France, Italy, Spain, 
Portugal start to look like the Sahara Desert----
    Senator Lugar. Do you have----
    Lord Stern [continuing]. By the end of this.
    Senator Lugar [continuing]. Confidence the 5 degree 
Centigrade is right? In other words, that that's in the 
ballpark?
    Lord Stern. I am a consumer of the science of--the great 
science that comes out of the center in the United Kingdom, at 
Princeton, et cetera, just to name two of the major centers. 
And the numbers I'm giving, about business as usual for much of 
this century, taking us to a 50-50 chance of being either side 
of 5 degrees Centigrade by the end of this century, early next, 
comes directly from them. And it's now pretty balanced view 
across the scientists of the world, that you'll find those 
kinds of numbers.
    So, people who say we've been up and down--we've been down 
quite recently; last ice age, 10 or 12,000 years ago. We have 
never, as humans, been anywhere near the kind of range we're 
describing, and it would transform United States just as much 
as other countries. But, of course United States, like many of 
the countries of the rich world, would have to deal with 
massive movements of people. I mean, it would just be a long 
period, a period that we couldn't see the end of, actually, of 
movement and conflict. We just have to understand the scale.
    But, it's not just that kind of image. I think it's also 
the image that the alternative story is actually very 
attractive. It's a different kind of growth. It drives growth 
for the next few decades, when we get to low carbon growth; it 
allows growth to continue, and so on. And, you know, it's 
cleaner, it's more energy-secure, it's quieter, it's safer, 
it's more biodiverse.
    So, the worrying side is very, very worried, but the 
different way of organizing ourselves, continuing to grow, 
continuing to move around, continuing to heat and cool our 
homes, all those things we can do, but we can do it in a low 
carbon way, and it will be actually attractive, for all sorts 
of reasons.
    So, I think those arguments have to be made powerfully; as 
I said, by academics, industrialists, politicians, media. 
There's very good film coming out, being issued round the 
world, called ``Home,'' made by Yann Arthus-Bertrand, is a very 
famous sort of French photographer and ecologist--that's coming 
out next month--which has a lot of visual things it can show. 
But, we need many more things like that for the communication.
    On the price side, I mean, I think 40 percent extra for 
electricity consumer is way over the odds of estimates of these 
kinds of things. The extra price for generation, of course, is 
very different from the extra price for delivery, because the 
price for generation is only--it would be generally less than--
again, I--some trepidation, with Jim Rogers, on my right--the 
price for generation would generally be less than half of the 
price actually delivered to the consumer. So, you know, you've 
got to make sure that when people are talking about prices 
here, they're talking about delivered prices to the consumers.
    On the----
    The Chairman. Yes, also, that--can I just ask you before 
you----
    Lord Stern. Yes.
    The Chairman [continuing]. Run? In answer to that question 
of Senator Lugar, while prices may go up for the unit of energy 
itself----
    Lord Stern. Yes.
    The Chairman [continuing]. The Union of Concerned 
Scientists come out with a report showing that all across the 
country, sector for sector, the consumer gains, because of all 
the other efficiencies that you can actually----
    Lord Stern. Yes.
    The Chairman [continuing]. Measure and factor coming into 
the system. So, out-of-pocket family expenses, budget, are, in 
fact, going to see savings, not expense.
    Lord Stern. We are actually in the middle of--well, perhaps 
not the middle of--at the beginning of a revolution in energy 
efficiency, just the kind of light bulbs being developed, 
they're changing--they're cutting the usage of electricity by 
factors of 5 or 10 or 15--not percentage--by factors like that. 
So, the kinds of efficiency standards that were being discussed 
today, if I understand correctly, by President Obama, you're 
seeing very big increases in efficiency there. So, one has to 
set, as it were, the price of the energy in the context of the 
world, through these kinds of pressures and schemes and 
regulations and incentives, are actually driving a whole 
energy-efficiency revolution. I think you described it, 
yourself, Senator, how excited people get when, in their 
communities and in their institutions and their universities or 
wherever they work, they see those opportunities.
    On CCS, I think we have--because there are so many types of 
geology and so many types of coal, I think what we would like 
to see is, in Europe, some kinds of experiments; United States, 
some kinds of experiments--and we mean, here, commercial-scale 
plants, because we have to find out how they're going to 
function and what it's going to cost--and Australia. We have to 
communicate with each other as to which ones we're doing so 
that if we have 30 or 40 round in the world--in the world, in 
the next 10 years, there is sufficient variation that we do 
enough learning to cover these different types of coal, 
different kinds of technology, different kinds of methods of 
when you capture it in the process. So, I think we have to 
share what we're doing as a world, and not all do the same, 
because otherwise we're not going to learn. And that kind of 
cooperation doesn't need a worldwide CCS energy council; that's 
another layer of bureaucracy. It actual needs communication, 
country by country, and asking, ``What are you doing? OK, we'll 
do something--we'll do something different.''
    Last, on the counting, Deutsches Bank, in Times Square in 
New York, in about 3 weeks time--I hope I'm not jumping the gun 
here--is going to launch a carbon counter. I just recorded 
something for that occasion. And it's going to be running up. 
And so, at any point in time, you go to Times Square--and 
obviously you get there online, as well--and you can watch the 
carbon concentrations----
    Senator Lugar. The concentrations----
    Lord Stern [continuing]. In the atmosphere----
    Senator Lugar [continuing]. Counter up there.
    Lord Stern [continuing]. Going up. So, these are the kinds 
of communications stories----
    The Chairman. Great.
    Lord Stern [continuing]. That I think that we're going to 
need, and we're all going to have to be involved, in our own 
ways.
    The Chairman. They ought to work----
    Mr. Rogers. Senator Lugar----
    The Chairman [continuing]. Having a carbon counter on every 
face page of every search engine so that it goes up; we should 
really do that, I'm serious. That would save everybody spending 
more time driving it up by going to Times Square to see it. 
[Laughter.]
    We could do it virtually, I think.
    Sir Nicholas, we need to excuse you. I know you've got to 
be in a car within 5 minutes to get where you're going and do 
what you're doing. So, before Jim answers, if I can just thank 
you, on behalf of the committee, we're extraordinarily 
appreciative of the contribution you've made to this. It is no 
small feat that your report is sort of the gospel, or whatever 
other denomination you want to attach to it, of guidance in 
this effort, globally, and I've enjoyed working with you, as 
have others, and we look forward to staying in touch with you.
    I would like to ask you--we're going to get a meeting, 
probably in a few weeks, once the House has done something, 
we're going to sit down with our colleagues on the other side 
of the aisle and really begin the hard-nosed effort, here. It 
would be wonderful if, on your next scheduled visit through 
here, you'd let us know so we could schedule you to come in 
there. I think it would be really great to have you and USCAP 
members come in, in that context, and I want to try to schedule 
that.
    Lord Stern. Thank you so much.
    Senator Lugar. Thank you very much, sir.
    The Chairman. Thank you so much. We appreciate it and wish 
you well in your travels.
    Lord Stern. Thank you very much for having me.
    The Chairman. We're delighted. We're honored. We really 
are. Thank you.
    Mr. Rogers. Safe travels. We've had an opportunity to work 
together a lot, and it's been a great inspirational for me, and 
been very informative. And thank you so much.
    The Chairman. Thank you.
    So, if you could answer Senator Lugar, would that great.
    Mr. Rogers. I would. And, Senator Lugar, I'm going to start 
by saying I come from a perspective--as a guy who started his 
career as a consumer advocate fighting rate increases at 
utility companies in the 1970s. And I've spent the last 20 
years as a CEO, starting in Indiana, as you know well. So, 
first of all, when I approached this, I approached this with--
really wearing both hats.
    What I've done is really depend on the work of the 
scientists. And the scientists of IPCC really say that the 450 
to 550 parts per million is where we need to be by 2050, and 
that means an 80-percent reduction in this country, and that we 
need to be on that road. Now, there's been additional 
scientific work done that suggests different numbers, but, 
quite frankly, those are the numbers that I'm comfortable with, 
mainly because it represents kind of a worldwide consensus with 
respect to this very technical issue.
    I would say that when you--when we look at national 
averages in terms of impact, the fact of the matter is, this 
falls unevenly across our country. The same is true when you 
look at climate change and adaptation. Some parts of the world 
benefit, other parts are hurt, so there's uneven impact, and 
even the scientists are not clear how that plays out.
    They are clear that the Earth is warming. They're clear 
that manmade emissions are contributing. There is--not perfect 
clarity around the timeline and the impacts, but more work is 
being done. But, I think there's enough science that says we 
need to act.
    The second point I would make--and this really gets to why 
we're where we are and why we need a fair transition, an 
equitable transition. I happen to remember back, new to 
Washington after being a consumer advocate, working for the 
Federal Energy Regulatory Commission, and later for a law firm 
here, that--the passage in 1978 of the National Energy Act. And 
the important thing I remember is that, at that point, 18 
percent of the electricity of this country came from oil, and 
we said we must wean ourself from oil in energy independence in 
1970 standards. We did do several things. First, we encouraged 
the building of coal plants in this country, and we encouraged 
the building of nuclear plants. The second thing we did is, we 
passed a law that prohibited the burning of natural gas. Few 
people remember that law being passed in 1978, but it was later 
repealed, as you know, in 1985, to allow us to use natural gas 
to generate electricity. But, the reality became--our mission 
in the 20th century was to provide universal access, 
affordable, and then, when Three Mile Island happened and we 
had Marble Hill in Indiana, we basically only had one way to 
provide generation 24-by-7, and that was coal. And so, many 
States, who had to meet the demand in the most affordable way, 
built coal plants, and that was just the reality of national 
policy. And I've taken the position, in many forums, that it 
would be unfair to punish that region of the country for 
carrying out the national policy of the 1970s, in terms of 
building coal plants, that we need a fair transition.
    Now, let me make another point that really answers your 
question that I think is very important. Even--and this is the 
motivating point for all Hoosiers--first of all, we're going to 
have to retire and replace all of our plants anyway. And so, we 
need to do that in a smart way with advanced technologies. That 
is just going to happen. And there's a certain reality, even 
without carbon legislation, that process will drive prices up. 
And so, that is a certain inevitability that I'm unafraid to 
talk about, because we need to talk about it to be straight 
with the American people and with Hoosiers.
    But, the second thing that I think is really important--and 
this is why I'm such an advocate for energy efficiency--between 
now and 2050, the world's going to go from 6\1/2\ billion 
people to 9 billion people. There's going to be a tremendous 
battle for scarce resources. I believe that the State or the 
country that's the most energy efficient in the world are going 
to be the ones that have the highest probability of raising GDP 
per capita. And even without carbon concerns, I think we ought 
to be on that road, because of this battle over scarce 
resources.
    So, when I add the retirement-and-replacement point and the 
need to--the battle over scarce resources, I combine those two 
facts, and then I look at the need to reduce our carbon 
footprint--all of that comes together, that says we need to act 
urgently, because we're already in a period, I believe, where 
we're beyond mitigation, we're in a period of adaptation, and 
the only issue is what adaptation will occur and what the cost 
will be. The sooner we act, it reduces the probability that we 
have adaptation costs and issues in the future. And I know that 
if Sir Nicholas was here, he would--he has made that argument 
very persuasively, because the sooner that we act, it minimizes 
the adaptation, going forward.
    So, from my standpoint, we do need to educate consumers. We 
feel like that's an important role that we have. But, we also 
need to educate them to the--what the worldwide scientists are 
saying--to the inevitability of retirement and replacement, and 
to the need to be energy efficient, because that, over time, 
not just for us, but for our children and grandchildren, will 
assure that the--increase the probability that the GDP per 
capita for our consumers will grow if we're the most efficient 
in the world.
    Thank you very much.
    Senator Lugar. Thank you, sir.
    The Chairman. Let me follow up on that, if I can. And thank 
you for your terrific answer.
    I want to ask you a couple of toughies that get thrown at 
us by some folks around here as we struggle through this. Some 
people say, ``Well, you know, the utility guys, yeah, they're--
they can be for it, because they're going to get these big 
allowances, and it's going to help them do exactly what you 
just described, and they'll get a bunch of money in the pocket, 
but the other guys are going to get hit a little harder, 
because they don't have the same capacity to grab the 
allowance, et cetera.'' What do you say to that? I'm sure 
you've heard it.
    Mr. Rogers [laughing]. Yes, sir. Mr. Chairman, based on the 
way we're regulated in the five seats we operate--Indiana, 
Ohio, Kentucky, and North and South Carolina--that these 
allowances, they're the same way the CO2 allowances--go 
directly to our customers. Directly. And I'm a CEO that would 
sign in blood that these go directly to our customers. And 
actually, I had a wonderful conversation with Larry Summers the 
other day, talking through this and the recognition that--of 
how regulated utilities work. It goes directly to the 
customers, particularly if you send it directly to the local 
distribution companies, because there are some States that have 
been deregulated, and in those States it still needs to go to 
the LDC, which is regulated by the State Commission.
    So, I think the short answer is, no windfalls. And I think 
you can write that into the legislation. I'd be delighted to 
sign it, because I think that is one reality. So, in a sense of 
the word, I sit here today, not because this is going to affect 
my investors; I sit here today because it's going to have an 
adverse impact on my customers, which goes back to the very 
beginning of my career as an assistant attorney general 
fighting rate increases.
    Because I see prices going up anyway, because our company 
spent $5 billion retrofitting our plants for SOX and 
NOX coming out of the 1990 amendments, and we've 
been able to do that over time at a lower cost, as you 
suggested, can smooth out the impact on consumers, because of 
the way the allowance system worked.
    The second thing is, is that we're building out Smart Grid. 
Smart Grid, we have in our budget, about $1 billion over the 
next 5 years. That will drive prices up. But, the important 
thing about Smart Grid is, that will fundamentally transform 
several things. It will improve our reliability. It will 
improve our ability to do restoration after storms. It will 
reduce line loss. And probably, Mr. Chairman, most importantly, 
it will enable the next several generations of energy 
efficiency that many of us today can't imagine. My prediction 
is, we'll look back, 5 years from now or 10 years from now, and 
what we're doing for energy efficiency today will look very 
primitive with respect to what we will do then. And the Smart 
Grid is really the key to being able to enable that.
    The Chairman. Good answer. And a direct answer. And I 
appreciate it.
    Let me ask you another sort of question you hear and get 
asked. I think the record's important to build out, here. If 
coal-fired powerplants are such a danger--and I believe they 
are--any pulverized coal-fired powerplant that can't capture 
and sequester, today, is a problem--why are we not creating a 
greater crash project to build nuclear or some other--i.e., 
solar thermal, concentrated solar thermal or something else in 
Arizona, et cetera? I know you said you're doing solar, you're 
looking at wind, you're doing these other things so are you 
investigating how to scale this up? I would assume you're 
balancing that kind of thing as mightily as anybody in the 
business can.
    Mr. Rogers. Yes, sir. We're in a unique place. We're the 
third-largest generator of electricity from coal, but we're 
also the third-largest generator from nuclear. And we have 
proposed building a 2,200-megawatt nuclear plant in Cherokee 
County, SC, and we're actually exploring the possibility of a 
nuclear plant in the Midwest.
    The reason that we are looking at nuclear, because we 
believe there will be a need for baseload generation--and, as I 
sit here today, the only technology that exists that provides 
power 24-by-7 with zero greenhouse gas is nuclear--it will 
allow me to retire some of my coal plants. We have not 
retrofitted every one of our coal plants. Some are 40, 50, 60 
years old. It didn't make economic sense to retrofit them for 
SOX and NOX. And, as I look at 
mountaintop mining, I look at ash ponds, I look at stricter--
and I had an opportunity yesterday to meet with Administrator 
Lisa Jackson----
    The Chairman. Yes.
    Mr. Rogers [continuing]. To talk about this.
    The Chairman. Absolutely.
    Mr. Rogers. As I see this coming, I believe I need a 
program to retire, as soon as possible, without making 
incremental investments in, these old plants. So, from my 
standpoint, I believe that the only 24-by-7 product that I can 
build is nuclear, but I also believe--because we have 500 
megawatts that we operate today, and 5,000 under development--
wind will play a role. But, I'm actually coming to the belief--
and I'm going to share this in a very careful way--that I think 
that solar will end up playing a much bigger role, because--for 
a variety of different reasons, and one reason is I'm on the 
Board of Advanced Materials in Santa Clara, which is really 
developing the manufacturing capability to really accelerate, 
in the same way they did for semiconductors, to reduce the 
cost. I believe solar will end up playing a much bigger role, 
at the end of the day, than wind.
    And then when you start to--because it also provides a 
distributed generation option that wind doesn't, because wind--
the transmission issues are immense, in terms of getting it 
from where the wind is to where the load is, and that's a long 
conversation in itself--but, the important point is, I think 
nuclear and wind and much cleaner coal--but, I think it's an 
open question.
    And the last point I'll make--and I say this very 
carefully, and I present it to you as a work in process--but, I 
have come to believe addressing the spent-fuel issue for 
nuclear, with the cask system that we have today and with the 
process--the possibility of recycling, might prove to be easier 
to do and cheaper to do than sequestration of carbon, because 
of the--huge infrastructure will have to be built. And a 
Princeton scientist said it to me in a very direct way. He 
said, ``If you look at all the spent fuel in America, you could 
put it on one football field, 7 feet high.'' If--contrast that 
geography to the geography of hundreds and hundreds and 
hundreds of thousands of acres of storing carbon underground. 
As a guy who used to run natural gas storage fields with 
migration of gas and the other issues, I have some sense of 
some of the technical challenges associated with sequestration.
    But, from a time standpoint, there's another dimension. As 
I talked to the scientists at MIT, they truly believe that we 
can advance the recycling technology that's been used in France 
successfully, where 75 percent of the electricity comes from 
nuclear, that we can do that in the next 25 to 50 years. And 
the current storage that we have in the cask system works. What 
we really need to do is pour money into the recycling. And, 
quite obviously, the proliferation issue is not the same today, 
when you recognize that over 30 nuclear plants are being built 
around the world, and not in the United States.
    The Chairman. Well, that really sets the stage. I couldn't 
agree with you more. And I know it's a little heresy in some 
quarters to say it, but I wrote a book, a year and a half ago, 
with my wife, in which we dedicated a small amount of it to 
this issue, because it wasn't really about that, alone. But, I 
allowed--I mean, as a strong environmentalist and one who 
opposed nuclear, you know, 15, 20 years ago, when I thought we 
were going to come online faster with bigger alternatives. But 
I look at the predicament we're in today, and, if you accept 
the science that drives the notion that you have to do 
something about this--and I've said, many times, you can't be 
half pregnant on this--if you accept the science of global 
climate change, and accept the greenhouse, and accept that 
we're causing it, then you also have to listen very carefully 
to the scientists who tell you, ``This is what's going to 
happen, X, Y, and Z,'' particularly when you measure all the 
science that's coming in today, all of which is coming in at a 
much faster rate and to a much higher quantity, telling us all 
the things they said were going to happen are happening. So, as 
a public policy, sort of, precautionary point of view, I think 
we have to respond to that. And I would far rather, 
particularly, as you've said--I mean, there are going to be 
nuclear plants built all around the world; none are safer than 
here, and none of the waste is safer than here. I would far 
rather do that than build a coal-fired powerplant right now. I 
don't think we ought to build another one until we know how to 
capture and sequester.
    When people talk about ``clean coal,'' I accept that. It's 
great. We can have clean coal, and we can burn it clear, 
terrific, because we have huge supplies, it's cheap. All of 
those arguments are real. But, I have to tell you, I don't know 
quite yet how we're going to do that.
    Vinod Khosla, whom you know and I know, is pursuing an 
interesting new venture-capital effort that may be a game 
changer; it may show us how we can actually burn coal, take the 
CO2, turn it into a product that you can then sell, and you win 
on both sides of the equation. More power to it. But, until we 
know we can do that and cleanly, we shouldn't be building more 
of them. And it seems to me that nuclear is an enormously 
obvious alternative, in the near term. Long term, I agree with 
you 100 percent. Solar, if I were in the private sector today, 
and I was doing this, I'd be racing down that solar road, 
because there's just no question in my mind of the numbers of 
places in the world where this is--I just came back from Jordan 
over the weekend. King Abdullah is exploring solar. I was 
interested to hear that--he's exploring it with several 
countries, and I asked him, ``Is the U.S. in this game?'' He 
said, ``No.'' And he was a little surprised. And I'm surprised. 
We're not in the hunt for their solar project. We ought to be. 
We ought to be in the hunt for these projects all over the 
world.
    So, the sooner we can do this, the better. You know, there 
are more places with more sun that have more ability to 
translate it into electricity in places that don't have it, 
where there's a huge market. That's what I meant by the $6 
trillion market. That's for today's users. There are a bunch of 
people out there who aren't today's users, but who want to be. 
And if you're talking about an electric-car market, you've got 
to find a way to supply electricity that is going to power 
those cars and charge those batteries at night, and so forth.
    Another point I'd make is, on the issue of the 
transmission, that's the second biggest piece of this. And we 
ought to be doing--and I think this is a debate we've got to 
get into quickly--it's absurd that, in the United States of 
America in 2009, you can produce electricity out in California, 
but you can't get it to other parts of the country. For 
instance, Texas has its own grid but it won't connect to New 
England. If you're going to produce solar or produce wind in 
these places, it's not 24-7. Therefore, No. 1 is that you've 
got to have some feed into that grid to make up for it; but, 
two, you've got to get it from here to there. I am told that 
the minute we deal with that issue, there's anywhere from $150 
to $200 billion in the private sector waiting to rush in, that 
will engage in construction of facilities, because they now 
know they can get a return on the investment by appealing to a 
larger market.
    So, my hope is that this will be the front--I mean, this 
ought to be the major debate, here. We ought to be grabbing 
this stuff and getting it done. And I do think the experience 
of Franklin Roosevelt and electricity is relevant, because--you 
know, they put it out there for about $5 billion of cost in the 
1930s. He made a fundamental policy decision: All of America 
has got to be connected. And within about 4 or 5 years, all of 
America was connected, and look at the difference that it made. 
This is not unlike the Internet or some other thing in the way. 
We've got to get it out there. And we're falling behind on 
that, too, because we haven't made the commitment to get 
broadband to all the parts of our country, so other countries 
are far more wired than we are, and their productivity goes up 
faster.
    So, I think that this is all linked in a funny way, and 
your leadership, Mr. Rogers, is really critical, you and the 
rest of the USCAP folks, because you can validate this in ways 
that we elected officials just can't. You know, anybody who 
employs thousands of people, and pays the levels of taxes you 
do, and has the kind of annual revenues you do, has more 
ability, I think, to move minds here in these next months. So, 
we're going to call on you to do that, and I would hope we can 
rely on you to have Washington on your travel schedule, you 
know, a little bit over these next 5, 6 months, because you're 
going to be a key part of this.
    Mr. Rogers. Mr. Chairman, I appreciate that, and I will do 
that. But, may I drop a footnote to your last comment?
    The Chairman. Of course.
    Mr. Rogers. Because I think it will add to the 
conversation.
    First, in North Carolina we just got approval for us to 
invest to put solar on the rooftop, so when we look out, we see 
the rooftop of our customers as future plant sites. And so, 
we're going to be installing, operating, and dispatching, and 
learning to operate our grid reliably with solar on the 
rooftop. It's one of the first programs approved in the United 
States.
    The Chairman. That's great.
    Mr. Rogers. The second thing that I would say, with 
transmission--and that's why I believe, at the end of the day, 
solar wins, versus wind--is because the only way you get 
transmission built in this country, to be--use a technical 
term, as a former lawyer--you have to eminent domain, because--
and, quite frankly, most people that want transmission built--I 
mean, want renewables, don't want eminent domain, because of 
the local pushback. So, I think we need to have a honest 
conversation about eminent domain, but also to look at what the 
ultimate cost is of moving power across the country.
    And my last point--and I think this is one of the reasons 
that I'm here today, and it's in my testimony, but I want to 
underscore it, because I think this should be the clarion call 
to Congress, to the American people, to the future of our 
economy, and there's recent research that's done by Lazare, 
that says, of the world's top 10 solar, top 10 wind, and top 10 
advanced battery manufacturing companies, only 5 of the 30 are 
American companies. We're losing out on an opportunity. And I 
think good, sound policy, that I know you all are working 
toward, is going to give us a running shot, because it isn't a 
question of leading, it's a question of catching up so that we 
can lead someday.
    The Chairman. Boy, do I agree with that, and I quote, 
often, in some speeches lately, that, having founded the solar 
cell, as I mentioned earlier, of the top 10 solar companies in 
the world, we don't have one of them. And out of the top 30 
alternative renewable, I think we only have 6. We only have 6 
out of the 30. I mean, this is our economic future.
    And I couldn't agree with you more, I testified, a year 
ago--I have legislation on the question of how you're going to 
put some of these pipes in, and so forth, for sequestration. It 
works, as you know, pretty well if you're in North Dakota or 
South Dakota or somewhere and you're near a particular plant. 
They're doing some enhanced oil recovery with natural carbon 
dioxide now. And you can do it. But, the fact is, boy, did I 
learn, in that hearing, as you listened to the various Senators 
and the questions that were asked, the morass of liability 
issues and of passage, rights-of-way, and easements and the--
just the cost of the infrastructure--I have grown very, very 
skeptical and leery of joining in this grand chorus about 
geologic sequestration in far-off places. I think you can find 
some plants and put them right beside a place, and you may get 
some of it, but that is not going to be the silver bullet to 
this issue, because the cost of those pipelines and of those 
pipes and of that maintenance, as you just said, compared to 
that football field, it just--it's not going to take you where 
you need to go.
    So, these are good things to be putting out on the table 
now, and I thank you for helping to do that today. We all need 
to do it. But, I hope--some of Senator Lugar's questions, I 
hope, have been answered, and we look forward to continuing 
this dialogue in a very constructive way over the course of the 
next months.
    Thank you very much for being here.
    Senator Lugar, do you have any more questions or any 
comments?
    Senator Lugar. I just would add to your compliment of our 
witness, Jim Rogers. He is uniquely in a position of being 
executive of a large power company and providing services to 
five States, as you pointed out, but, likewise, experienced 
enough with legislators here in Washington, as well as the rest 
of the other interest groups, to pragmatically try to weave 
together some source of formula. So, by the time these formulas 
are woven together, the purists, idealists, whatever, find all 
of this to be one compromise that is just simply unconscionable 
after another. But, it's this kind of individual that 
conceivably can bring together a piece of work that, in our 
democracy, with all the complexities, and 50 States, and so 
forth, might happen.
    So, I appreciate your enormous patience, as well as the 
intellectual grasp you have of all this; likewise, your 
understanding of working politicians who are dealing with 
constituents, as you are. Yours is customers, ours is voters, 
and so forth.
    But, thanks so much for coming.
    Mr. Rogers. Thank you.
    The Chairman. Sometimes they're the same. [Laughter]
    Thanks so much. Appreciate it.
    We stand adjourned.
    [Whereupon, at 4:10 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


  Prepared Statement Submitted by the Staff of Friends of the Earth, 
                             Washington, DC

                              introduction
    Chairman Kerry, Ranking Member Lugar, we ask that this written 
testimony be submitted into the record for the above-referenced 
hearing. Our comments concern reducing black carbon emissions from 
ships transiting Arctic waters.
         black carbon emissions are exacerbating arctic warming
    Climate, change impacts are apparent in many areas around the globe 
but nowhere more so than in the Arctic, ground zero for warming, where 
winter temperatures have climbed 3-4 degrees Celsius over the past 50 
years, and may rise another 4-7 degrees Celsius over the next 
century.\1\ In addition to having well-documented public health effects 
\2\ and accelerating the melting of Himalayan glaciers to the detriment 
of billions in South Asia,\3\ black carbon, the light-absorbing 
carbonaceous element of soot, can have profound effects on Arctic 
warming, and, in turn, global ramifications. Suspended black carbon 
particles not only heat the atmosphere by absorbing direct and 
reflected sunlight,\4\ but they also reduce the reflectivity of ice and 
snow, thereby increasing melting rates.\5\ As lighter colored snow and 
ice recede and are replaced by darker, more light-absorbing matter such 
as water and land, warming is accelerated in a dangerous feedback 
mechanism. Recent studies find that black carbon is responsible for 
almost half of Arctic warming,\6\ and that incomplete fossil fuel 
combustion, such as from marine vessel engines, constitutes a 
significant source of black carbon in this region.\7\
---------------------------------------------------------------------------
    \1\ Arctic Climate Impact Assessment, ``Impacts of a Warming 
Arctic,'' 10, 12 (2004), available at http://amap.no/acia/.
    \2\ J. Schwartz, Testimony to the House Committee on Oversight and 
Government Reform Committee, U.S. House of Representatives, The 
Honorable Henry A. Waxman, Chair, October 18, 2007.
    \3\ Elisabeth Rosenthal, ``Third-World Stove Soot is Target in 
Climate Fight,'' N.Y. Times, April 15, 2009, available at http://
www.nytimes.com/2009/04/16/science/earth/16degrees.html?scp=l&
sq=Ramanthan%20black%20carbon&st=cse.
    \4\ The current estimate for black carbon forcing at the ``top of 
the atmosphere'' is as much as 60% of the current radiative forcing due 
to carbon dioxide's greenhouse gas effect. V. Ramanathan, ``Role of 
Black Carbon on Global and Regional Climate Change,'' Testimony to the 
House Committee on Oversight and Government Reform Committee, U.S. 
House of Representatives, The Honorable Henry A. Waxman, Chair, October 
18, 2007.
    \5\ C. Zender, ``Arctic Climate Effects of Black Carbon,'' 
Testimony to the House Committee on Oversight and Government Reform 
Committee, U.S. House of Representatives, The Honorable Henry A. 
Waxman, Chair, October 18, 2007.
    \6\ D. Shindell & G. Faluvegi, ``Climate Response to Regional 
Radiative Forcing During the Twentieth Century,'' 2 Nature Geoscience 
294, 2009.
    \7\ D. Koch et al., ``Global Impacts of Aerosols from Particular 
Source Regions and Sectors,'' 112 Journal of Geophysical Research 
D02205, 2007; see M. Flanner et al., ``Present-Day Climate Forcing and 
Response from Black Carbon in Snow,'' 112 Journal of Geophysical 
Research D11202, 2007 (finding that over 80 percent of the forcing 
caused by black carbon on snow comes from black carbon from fossil 
fuels).
---------------------------------------------------------------------------
    Many scientific experts assert that near-term black carbon 
mitigation efforts can limit warming and forestall cataclysmic 
``tipping point'' events, such as permafrost melt and loss of the 
Greenland ice sheet and associated sea level rises.\8\ Additional 
derivative problems from Arctic-related warming that can be forestalled 
include prolonged droughts, altered weather patterns in the northern 
hemisphere,\9\ desertification, increased boreal wildfires,\10\ coastal 
erosion, and reduced glacial-fed freshwater resources in other parts of 
the world.\11\ These issues threaten the environmental, economic, and 
national security interests of the United States and the international 
community. Secretary of State Clinton,\12\ Nobel Prize Laureate Al 
Gore,\13\ and the Arctic Council \14\ have all recently noted how 
addressing short-lived \15\ climate forcers such as black carbon can 
slow Arctic warming. More specifically, one scientific expert even 
remarked during a 2007 congressional hearing that ``[r]educing intra-
Arctic [black carbon] emissions from generators and marine vessels will 
become increasingly important as industry and transport seek new 
opportunities in the thawing Arctic.'' \16\
---------------------------------------------------------------------------
    \8\ E.g., Ramanathan, supra note 4.
    \9\ M.C. Serreze et al., ``Perspectives on the Arctic's Shrinking 
Sea-ice Cover,'' 315 Science 1533, 1536 (2007).
    \10\ Arctic Climate Impact Assessment, ``Arctic Climate Impact 
Assessment,'' 840 (2005).
    \11\ Rosenthal, supra note 3.
    \12\ Secretary of State Hilary Clinton, Remarks at The Joint 
Session of the Antarctic Treaty Consultative Meeting and the Arctic 
Council, 50th Anniversary of the Antarctic Treaty, Washington D.C., 
April 6, 2009, available at http://www.state.gov/secretary/rm/2009a/04/
121314.
htm.
    \13\ Arctic Council Conference on Melting Ice, Co-Chair's Summary--
``Melting Ice: Regional Dramas, Global Wake-Up Call,'' Tromso, Norway, 
April 28, 2009, available at http://arctic-council.org/filearchive/
summary.pdf.
    \14\ Tromso Declaration, 6th Ministerial Meeting of the Arctic 
Council, April 29, 2009, Tromso, Norway, at http://arcticcouncil.org/
filearchive/FINAL%20DRAFT%20DECLARATION%2028%20
APR%2009%20A4.pdf.
    \15\ Generally black carbon aerosols stay aloft for less than one 
week. Reddy, M.S. and O. Boucher, ``Climate Impact of Black Carbon 
Emitted from Energy Consumption in the World's Regions,'' 34 
Geophysical Research Letters L11802, 2007.
    \16\ Zender, supra note 5, at 6 (emphasis added).
---------------------------------------------------------------------------
          black carbon emissions from ships: a growing problem
    Ships accounted for 3.6 percent of black carbon emissions in the 
United States \17\ in 2002 and 1.7 percent of black carbon emissions in 
the world in 2000,\18\ and in 2004 released 1,180 tons of black carbon 
in or near the Arctic.\19\ Moreover, since 2004, shipping and attendant 
black carbon emissions have increased substantially.\20\ With the 
Arctic continuing to warm at twice the rate of the rest of the 
world,\21\ and the region's sea ice extent \22\ and thickness \23\ 
decreasing dramatically, the fabled Northwest Passage and Northern Sea 
Route opened to traffic in the summer of 2008.\24\ In the near term, 
shipping involving oil and gas in the Arctic, where nearly one quarter 
of the world's untapped hydrocarbon resources reside,\25\ as well as 
shipping of minerals and timber, is likely to increase.\26\ In the not-
so-distant future, as sea ice melting accelerates, trans-Arctic 
shipping along the above-mentioned passages--as well as over the North 
Pole \27\--will present attractive options for shippers as it could 
save many thousands of kilometers, and substantial fuel costs, on 
voyages between Asia and Europe.\28\ In addition, destinational cruise 
ship travel to the Arctic is exploding, and pushing further north.\29\ 
In sum, approximately 3,000 marine vessels operated in the Arctic in 
2004 alone,\30\ and that number has likely increased in the following 
five years time as summer sea ice has continued to wane and the 
Northwest Passage and Northern Sea Route have opened up. These vessels 
present a significant, continuing, and growing black carbon threat to 
an already warming Arctic.
---------------------------------------------------------------------------
    \17\ W. Battye et al., ``Methods for Improving Global Inventories 
of Black Carbon and Organic Carbon Particulates,'' Report No. 68-D-98-
046, Prepared for U.S. EPA by EC/R Inc., 2002, available at http://
www.epa.gov/ttn/chief/conference/ei11/ghg/battye.pdf.
    \18\ D. Lack et al., ``Light Absorbing Carbon Emissions from 
Commercial Shipping,'' 35 Geophysical Research Letters L13815, 2008.
    \19\ Arctic Council, ``Arctic Marine Shipping Assessment 2009 
Report,'' 141 (2009), available at http://arcticportal.org/en/pame/
amsa-2009report [hereinafter AMSA].
    \20\ Dr. Lawson Brigham presentation at 8th Conference of Arctic 
Parliamentarians, Fairbanks, Alaska, August 12, 2008, cited by 
Treadwell M. & Wiepking T., ``Why the Arctic Matters . . . America's 
Responsibilities as an Arctic Nation,'' Commonwealth North Study 
Report, at 22, April 2009, available at http://
www.commonwealthnorth.org/index.cfm?fa=documents_over
view&doctype=54.
    \21\ IPCC 2007, Observations: Surface and Atmospheric Climate 
Change, In: ``Climate Change 2007: The Physical Science Basis, 
Contribution of Working Group I to the Fourth Assessment Report,'' 
[Trenberth, K. et al, (eds.)], 237, available at: http://www.ipcc.ch/
pdf/assessment-report/ar4/wg1/ar4-wgl-chapter3.pdf.
    \22\ R.W. Lindsay & J. Zhang, ``The Thinning of Arctic Sea Ice, 
1988-2003: Have We Passed a Tipping Point?'' 18 Journal of Climate 4879 
(2005); J. Stroeve et al., ``Arctic Sea Ice Extent Plummets in 2007,'' 
89 Eos Trans. Amer. Geophys. Union 13 (2008), available at http://
www.agu.org/pubs/crossref/2008/2008EO020001.shtml; J. Richter-Menge et 
al., ``Sea Ice Cover,'' in Arctic Report Card 2008, available at http:/
/www.arctic.noaa.gov/reportcard/seaice.html (in 2007, sea ice extent 
was thirty-nine percent lower than the long-term average from 1979 to 
2000).
    \23\ ``Arctic is Seeing Thinner Sea Ice, Experts Warn,'' Associated 
Press, April 6, 2009, available at http://www.msnbc.msn.com/id/
30074699/.
    \24\ Andrew Revkin, ``Arctic Ice Hints at Warming, Specialists 
Say,'' N.Y. Times, September 6, 2008, available at http://
www.nytimes.com/2008/09/07/science/earth/07arctic.html?_r=4&scp=
2&sq=northwest%20passage&st=cse&oref=slogin.
    \25\ USGS Newsroom, ``90 Billion Barrels of Oil and 1,670 Trillion 
Cubic Feet of Natural Gas Assessed in the Arctic,'' USGS, July 23, 
2008, available at http://www.usgs.gov/newsroom/article.asp?ID=1980.
    \26\ AMSA, supra note 19, at 76-77.
    \27\ Scott Borgerson, ``Sea Change: The Transformation of the 
Arctic,'' The Atlantic, 88-89, November 2008 (indicating that a voyage 
between Yokohama, Japan, and Rotterdam, Netherlands, over the North 
Pole, rather than through the Panama Canal, would reduce trip length by 
over 12,000 kilometers).
    \28\ K. Wilson et al., ``Shipping in the Canadian Arctic: Other 
Possible Climate Change Scenarios,'' Geoscience and Remote Sensing 
Symposium, IGARSS '04 Proceedings, September 2004, available at http://
www.arctic.noaa.gov/detect/KW_IGARSSO4_NWP.pdf.
    \29\ Approximately 250 passenger ships operated in the Arctic in 
2004. AMSA, supra note 19, at 71; see also M. Treadwell & T. Wiepking, 
supra note 20, at 22 (noting that, in 2008, 45 cruise ships, carrying 
55,000 passengers, visited Greenland, up from 30 ships in 2007; and 
three different cruise ships voyaged through the Northwest Passage in 
the summer of 2007, while seven cruise ships with over 3,000 passengers 
visited the northern Bering Sea and Arctic Alaska waters in 2008).
    \30\ AMSA, supra note 19, at 72.
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           how the united states should proceed on this issue
    Presently there are no national or International Maritime 
Organization (IMO) measures regulating black carbon emissions from 
ships in the Arctic. For instance, while the United States and Canada's 
recently submitted Emission Control Area (ECA) application to the IMO 
is a necessary and laudable action directed at lessening the public 
health and environmental impacts from ships in both countries, the ECA 
does not extend into the U.S. or Canadian Arctic, nor do its proposed 
measures target black carbon emissions.\31\
---------------------------------------------------------------------------
    \31\ See U.S. EPA Web site, at http://www.epa.gov/otaq/
oceanvessels.htm.
---------------------------------------------------------------------------
    The IMO has the ability to create stringent particulate matter 
standards that decrease black carbon emissions as well as adopt ECAs 
which focus on black carbon particle reductions, similar to what has 
been done with respect to sulfur in Baltic and North Sea SECAs. 
Further, there are available ways to reduce black carbon emissions 
immediately that are cost-effective and practicable, through in-engine 
modifications (e.g., slide valves) and operations (e.g., reduced 
speeds). Moreover, the use of distillate fuel in ship engines, rather 
than heavy fuel oil, would facilitate the use of engine exhaust 
technologies such as particulate filters that decrease black carbon 
emissions.
    We request that this Committee urge the U.S. IMO delegation, and in 
particular the U.S. EPA, to collaborate with IMO member nations, 
especially countries with territory in the Arctic, to (1) develop 
particulate matter/black carbon-specific ECA emission standards and 
adopt a black carbon (and also nitrogen oxide) Arctic ECA in the near 
term; (2) institute interim voluntary black carbon measures for ships 
operating in the Arctic immediately; and (3) support the development 
and enhancement of technical and operational measures to control and 
reduce black carbon emissions from ships.
    It is imperative that strong and effective measures to reduce black 
carbon be initiated now as shipping emissions are currently 
contributing to melting Arctic sea ice and snow, Arctic shipping is 
growing considerably, and adequate mitigation measures may take several 
years to implement. Neglecting the issue of black carbon emissions from 
Arctic shipping at this stage would risk exacerbating the speed and 
degree of climate change. We believe that the U.S. delegation should 
take a leading role at the IMO to immediately address Arctic black 
carbon emissions from ships.
    We further request the Committee urge the U.S. IMO delegation to 
provide technical expertise and guidance in helping to strengthen and 
harmonize any black carbon-related efforts at the IMO with pending 
federal legislation (e.g., H.R. 1760) addressing black carbon 
emissions.
    Thank you for the opportunity to provide these comments.
            Sincerely,
                                  John Kaltenstein,
                             Clean Vessels Program Manager,
                                              Friends of the Earth.

                                  
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